Domino’s plans up to 200 new stores, lifts profit 29pc

Domino’s Pizza says two-thirds of its growth is coming from burger and chicken chains, as it delivered a profit rise of 29pc.

A Domino's Pizza deliverer on Queensland’s Gold Coast. Pic: Regi Varghese.

Domino’s Pizza chief executive Don Meij says he is stripping customers away from popular takeaway options like hamburgers and fried chicken, with two-thirds of his growth sourced from these rival chains.

He has also brushed off any threat from supermarkets’ private label pizzas, which he labelled “mass plasticised’’ commodities.

Mr Meij’s comments came as Domino’s declared a record profit and announced plans to open up to nearly 200 new stores over the next year.

He told The Australian Domino’s was grabbing a growing slice of the nation’s $15.6 billion fast-food market dominated by well-known chains selling traditional burgers and fried chicken, thanks to a mix of pricing, improved offers and the increasing use of technology to hasten cooking and delivery times.

“About two thirds of our growth is coming outside of pizza, from various different places, it is coming from other (fast-food) categories, coming from other players,’’ Mr Meij said.

Domino’s Pizza (DMP) today posted a full-year profit of $82.4 million, a 29 per cent increase on the prior year’s result and a new record result for the chain.

Shares in Domino’s were down more than 5 per cent this morning as the result missed some forecasts, falling $3.90 to $73.08.

Mr Meij said consumers were increasingly turning away from other fast-food and takeaway categories and were drawn to Domino’s widening pizza and side orders offering.

“We are rewarding the whole pizza experience, so it is continuing to push into other categories, but it’s also about driving even existing customers to also feel more excited.’’

Domino's Pizza CEO Don Meij.

The profits to be made in home pizza haven’t been missed by the giant supermarket chains, with Coles recently advertising a new range of pizzas priced as low as $3. Aldi also offers a small range of bargain-priced pizzas.

Mr Meij said Domino’s didn’t feel threatened by the incursions from supermarkets and their cook-at-home pizzas.

“You still have to take it home, you still have to cook it, what is your oven going to be like when you cook it? And the outcome of that, what taste, health and wellbeing - is it unique and special?

“There are a whole lot of reasons why people purchase pizza, and (supermarket pizza) just doesn’t differentiate, it’s just commoditised, mass-plasticised product and as a result it doesnt have any impact on Domino’s fresh, made-to-order dining experience.’’

Domino’s reported revenue was up 32 per cent to $930.2m over the year, during which Domino’s added a hefty 484 new stores to its network. A large parcel of new stores came from acquisitions of Joey’s Pizza, Pizza Sprint and stores from Domino’s Pizza Germany.

Domino’s has also been spending up on digital technologies in a bid to push the pizza chain ahead of its competitors.

“We are focused on improving technology, pushing safer, more efficient delivery, whilst investing in world class ordering platforms,” Mr Meij said. “We expect ‘Project 3/10’ to continue to be a significant sales stimulus over the next 3-5 years, with 10-minute delivery attracting drive-through customers from our largest competitors.”

Domino’s will pay a final partially franked dividend of 38.8c per share, bringing the year’s total distribution to 73.5c, an increase of 41 per cent on the prior year.

The company said momentum was continuing into the new financial year, with Domino’s making its strongest start to a new year in terms of store openings and group same store sales. However, despite expecting to open its 500th store in Japan over the coming year, Domino’s said same store sales remained challenged in the currency economic environment.

Domino’s said it was expected net profit growth in the region of 30 per cent over the coming year, flagging the opening of as many as 175 to 195 new stores across the group over the period.