Domino’s profit surges as COVID-19 lockdowns boost global pizza deliveries

Domino’s delivered three pizzas per second during the global COVID-19 lockdown, boosting its profit more than 30 per cent amid a flurry of new store openings.

Fast food giant Domino’s delivered three pizzas every second during the global COVID-19 lockdown last year helping boost first half profit by a third.

Brisbane-based Domino’s reported a 32.8 per cent increase in half yearly profit to $96.2m on a 16.5 per cent hike in sales to $1.84bn.

The company, which has outlets in Europe, Japan, Australia and New Zealand, cooked 209 million pizzas last year, enough to circle the globe 1.5 times.

The company said it would boost investment in artificial intelligence that predicted customers’ behaviour online as well as new delivery technologies including robots and drones.

The chain’s outlets in Europe and Japan – markets where COVID-19 has caused significant economic disruption – were among the best performers, with sales rising 42.6 per cent and 13.8 per cent respectively.

Domino’s chief executive Don Meij said COVID-19 had brought forward long-term demand for delivered food, with online sales accounting for the lion’s share of the growth.

“This online trend will continue past COVID-19,” Mr Meij said, adding online sales across the group expanded 25.4 per cent to $1.42bn in the first half.

“We have been saying for some time that within a decade, half of all take away food would be delivered.”

Domino’s opened 131 new stores in the first half, including 68 in Japan, 19 in France and 15 in Germany. “There is no doubt that Japan and Germany have exceeded already high expectations,” Mr Meij said. “Importantly, franchisee profitability remains strong and franchisee appetite for reinvestment and expansion is as high as ever.”

Domino’s reaps online growth

The shares climbed 7.39 per cent to a record $105 on Wednesday, boosting Mr Meij’s stake from his 1.8 million shares by $13.3m to $189m.

Chairman Jack Cowin, who brought KFC to Australia in the 1960s, saw his 26 per cent stake in the company climb $170m to $2.42bn.

Domino’s shares have surged more than 81 per cent over the past 12 months driven by rising fast-food orders during the lockdown.

The company will pay an interim dividend of 88.4c a share, 50 per cent franked.

Mr Meij said the company’s agile response to changing market conditions had lifted expectations for full year performance. “Despite the unique challenges of this time, store opending have accelerated with an average of five new store opening each week,” he said.

Same store sales at the start of the second half have risen more than 10 per cent but Mr Meij cautioned carry-out orders remained challenged in most markets, particularly in CBDs.

He said the growth of online sales had vindicated Domino’s investment in its own in-house team of delivery workers as opposed to using “gig economy” workers. “We are proud they work in the company wearing our uniforms and driving safe vehicles,” he said.

They would remain crucial to the company’s success even as Domino’s looked at trialling deliveries using land robots and drones.

Mr Meij said at the back end of Domino’s delivery system the company was looking at using artificial intelligence (AI) to improve customer satisfaction. “We are looking at using AI in our app that will predict whether a customer will go ahead with an order,” he said. “That means we can get started on cooking before the order has been completed.”

Pitcher Partners director of wealth management David Lane said Domino’s had reported profit above expectations with the COVID-19 lockdown helping in regions like Europe.

“Markets like Japan where home delivery of pizzas is relatively new has also seen growth,” said Mr Lane. “Domino’s focus on digital technology has meant that once people realise the convenience of ordering online it becomes a habit.”

Domino’s earlier announced it would return $792,000 of JobKeeper support it had received from the federal government last year. Mr Meij said the payments had been helpful in supporting workers at Domino’s pamphlet printing operation during the lockdown.