Underlying Profits Of Domino’s In UK Battered By Pandemic

The biggest pizza delivery chain of the United Kingdom, Domino’s Pizza, reported a slump in its order during the novel coronavirus pandemic as customers were prevented from collecting orders because of the strict travel and movement restrictions imposed to prevent the spread of the pandemic. The company reported a drop in orders for its popular products such as the Cheeseburger pizza, stuffed crust and chicken wings which were also dropped from its menus as part of safety measures.

Despite more customers placing orders for pizza, sides and desserts during the lockdown induced by the pandemic, the company’s performance was affected as it scrapped collection and rationalised its menu in order to ensure a safe method of cooking. It also spent additional money to ensure contact-free deliveries of its products to customers.

In the first six months of the year, despite a 12 per cent year on year increase in orders, Domino’s reported a slide of 44 per cent in collection orders which resulted in a 5 per cent dip in its total orders during the period.

That resulted in a 4.6 per cent drop in the underlying profit before tax of the company at £47.6m even though the sale of the company rose by 5.5 per cent to £628.9m during the half year.

Domino’s was forced to remove its popular products such as pizza customization, stuffed crust and other items from its menu because they were found to be difficult to prepare while adhering to the strict physical distancing rules in place. The company’s profit margins went down because more of sides and desserts were ordered by customers during the period which increased revenues but cists also increased at the same time.

£3.4m on face masks and “contact free delivery boxes” was spent by the company during the period. In order to ensure a hygienic delivery, a new platform box was designed by the company in which pizzas and other food are placed on and left on doorsteps of the customers.

Domino’s has however reinstated stuffed crust, the cheeseburger pizza and chicken wings in its menu since the easing of the lockdown.   

Caution about the future was sounded by Domino’s new chief executive Dominic Paul, the former boss of Costa Coffee who took up the role in May.

“While trading in the first few weeks of the second half has been encouraging, it is too early to conclude on how consumer behaviour will evolve,” Paul said.

With 1,192 stores across the UK and Ireland, Domino’s operates under licence from its US parent. Apart from 36 outlets in London that are directly owned by the company, most of the other stores in the two countries are run by franchisees.

The company said that the business in the capital city of London has suffered more than in other parts of the country as lesser number of customers walked into the stores choosing collection orders instead.

(Adapted from TheGuardian.com)

Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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