Domino’s Pizza today said that 82% of its delivered sales were ordered online in the first half of the year – but while online sales are growing, its franchisees’ store opening plans are being held back by factors including a shortage of delivery drivers. Domino’s is encouraging customers to collect their pizzas, and said use of this more profitable sales channel rose by 3.6% to 21% of system sales during the period.
Domino’s Pizza reported revenues of £295.6m in the 26 weeks to June 30. That’s 3.5% up on the same time last year. Sales in the UK and Republic of Ireland were up by 5.5% – with 82% of sales being made online. But pre-tax profits of £30.5m were 26.9% down on the last time, while net debt grew to £238.8m from £182.1m. Domino’s said its debt and earnings figures were affected by putting aside £22m working capital for contingencies including Brexit stock building.
UK online sales grew by 9.3% year-on-year and represented 81.7% of system sales, or 90.7% of all sales that are delivered. Collection, meanwhile, now accounts for 21% of system sales – or 30% of all orders.
Chief executive David Wild, who is to retire from the role, said its core UK and Ireland market had put in a good performance. “Digital remains a key driver of customer engagement, with online now accounting for 82% of total sales in the UK.”
But he said that the retailer was involved in “detailed discussions” with franchisees in the UK and Ireland – with a need to find a win-win solution that satisfied both parties. And in Europe, it said, trading was challenging, especially in Norway but also in Sweden, Switzerland and Iceland. “We are very focused on improving our operational capability across our international markets and will provide a further update at our full-year results.”
The main challenge for franchisees, said Domino’s Pizza, was in the cost and availability of labour, especially delivery drivers. This is among the factors that are making franchises less profitable to run. That in turn is making franchisees less willing to open new stores.
The retailer says it is now well underway with its plans to invest £10m funding in new platforms for commerce and app development. “This will further improve the customer experience, whilst enabling us to introduce enhancements more quickly and flexibly,” it said in today’s half-year results.
Image courtesy of Domino’s Pizza Group