In 2011, one share of Domino's cost less than $30, enough to get you a few pies and a 2-liter bottle of Coke. The pizza chain was still in the midst of a major rebrand that saw it toss out its old recipe and admit to its customers that it had failed to deliver quality food.
But over the past decade, Domino's has undergone one of the biggest transformations not only in fast food, but also in corporate America. At nearly $480, the price of a single share of Domino's today could pay for an entire pizza party.
And despite posting its first drop in same-store sales in more than a decade this week, the chain's long-time shareholders still have come up out on top.
If you had invested $1,000 in Domino's on Oct. 14, 2011 at a share price of $28.32, the market value of your shares would be $19,980 today, according to CNBC calculations. In contrast, a $1,000 investment in the S&P 500 index would have seen a 343% return over the same time period and would be worth about $4,340.
Domino's transformation can't be pinned on a single factor, but instead on a savvy rebrand that saw the company improve every aspect of its business, says analyst John Gordon of Pacific Management Consulting Group, who has 45 years of experience in the restaurant industry.
In early 2009, Domino's shares were trading under $10 and the company had seen years of weak sales. The company brought in new CEO Patrick Doyle who set about to turn the company around.
The first step was improving its food. The pizza chain was open in its marketing about the failures of its old product and emphasized how much of an improvement its new recipes were.
"They actually celebrated it, they made fun of themselves on TV," Gordon says. "They developed a knack for very good marketing that they were able to fine tune over a period of time."
Domino's also led the way, along with Starbucks and Panera, in digitizing its operation. It built out its website and app, and encouraged customers to stop placing orders over the phone and instead do it through the company's online platforms, which Gordon says allowed stores to run more efficiently.
"As the transactions became more and more digital, the average ticket became higher," he says. "Franchisee cash flow improved from $49,000 per store in 2008 to $158,000 in 2020. That gave them the internal cash flow to build more stores on their own without having to go to the bank."
The company also doubled down on analytics and increased the efficiency of its pizza delivery routes, which allowed franchisees to maximize revenue for their stores, Gordon says. And over the past decade, these improvements have turned it into "the dominant global U.S. pizza operator."
"Among the publicly traded stocks, I can't really think of any other stock that has recovered to this degree, both operationally and on the stock side," Gordon says. "Other stocks have gone up and down, but this company has fundamentally, operationally and financially recovered for its franchisees and shareholders."