Domino's revenue grows by enticing customers

A good year for the pizza chain.

Australian-listed food group Domino's recently reported strong results across all regions for FY14, including Australia and New Zealand (ANZ). The region's same-store sales was solid at 6.3% and revenue increased 17% to $203.3 million.

According to a JP Morgan report, a big part of the company's growth is related to the rollout of its 'Entice' format, a new store image launched more than a year ago which was part of the chain's nationwide refurbishment program. It incorporates softer tones and wood panelling to provide a more welcoming but contemporary feel for customers.

It noted that the rollout of the entice format has resulted in a strong uplift in sales for stores. A key example being Darwin, which is a “sit-down” model that saw sales increase +30%.

70% of stores has now been refurbished to the new 'Entice' look and feel, announced Domino's Group CEO & Managing Director Don Meij, from 16 stores in the first half of 2013. With the obvious success of the new store image, the chain is now enhancing the 'Entice' format and has started rolling out the next store look.

"[It is] the evolution of the Entice store design," he explained. "The new designs have been strategically planned with each Domino's store in mind, so each store is unique to the area and will definitely enhance the customer ordering experience and add value to the wider community."

Adding, “the evolution of 'Entice' is an authentic, raw and fresh design with stripped-back clean lines."

The evolution of the store design includes a range of new design palettes to suit any location including Beach, City and Urban Feels. With features including raw brick walks, coupled with soft wood panelling and the company’s mantra ‘People Powered Pizza,’ presented in speech bubbles embedded into the walls.

Meij noted that this plan is part of the $70 million store refurbishment program across Australia and New Zealand which is set to appeal to the pizza eating lovers and surprise local customers.

PRODUCT AND DIGITAL INNOVATION

Aside from the company's profitable expansion to Japan, Domino's successful growth in ANZ is also attributed to its product launches and digital innovations, according to Meij.

This year, the chain launched the Summer Prawn range, enhanced its dessert range, introduced its South American-inspired PeriPeri pizza range, announced new menu additions, and the continually introduced high quality ingredients.

The chain also simultaneously launched its Offers App and successfully integrated PayPal to its online ordering website. In addition, Domino's became the first quick service restaurant in Australia to utilise SnapChat for commercial activity and successfully operate a store location completely online for a whole day.

Meij said the business had worked hard to position itself with a clear digital advantage in its marketing and social strategies.

“During the past 12 months in particular, we have invested in our electronic commerce capabilities to ensure we remain relevant to our customers‟ changing preferences.”

This strategy has seen DMP reach record online sales in a number of markets.

“We continue to invest in this area and have successfully implemented our global point-of-sale and online ordering systems from Australia into The Netherlands as a first step to updating all of theCompany‟s European territories,” he said.

OUTLOOK FOR 2015

2015 is promising for Domino's as it launches initiatives like the 'Pizza Mogul' (a social retailing initiative); 'Cheaper Everyday' pizzas (the chain's $4.95 value promotion); and the 'Live Pizza Tracker', noted Meij.

Pizza Mogul has been designed to appeal to entrepreneurs and social media-savvy pizza lovers, offering the opportunity to profit from creating pizzas and marketing them; while the 'Cheaper Everyday' pizzas sparked a new trend nationally, with other brands following suit in lowering pizza prices.

Meij also shared to QSR Media that an enhancement to its pizza tracker is currently in development. The JP Morgan report noted that this GPS tracker will allow customers to track pizza to their door and has already been introduced to 38 stores already and seeing great results.

He said that while the results are still being delivered, the chain has seen increased productivity and a reduced number of driver incidents. "If it only achieves an increase in safety and driver awareness then it’s a huge success. We are excited about the 12 months in this space."

The tracker is expected to be rolled out across all ANZ stores in 12 to 18 months.

MORE STORE OPENINGS

The chain opened 44 new stores in ANZ for the year, setting a new record for organic new store growth, according to the chain. Momentum is expected to continue with a new company target of 60+ stores in the next year.

Domino's plans to open 20 'Entice' stores in the next 3 to 4 years, with the first one being opened in Darwin.

“We are confident of continuing the current strong momentum to deliver EBITDA growth in the region
of 20% and add approximately 175-185 new stores to the Group,” Meij noted.