Over the past few years, the consumer sector has witnessed repeated reshaping of market expectations. From consumption upgrading to downgrading, and from traffic-driven growth to stock competition, the market has grown increasingly discerning toward the catering industry, and is also placing greater emphasis on the sustainability of corporate growth.

 

In a recent research report, Industrial Securities noted that boosting domestic demand is a top economic priority for 2026. China’s residential service consumption has considerable room for improvement compared with overseas markets, and is expected to become a new focus of the country on the basis of further optimizing subsidies for commodity consumption. Capital allocation in the sector is at a historically low level and the overall valuation has priced in many pessimistic expectations. It is recommended to attach importance to 2026 as the first year of service consumption, and lay out the two main lines of inflation expectation recovery and segmented prosperity from a full-year perspective.

 

Against this macro backdrop, DPC Dash Ltd (“DPC Dash” or the “Company”)(1405.HK) recently released an eye-catching annual results. Despite the slowdown in the growth of the catering industry and intensified competition over the past year, which have left many players stuck in a growth bottleneck, DPC Dash has proven with data that an enterprise’s resilience to navigate economic cycles never comes from empty slogans, but from solid fundamentals and sustained growth momentum.

 

01

Profit Quality Improves Steadily, Economies of Scale Accelerate

 

A quick look at DPC Dash’s financial report reveals impressive performance in its core metrics.

 

In 2025, Domino’s China achieved revenue of RMB 5.382 billion, a year-on-year increase of 24.8%, representing five straight years of double-digit growth; adjusted net profit reached RMB 188 million, a year-on-year surge of 43.3%; adjusted EBITDA stood at RMB 635 million, up 28.2% year-on-year; adjusted EBITDA profit margin was 11.8%, a year-on-year increase of 30 basis points. Net profit hit RMB 142 million, a substantial year-on-year surge of 157.1%.

 

Behind this outstanding performance is the continuous consolidation of profitability at the store level. In 2025, store-level EBITDA totaled approximately RMB 1.001 billion, with a margin of 18.6%; store-level operating profit reached around RMB 740 million, maintaining a healthy operating profit margin of 13.7%.

 

These figures send a clear signal: the Company’s profit growth has moved beyond the inflection point of “turning losses into profits” and entered an upward trajectory of “sustained realization”.

 

2024 marked a milestone as the Company achieved annual profitability for the first time, and 2025 further validated the sustainability of its business model on this basis.

 

The revenue side maintained a high growth rate of 24.8%, and the profit growth outpaced revenue growth significantly—a typical characteristic of the materialization of economies of scale.

 

With the expansion of the store network, fixed costs are spread thinner, driving higher marginal profits. Headquarters management expenses are also spread thinner, and supply chain and distribution efficiency is optimized as network density increases. Every seemingly minor cost improvement, multiplied by the scale of over a thousand stores, translates into tangible profit elasticity.

 

On a deeper level, the improvement in profit quality is also driven by the optimization of store structure. In 2025, the revenue share of newly growing markets rose further. These new stores not only contributed to revenue growth but also boosted the overall profitability with their higher return on investment efficiency.

 

At the same time, mature markets continued to generate stable cash flow through consecutive years of same-store sales growth. A dual-drive pattern of “mature markets stabilizing the core business and new markets contributing growth elasticity” has taken shape.

 

It can be said that DPC Dash has built a self-reinforcing operating cycle: scale expansion leads to cost optimization, and such optimization in turn fuels the improvement of profitability, and the improved profitability provides financial support for a new round of expansion.

 

02

Store Milestone Achieved, 4D Strategy Powers the Growth Flywheel

 

The core keyword for DPC Dash’s 2025 results can be summarized as resilience. This resilience is not a short-term earnings surge, but a sustainable growth capability built on economies of scale, digital barriers and brand moats.

 

The Company’s “4D Strategy” anchored its full-year operations, encompassing high-quality store Development, Delicious Pizza at Value, efficient Delivery experience, and advanced Digital capabilities. These four pillars work in lockstep to accelerate the growth flywheel.

 

a. Store Network Achieves Growth in Both Quantity and Quality

 

In 2025, DPC Dash continued its expansion strategy of “deepening and expanding market reach”, with a net increase of 307 stores throughout the year, successfully meeting its annual store opening target. By the end of the year, the total number of stores reached 1,315, covering 60 cities. Entering 2026, the pace of expansion has further accelerated, with 62 new stores opening in 46 cities nationwide on New Year’s Day alone, including 8 cities where the brand entered those markets for the first time.

 

What is more noteworthy than the number itself is the performance of the new stores. Most of the newly opened stores are located in non-first-tier cities, yet their growth momentum has been nothing short of stunning. In October 2025, the first store in Xuzhou recorded a daily turnover of over RMB 680,000 on its opening day. The first store in Dalian, which opened on New Year’s Day 2026, further refreshed this record to RMB 700,000. As of January 31, 2026, the Company occupied the entire top 50 slots in Domino’s global ranking of first-30-day sales across its network of over 22,000 stores worldwide.

 

Clearly, the Company’s store location selection is not a matter of luck, but a data-driven model.

 

Every new store opening is backed by scientific, data-driven decision-making, from the analysis of urban tier characteristics and the measurement of business district traffic, to the control of rental costs and the design of delivery radii. “Deepening and expanding market reach” is not blind expansion, but a steady territorial expansion based on a replicable single-store model.

 

b. Expanding Member Ecosystem, Digital Strategy Builds Core Barriers

 

As of the end of 2025, the scale of DPC Dash’s “loyalty program” exceeded 35.6 million, with a net increase of over 11 million members and more than 15 million new first-time users throughout the year.

 

The value of these figures lies in the closed data loop. The Company’s digitalization has integrated the full customer journey of “ordering-production-delivery-repeat purchase”. The accumulated user portrait data can feed back into product research and development and marketing strategies, with data supporting decisions such as which cities to launch new products in, what promotions to match, and when to prioritize sales.

 

This digital asset is not something competitors can replicate in the short term. It is not a purchasable system, but a collection of user insights and operational methodologies accumulated over the years. At a time when traffic costs are rising steadily, DPC Dash, with a private domain user base of 35 million, has built its own brand moat.

 

c. Simultaneous Product Innovation and Precision Marketing

 

On the product front, DPC Dash maintained a high-frequency iteration pace of innovation. Throughout 2025, the Company launched a new product every 6 to 12 weeks, introducing a number of new pizzas that blend regional flavors with global inspiration, and also upgraded classic products with “more portions without extra cost”.

 

From Sicilian-style to Madrid-style pizzas, braised beef brisket with prawns to black truffle & mushroom, each new product enriches the product portfolio while reinforcing the brand’s value-for-money positioning. This continuous product renewal not only meets consumers’ pursuit of novelty but also solidifies the foundation for repeat purchases.

 

In terms of marketing, the Company accurately seized major consumer nodes throughout the year, launching Halloween-themed limited editions, Spring Festival promotions, and cross-border collaborations with popular IPs such as Sanrio. With coordinated online and offline efforts, it successfully reached the young consumer group. Meanwhile, classic promotional activities such as “Buy One Get One Free Super Week” returned regularly, providing consumers with a variety of choices. The simultaneous increase in brand exposure and sales conversion attests to the effectiveness of its marketing strategy.

 

03

The Expectation Gap in An Era of Differentiation Among Consumer Stocks

 

Currently, the investment logic of the consumer sector is undergoing profound changes. In the past, “choosing the right track meant success for anyone”, but now “investors are scrupulously picking alpha opportunities”.

 

In this differentiated environment, what underappreciated advantages support DPC Dash?

 

Expectation Gap 1: Pizza’s Inherent Anti-Cyclicality in China

 

The coexistence of consumption downgrading and upgrading may sound contradictory, but it is the real picture of China’s current consumer market. Consumers in first-tier cities may be more budget-conscious, while consumption upgrading in lower-tier markets is just beginning. The uniqueness of the pizza category lies in its dual attributes: it combines everyday convenience with social dining appeal. It works as a RMB 30 quick meal and a presentable RMB 80 treat. This flexible positioning gives pizza unusual resilience in a split consumer landscape.

 

When the catering sector faces pressure, its essential, everyday appeal provides a defensive cushion; when consumer confidence recovers, its experiential attribute releases growth elasticity. The market is accustomed to simply categorizing pizza as “Western fast food”, but overlooks its cross-tier pricing appeal. This inherent advantage of the category is the underlying logic for DPC Dash to navigate economic cycles.

 

Expectation Gap 2: Accelerating Economies of Scale Beyond 1,000 Stores

 

Many view economies of scale as linear, assuming that a 10% increase in the number of stores will lead to a corresponding percentage drop in costs. In reality, economies of scale are released in a cumulative and accelerating manner. When store density reaches a certain level, cost efficiency improves at a steepening rate.

 

The 1,000-store mark is a critical threshold. Crossing this threshold brings qualitative changes in procurement bargaining power, distribution network efficiency and brand recognition. With the further increase in store network density and optimization of operational efficiency, the scale dividends on the supply chain side are also expected to be further released.

 

Of course, the pace of opening about 300 stores per year means the Company is still in the expansion and investment phase, which requires continuous resource input for the cultivation of new markets and the growth of new stores. But the key is to look at the trend: as the number of stores increases, the fixed component of the single-store cost model will be diluted further; as store density rises, the efficiency of the distribution network will improve. This process does not happen overnight, but the direction is clear.

 

It is foreseeable that as new stores gradually move beyond the cultivation period and enter the mature stage, the improvement in profitability will be gradually reflected in the financial statements. This gradual but definite improvement is the expectation gap that the market has not yet fully digested.

 

Expectation Gap 3: Digital Assets Underappreciated in Valuation System of Consumer Stocks

 

When valuing catering stocks, the market is used to looking at PE ratios, store numbers and same-store sales growth. However, DPC Dash’s digital assets, from 35.6 million member data to order forecasting algorithms and delivery route optimization systems, are underappreciated in conventional valuation frameworks.

 

Digitalization is not a cost center, but a catalyst for higher valuation. A catering enterprise with a large private domain user pool and the ability to accurately reach and operate users has an incomparable long-term value compared with enterprises that rely solely on third-party platform traffic.

 

As the market gradually recognizes the competitive barriers built by this set of digital assets, the valuation system of DPC Dash is expected to face a re-rating.

 

Expectation Gap 4: Premium Brand Benefits in Lower-Tier Markets

 

Top Western brands are still in short supply in lower-tier markets. When young people in a county want to eat authentic pizza for the first time, they often have limited choices. At this time, the emergence of Domino’s is not consumption downgrading, but a catch-up opportunity for consumption upgrading. The queuing phenomenon at the first stores in more than a dozen new cities entered in 2025 is the best testament to this.

 

Behind this explosive growth is the dimension reduction impact of Domino’s global brand momentum. According to the “RESTAURANTS 25 2025” released by Brand Finance, Domino’s ranked seventh with a brand value of US$6.69 billion, firmly securing a spot in the world’s top 10 most valuable restaurant brands. For consumers in lower-tier markets, the recognition and trust in international top brands exceed expectations. This brand endorsement is an advantage that local brands can hardly replicate.

 

From this perspective, the story of the pizza track in China is far from over. First and second-tier markets compete on density and efficiency, while lower-tier markets compete on the first-mover brand perception. DPC Dash happens to stand at the intersection of these two tracks.

 

Therefore, for DPC Dash, sinking to lower-tier markets is not a move downmarket, but an in-depth expansion into a blue ocean market.

 

04

Conclusion

 

Looking back at the full year of 2025, DPC Dash’s economies of scale are being released at an accelerated pace. This is not a simple extensive expansion, but a sustainable snowball-like growth model. When the brand has a solid foundation and the market space is broad enough, growth momentum can be continuously accumulated.

 

While the market is still debating the strength of consumption recovery, DPC Dash has proven with its brilliant financial report that solid fundamentals are the most reliable anchor through economic cycles.

 

Of course, DPC Dash is not without challenges. Balancing the speed of expansion and the quality of single stores is a technical task amid rapid expansion. Entering new cities means continuous investment, and the early cultivation period may bring short-term fluctuations. The decline in the proportion of delivery revenue in some new stores will also affect the average transaction value. These are the normal costs associated with expansion, but such investment and layout are for the long term. Crucially, the Company has established a presence in only 60 cities to date, leaving massive untapped potential. Meanwhile, it supports the opening of around 300 new stores annually through internal cash generation, without increasing debt or depleting cash reserves—a level of financial stability rarely seen in the current catering industry.

 

It is important to note the brand value of Domino’s—ranking among the world’s top 10 restaurant brands is a moat built over decades. DPC Dash’s localized operation capabilities have also been verified: a sustained and strong expansion momentum, new stores in emerging markets repeatedly breaking sales records, a member base exceeding 35.6 million, four consecutive years of being awarded the “Best Employer” by Mercer, and the first “Star Employer” award by Mercer China in 2025.

 

What the market needs is a telescope for long-termism, not a microscope for short-term fluctuations.