As international sales disappoint, online and innovation drive Domino’s UK growth

Even amidst a reported franchisee row, Domino's Q1 performance in the UK and Republic of Ireland has achieved year-on-year growth

As international sales disappoint

Photo credit:”Copyright Domino’s Pizza Group Limited

The trading statement. It’s a document all franchisees eagerly await in order to determine how solid its franchisor’s financials are. And in the case of Domino’s, the base seems to be relatively appetising -“at least in Britain. Mostly.

The pizza franchise has released its Q1 2019 statement for the 13 weeks to Sunday 31 March 2019, which has revealed overall group system sales rose by 4.5% to £324.4m. The UK and Republic of Ireland were the markets to watch in particular as sales grew 4.8% year-on-year -“a 3.1% and 6.8% like-for-like sales spike for each territory respectively.”

Digital sales were a contributing factor behind the British and Irish increase, with an 8.5% growth of online purchases. As if the power of e-commerce wasn’t already clear, online also accounted for 90.5% of delivery-based sales and 81.7% of total sales. Seemingly consumers in the Republic of Ireland were particularly keen to tantalise their tastebuds with tech, as the region experienced an 18.5% surge in online orders.”

Domino’s is no stranger to trying out new things, having trialled drone deliveries in the past. And the company’s determination to keep pushing the envelope seems to be a winning recipe for the franchisor as innovation was another driver of sales according to Domino’s, with low calorie pizzas going down well alongside the cheeseburger-topped option, which has sold more than 1.6 million to make it “one of our most popular pizzas ever”.

“With continued like-for-like growth, the year has started well across our core UK and Republic of Ireland markets, which account for 90% of our business,” said David Wild, CEO of Domino’s.

“Our digital expertise remains a key driver of customer engagement, with online accounting for a record 81.7% of total sales in the UK.”

However, the trading statement comes following ongoing reports of unrest across the franchise network. 11 of the biggest Domino’s franchisees set up the Domino’s Franchise Association UK & Ireland in May 2018 with an objective “To provide Domino’s franchisees a unified organisation working to maximise the value of our member’s stores.” In December 2018, The Times reported body members were prepared to “declare war” on the franchisor to secure higher profits, while a new report suggests the power struggle over earnings continues.

Apparently alluding to the franchisor versus franchisee face-off in the network, Wild said: “We remain in open and ongoing dialogue with our UK franchisees, actively exploring win-win solutions for stimulating growth and new store openings.”

Outside of the UK, sales weren’t as successful – international sales grew by just 1.1%, with areas such as Switzerland suffering. “Internationally, performance remains disappointing and trading visibility is limited,” said Wild. As we outlined at the full year results, we have new management in Norway, Sweden and Switzerland and a heightened focus on store level performance. However, given persistently weak system sales in all our International markets we no longer expect this part of our business to break-even this year.”

With international sales struggling and the UK’s succeeding, it seems as though this will only serve as further leverage in favour of the Domino’s Franchise Association UK & Ireland as it looks to achieve its goals of getting a bigger slice of the profits.”

Zen Terrelonge
Zen Terrelonge