Domino’s Pizza China operator files for Hong Kong listing

BEIJING — The operator of Domino’s Pizza stores in China, DPC Dash, applied Monday to go public on the Hong Kong stock exchange, according to an online filing.

U.S.-listed franchisor Domino’s Pizza has a 15.7% stake in DPC as of the filing date through wholly-owned entities, the document showed. No one entity has majority ownership.

Much of the key information on pricing and timing were redacted in the publicly available document, as the listing has yet to occur. Bank of America Securities is the sole sponsor of the listing, according to the application.

DPC said in the filing it is Domino’s Pizza’s “exclusive master franchisee” in mainland China, Hong Kong and Macao, with 485 directly operated stores in 10 cities on the mainland — mostly in Beijing and Shanghai. The company said it plans to open 120 new stores this year.

Same store sales grew by 18.7% in 2021. But the company has operated at a growing net loss over the last three years, which the filing attributed to spending on new stores, central kitchens, marketing and staff training.

New stores take about one to three months to break even, with a typical cash investment payback period of three to four years, the filing said, noting shorter times for new stores in Beijing and Shanghai.

In 2021, more than 73% of revenue was generated by delivery orders, the filing said. The company said it hires dedicated drivers — a staff of 5,375 in 2021 — to meet a delivery promise of 30 minutes.

DPC warned about numerous business risks, including that of Covid-related restrictions.

Yum China, which operates Pizza Hut in China, warned on March 14 that same-store sales fell by about 20% year-on-year for the first two weeks of the month due to Covid. That was before the latest Shanghai lockdown announced this week.