Domino's delivers 17.6% sales jump as online orders increase

Click to follow
The Independent Online

Households sick of the sight of turkey after the Christmas binge feasted on pizza, according to figures from the leading delivery chain Domino's.

Concerns over consumer spending did little to dent sales at Domino's, which reported a 17.6 per cent jump in like-for-like sales over the six weeks to 30 December as the group benefited from increased internet sales. Over the year, like-for-like sales grew 14.7 per cent.

The home delivery market is worth £1.2bn, and Domino's accounts for one in seven of every meal delivered, which means it is well placed for expansion in the sector.

Its chief executive Chris Moore, who moved up from his position as deputy chief executive in a management reshuffle at the end of last year, said the key factor in Domino's continuing dominance was cutting preparation times down to ensure that all pizzas are delivered in under 30 minutes.

"It is about great-tasting pizza delivered on time," he said. "At that 30-minute point hunger turns to anger."

Mr Moore said Domino's has worked with its 147 franchisees to slice "out the door times", which means drivers have enough time to deliver onschedule.

The internet is also a driver of growth. E-commerce sales grew 102 per cent in the six-week Christmas period, while total online sales grew 60.5 per cent over the year to 32.2m.

Mr Moore said the company had increased its online marketing budget this year, which meant there were more links to Domino's. As people spent more time online Christmas shopping, they were much more likely to order a pizza over the internet than last year.

Furthermore, Domino's is more resilient than many restaurateurs and retailers to the consumer slowdown. When times are tight households are likely to cut down on the number of meals out but may order a takeaway instead.

Another factor in Domino's success has been its clever association with the hugely popular cartoon The Simpsons, which the company has been sponsoring since 1997. Although a ban on advertising fatty foods to children meant Domino's is no longer able to advertise its pizzas via The Simpsons, it is still able to advertise its brand.

All of the company's franchisees must contribute to the national advertising pot with an amount equivalent to 5 per cent of sales. This means the higher the turnover, the higher the marketing budget. Mr Moore said next year's spend willincrease to 17.5m from 14m.

Domino's currently operates from 501 stores with a ratio of 3.1 stores to each franchisee. Its aim is to get this to five stores for every franchisee by encouraging the more successful ones to take on more sites. It hopes to have 1,000 stores within 10 years.

Analysts were busy revising their forecasts for the chain yesterday. Douglas Jack, at Panmure Gordon, upgraded forecasts by 4 per cent, and is now predicting a pre-tax profit of £18.4m for 2007.

Although Domino's had to factor the spiralling cost of cheese into its retail prices from November after the cost of mozzarella cheese increased by more than $1,000 a tonne it appears to have had little effect on the consumer's appetite for its pizzas.

The company regularly introduces new pizzas to bring new customers in, but its top-selling pizzas remain the Pepperoni Passion and the Texas BBQ.

Elsewhere, the Co-operative, which merged with United Co-operatives in July to form the world's largest co-operative, reported a strong Christmas trading period, with like-for-like sales up 3.4 per cent. This marks the company's eighth successive quarter of growth. Fairtrade products, British Freedom Turkeys and own-brand products all sold well, the company said.

Comments