Pizza delivery company Domino’s said today that UK pre-tax profits jumped to £10.9m in the six months to June, a hike of 32.7%, as British punters increasingly choose to stay in for a Pepperoni Passion Dominator rather than waste their hard-earned credit-crunched salaries at local restaurants. And that’s despite the fact that as a food delivery business, it’s been hit harder than most by soaring fuel and commodity prices.
Of course, the main reason for this is that it’s been able to pass its higher costs onto customers via higher pizza prices – but judging by half-year sales of £66.2m, we’re clearly willing to pay the difference. Its online arm was the star performer, with sales up 85% to £25.3m, over a fifth of the total. But it’s not neglecting bricks for the sake of clicks – it opened a record 25 stores in the UK in the first half of this year, taking its total to 526, with a similar number expected in the second half. And it won’t stop there – it’s aiming to have 1,000 stores by 2017.
Executive chairman Steven Hemsley said he was ‘pleased that our business has proved to be resilient’, despite a ‘significantly tougher trading environment’ than the same period last year. And he was in no doubt why Domino’s was succeeding where others are failing: ‘Many consumers are 'trading down', which in our industry means that they are eating out less often and staying at home,’ he said, trying not to look too pleased with himself.
As for rising costs, he admitted this had been a headache so far this year – but apparently Domino’s has fixed price contracts in place for the rest of 2008, so there’ll be no need for more price hikes until 2009. Good news for fans of the Tandoori Hot. Besides, as he pointed out, all of its rivals have been affected in exactly the same way, so there’s no reason why it should be a competitive disadvantage.
So all in all, it’s another sterling performance from Domino’s, which has seen its share price jump 8% this morning. Just a few months since it graduated from AIM to the London Stock Exchange, its rise continues to be Meateoric...
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