Domino's Pizza second-quarter earnings, released Tuesday morning, surpassed Wall Street consensus by 2 cents, led by international same-store sales growth of 7.7%. It was the third consecutive quarter in which Domino's Pizza notched sequentially stronger same-store sales growth from its international operations, and followed a 7.4% increase in the first quarter. As for the key domestic franchise business, same-store sales increased 5.5%, following a 4.9% in the first quarter and surpassing McDonald's (MCD) U.S. second quarter same-store sales decline of 1.5%.
But the real story on Domino's Pizza is in the historical performance of the company.
Domino's Pizza, the No. 1 pizza delivery company in the U.S. based on reported consumer spending, has built up a plethora of tasty financial trends in its business in two year's time. Year-over-year revenue growth has been positive since the second quarter of 2012, no small feat as rival Papa John's (PZZA) has introduced new menu items that include an eight-inch dessert cookie and a "Cinnapie," aggressive bundle deal promotions (buy a pizza, get a Pepsi (PEP) 2-liter soda) and online ordering capabilities. Further, fast casual restaurants Chipotle (CMG) and Starbucks (SBUX) continue to drive strong traffic nearly around the clock -- the latter has unveiled a fresh round of evening menu items designed to capture the post-work dinner crowd.
At an average of 1,500 square feet, Domino's Pizza restaurants remain focused on carry-out and delivery food services for its hungry patrons.
What's more impressive than Domino's Pizza revenue growth are the directions of its profit margins. The company has added 1,100 basis points to its earnings before interest, taxes, depreciation and amortization margin, or EBITDA, since the second quarter of 2012. At 20% in the first quarter of 2014 (29.9% in the second quarter), that was roughly two times Papa John's profit margin, according to Bloomberg data.
The recipe for success for Domino's Pizza has been rooted in new technology platforms both online and inside the restaurant, which have helped to improve order accuracy and delivery speed. Digitally derived sales now represent 45% of Domino's Pizza total sales, while the collection of customer profiles has afforded the company the luxury of better targeting its marketing and promotions. In terms of new menu items, Domino's Pizza specialty chicken, launched in April of this year, has led to positive buzz and raised the prospect for incremental sales going forward. Chicken is the second largest part of the company's business behind pizza.
Even international operations have been a favorable aspect to the investment thesis on Domino's Pizza as the company has pushed into emerging markets, such as India. On its first quarter earnings call, Domino's Pizza remarked that India is its "fastest growing market" in its system. Overall international same-store sales have now grown for an unwieldy 82 straight quarters.
-- Written by Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.