Domino’s Pizza stated the takeaway market had “grow to be harder” because it blamed weaker client confidence within the run-up to the autumn price range and rising wage prices for decrease than anticipated gross sales and a droop in income.
The takeaway specialist stated it now anticipated full-year underlying income of between £130m and £140m, about £6m under the typical of analysts’ expectations.
Domino’s stated it was taking market share however its franchise companions had been being extra cautious about opening new retailers due to increased employment prices. Employers’ nationwide insurance coverage funds and the authorized minimal wage had been elevated in April.
The corporate opened 11 shops within the six months to the tip of June, fewer than anticipated, and is now forecasting openings within the mid-20s for the total yr. In April it stated it hoped to open “in extra of fifty new shops”.
Andrew Rennie, the chief government of Domino’s, stated: “There’s no getting away from the truth that the market has grow to be harder each for us and our franchisees, and that’s meant that the constructive efficiency throughout the primary 4 months didn’t proceed into Might and June.
“Given weaker client confidence, elevated employment prices and uncertainty forward of the autumn assertion, franchisees are taking a extra cautious strategy to retailer openings in the interim.”
He stated the group was extra automation to assist maintain prices down.
Shares within the UK-listed group slid greater than 13% in morning buying and selling on Tuesday because it reported flat complete order numbers within the first six months. Underlying gross sales dipped 0.1% because it struggled to beat the sturdy gross sales final yr in the course of the males’s Euro 2024 soccer event.
Underlying pre-tax income slid virtually 15% to £43.7m as system gross sales, which embrace complete gross sales made at franchise retailers and new retailers opened in the course of the yr, rose 1.3% to £778m.
The poor efficiency at Domino’s follows comparable difficulties on the bakery specialist Greggs, which reported a 14% fall in half-year income final week amid weaker than hoped for gross sales. It stated that income had been hit as shoppers shunned pastry bakes and scorching meals in favour of chilly drinks in the course of the scorching climate.
The rival pizza franchise Papa Johns has additionally closed greater than 70 retailers, whereas Pizza Hut’s 140 eating places had been rescued from insolvency in January.
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Katie Cousins, an fairness analyst at Shore Capital, stated: “We word ongoing headwinds from low client confidence and slowing earnings tracker knowledge, notably for [those on low income], together with potential impacts of weight-loss injections on the sector.”
Mark Crouch, a market analyst for eToro, added: “Regardless of [Domino’s] income rising and better like-for-like gross sales, income have dropped sharply, and retailer openings have slowed, a troubling mixture for a growth-focused franchise mannequin.
“If quick inexpensive meals is feeling the pinch, what does that say in regards to the broader client panorama? Traders may even see a resilient model, however the numbers level to structural headwinds that transcend pizza.”
