Pizza chain giant Domino’s is facing pressure over reports today that its relationship with its franchisees has worsened.
The alleged discontent comes in the wake of growing pressure on franchisees to open more outlets in existing areas, which can often lead to profit for Domino’s but higher costs for franchisees.
The FTSE 250 firm opened a record 95 new stores last year in the UK, including 34 in the fourth quarter. However, Domino’s insists that while rising supply chain costs have always been passed on to franchisees, more stores “benefit both parties long term” and that the rate of openings, particularly at the end of 2017, “pulled forward the first half of 2018 pipeline”.
Franchisee upset has become a more prominent issue in recent months, with 11 big franchises recently creating Domino’s Franchise Association UK and Ireland as a response to the strained relations.
Last night a spokesperson for Domino’s told City A.M.: “We are proud to have worked for many years with the most successful franchisees in the world.”
The firm said that last year it invested £4m to help absorb the costs inflicted on franchisees when new sites opened. David Wild, who is chief executive of the global pizza chain, took over the role in 2014 and earned £1.6m last year.
Yesterday a source told the Sunday Times that Wild’s “hard-man” behaviour was stoking the current unrest within the company. Despite the contentious rows brewing, the firm has enjoyed a strong performance in the last year, with sales of £311m in the first three months of the year, up 18 per cent from the same period last year.
The UK’s largest pizza delivery company said that online orders had helped to offset the impact of unusually chilly weather in the first quarter. Domino’s, which was founded in 1960, now operates more than 1,000 stores across the UK, and also has stores in Ireland, Switzerland, Germany and the US.
Source: City A.M.