Pizza chain Domino’s said it would focus more on collections so it can limit the impact of rising delivery driver pay on its bottom line.
Sales for the three months to 26 March grew to a record £386.6m. However, the 10.7% rise in sales, before the impact of lastr year’s hike in VAT, was well below food inflation. According to the ONS, a basket of flour, tomatoes, cheese and sliced meat was 31% more expensive this March than it was a year earlier.
Collection orders grew much more quickly. This, the company said, helped it avoid rising labour costs by ‘outsourcing’ work to customers.
“Collection represents the most efficient labour channel, with delivery effectively outsourced to the customer,” Domino’s said. “This is particularly important in an environment where there are pressures on labour availability and wage inflation.”
While it took a larger slice of the UK takeaway market in Q1, the company said the sector as a whole was “challenging”.
Interim CEO Elias Diaz Sese said: “Whilst this year has started well for Domino’s, there continues to be uncertainty in the economic environment with household budgets likely to remain under increasing pressure.
“However, we continue to be excited about the many opportunities we see for Domino's in 2023 and beyond as we continue to work towards our purpose of delivering a better future through food people love.
"We are well placed to succeed as we accelerate the execution of our strategy. We are focused on improving our franchise partners' profitability and we have made good progress in investing in the business and driving operational efficiencies.”
Domino’s added that sales were up 10.9% so far in the second quarter of the year.
Shares were up 5.4p to 307.2p as the company announced a £20 million share buyback. Analysts at Peel Hunt said Domino’s could give back £330 million in the next three years and still cut its debts.
