Domino’s Pizza [IRDX RDOM] has reported that UK sales passed £1bn for the first time in its latest financial year – with 75% of orders taking place online. That’s up from 71.8% in the previous year.
Group system sales of £1.2bn in the year to December 31 were 15.1% up on the previous year. UK and Republic of Ireland sales of £1.1bn were 9.2% up on last time. Overall pre-tax profits of xx were xx on last time.
Chief executive David Wild said: “”2017 has been a year of significant progress for Domino’s, despite the weaker consumer demand and cost inflation affecting the sector. Given this backdrop, I am particularly pleased with our performance. In the UK, system sales broke through £1 billion for the first time, helped by a record 95 new store openings. We also took action to improve value for customers, and this led to improved growth in H2, benefiting shareholders and franchisees alike. Our international operations are becoming a more material part of the Group. In Ireland and Switzerland, system sales growth accelerated, supported by very strong digital performance. In the Nordics, the move to majority control and the acquisition in Norway demonstrate our increasing confidence in the opportunity.”
He said a new supply chain centre in Warrington would enable it to serve at least 1,600 sites. That represents a significant expansion: as of December 31, the group had 1,192 stores in six markets, of which 1,045 were in the UK.
Here are the highlights of what the group said about its multichannel strategy. Although not technically a retailer, Domino’s strategy is always very relevant for the sector.
Discounting and promotions
Customers, said Domino’s, have more choice than ever in the range of different types of takeaways available and the ways they can order. But at the same time, incomes have been squeezed by inflation. Although 87% of Domino’s orders in 2017 were on a promotion, with an average discount of 38%, it said menu prices appeared high to customers and as a result it focused on the value for money that it believes it offers. During the year it decided to invest up to £4m in absorbing food cost inflation, and focused in campaigns on the price of an individual pizza, such as Dine for £9.99.
Shoppers can now order through Amazon Alexa and pay via Apple Pay.
Domino’s says the closer it is to customers, the quicker pizza is delivered – and the more sales are collected. “Quick delivery significantly enhances the customer experience and leads to a higher level of repeat ordering,” it said in today’s figures. Its delivered on time (DOT) metric assesses the percentage of deliveries that reached customers within 30 minutes of ordering. “During the year,” it said, our % DOT fell very slightly from 82.o% of orders to 81.8%, but still remains a key differentiator.”
More pizzas were picked up over the year, with collection sales up by 12.6% and representing 21.4% of system sales. In newer stores, almost a third (31%) of pizzas were collected.
Its new supply chain centre in Warrington is due to come into service this spring, at a cost of up to £39m, and will enable it to serve at least 1,600 stores.
Domino’s Pizza Group, based in the UK, also operates in Switzerland, Iceland, Norway and Sweden and has an associate in Germany. “We expect International to represent an increasing proportion of the Group’s profits and cash flow over the longer term, both from the development of our existing markets and entry into selected new markets with similar dynamics,” it said in today’s figures.