The Domino's Pizza Enterprises Ltd (ASX: DMP) share price is dropping lower on Friday after providing a business update.
At the time of writing the pizza chain operator's shares are down 2% to $48.65.
What was in the update?
This morning Domino's provided an update on how its operations were being impacted by the coronavirus pandemic.
According to the release, the company's stores in France have been progressively reopening this month. It now has approximately 70% of its stores trading in the country again.
In New Zealand its store network is preparing to reopen when government trading restrictions are lifted. This is expected to be on April 28.
For its stores that are open in Australia and Europe, the company notes that their overall same store sales performance has been positive. Germany has been a particularly strong market. However, it advised that new consumer behaviour is affecting individual stores in each market unevenly.
Finally, over in Japan the company's operations have continued their strong performance and delivered a significant increase in sales during the pandemic.
Guidance update.
Due to the uncertainty caused by the coronavirus pandemic, the company continues to refrain from providing any short term guidance.
However, over the medium-term Domino's continues to target new store openings of 7% to 9% per year and same store sales growth of 3% to 6% per year. It is also aiming for net capital expenditure of $60 million to $100 million each year.
Should you invest?
Today's decline means Domino's share price is now down 27% from the high it reached in February.
I think this share price weakness represents a buying opportunity for investors looking to make patient buy and hold investments.
Especially given the solid demand for pizzas it is experiencing in markets where it remains open. And while its store expansion plans will inevitably be impacted in the short term because of the pandemic, I believe when the crisis passes the company will catch up and get back on the right path.
For similar reasons, I like fellow quick service restaurant operator Collins Foods Ltd (ASX: CKF). I believe it has strong long term growth potential thanks to its expansion opportunities for the KFC brand in Europe.
So, with its shares down 52% from their high, it could also be an opportune time to invest.
