Domino’s Pizza Group has announced it is aiming to continue expanding by opening a total of 70 new branches across the UK this year.
The company, which holds the US chain’s master franchise in the UK and Ireland, told investors on Tuesday it was “gaining traction” after a slow start to the year, including by halting a downward trend in orders.
The group, which has a profit-sharing agreement with its own franchise partners, hailed “good momentum” in its business despite lowering its full-year profit outlook.
Domino’s also said its average delivery time had been cut to 24 minutes between April and June – shaving one minute off its time in the previous quarter.
Chief executive Andrew Rennie hailed the “outstanding service improvement” and claimed some of the chain’s competitors were hitting times “over double that and sometimes worse”.
Domino’s reported underlying core profit of £69m in its half-year results on Tuesday, a slight 0.4% increase on the same period last year.
Total orders were down 0.9% to 35.1 million in the six months to the end of June, although the firm said they had been picking up notably since May and increased by 0.6% in the second quarter.
However, the company also forecasted that its overall profit for the year would be between £144m to £149m, at the lower end of market expectations.
Domino’s said that while it expected food costs to fall in the coming months, it had decided to pass these savings on to franchisees and customers via special offers to help drive the brand’s longer-term growth.
It prompted the company’s shares to fall as low as 8% at one point during trading on the FTSE 250 on Tuesday as investors digested the announcement.
But Mr Rennie insisted the company was in a strong position heading into the second half of the year.
He said sales had been boosted by the Euros, but added that the company’s fortunes had been improving before the tournament kicked off.
“Following a slow start to the year, we now have good momentum in the business with our strategic initiatives gaining traction and our trading performance accelerating steadily against strong comparatives from last year,” he said.
Mr Rennie added: “We’re executing well in an uncertain market thanks to our unrelenting focus on brilliant value, quality and service for our customers.
“In our core UK and Ireland business, we see significant opportunity for further growth through opening new stores, an exciting new loyalty trial to drive frequency and a focus on value and service, especially in the delivery channel.”
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Analysts at Investec said while the revised profit guidance might impact short-term numbers, the decision to pass on cost savings to franchisees was “totally consistent with the business strategy and helpful for the long-term sustainability of the model”.
However, Russ Mould from investment platform AJ Bell described the results as being “as soggy as day-old pizza” and said the company would need a strong performance in the second half of the year to win over investors.
He added: “While a recent boost in business during the Euros football tournament is obviously welcome it is also transitory and the fear will be that a difficult first few months of 2024 are more reflective of people’s willingness and ability to shell out £20-plus on a pizza.”