Domino’s Pizza Group has announced plans to continue its expansion in the UK by opening 70 new branches this year. The company, which holds the US chain’s master franchise in the UK and Ireland, shared this news with investors on Tuesday, highlighting its progress after a slow start to the year. Despite facing challenges such as a downward trend in orders, the group remains optimistic and has seen “good momentum” in its business.
One of the company’s recent achievements is the reduction of its average delivery time to 24 minutes between April and June, one minute faster than the previous quarter. Chief Executive Andrew Rennie praised this “outstanding service improvement” and noted that some competitors are taking “over double” the time for deliveries. In its half-year results released on Tuesday, Domino’s reported an underlying core profit of £69m, a slight increase of 0.4% compared to the same period last year. However, total orders were down 0.9% to 35.1 million in the first six months of the year.
Despite these numbers, the company is confident in its long-term growth and has lowered its full-year profit outlook. It anticipates a profit between £144m to £149m, which is at the lower end of market expectations. Domino’s explained that it has chosen to pass on cost savings to franchisees and customers through special offers, in order to drive the brand’s growth in the future. This news caused the company’s shares to fall by 8% during trading on the FTSE 250 on Tuesday.
Despite this, CEO Andrew Rennie remains positive about the company’s performance in the second half of the year. He credited the boost in sales during the Euros football tournament, but also highlighted that the company’s progress began before the tournament started. “Following a slow start to the year, we now have good momentum in the business with our strategic initiatives gaining traction and our trading performance accelerating steadily against strong comparatives from last year,” Rennie stated.
He continued, “We’re executing well in an uncertain market thanks to our unrelenting focus on brilliant value, quality, and service for our customers.” Rennie also outlined the company’s plans for further growth through new store openings, a loyalty trial to drive frequency, and a focus on value and service, particularly in the delivery channel.
Analysts at Investec weighed in on the revised profit guidance, stating that while it may impact short-term numbers, it aligns with the company’s business strategy and is beneficial for the long-term sustainability of its model. However, Russ Mould from investment platform AJ Bell had a different view, describing the results as “soggy as day-old pizza.” He believes that Domino’s will need a strong performance in the second half of the year to win over investors, as the recent boost in business during the Euros is only temporary. He also noted concerns about consumers’ willingness and ability to spend on high-priced pizza, citing a difficult start to the year in 2024.
