Domino’s Pizza Group, the operator of the Domino’s chain in UK and Ireland, is reported to have agreed a €12.5m deal to acquire a 15% stake in Shorecal, its biggest Irish franchisee.
According to The Irish Times, the Caldwell family will retain majority control of Shorecal, which operates nearly 30 Domino’s outlets in Ireland. It recently sold about a third of the business to the Bronfman family from the US, whose wealth was originally derived from the Seagram whiskey company.
Domino’s has stated that it wants to increase the number of franchised outlets in the Irish market from 50 to about 75 in coming years. Shorecal is planning open about 10 new Irish stores (of which six will be in the Republic) over the next four years.
Commenting on the deal, Domino’s Chief Executive David Wild said: “Shorecal came to us last year and told us they had been approached by a family office [Bronfman] to invest.
“The opportunity was for us to co-invest with the family office. We can see the benefits of this type of patient capital as a form of funding. We may want to do more of this in the UK.”
Domino’s yesterday revealed mixed annual results with “growing pains” internationally hampering its overall financial results.
The group said its performance in international markets was worse than it had anticipated with its Swiss, Norwegian and Swedish businesses continuing to make losses. Performance was stronger in its main Domino’s UK and Ireland units.
“2018 was a mixed year. In the UK and Ireland, which account for around 90% of the business, we extended our excellent track record of growth and cash generation, responding well to the very challenging environment for the casual dining market,” said Wild.
Domino’s system sales climbed 9% to £1.3bn in the year to 31 December 2018. Like-for-like sales in its UK operation rose 4.6%, whilst Ireland saw a 4% rise.
Pre-tax profits dropped 24% to £61.9m. However, underlying profits, which exclude charges of £31.5m relating mainly to international impairments, UK supply chain transformation and integration costs, edged down only 1.1% to £93.4m.
The group said internationally it hopes to break even during 2019, while UK growth is expected to continue. Domino’s opened 81 stores across the group, of which 58 were in the UK. It stated that its UK “store pipeline” is similar to 2018 at the same time last year “although actual openings are likely to be lower than 2018 given ongoing franchisee discussions”.