FOOD SERVICES | Staff Reporter, Australia

Domino's ANZ profit rose 7% to $62.9 million

It updated its same store sales guidance for ANZ, now expected to be 6-8% for the Full Year versus 7-9%.

Domino’s ANZ CEO Nick Knight said the 799 stores in the region were recording strong sales, but growth was appreciably lower in H1 versus the H2 forecast because of the significant growth recorded in H1 17. The same store sales continue to grow by 3.7% in H1 18, rolling 17.4% from H1 17. Domino’s ANZ stores delivered revenue of $173.9m, up 15.8%, and EBITDA of $64.1m, up by 16.2%.

“Our hard-working franchisees and team members have continued to grow the Domino’s business, after lifting SSS +17.4% in H1 17, they grew sales further +3.7% in H118,” Knight said. “The result was slightly softer than we anticipated, but we remain committed to exceeding our customers’ expectations with a menu and customer experience that listens to, and exceeds, our customers’ cravings. Adding avocado, Extreme Desserts, and our very first Dessert Pizza, typified this approach, and we rounded out H1 by adding our 16” New Yorker range, that met a previously unsatisfied demand.

“We have the foundations in place for an even stronger performance to deliver a more significant SSS growth increase in H2 compared to H1. We have a positive sales momentum leading into H2, we are rolling over a +10.0% increase in sales (versus +17.4% in H1), and we are excited about the products and initiatives we believe will deliver even stronger results,” he added.

The ANZ network added 25 organic new stores in H1, and the Company has reaffirmed it expects to open a record number of stores by 01 July 18. “Our existing franchisees and team members are well placed to decide whether our business is a rewarding investment, and in H1 96% of franchisees were from internal applicants,” Knight said.

Domino’s Australian employees also recently voted in favour of a new Enterprise Agreement, a step in becoming one of the first Australian quick service restaurants to offer employees a fully modernised agreement, offering terms better than the Modern Award.

The Company has been putting in place strategies to ensure franchisees not only remain profitable but grow profitability and continue to prosper with the new wages in place. Domino’s reaffirmed the impact at a store level was in line with previous guidance.

The Company continues its effort to remove wages underpayments from its system, with the nationwide assessment close to completion. Of the stores assessed, breach notices for four franchisees (with 15 stores) have been issued, and three full external audits are currently underway.

“The audit results support our view that this behaviour is the activity of the minority and, while their presence and actions in our business are deeply disappointing, it should not reflect on the positive work of the majority of our franchisees.”

The Company has updated same store sales guidance for Australia and New Zealand, and is now expecting sales to be +6-8% for the Full Year versus +7-9%.

Here's an interview with Don Meij regarding the Annual Results on ABC News.

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