Domino’s net profit has dropped by 74 percent, with the international chain planning to downsize by as much as 20 percent. This result was taken as Domino’s financial year finished in early July.
As published in the company’s annual report, Domino’s network sales grew by 2.2 percent, but were offset by inflation and economic pressure. CEO and managing director, Don Meij, said that Domino’s has navigated its way to balance price increases with customer growth.
“Where we did not, we grew sales through increased price alone, mirrored by a customer count decline that reduced volumes, and therefore margins, for our Franchisee Partners and Domino’s,” Meij said.
The drop is 23.3 percent more than that of the financial year before, despite network sales.
“This reflected the volume decline in stores flowing through to our warehouse margins. Domino’s margins were also affected through our inability to pass through ingredient cost changes as we ordinarily do, following some suppliers declaring force majeure on supply contracts at short notice, largely due to regional impacts of conflict in Europe, such as spiking energy prices.”
Meij added that some of Domino’s strategies over the past financial year have been to create the best possible service for customers despite ongoing economic pressures. For example, delivery service fees in Australian and New Zealand markets did not resonate with more price-conscious customers who typically ordered delivery.
“These customers reduced their frequency over multiple purchase cycles, a delayed effect that we subsequently identified and have been addressing over the second half of the Financial Year.”
