Dan Murphy’s gets ‘forensic’ with app deals as drinkers hunt bargains
By Jessica Yun
The operator of Dan Murphy’s and BWS is combating reluctant consumers through targeted discounts and slashing costs, including its wage bill, and growing market share as higher interest rates eat into profits.
Endeavour Group chief executive Steve Donohue said artificial intelligence and machine learning had helped the company be “very deliberate” about where to place promotions amid a long-term decline in alcohol consumption.
“We are targeted and precise. It’s very forensic now to drive sales,” he told investors on Monday.
Endeavour Group CEO Steve Donohue said he was keen to expand productivity across the hotels business.Credit: Nine
Personalised offers made through the app – such as prompts, deals on a customer’s frequently purchased item, or offers on a similar product – could lead to a 29 per cent increase in sales, he claimed.
“There [are] so many permutations of the types of offers that you can’t do it on the back of a manila folder. You have to have the machine learning capability to crunch all the data because it’s moving constantly,” Donohue told this masthead.
Efforts to entice customers through online deals have driven stronger engagement as members of the My Dan’s loyalty program spend 80 per cent more every transaction than non-members and “Appy Deals” increase monthly app users by more than double.
“People are back to loving and chasing bargains because you feel good about it.”
As household budgets remain under pressure and consumers continue to make more mindful purchases, Donohue noted people were trading out of protein dishes such as steak.
“Even chicken schnitzels we’ve seen people trade out of … into fish and chips and burgers,” the chief executive said. “I’ve seen that happening in both regional and metro [venues].”
The pubs and liquor store operator notched up a 3.6 per cent increase in group sales to $12.3 billion and a similar rise (3.1 per cent) in group earnings to $1.1 billion. However, net profits for the group fell 3.2 per cent in the 2024 financial year to $512 million, driven by higher debt and interest rates.
Drinks sales at liquor store chains Dan Murphy’s and BWS grew 3.4 per cent, or 1.1 per cent on a comparable store sales growth. Growth in its hotels division (encompassing more than 350 venues across the country) was slower at 2.3 per cent, or 1.5 per cent on a comparable basis.
Draught beer is seeing a resurgence, while smaller wine producers are taking the fight up to the bigger incumbent brands, according to Donohue.
“Small wine brands often fly under the radar,” he said. “Guys like Tyrrell’s [Wine] in the Hunter Valley that have always made these beautiful, refreshing styles of white wines are selling like hotcakes,” he added.
Endeavour also found $100 million in cost savings and said it was on track to save $290 million by the 2026 financial year. It has made a 5 per cent improvement in productivity at Dan Murphy’s, which Donohue said he was keen to expand across the hotels business. A national roll-out of electronic shelf labels has also helped to reduce labour costs.
Drinks sales at liquor store chains BWS and Dan Murphy’s grew 3.4 per cent.Credit: Louie Douvis
The $9.2 billion entity is the largest operator of pokie machines in the country. Most (81.2 per cent) of its full-year revenue came from liquor sales, while 6.7 per cent of it was derived from gaming - a slight decline from the year before (6.8 per cent). Bars made up 5.1 per cent and food accounted for 3.8 per cent of overall annual revenue.
Endeavour spent $64 million less on capital expenditure this year, with fewer and less expensive liquor store refurbishments, and fewer but bigger hotel renovations.
The company will pay a dividend of 21.8¢ a share, the same as last year.
Investors appeared disappointed with the result, sending the share price 7 per cent lower in late trading.
Analysts described the numbers as “clean” and “solid” but noted that the outlook for hotel and pub sales, which the company said had “slightly improved” in the first seven weeks of the new financial year compared with the fourth quarter, was softer than expected.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.