Domino’s delivers on profits – thanks to cheap cheese

Domino's said its bottom line was helped by cheaper cheese, fuel and dough. Picture: Jonathan Brady/PA Wire
Domino's said its bottom line was helped by cheaper cheese, fuel and dough. Picture: Jonathan Brady/PA Wire
Share this article
0
Have your say

Domino’s Pizza said rock-bottom cheese prices helped the fast food chain rack up double-digit profit growth last year.

The group, which has about 870 stores across the UK, said pre-tax profits jumped 20 per cent to £59.3 million in the year to 27 December, helped by lower costs for fuel, wheat and a “record low cheese price”.

It said last year it was able to save £11m on food costs alone, primarily on cheese and dough. The business added that “food costs remain benign going into 2016”.

Like-for-like sales in the UK jumped 11.7 per cent last year, while its online operation now accounts for 77.7 per cent of all sales from deliveries, up from 70.8 per cent a year ago. Its app service makes up 48.6 per cent of all online sales.

READ MORE: Domino’s Pizza serves a slice of profit cheer

Domino’s, which has launched a tikka pizza and re-introduced its hot dog stuffed crust, last year opened 61 stores in the UK, where its business has produced nine successive quarters of double-digit like-for-like sales growth.

The first nine weeks of its new financial year got off to a “good start”, with like-for-like sales up 10.5 per cent against tough comparatives.

Chief executive David Wild said: “2015 was a terrific year for Domino’s Pizza Group; the UK performance was outstanding, reflecting continued investment in our e-commerce platform.”

“Our strategy remains simple and clear. We aim to be the number one pizza company in each neighbourhood in which we operate.”

Apart from the UK business, Domino’s Pizza also owns the franchises in the Republic of Ireland, where it has 47 stores, and Switzerland, where it has 15, as well as Liechtenstein and Luxembourg.

Analysts at Numis said that, due to strong sales from new stores in the UK, the broker has upgraded its 2016 pre-tax profit forecast by 3 per cent to £80.6m.