Domino’s bites off a bigger slice of the pie

PIZZA juggernaut Domino’s is eyeing troubled rival Eagle Boys as it plans to almost double its Australia and New Zealand store network in the wake of another all-time high profit.

Domino’s is interested in embattled rival Eagle Boys, which went into voluntary administration last month.

PIZZA juggernaut Domino’s is eyeing troubled rival Eagle Boys as it plans to almost double its Australia and New Zealand store network in the wake of another all-time high profit.

The fast food retailer outlined the aggressive nine-year expansion plan after new store openings and strong same-store growth in six of its seven territories lifted full-year net profit 28.7 per cent to $82.4 million.

Its revenue rose 30.9 per cent to $705.7 million in the 12 months to July 3, with Australia and New Zealand leading the pack in terms of same-store sales growth.

Domino’s biggest market showed a 14.8 per cent increase in same-store sales, against a company-wide improvement of 10.9 per cent.

“Many of our new stores are hitting volumes we would never have dreamt of,” chief executive Don Meij said yesterday. “We need to open up new stores to meet the pent-up demand.”

Domino’s wants to expand its Australia and New Zealand store network from 714 to 1200 outlets by 2025 — 300 more than it previously targeted — by which time it plans to have 4550 stores worldwide.

Macca cartoon.

Mr Meij said the next acquisition could come within six months or it could take as long as three years, although he confirmed an interest in rival Eagle Boys, which was put up for sale after going into voluntary administration last month.

“We are taking a look. It is quite small,” Mr Meij said of the near 120-store chain.

Mr Meij said even with 1200 stores Domino’s would still trail McDonald’s, Subway and KFC in the $20 billion-plus quick service restaurant sector in Australia and New Zealand.

Mr Meij said a broad range of desserts, breads and other side dishes was stealing customers from
non-pizza outlets.

“We are growing sales from outside the pizza category,” he said. “In many cases, we get full transactions that are non-pizza.”

Domino’s Pizza Enterprises chief executive Donald Meij.

The company also delivered its strongest guidance to date, forecasting net profit to rise 30 per cent this financial year.

Despite overall revenue rising, Japan’s same-store sales fell while Europe (Germany, France, Netherlands and Belgium) came in at the lower end with 8.2 per cent same-store sales growth.

The group lifted its 70 per cent franked final dividend by 11.6c to 38.8c. Domino’s shares finished $2.87, or 3.7 per cent, lower at $74.11.

CMC Markets chief market strategist Michael McCarthy said Domino’s share price had nearly doubled in the past 12 months, and while its results were “exceptional, the pricing of the share price has got ahead of that”.