DMP - Domino's Pizza Enterprises

[Wysiwyg]

It definitely looks like Dominos has stolen your technology, tried to b.s. their way around it and then tried to silence you. Man that is so so wrong.

 

[skc]

Last Friday, the NSW Supreme Court lifted the injunction that Domino's had obtained to prevent film maker Phoebe Stuart-Carberry from publishing her documentary.

Everyone can now see her documentary at ExposeDominos.com

On Saturday morning, Channel 7's Weekend Sunrise interviewed Phoebe as well as the directors of Precision Tracking (of which I am one). We chatted with host Sally Bowrey about our battle with Domino's.

Disclosure: I am the R&D Manager at Precision Tracking Pty. Ltd and am also a director of the company. My company is involved in a patent dispute with Domino's over GPS tracking technology. I was one of the people interviewed for this documentary video.

Unfortunately it doesn't look like it has generated the media hype that you are hoping for? The youtube link above had only 158 views when I accessed it. Is there another place where it is hosted? The doco was the effort of one person on a shoestring budget and short timeframe, so perhaps it lacked the elements (e.g. background music, deep conspiracy-sounding narrator etc) that would engage the general public. May be the next step is to crowdsource some ideas on how to fight the battle?

From a neutral witness perspective... the doco provided more details on the nature of the dispute, but it doesn't contain anything concrete enough to persuade me one way or another.

One thing I do believe is that there is probably little reason for a small company like Precision Tracking to take on DMP for fun... so chances are you truely believe (and indeed, may have been) wronged by them. I do wish you a just and proper outcome (whatever that may be).

 

[McLovin]

One thing I do believe is that there is probably little reason for a small company like Precision Tracking to take on DMP for fun... so chances are you truely believe (and indeed, may have been) wronged by them. I do wish you a just and proper outcome (whatever that may be).

+1

Maybe try Four Corners to get some exposure. They could also consider approaching someone like IMF for funding.

 

[sinner]

Unfortunately it doesn't look like it has generated the media hype that you are hoping for?

They already got the hype though, articles in news.com.au, AFR, smartcompany, even interview on TV!

One thing I do believe is that there is probably little reason for a small company like Precision Tracking to take on DMP for fun... so chances are you truely believe (and indeed, may have been) wronged by them. I do wish you a just and proper outcome (whatever that may be).

My is that the likely story is that Dominos probably acted in bad faith but unlikely they acted illegally. Companies do this stuff to tech contractors all the time - I can recall multiple instances of almost identical scenarios from my personal experience and some very large global companies (much much larger than DMP) have a reputation for doing this - it is a lesson most startups end up having to learn the hard way unfortunately.

If I was the CEO of this company, I'd take my hard lumps and move the company on ASAP, all of this effort and capital which are very precious in a small company could easily be better spent on more productive endeavours. I have been under a CEO who ended up with this sort of myopic focus and from that experience I doubt much good will come for the employees.

 

[skc]

They already got the hype though, articles in news.com.au, AFR, smartcompany, even interview on TV!

Fair to say that the prospect of the video generated some hype, but the actual video generated no follow through.

TV!? Is that still a mainstream media? :

My is that the likely story is that Dominos probably acted in bad faith but unlikely they acted illegally. Companies do this stuff to tech contractors all the time - I can recall multiple instances of almost identical scenarios from my personal experience and some very large global companies (much much larger than DMP) have a reputation for doing this - it is a lesson most startups end up having to learn the hard way unfortunately.

If I was the CEO of this company, I'd take my hard lumps and move the company on ASAP, all of this effort and capital which are very precious in a small company could easily be better spent on more productive endeavours. I have been under a CEO who ended up with this sort of myopic focus and from that experience I doubt much good will come for the employees.

That's my general feeling and I agree with your suggested path.

 

[VLX]

Unfortunately it doesn't look like it has generated the media hype that you are hoping for? The youtube link above had only 158 views when I accessed it. Is there another place where it is hosted? The doco was the effort of one person on a shoestring budget and short timeframe, so perhaps it lacked the elements (e.g. background music, deep conspiracy-sounding narrator etc) that would engage the general public. May be the next step is to crowdsource some ideas on how to fight the battle?

Last time I checked, it had over 5000 views. I just checked again - apparently, the video was re-uploaded and that one now has about 2000 views, so I can only presume it's gaining traction.

From a neutral witness perspective... the doco provided more details on the nature of the dispute, but it doesn't contain anything concrete enough to persuade me one way or another.

It's a documentary for the general public as opposed to a legal brief for a court of law.

One thing I do believe is that there is probably little reason for a small company like Precision Tracking to take on DMP for fun... so chances are you truely believe (and indeed, may have been) wronged by them. I do wish you a just and proper outcome (whatever that may be).

Thank you for your kind wishes.

 

[VLX]

IT News just published this article:

ITNews: Domino's suffers setback in IP fight over GPS Driver Tracker

Here are some highlights from the IT News article:

'Domino's Pizza has hit a roadblock in its bitter dispute with IT firm Precision Tracking over the intellectual property in its GPS Driver Tracker technology, after the patent office refused to allow the retailer to grill executives from its former partner.'

'However, in a ruling yesterday, the Australian Patent Office refused Domino's request to summon witnesses from Precision Tracking to a patent hearing to be grilled on their application.

Domino's had asked for Precision executives Alexander Green, Vlad Lasky and Nathan Parrott to front up for examination and for the firm to produce emails and documents confirming the validity of their claims.

But deputy patent commissioner Phil Spann said he had no reason to believe the requested emails and documents would have a substantial impact on the proceedings.

He similarly said Domino's did not have a general right to cross-examine individuals, but would reconsider summonsing witnesses should Domino's prepare a list of specific questions it wanted asked - and should he consider them to be highly significant in detemining a resolution to the dispute.

"[The summonsing of witnesses] is not to be invoked by one party as a general means of exploring the other party’s case and particularly is not to be used in a fishing expedition or a hunt for a ‘smoking gun’," Spann said.

"Usually it will be necessary to identify a real and specific factual issue in dispute, not merely speculation that production or summons might reveal such a matter."

He said Domino's approach was "unusual" in that it appeared to be arguing that Precision's statements should be considered incorrect until documents were produced to substantiate them.

"For example, [Domino's] seeks unspecified documents recording the brainstorming of the inventive concept by Precision before the meeting in November 2012 which it says should exist if Precision’s claims are valid," Spann said.

"Domino’s therefore appears to be making the request on the assumption that the documents do not exist."

The pizza chain now has just 14 days to file any further information to avoid the patent being awarded.'

Disclosure: I am the R&D Manager at Precision Tracking Pty. Ltd. and am also a director of the company.

 

[kid hustlr]

What a company.

Incredible.

I have no idea how they make money at $8 a pizza but the quality of their chef's best range at that price is very good.

I don't hold - just a happy customer

 

[McLovin]

And another 13%+ this period.... Wow. It's not like they are increasing their prices either? It seems to be all productivity / volume gains...

10.9% group wide, 14.8% in ANZ. Amazing result. They've increased their SSS growth in ANZ over last year.

NPAT up 43.6%.

I still hate the pizzas.

 

[Ves]

10.9% group wide, 14.8% in ANZ. Amazing result. They've increased their SSS growth in ANZ over last year.

NPAT up 43.6%.

I still hate the pizzas.

It's staggering really. The technology must be fantastic to squeeze so much productivity out of small pizza shops. The SSS growth is becoming more rapid rather than slowing down too.

It's been an interesting story watching this all unfold.

 

[skc]

10.9% group wide, 14.8% in ANZ. Amazing result. They've increased their SSS growth in ANZ over last year.

NPAT up 43.6%.

I still hate the pizzas.

Is it just me or is the FCF ~$20m a bit low for a $6.5B company? Operating cashflow is $128.5m while capex was $132m. The FCF of $20 is pretty from sale proceeds of PP&E.

They spent a lot of capex... I am guessing a lot of that is store conversions of acquired store? I haven't the time to look at how much they spent on other stuff like IT, oven or robots. But while profit growth of 44% is high, it's really <$30m in absolute terms.

What is the effective life of these capex investments? What does a steady state picture actually look like? I am guessing we won't know for some time as they just upped there store rollout target.

Also... is there a cap on SSS? How many more ovens/chef can physically fit in a store?

DMP at current prices can't stop growing... or the share price will half. I hope it doesn't offer the wrong incentive to management as a result.

Lastly they forgot to mention the penalty rates wage discussion.

I need a bit more time to look thru this... but DMP's been a crowded trade for some time. I wonder if there's something in the results to change that.

 

[McLovin]

Is it just me or is the FCF ~$20m a bit low for a $6.5B company? Operating cashflow is $128.5m while capex was $132m. The FCF of $20 is pretty from sale proceeds of PP&E.

They spent a lot of capex... I am guessing a lot of that is store conversions of acquired store? I haven't the time to look at how much they spent on other stuff like IT, oven or robots. But while profit growth of 44% is high, it's really <$30m in absolute terms.

What is the effective life of these capex investments? What does a steady state picture actually look like? I am guessing we won't know for some time as they just upped there store rollout target.

I think there was a bit put into Japan. They mentioned somewhere about an accelerated store rollout in Japan. Japan also had falling SSS, which they blamed on the economy. I'm not sure how long the market will accept -ve SSS in any jurisdiction. And there is a lot of expectation baked into the crust about DMP doing what it did in Australia in Europe and Japan. Too much for my liking, but I've been wrong about this stock for years.

Also... is there a cap on SSS? How many more ovens/chef can physically fit in a store?

I asked the same thing this time last year. It's kind of remarkable to think how much excess capacity is available that they've been able to ratchet up SSS so quickly and consistently. It does explain how they can offer pizza at $4.95. The marginal cost of each pizza must be tiny.

I need a bit more time to look thru this... but DMP's been a crowded trade for some time. I wonder if there's something in the results to change that.

I don't think there's enough in the result for the shorters to really get at it, but it's a huge pinata waiting to get whacked. That investment into the store rollout will need to show results quickly. At ~80x earnings there is zero room to disappoint.

 

[Ves]

At ~80x earnings there is zero room to disappoint.

Honestly, 80x earnings would probably be pretty steep if they owned the Domino's brand.

But they don't own it, they have exclusive rights from the Master Franchisor (Domino's US). So I think it's incredibly steep, even if there is only a minor chance of a catastrophic tail-risk event appearing.

I think the agreement for Aus/NZ is up for renewal in 2028 and some of the others are 2031.

What are the assets worth without the Franchise rights?

It's safe to say any long-term success means they'll probably be paying a lot more to renew the license than they did last time.

I'm happy to be wrong on this one.

 

[kid hustlr]

Reading the start of this thread is enjoyable.

What a company 2 bucks to 70 in 10 years.

ROE have you still got your initial parcel?

 

[skc]

Has anyone else notice that there seems to be a lot of Domino's discount offers of late in their email?

 

[Klogg]

Has anyone else notice that there seems to be a lot of Domino's discount offers of late in their email?

Not particularly in my email, but check how many active coupons they have:
https://www.ozbargain.com.au/deals/dominos.com.au

And some of those are really good deals.

 

[skc]

Not particularly in my email, but check how many active coupons they have:
https://www.ozbargain.com.au/deals/dominos.com.au

And some of those are really good deals.

Thanks. I haven't had DMP pizza for some time so may be there's a marketing time trigger or something that sends me deals in bunches....

 

[rb250660]

Saw this little beast in Japan near my apartment the other day. I might give them a try to compare with Australia.

 

[VLX]

Hiyas,

The Domino's Annual General Meeting (AGM) is being held next Monday 7th November at 3:00 p.m. (Brisbane time) in Cinema B at the Gallery of Modern Art (GOMA) at Stanley Place, South Bank, Brisbane (from the official announcement).

If you’ve got DMP shares, the AGM will provide an excellent opportunity to hear what Domino's executives have to say and have your questions answered face-to-face.

I’m now a Domino’s shareholder and will be flying up from Sydney to attend the AGM.

If any of you awesome people are coming along, I'll be hanging around for a couple of hours after the AGM and would love to catch up for a beer or other cold drink before I fly back to Sydney.

I'll be wearing my Peter Jackson Morgan Grape Linen jacket (reddish-pink coloured) so you shouldn't have too much trouble finding me

As I am a party to litigation with Domino's that is now before the Federal Court, I will not be asking any questions or making any statements related to the legal dispute. I politely ask Domino's to respect my shareholder rights and not do anything to prevent me from attending the AGM.

Vlad.

Disclosure: I am the R&D Manager of Precision Tracking and a director of the company. I am one of the parties to the current litigation with Domino's that is now before the Federal Court.

 

[skc]

Is it just me or is the bear case for Dominos building? Since the AGM update in Nov generating a bit of price spike, it has been trading very soft on a range of factors:

- Started paying weekend penalty rates. The increase was about $5 per hour for the average worker. If there are 4 workers per store (2 drivers, 2 kitchen) doing 12 hours on a Sunday, that's' an additional cost of $5 x 12 x 52 x 4 = $12.5k per store in extra labour costs. With 700 stores in Australia that's an extra $9m in cost, or ~6% of the $139 NPBT last year.

- Started Sunday surcharge of 10%. DMP said they have tested this with customers in selected market. But it's really hard to see this not impacting demand.

- The last announcement by DMP claimed that "DMP has seen no evidence to support link between share price and introduction of Sunday surcharge)". Of course there isn't! Unless you do a survey of the sellers and ask if they sold due to the surcharge, how can you come up with evidence linking to the share price. What isn't said was that DMP hasn't seen a link between Sunday surcharge and sales. The fact that this was not mentioned could be telling - it would have arrested the share price fall nice and quick.

- Being investigated for wage underpayment (following footstpes of 7-Eleven, Caltax, Bakers Delight etc) - fresh news this morning from AFR.

- No real new technology innovation - gimmicks like zero-click and drone deliveries are unlikely to move the dial in sales.

- Japan and Europe unlikely to outperform - Japan's been poor for some time, and Europe's only just going through a big integration / rebranding, plus currency impact would have eaten away most growth.

The share price has retreated from a high of $80, but I'd guarantee you that it is not priced in should DMP disappoints the market. The Dec half shouldn't be much surprise but the market will pour over any change in the outlook.