UK’s Domino’s Pizza franchise to exit four international markets

October 18, 2019

Britain’s Domino’s Pizza Group will exit its international markets, where it has been facing mounting losses.

“We have concluded that, whilst they represent attractive markets, we are not the best owners of these businesses,” outgoing chief executive officer David Wild said.

 
The company, which is a franchise of US-based Domino’s Pizza Inc, said third-quarter group system sales rose 3.4 per cent to £313.5 million (€361 million) on strong demand in the UK and Ireland.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

The British company owns Domino’s operations in Switzerland, Iceland, Norway and Sweden, and is a minority shareholder in the Germany operations as well.

However, it reported a 2.7 per cent dip in international system sales, which have taken a hit from macroeconomic events, including declining tourist numbers in Iceland.

Related: Food Franchises – Search Franchise Reviews Directory

Europe’s economy has slowed this year as the US-China trade tensions weakened global growth, and consumers and businesses in and around the United Kingdom worried about the impact of Brexit on jobs and incomes.

The company, which has 57 stores in Norway, said it had implemented a turnaround plan in the country during the quarter, but early signs have been mixed and improvement in sales were weaker than expected.

Related: Domino’s Pizza Franchise

The decision to exit these markets comes a few months after the company announced the retirement of its CEO Wild, while in the midst of trying to resolve a profit sharing row with disgruntled franchisees in the UK and Ireland. – Reuters

Source: Irish Times

Elm Park Domino’s Pizza in bid to extend opening hours to 3am

July 14, 2019

A Domino’s Pizza takeaway in Elm Park is applying to extend its opening hours to 3am despite opposition from Havering Council’s planning department.

The Domino’s in Tadworth Parade applied to the borough’s licensing team on June 8 for permission to change its opening hours from 9am-1am to 11am-3am.

 
The application will now be heard by the borough’s licensing sub-committee at a town hall meeting on Friday, July 26.

It is made clear in documents provided to the council that customers will only able to collect pizzas from the site until 11pm, and from then until 3am pizzas will only be provided by delivery drivers.

In a detailed submission, the franchise director Satvir Gosal outlines how the restaurant will continue to meet its current licensing objectives including: the prevention of crime and disorder, public safety, protecting children from harm and the prevention of public nuisance.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

It reads: “The store is a franchise of the worldwide Domino’s home delivery pizza chain.

“Domino’s has been in business since 1960 and during that time, has developed a system of business which primarily involves a home delivery service. “Whilst it is possible to collect our products from the store, the vast majority of our business is delivering pizzas and other products we sell to people’s homes.

“We are governed by the rigorous standards set out in the Domino’s Franchise Agreement and these relate to all aspects of operating the business, from the preparation of ingredients right through to the manner in which the product is delivered to our customers.

“We are mindful of our obligations to our staff, our customers, and others, for example local residents, who may be affected by the operation of our business.”

Related: Food Franchises – Search Franchise Reviews Directory

In a bid to prevent littering, no single slices of pizza will be served after 11pm, and the store will take in no deliveries between 11pm and 8am.

One resident has objected, as have the borough’s planning team.

The resident wrote: “This company has a business model of supplying food via a delivery service and if was allowed to go into the early hours of the morning would cause noise disturbance due to delivery vehicles driving around a quite area.

“There is no usual traffic late at night and I do believe this would therefore disturb a usually quiet neighbourhood.”

The planning department insists that “granting a licence with such a late finish clearly goes against Havering’s Licensing Policy.

“The premises is situation in a mixed use area where there are domestic properties directly above the shop and along the rest of Tadworth Parade.

Related: Domino’s Pizza Franchise

“There is the potential that by granting a licence until such a time, it may impact on local residents, especially those living above the premises.

“There is the potential that the coming and going of delivery drivers, using cars or scooters as means of delivery, the revving of engines and slamming of car doors could cause a disturbance or noise nuisance to residents.”

The application will be determined at a Havering Town Hall meeting at 10.30am on Friday, July 26.

By Matthew Clemenson

Source: Romford Recorder

Domino’s Pizza set to open new store at building owned by Portsmouth City Council

June 20, 2019

Domino’s Pizza is taking the lease for the ground floor unit of Portsmouth City Council-owned Illustrious House in Winston Churchill Avenue. The block was opened in 2017 and has 16 affordable flats.

The unit will join the franchise’s stores in Cosham High Street; London Road, North End; and in Fratton Road.

 
But a senior councillor has said no further council-owned properties will be leased for fast food outlets unless that is their current use.

Councillor Steve Pitt – cabinet member for culture and city development – said: ‘I don’t want it to be seen for the council to be increasing the number of takeaway outlets in the city.

‘The council has all sorts of corporate priorities, many around healthy living and a cleaner environment, and I don’t think that meets our corporate priorities.’

He said when he found out about the lease negotiations it was too late for the council to pull out.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

But he added: ‘I’ve made it clear to officers that in my view we should not be letting council properties to fast food outlets unless of course it’s already a fast food outlet.’

Conditional planning permission has been granted for the change of use.

A highways engineer said moped delivery drivers will be tempted to join traffic on a roundabout in Winston Churchill Avenue despite there being no junction.

Related: Food Franchises – Search Franchise Reviews Directory

The unnamed engineer who monitored the Fratton Road branch for an hour at peak time saw 60 trips to the store but said the new store is unlikely to hit this number. They had concerns about mopeds.

The engineer’s comment said: ‘Whilst a loading area is available to the rear of the site, the route to reach it is convoluted and therefore unattractive.

‘I therefore find it likely that delivery vehicles will either stop outside the premises or pull onto/across the footway fronting the site in order to gain easier access.

Related: Domino’s Pizza Franchise

‘This is especially likely in the case of mopeds used for pizza delivery given the large expanses of paving immediately outside the shop and footway between Winston Churchill Avenue and Wellington Street.’

By BEN FISHWICK

Source: Portsmouth

The Domino Effect: Can This Pizza Giant Continue To Deliver Success?

June 3, 2019

With some reported sales figures as flat as its famous pizzas, Domino’s announced this month that its U.K orders have fallen (for the first quarter of this year like-for-like sales grew by 3.1%, but order volumes fell by 2.7%) and that for another year its international operations will remain loss-making.

This might be surprising news to many. Here in the U.K, the takeaway pizza market has been dominated by only 3 or 4 main players for more than a decade now, with Domino’s being one of the most well known and with branches on most suburban shopping streets across the U.K.

The first U.K Domino’s franchise branch opened in Luton in 1985 and the franchise network has seen a steady pattern of growth over the years, with just under 1,200 units now operating across the U.K

These recent figures will be another headache for Domino’s bosses, who are already facing a backlash from their U.K franchisees. Franchisees have become disgruntled at the franchisor’s decision to split geographical territories, resulting in new stores being less profitable. They are also face rising costs generally and as a result, franchisees have joined forces to demand an increased profit share. The Domino’s Franchise Association U.K and Ireland which represents around 90% of the UK franchisees, has stated that its members will not open any more U.K stores until the issues are resolved. And in a hugely public and embarrassing comedown, the pizza chain franchisor was forced to cancel its annual UK franchisee awards event last month when nearly all of the Domino’s UK franchise network said that they would boycott the event.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

Chief executive David Wild said that the group is continuing an “open and ongoing dialogue” with its unhappy franchisees to look at ways in which to resolve the dispute without simply cutting the cost of the food supplied to stores, which of course would significantly affect overall group profits. He said: ‘We’re working with our franchisees to try and resolve their concerns, but we want to resolve their concerns by finding a win-win solution. We don’t want to resolve them by finding lose-win solutions.’

With all of this in-house turmoil to deal with, its not surprising that the pizza chain may be struggling to improve its numbers.

Dominos isn’t the only Italian casual dining chain here in the U.K to be feeling the heat. Whilst not a franchise, the Jamie Oliver Italian restaurant chain last week fell into administration with a loss of around 1000 jobs. Pizza chain Prezzo also announced last year a plan to close 100 restaurants U.K wide.

Related: Food Franchises – Search Franchise Reviews Directory

These financial troubles must in part be due to the widely reported change in casual dining habits – British consumers who are feeling the financial pinch or are Brexit-nervous either choosing not to dine out or order in but to cook at home, or using their treat night outs to sample more diverse cuisine experiences now on offer on the High Street. Pizza is also now no longer the most popular takeaway cuisine in the U.K, in third place behind Chinese and Indian food. Domino’s also faces considerable competition from independent takeaway businesses with the introduction of meal delivery services such as Deliveroo and Just Eat.

In light of all of the above, will Domino’s be able to weather the storm and remain at the top of the pizza game? It is trying to respond to customer demands, having recently introduced a new low calorie “Delight” range of pizzas, and rumor has it that a vegan pizza is in the offing. Whilst the dispute with U.K franchisees remains ongoing, Domino’s is focusing on perhaps happier overseas territories, installing a new management structure in Norway, Sweden and Switzerland where its operations have remained loss-making, and focusing on store level performance. Clearly lessons have been learned from experiences over here.

Related: Domino’s Pizza Franchise

What the Domino’s business journey to date shows us is that as a brand it is very self-aware. When customers criticized the very core of its business – its pizza recipe – it took the criticism on the chin and took the brave decision to completely scrap its existing offering and start from scratch again. They understand that their customers love them because of the convenience factor and have continued to use all technology available to improve convenience, speed and delivery for their loyal fans. So having demonstrated in the past that they are agile, customer focused and forward-thinking, there’s every reason to think that Dominos will be able to successfully navigate this particularly tricky chapter in its franchise story and continue to deliver pizza success right to our front doors.

By Fiona Simpson

Source: Forbes

Domino’s warns over overseas losses and sees UK row hit openings

May 8, 2019

Domino’s Pizza has warned over losses in its international arm and said it remains locked in discussions with UK franchisees amid an escalating row.

The pizza delivery company said it saw a “disappointing” performance in its international business, with “weak” system sales across all its overseas markets – down 2% on a reported basis to £25.1 million overall in the division.

Shares fell more than 6% as the group warned that it no longer expects to break even in the international business over the full year.

Sales fell as much as 8.4% in Switzerland. Its international operations also include chains across Iceland, Norway and Sweden.

It is now looking at cutting costs in its overseas arm, including looking at hours worked by staff, as well as its international head office operations.

Domino’s chief executive David Wild said: “Internationally, performance remains disappointing and trading visibility is limited.”

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

He added: “Given persistently weak system sales in all our international markets, we no longer expect this part of our business to break even this year.

“We are therefore further tightening our focus on international costs and capital deployment.”

In the UK, Domino’s reported a 3.1% rise in UK like-for-like sales for the 13 weeks to March 31 against a “challenging” market backdrop.

The chain said like-for-like orders by volume fell 2.7% in the UK, but this was offset by a 5.1% hike in prices.

Online sales lifted 8.5%.

It confirmed that store openings continue to be hit by the ongoing dispute with disgruntled store operators.

The group opened four new stores in the first quarter – compared with nine opened in the same period a year earlier.

Mr Wild said the group remains in an “open and ongoing dialogue” with its UK franchisees.

Domino’s is working to resolve a dispute with store operators, who have set up a group called Domino’s Franchise Association UK & Ireland, demanding more support from the company in the face of rising costs.

Related: Food Franchises – Search Franchise Reviews Directory

They also say Domino’s has asked them to open stores in existing locations, which they claim is affecting their profits.

He denied the group was in a stalemate with franchisees over the issue, but stressed the firm was “trying to find solutions that benefit both of us, rather than a loss of profit for us in order to boost profits for franchisees”.

Last month, Domino’s signalled that it was preparing for a change at the top as it revealed it was considering succession planning for Mr Wild and chairman Stephen Hemsley.

Mr Wild remained tight-lipped on the succession plans or timing, saying it is “what good boards do”.

Asked if he would still be in the role in a year’s time, he said: “I hope so.”

Steve Clayton, fund manager of the Hargreaves Lansdown Select funds, said: “Domino’s are struggling to make their international businesses fire on all cylinders.

“It is disappointing to see them losing ground in almost all of the areas that the group operates, outside of the UK and Ireland.”

Related: Domino’s Pizza Franchise

By Holly Williams

Source: Yahoo Finance UK

Domino’s Grabs Slice Of Irish Franchise

March 16, 2019

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.”

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

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”.

Source: KamCity

Domino’s sees UK store openings hit by franchisee dispute as profits fall

March 13, 2019

Domino’s Pizza has posted falling annual profits and admitted store openings will be hit this year amid an escalating row with its franchisees.

The pizza delivery company said that, while its pipeline of new stores is set to hold firm in 2019, the actual number of openings is likely to be lower given “ongoing franchisee discussions”.

The news came as it posted a 22% plunge in annual pre-tax profits to £61.9 million after suffering “growing pains” in its international business.

£93.4 million
Domino’s underlying pre-tax profits for the year to December 30

The group said on an underlying basis pre-tax profits dropped 1.1% to £93.4 million for the year to December 30.

But shares lifted 6% despite the profit fall.

Domino’s is working to resolve a dispute with disgruntled store operators, who have set up a group called Domino’s Franchise Association UK & Ireland, demanding more support from the company in the face of rising costs.

They also say Domino’s has asked them to open stores in existing locations, which they claim is affecting their profits.

Domino’s said it was “conscious” of the price pressures for franchisees and that it was confident of resolving the conflict.

The group added that it recognises the “temporary” impact of new stores close to existing sites and has increased short-term relief offered to franchisees – paying out equivalent to around £75,000 per new store in 2018.

But chief executive David Wild said the group did not want to end the row simply by lowering the price of food it sells to franchisees, which would cut its own profits.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

He said: “We’re working with our franchisees to try and resolve their concerns, but we want to resolve their concerns by finding a win-win solution.

“We don’t want to resolve them by finding lose-win solutions.”

He cautioned that new store openings will be particularly impacted in the first half of 2019, but are set to pick up in the final six months amid hopes for the franchisee dispute to be resolved and an end to Brexit uncertainty.

Domino’s opened 59 stores in the UK and Ireland last year and now has a 1,100-strong estate.

The group’s results showed a mixed performance, with the woes in its international arm offsetting an otherwise robust showing from the UK and Ireland, where like-for-like sales rose 4.6%.

Domino’s warned in January that profits would be at the lower end of expectations following weaker international sales and business integration challenges in Norway.

But Mr Wild said he expects the international division to break even in 2019, after reporting underlying losses of £4.1 million in 2018, with Switzerland, Norway and Sweden all continuing to be loss-making.

Neil Wilson, chief market analyst for Markets.com, said: “The franchisee strife looks set to weigh on growth prospects as it will impact the store rollout in the UK and Ireland.

“Meanwhile there are also more challenges from competitors than before.

“Nevertheless, Domino’s seems to be holding onto market share and the app in particular is very sticky with customers.”

Source: Belfast Telegraph

Domino’s hurt as delivery firms offer more choice, shares fall 10 percent

February 23, 2019

Domino’s Pizza Inc missed analysts’ estimates for quarterly same-store sales on Thursday, sending its shares down 10 percent and underscoring pressures the company is facing from food delivery startups that are offering diners more choices.

The largest U.S. pizza chain has been investing in technology to simplify its ordering process and to cut delivery times to below 30 minutes but, like other fast-food chains, faces the threat from delivery “disruptors” such as GrubHub, DoorDash and UberEats.

“Investors will focus on the ongoing difficult U.S. compares… and the increased prevalence of delivery across the U.S. restaurant landscape, all of which are unlikely to subside near-term,” said Jeffrey Bernstein, an analyst with Barclays.

Same-store sales at Domino’s company-owned U.S. outlets rose 3.6 percent, the slowest pace in at least four years, while franchises posted a 5.7 percent growth in the fourth quarter, both well below Wall Street expectations.

Earlier this month, Yum Brands’ Pizza Hut reported no growth in same-store sales as stiff competition hit dine-in customer visits.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

Domino’s same-stores sales were also impacted as New Year’s Eve – a key day for pizza sales – shifted from the fourth quarter to the current quarter.

The company’s strategy of adding stores in areas where it had a large presence likely skewed delivery sales towards the new outlets hitting same-store sale comparisons, analysts said.

“Same-store sales performance can certainly improve versus what we have all come to expect,” Chief Executive Officer Richard Allison said on a post-earnings call.

The company missed profit expectations for the first time in at least nine quarters as investments in technology led to a 15 percent jump in expenses in the last three months of 2018.

International same-stores sales growth also fell short of estimates, coming in at 2.4 percent compared with expectations of 4.14 percent. The company, which operates over 10,000 outlets in international markets, blamed weakness in some markets in Europe and the Pacific region.

Total revenue rose to $1.08 billion, but missed the average analyst estimate of $1.10 billion.

Shares of the Ann Arbor, Michigan-based company, which have gained about 12 percent since the start of the year, were down 9.7 percent at $251.61.

Source: UK Reuters

Domino’s sells more than 500,000 pizzas in record UK trading day

January 29, 2019

Domino’s sold more than 535,000 pizzas in the UK on the Friday before Christmas – equivalent to 12 a second over a 12-hour trading day – but a weaker international performance has forced the company to slice its profit guidance.

The strong run-up to Christmas helped group sales to rise by 5.5% year on year to £339.5m in the 13 weeks to 30 December, it said in a trading update published on Tuesday. Sales growth was driven by its Republic of Ireland operations, where like-for-like sales rose by 7.5%.

Domino’s particularly benefited from days when Britons had reason for a big night in. It credited the final of the BBC’s Strictly Come Dancing on Saturday 15 December for a new online record, with sales up by a quarter compared to the same day the year before.

The overall sales record came on the Friday before Christmas, 21 December, the day traditionally known as “Mad Friday” or “Black Eye Friday” for revellers getting into the festive party spirit. Though the record Domino’s sales that day suggests people may be staying home more now.

However, the FTSE 250-listed company’s efforts to expand to new markets after fast UK growth stumbled during the quarter. International sales fell by 2% year on year to £26.6m.

David Wild, the Domino’s Pizza Group chief executive officer, said the international operation had experienced growing pains this year.

The company suffered “business integration challenges” in Norway in particular, he said. Sales also fell in Switzerland and Iceland.

The weaker international performance prompted Domino’s to guide that its full-year underlying profit before tax will be at the lower end of analysts’ expectations of between £93.9m and £98.2m. The company also said that investment in central functions would dent short-term profitability.

Shares in Domino’s fell by almost 7% on Tuesday to 255p. The company’s shares were worth more than 380p as recently as June, before the international struggles dented summer profits.

Domino’s, originally an American brand, opened its first UK outlet in 1985, before the British and Irish franchise was bought out in 1993.

The company sold almost 90m pizzas last year in the UK, but its addition of 59 stores during the year to the more than 1,200 it already ran was significantly below its plans at the start of the year.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

On Tuesday Domino’s reaffirmed its long-term target of 1,600 stores in the UK, but did not give guidance on how many it expects to add in the coming year, prompting some concerns among City analysts.

Domino’s also continues to face pressure from franchisees for an increased share of profits, which some investors believe could weigh on future growth in the UK.

Competition is increasing rapidly in food delivery, with Domino’s facing pressure from companies such as Just Eat, Deliveroo and Uber Eats, all of which enable rival pizza restaurants to offer home delivery. However, Domino’s is betting that its brand and record of profitability will enable it to fend off some of its newer competitors, many of which are still loss-making.

Wild said: “The UK delivered food market is vibrant and we estimate that it will grow at a compound rate of 8% a year to 2022. We aim to maintain our share of this market.”

Source: The Guardian

Domino’s Pizza shares fall 7% amid franchise row

December 12, 2018

Shares in Domino’s Pizza Group have dived 7% amid reports of an escalating row between the firm and its franchisees.

According to the Sunday Times, 11 of the company’s biggest franchisees have written to the board threatening to “declare war” on the firm unless they get a bigger slice of the company’s profits.

They warned they could stop opening new stores if their demands were not met.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

Domino’s declined to comment.

In total the firm has about 70 franchisees to whom it supplies ingredients and other goods and services.

But the disgruntled operators, which have set up a group called Domino’s Franchise Association UK & Ireland, say they face rising costs and want more support from the company.

They also say they are being asked to open more sites in existing locations – something that benefits the wider company and customers but eats into their profits.

A record 95 new Domino’s stores were opened in 2017 – mostly by the biggest franchisees – but the firm is targeting a more modest 60 this year, in part because of the row.

Related: Pizza chain giant Domino’s is facing pressure over reports today that its relationship with its franchisees has worsened

It’s put pressure on the FTSE 250 firm’s shares, which are down by about a third since June. Some analysts believe Domino’s Pizza will be unable to meet a goal of having of 1,600 stores in the UK – up from the current 1,060 – while the conflict rumbles on.

Despite the market moves, sales at the group sales have been growing, climbing 6% to £303.3m in the third quarter.

The firm also continues to open stores despite a wider consumer spending slowdown driven by concerns about Brexit and a rise in inflation.

Source: BBC