Domino’s plays ‘long game’ as profit drops

Domino’s Pizza continues to find the balance between a growing Australian and New Zealand market and a complicated European and Asian market as it records an interim net profit of $58m.

The fast food restaurant franchise recorded in its half yearly report on Wednesday that the company saw an 11 per cent increase in revenue to $1.27bn for the six months ending on December 31.

However, the 9.2 per cent drop in its interim net profit showed the company was still trying to find stable ground as it battled challenging international markets.

Domino’s CEO Don Meij said the company had been working towards addressing any missteps it had faced during a difficult period expanding across multiple markets off the back of Covid-19.

“We’ve had stronger performance in growth in Australia and New Zealand but those results have been diluted by the Japan and French franchise results,” Mr Meij told the public shareholder meeting on Wednesday.

“We’ve been disappointed with our recent results, we’re not proud of many parts of the business.

“After today hopefully we can highlight where those missteps have been and we continue to highlight those missteps.”

He said the Australian New Zealand business had been stagnant for a few years but “we’ve got very strong commitment with franchise partners on what we’re going to do together.”

Mr Meij said the Australian and New Zealand market saw the strongest sales growth in six years, which he attributed to the business meeting customer demand by providing value for money products as well as extending its business hours to accommodate the morning and lunchtime trade.

“We’re (seeing) 5.28 times in traffic compared to our nearest competitor in pizza,” he said.

Mr Meij said the company still has a “lot of opportunity to correct” any decline in sales and growth the company continues to face.

That’s why Domino’s launched a $5 or less menu on Wednesday, to combat where it’s underperformed in the offline pick-up side of the business.

“We have front loaded in Australia and New Zealand, we made sure our franchise is strong.”

Mr Meij said the pizza giant expected stores to be accelerating into other markets.

“My expectation is to see that flow through to shareholders next, a lot of these savings are making sure they get into our franchise partners and creating that value,” he said.

“We’re still in build mode (in Asia), seven weeks is not a track record in Asia yet, particularly in Japan.

“We also face macro issues particularly in Malaysia … (which are) externally influenced.

“This result shows exactly what’s working, what’s not and what we’re doing about it.

The results also indicated the French market was proving more difficult than expected for the company, as it adjusts to tough labour laws and other trade factors.

The company declared an interim dividend of 55.5c a share, which will be unfranked, and paid on March 27.