Domino’s Pizza today said its business moved online faster in the first half of its financial year, when 93% of delivered sales were made over the internet.
The pizza delivery business said UK online sales grew by 15% and app sales by 19% in the 26 weeks to June 28, compared to the same time last year. In the second quarter alone – which covers the Covid-19 lockdown period – online sales grew by 22% and app sales by 26%.
That helped to lift UK and Ireland system sales by 5.5% to £628.9m in the 26 weeks to June 28. In the UK alone, like-for-like sales grew by 4.8%. Statutory pre-tax profit from continuing operations reached £45.8m, up by 13.6% on last time. But after a £19.3m loss from discontinued international operations, its bottom line profit from continuing and discontinuing operations, came in at £19m, down by 15.2% on last time. Domino’s sold its Norwegian business in May and also plans to dispose of its businesses in Sweden, Switzerland and Iceland.
The lockdown effect
The company, which sells via franchisees, said it had “accelerated our evolution to a digital business” during the half-year. It switched off collections throughout the lockdown period, with the result that orders for collection were down by 87% in the second quarter, while orders for delivery rose by 22%. In 2019, collection accounted for 21% of sales and 31% of orders. However, said Domino’s, while stopping collections did not affect sales figures, it did reduce first-half order numbers by a net 5% (collections -44%, deliveries +12%). Contact-free collection has now been introduced, but demand for the service is currently still running below previous levels.
Online traffic doubled at the start of lockdown, prompting the need for fast development to update systems – including 40 system releases in 10 days. Some 39% of system sales are now via the Domino’s app, and the next iteration of the app is due out in the autumn. This is designed to make it easier for shoppers to find deals, and toimprove both its navigation and look and feel.
Incoming Domino’s Pizza chief executive Dominic Paul said: “Throughout these unprecedented times we have focused on doing the right thing for our customers, colleagues, franchisees and communities. We view it as a privilege to have been able to stay open throughout the period. I have been hugely impressed by the hard work, dedication and agility of our colleagues and our franchisee partners to keep Domino’s delivering, and I would like to say a big thank you to the entire team.”
He said that although trading in the early weeks of the second half had been encouraging – thanks to factors including the introduction of contact-free collection, the return of Premier League football, a VAT reduction on hot foot and the rise of UK staycations – it was too early to predict how customer behaviour would change.
The business has had a “challenging” relationship with franchisees and it says it aims to build a new constructive relationship with them as it creates a long-term strategy to improve growth, now primarily via digital. During lockdown, the business did not furlough any staff or take part in government lending.