"At the end of the day it's a combination of a number of things -- I think we got our food right starting six years ago with our re-launch, our approach to advertising has worked incredibly well with the direct honest nature of it connecting with consumers, and our technology I think is the best in the business," Domino's Pizza president and CEO Patrick Doyle told TheStreet.
On Thursday, Domino's Pizza reported domestic same-store sales surged 10.7% year over year in the fourth quarter. For the year, Domino's cooked up a 12% same-store sales gain in the U.S. Adjusted for one-time items, Domino's earnings for the quarter rose 26.4% from the prior year to $1.15 a share. Wall Street had expected $1.13 a share.
The better-than-expected quarter sent shares of Domino's surging higher by about 7% in trading on Tuesday.
Domino's trounced its pizza competitors last year as it promoted a new $5.99 value menu, $8.99 pan pizzas and the ease of use of its digital ordering platform. Digitally-derived sales now comprise about 50% of Domino's U.S. business.
The company also continued to aggressively remodel its restaurants into its "pizza theater" concept, as Domino's calls it, in order to lure in patrons. The new design features a sleeker-looking interior and exterior, with seating both inside and outside, a new feature for a chain best known for its delivery cars. Customers can even watch their pizza being made, similar to what they can do at Chipotle (CMG) - Get Chipotle Mexican Grill, Inc. Report .
By 2017, the company intends to finish refurbishing its entire store fleet of over 12,000 global locations.
Domino's began TV marketing this week of its new DXP delivery car.
Papa John's (PZZA) - Get Papa John's International, Inc. Report , which has continued to emphasize its ingredient quality and new items rather than price in its marketing, saw its system-wide sales in North America rise a paltry 1.9% in the fourth quarter. The result badly lagged Domino's, and marked a slowdown from the 4.2% growth rate delivered for the entire year.
To jump-start sales, Papa John's recently announced a pledge that any customer dissatisfied with their pizza will get their next pie free. It also continues to tout an offer for a 50 cent large pizza when one large, one-topping pizza for regular price is purchased.
Whereas Papa John's sales stumbled late in 2015, Yum! Brands (YUM) - Get Yum! Brands, Inc. Report owned Pizza Hut experienced a mini-revival owing to a new value menu and more frequent deals. Still, sales underperformed Domino's, with Pizza Hut's U.S. same-store sales improving 2% in the fourth quarter, following a quarter in which they were unchanged. For the year, Pizza Hut's U.S. same store sales gained 1%.
In addition to Domino's, McDonald's appears to be a recent winner in the fast food wars with the successful launch of its all-day breakfast menu and a new discount menu.
Domino's continues to cook up better sales than rivals.
Domino's also managed to leave the rest of the pizza industry -- which includes a plethora of local independent mom and pop chains -- in the dust.
According to foodservice data firm CHD Expert, pizza industry sales fell 0.5% for the year ended Sept. 30 to $38.5 billion. Independent pizza operators, defined as those with fewer than 10 stores, saw their sales dive 5% to $14.9 billion. At chain operators that operate over 10 units, sales increased 3.4% to $23.5 billion.
Given the momentum in its business, Domino's stock may continue to serve up savory gains in 2015. Over the past year, Dominos shares have risen about 26%, outdoing the S&P 500's 8% decline. Shares of Yum! Brands and Papa John's have fallen roughly 13% and 4.9%, respectively, during that span.
To keep sales hot, Domino's is investing even more in digital.
In September, the company launched its first ever rewards program -- for every order of $10 or more, a user snags 10 points. After amassing 60 points, customers can get a free, medium two-topping pizza. Domino's declined to share how many users it has enrolled so far in its loyalty program, but said it's off to a "strong" start.
"We have spent a lot of time trying to grow digital penetration in the U.S.," said Doyle. "Now that it is the majorly of our business we are turning our attention a bit more to how can we drive more sales from the customers that are already there digitally. The first example of that is the loyalty program, which is digital only."