Domino's shares feel the effect of TV advertising

Domino's Pizza, the takeaway and delivery chain, yesterday applauded the power of advertising after its first terrestrial campaign spurred like-for-like sales to soar 22 per cent, sending its shares 8 per cent higher.

Stephen Hemsley, the chief executive, said the company's record sales performance reflected the success of the Channel 4 adverts, which followed Domino's sponsorship of The Simpsons on Sky.

"Every time we ran national adverts our sales increased. In turn, every time our sales increased, the size of our national TV advertising fund increases," Mr Hemsley said.

The group, giving a trading update, said that total sales for the fourth quarter to 31 December grew by 29.4 per cent to £98m, helping average weekly sales per outlet to increase by 19.1 per cent to £8,500. Its shares rose 9p to 74.5p.

Domino's, which last year incurred the wrath of Pizza Hut when it alleged that it was the UK market leader in the home delivery and takeaway market, plans to double its stores to 500 by 2006, creating 5,000 jobs. The group, which has refined its claim to controlling the UK's pizza home delivery market, opened 24 new stores and now delivers from 237 outlets.

Mr Hemsley said the focus on accelerating the roll out was necessary because although the ads went out to the whole of the UK's population, only 35 per cent lived within range of a Domino's branch. As well as chasing new stores, Domino's has also spruced up the image of its existing estate, which increased what Mr Hemsley called their "kerbside appeal".

Analysts said the sales burst was also helped by customers opting to eat in rather than go out, fearing an impending economic downturn. Luke Ahern, at Seymour Pierce, said the trend was expected to intensify. "Things will get worse instead of getting better in terms of consumer spending. If a parent can avoid kids screaming for more ice cream and fizzy drinks and cap spending by going for a takeaway option they will," he said.

The research group Mintel has said that more pizzas are eaten outside UK restaurants than within, reflecting the acceleration of the home delivery market – the fastest-growing area of the quick service foods sector.