Domino’s half-year profit down, eyes delivery growth to counter labour pressures

The company expects to reach $4 billion in global food sales this year.

Domino’s Pizza Enterprises posted lower profit but higher sales for the half ending December, as it aims to open 500 new stores this financial year.

The listed company saw underlying net profit after tax (NPAT) at A$91.3 million, down 5.3% compared to first-half 2021. Earnings before interest and tax dipped 5.7% to A$144.7 million whilst network sales and online sales increased 11.1% and 11.5%, respectively.

The company added 285 stores in the first half, 156 of which were as a result of buying up the pizza chain’s Taiwan operations.

Domino’s explains that the half-year earnings results were lower than the prior comparable period largely due to investments in Project Ignite in Australia and New Zealand and a rebasing of sales in Japan in Q2.

The company expects to reach $4 billion in global food sales this year, with more than $3 billion online.

“COVID-19 has not changed our shared business strategy but instead reinforced the importance of it. Having experienced franchisees open stores closer to customers reduces delivery times and costs, increases customer satisfactions and sales, and makes our marketing and technology investments more efficient,” group chief executive Don Meij said in a statement.

The company saw sales in Asia rise 25.5% to ¥46.1billion, but EBIT dip 17.3% to $45.7m.

“Our franchisees have demonstrated their alignment with our strategy. The resilience of their businesses is supporting their demand for organic new store openings and franchising corporate stores,” APAC chief executive Josh Kilimnik said.

“I’m also very pleased that our newest market, Taiwan, has performed above expectations, with sales growth and new store openings accelerating compared to pre-acquisition.”

Domino’s management expects same store sales to be slightly below their three to five-year year outlook.

“This means we will respond to tackle short-term inflationary pressures with a customer-first approach, serving ‘More for More’ – such as upsized meal offerings that are a win for customers and franchisees,” Meij said. “We intend to grow our delivery team by offering real jobs with long-term opportunities, including franchising, and will counter labour pressures by being the most relentlessly efficient delivery company – particularly by reducing the last mile with even more stores.”

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