Domino’s to trim size
Costs cut crucial for pizza giant
FORGET super sizing. Domino’s may be about to shrink the size of its pizzas as it works to trim its cost base, according to speculation from a leading investment bank.
Deutsche Bank said it expected the nation’s biggest pizza chain to shortly start trialling smaller pizzas to offset the impact of a rising wage bill.
The mooted menu shakeup at Domino’s came as it confirmed it had dumped Coca-Cola Amatil as its drinks partner in favour of the lower-cost Pepsi.
Shares in Domino’s have fallen 20 per cent in 2017 as investors fret it will not be able to maintain the breakneck pace of growth that has made it one of the best performers on the local bourse of the past few years.
The pizza chain is facing a higher wage bill as it beds down a new agreement with the Shop, Distributive & Allied Employees union under which it is expected to pay higher weekend penalty rates. It began paying a Sunday wage loading at the start of the year.
Deutsche Bank analyst Michael Simotas yesterday said he understood the company would reduce the size of its pizzas in an effort to cut costs.
“Domino’s has already conducted trials on selling Pepsi products and is about to conduct trials on the smaller pizzas, but we see some risk to consumer perception from both of these initiatives,” Mr Simotas said in a note to clients.
Domino’s confirmed it was reviewing its menu but said the Deutsche suggestion of an across-the-board cut to its pizza sizes had been “taken out of context”.
Rather than shrink its pizzas, it is understood a new, smaller size may be introduced.
“Domino’s development kitchen is working on an enhanced menu to cater for our customers’ diverse taste requirements, including new pizzas, sides and desserts,” it said in a statement. “We look forward to launching our new menu, and seasonal range, later this year.”
The move by Domino’s to switch to Pepsi as its drinks supplier from September delivered Coca-Cola Amatil a double blow after it emerged Woolworths had opted not to stock its new no-sugar brand.