Domino’s NZ delivers strong result
Franchise-holders underpaying staff not a problem in NZ, says Scott Bush
The New Zealand arm of Domino’s Pizza Enterprises is helping the company rake in the dough, with a strong first-half profit. The ASX-listed pizza business, which operates 106 stores in New Zealand, posted net profit after tax of A$59.7 million ($63.8m) for the six months to January 1 — up 30.8 per cent on the same period the year before.
Domino’s New Zealand general manager, Scott Bush, said that while the result was a good one, the New Zealand arm of the business had been performing well for years.
“Our good, solid growth has been going for a while, so we’re doing a lot of the heavy lifting,” Bush said.
“Obviously it’s a different business ratio in terms of outlets and everything else but from a percentage perspective we’re punching on really well.”
Group sales totalled A$1.17 billion, up 26.8 per cent, marking the first time the company had made sales of more than A$1b in a half-year period.
Total revenue for the half-year was up 21.1 per cent to A$539.4m and the company said it was expecting a stronger full-year profit — about 32.5 per cent up on the year before.
Group chief executive Don Meij attributed the result to focus on digital innovation, easy payment solutions and investment in premium ingredients, as well as support for its recently upgraded menu.
In its results briefing, the company sought to reassure shareholders after revealing it had returned A$4.5m in unpaid wages to staff in the past three years and had 26 franchisees leave after internal audits.
Meij said there was “no correlation between store profitability and the underpayment of staff wages” and the company had zero tolerance for unethical behaviour.
“I make no apologies for expecting the highest standards from our franchisees,” Meij said. “Due to our investment in proactive compliance, we have identified some franchisees who have wilfully breached their obligations to their team members.”
Domino’s said that in the past three years it had conducted 456 store spot checks, completed 102 store audits via a third-party audit process, with 42 ongoing, and investigated 88 individual complaints, with 25 ongoing.
Bush said he was aware of the issues in Australia but said the New Zealand branch regularly did audits to ensure this was not happening.
“The [franchise issues] haven’t affected New Zealand at all at this stage. Obviously I’m aware of what’s been in the media and everything else but at this point it hasn’t affected the New Zealand business and there’s no reason why it should.”
The Domino’s New Zealand business successfully trialled its first pizza delivery by drone last year, and Bush said it was moving into the second phase of the trial.
Nine more stores were under construction and Bush said he expected to lift store numbers to over 120 by the end of the year.
Domino’s operates in seven markets including Belgium, France, the Netherlands, Japan and Germany. It plans to open between 175 and 195 new stores this year.
Domino’s will pay an interim dividend of 48.4c in March, up 39.5 per cent on the previous period.