Domino's sticks to strategy as it reports H2, 2021 results

QSR giant highlights changes to customer behaviour due to COVID-19 conditions but says it's sticking to its strategy guns

Customer purchasing patterns may have changed off the back of the COVID-19 pandemic, but Domino’s is confident it can continue to deliver strong performance by sticking to its existing strategy for the next decade.

Domino’s managing director, Don Meij, made the comments as part of the ASX-listed QSR group’s first-half financial year results released to market today. The company reported a 16.5 per cent increase in revenue to $1.84 billion for the half-year to 31 December 2020, or 8.5 per cent increase based on same store sales, as well as a 23.8 per cent rise in EBITDA to $218.7 million over H1, 2021. Of total revenues, $324.8 million was attributed to A/NZ.

Across the six-month period, online sales lifted 25.4 per cent and were worth $1.42 billion. Overall franchisee profits stayed at 20.8 per cent and 131 stores were opened in the past six months, largely in Europe and Japan but including 13 in Australia.


In A/NZ, Domino’s noted experienced franchisees grew sales by 5.7 per cent to $648 million, and improved margins saw EBIT lifted 9.8 per cent to $63.7 million.

Meij said the group was pleased with its performance over the first half, attributing it to experienced management and franchisees executing on a long-term strategy, rather than one-off costs or short-term sales attributable to the COVID-19 pandemic. This was despite noting mixed community responses and sales results across the company’s portfolio of nine countries as a result of the global pandemic.

“The performance this half predominantly reflects the benefits from investing in, and strengthening, our franchisee base and expanding our store footprint on a global scale and the efforts of tens of thousands of our people executing against our strategy,” he said.

Meij said COVID-19 has brought forward long-term demand for delivered food, ordered online, in all markets. “At the same time, carry-out orders remain challenged in most markets, as specific customer segments [including CBD office lunches] have changed their ordering behaviour,” he continued.

“This has affected individual countries differently–in some markets the growth in delivery sales has more than offset the changes in carry-out customers, in others, same store sales growth remains lower than expectations in the short-term.”

With significant swathes of new customers coming into the Domino’s fold in 2020, including those trialling delivery for the first time, Meij said the goal is to retain them through a combination of excellent product, service and image. He pointed to “encouraging signs of repurchasing” to indicate the strategy was working.

“Prior to this pandemic affecting our communities, management’s view was the strategy that had delivered our performance over the past decade would deliver growth for the next decade,” Meij said.

“COVID-19 has not changed this view –high quality food at an affordable price, served quickly and safely, benefits both our franchisees and our customers –and our recent performance reinforces it.”

In a sign of its strong financial performance, Domino’s has become one of several Australian companies to return JobKeeper payments back to the Australian Government, in this case $792,000 over the second half of the 2020 calendar year.

“Throughout COVID-19 we will continue to put people first; providing safety equipment, supporting franchisees where needed and giving generously to our communities. I am proud we have the resources to invest in our people without receiving any government support this financial year,” Meij added.

“It is the ongoing efforts of our people that gives management confidence Domino’s Pizza Enterprises will be an even stronger, more sustainable, and resilient business post COVID-19.”

Also highlighted in the Domino’s financial report is its decision to appoint an inaugural chief ESG officer, Marika Stegmeijer, to the group as part of its Domino’s For Food program of work. She sits on the global leadership team and will help to set measurable goals around sustainability and societal areas of importance for customers such as plastic and cardboard waste reduction, community giving programs and other key issues, Meij said.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, or follow our regular updates via CMO Australia's Linkedin company page.

 

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