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Domino’s performance plummets as food inflation eats away at profits

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Domino’s Pizza has reported a slump in half-year profits after being hit by rising costs despite price hikes for franchisees and the introduction of a delivery fee.

The British pizza supply chain reported a 16.3 percent fall in underlying pre-tax profit to £50.9 million for the six months ended June 26.

This comes despite efforts to offset rising ingredient prices and other cost pressures, including the introduction of a delivery fee of between 99p and £2.50 in March.

The company said it has raised prices for its franchisees but has “delayed” doing so, meaning the full benefits won’t be felt until the final six months of the year.

The group expects weighted earnings towards the end of the year and left its full-year guidance unchanged.

Domino’s said it is increasing marketing spend “significantly” to attract more customers after like-for-like sales excluding so-called shared areas fell 6.4 per cent due to the increase in the UK VAT rate.

Outgoing CEO Dominic Paul said: “We will increase our media spend in the second half compared to the first half and reinforce our value message to customers as we head towards key events such as the Men’s World Cup.

“We continue to attract new customers by expanding our study with Just Eat following positive initial results.”

He added: “Domino’s scale and integrated supply chain will always be key to our success.
“With inflation accelerating and consumer budgets tightening, these differentiators are more important than ever.”

Mr Paul recently announced plans to leave in December to manage the Premier Inn owner, Whitbread.

Domino’s is looking for his replacement.

The numbers come after the company recently ended a long-standing dispute with its franchise partners.

As part of the deal unveiled in December, the group said it had agreed to invest £20m over the next three years, with franchise owners agreeing to increase the pace of new store openings.

It also recently completed an exit from all directly operated international markets to focus on the UK and Ireland.

https://www.independent.ie/business/irish/dominos-performance-slumps-as-food-inflation-takes-bite-out-of-profits-41884505.html Domino’s performance plummets as food inflation eats away at profits

Fry Electronics Team

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