Pizza serving up bigger slice of fast-food market

Localized menus, deliveries drive sales thanks to prevalent at-home dining habits

Fueled by an increasing appetite for Western-style foods among young Chinese consumers, foreign pizza retailers plan to open more stores in the country, with localized pizza-focused menus and deliveries becoming a more prevailing trend.

US-based Domino's Pizza Inc, the world's largest pizza company in terms of sales revenue last year, said it would continue to ramp up its expansion campaign by opening 180 new stores in China this year and another 240 next year.

The company's ambitions are backed by its plans to cash in on the rising demand in the pizza delivery segment in China, which is expected to see booming growth, especially since COVID-19 measures were relaxed, as more consumers have fostered a habit of ordering food deliveries online.

Over the past weekend, Melissa Liu, a 30-year-old office worker in Beijing, ordered two large pizzas from Domino's, as her family members were ill and not in the mood to cook.

"Ordering pizza is quite convenient and I got the food quickly. We didn't finish eating at once, but it still tasted quite delicious after reheating it later," Liu said.

DPC Dash Ltd, Domino's Pizza's exclusive master franchisee on the Chinese mainland, Hong Kong and Macao, believes it will enjoy continued expansion across China.

As of May 31, DPC Dash operated 656 stores in 20 Chinese mainland cities. In late April, the company opened its first stores in Qingdao, Shandong province, and Wenzhou, Zhejiang province. Their first 30-day sales hit record highs among the company's newly opened stores globally.

DPC Dash stores now hold all top six spots for first 30-day sales among Domino's stores globally. Domino's operated nearly 20,000 stores worldwide in more than 90 markets by the end of last year. The company is the fastest growing among China's top-five pizza brands, according to a report by consultancy Frost & Sullivan.

"We are pleased to see the continuous high-quality growth of our presence in China. We adopt a unique business model that combines the globally recognized Domino's playbook with our knowledge of the Chinese market," said Aileen Wang, executive director and chief executive officer of DPC Dash.

"We aim at serving handcrafted, quality pizza at a competitive price, with easy ordering access and efficient delivery, enhanced by technological innovations," she said.

DPC Dash has adapted and built upon the proven business model of its franchiser Domino's by localizing its key features for China and its consumers, focusing on serving Chinese consumers delicious pizzas through online channels, it said.

In March, DPC Dash debuted on the Hong Kong stock exchange. The company said its priority is still store expansion after going public, and it plans to open another 200 stores and 300 stores in China in 2025 and 2026, respectively, according to its prospectus.

Under its current management, DPC Dash will continue to execute its tailored localization strategies, implement an actionable store expansion plan, become more focused on a delivery-centric business model, and strengthen its development capabilities with respect to both menus and technology, the company said.

The delivery segment of Domino's in China has gradually increased year by year. In 2022, the self-owned delivery business accounted for 52.2 percent of the company's overall business in the country. Domino's has further developed its app, a mini program on WeChat, and its official website in China. Thus, it has relied less on third-party platforms, it said.

In 1997, Domino's entered the Chinese mainland market, and the concept of food delivery began to emerge in the country. Back in 1990, Pizza Hut opened its first outlet in Beijing, which marked the beginning stage of China's pizza market.

By the end of June, Texas-based Pizza Hut operated more than 3,000 stores in China, according to its parent company in China, Yum China, which has been speeding up its expansion in the Chinese market this year.