By Emma Koehn
Pizza chain Domino’s has introduced a 6 per cent delivery fee for online orders as rising food and fuel costs begin to bite across Australia’s fast food industry.
The ASX-listed pizza maker told The Sydney Morning Herald and The Age it had introduced the fee to cover the increasing costs of doing business.
Dominos has done well out of COVID-19 lockdowns. Credit: Paul Harris
“This delivery service fee will help our local Domino’s stores, many of which are owned and operated by local community members, cover the cost of operating a delivery business in the current environment,” a spokeswoman said.
The 6 per delivery service fee was introduced by the company from Monday for online delivery orders made between Monday and Saturday. Domino’s already has surcharges for delivery on Sundays and public holidays.
The spokeswoman said the fee would also help stores train and retain staff during the challenging economic times.
Restaurant delivery platform Menulog said that despite the tough conditions, it had not made any changes to its fees. However, a spokeswoman said businesses across the industry were feeling the pressure of supply chain costs and the challenge of finding workers.
“For our marketplace restaurant partners, who manage their own deliveries, the issue that comes up time and again is the labour shortage,” she said.
DoorDash Australia is not considering surge pricing for deliveries despite the conditions, with general manager Rebecca Burrows saying the company wanted to keep its offer “affordable, convenient and accessible” to users.
The impacts of inflation are being felt right across the food retail sector, from the major supermarkets to smaller startups. Grocery giants Coles and Woolworths have pledged to keep the price of home brand staples down to help with living costs, while grocery delivery startups are facing tough conditions after having strong starts during pandemic lockdowns.
Fresh produce shortages have also forced some retailers to change their recipes - like KFC, which has been using cabbage to supplement lettuce due to rising prices.
The chief executive of KFC operator Collins Foods, Drew O’Malley, has flagged further product price hikes may be necessary to balance rising packaging and fuel costs.
Australian retail sales hit record levels in May, up 0.9 per cent to $34.2 billion, according to Australian Bureau of Statistics retail trade figures released on Tuesday.
Café, restaurant and takeaway services had the second-biggest spending increase of any category, up by 1.8 per cent for the month - but the inflationary pressures were behind that increased spend.
“Higher prices added to the growth in retail turnover in May. This was most evident in cafes, restaurants and takeaway food services and food retailing,” ABS director of quarterly economy wide statistics, Ben Dorber said.
UBS analyst Shaun Cousin said Domino’s new surcharge would not radically change sales volumes, given that when Domino’s introduced extra charges in the past it hadn’t had much impact. However, he said the majority of the expenses that pizza makers incur are going up.
“The split of costs for a Domino’s pizza is 32% food (some hedged), 32% labour and mileage, and then other costs including royalties, rent, energy and advertising and marketing. Most of these costs are increasing,” he said in a note to clients.
Domino’s shares closed up 1.8 per cent to $70.44.
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