Interview: Chris Moore - Pizza boss relishes the Domino's effect

As the recession turns the UK back into a fast food nation, Domino's is one of the few companies rolling out the profits. And investors are clamouring for the good news.

Moore's head is spinning as he takes a short five-minute breather between investor meetings. He had a total of 37 to fit in before the weekend, and a similar number are scheduled for this week as the City soaks up as much of his enthusiasm as it can get.

"It's just ridiculous," he laughs. "At least I'm going to them with good news. I imagine it must be pretty dire out there for the others."

Moore's hectic schedule no longer allows much time to indulge in his first love – guitars – and he admits he's recently only had a chance to practise once a week. Before his life was taken over by pizzas, he used to spend three hours a day strumming on his collection of electric and acoustic guitars.

But as he reminisces over his career at the franchise company, which he joined as a marketing manager in 1990 after a 10-year flirtation with the advertising industry, he does have time to share a few memories from his upbringing in Brazil.

Moore was born in Weymouth in Dorset but spent what he describes as his "formative years" living in Rio de Janeiro. "For a 17-year-old boy to be in Rio at that time I think you can safely say I was spoilt, without going into too much detail," he jokes.

Moore is well known for bringing a bit of humour to the City, having turned up to awards ceremonies dressed up as Marilyn Monroe and Marge Simpson. But recently it has been his financial results that have been attracting most excitement.

Last week, Domino's proved it is one of the UK's few recession-proof firms, posting a 25% surge in annual profits. As Moore points out, Domino's is proving more than recession proof, it is actually benefiting from households cutting back on entertainment budgets.

Sales have soared as people choose to stay at home with a takeaway instead of going out to a restaurant as they did during more affluent years. Domino's added an extra 52 outlets to its stable of more than 500 stores last year, creating 1,600 jobs, and a further 50 are planned over the next 12 months, including at least three in Scotland.

After several difficult years for the fast food industry, the UK has officially fallen back in love with takeaway pizzas, burgers and fried chicken. However, cautious not to reignite the wrath of the health lobby, Moore is reluctant to put Domino's in the same bracket as other fast food outlets such as McDonald's and KFC.

Although Domino's sales rose by 18.4% last year, he argues that research shows its pizzas are still a "treat" for its customers and not a weekly staple. "This is not like a McDonald's or a KFC or anything like that. Where those brands would enjoy an average frequency of once a week or once every two weeks, the average order frequency from Domino's is once every 34 days. People still approach the idea of getting pizza delivered to their home as a treat."

On the health front, he says that, to the best of his knowledge, Domino's is the only takeaway pizza company offering lower fat cheese, although, with few customers taking it up, it represents only 2% of total sales. He says that ordering a pizza is more about deciding you don't want to cook.

There is clearly a growing appetite for pizzas. Analysts are forecasting a further 13% rise in Domino's pre-tax profits to 26.5m, though the resurgence of the fast food sector in the recession has taken the City by surprise. Moore says he is confident the firm will emerge as one of the few winners during the downturn.

Shortly after he joined the firm in 1990, the Milton Keynes-based company had its first experience of recession in the UK. "At the depths of that recession, sales were flat and we only had 40 stores and 350,000 in the advertising fund and no way of knowing where our customers were because no one had computers back then."

He says the firm, which separated from its American parent company in 1993, has entered this recession in an entirely different shape. In particular, he argues, Domino's has an especially generous advertising fund at its disposal to help boost its appeal to cash-strapped families.

Last year, the company spent 18m on advertising, including sponsoring Simon Cowell's Britain's Got Talent on ITV. Last year's profits haul will allow Moore to increase that advertising budget to 20m, and he intends to take full advantage of the downturn in the broadcasting sector to negotiate some cheaper deals.

"Looking forward, we do have a number of things in our favour. The way that we fund our advertising activity is very different to other companies in that it is a straight percentage of sales that go through the till.

"In 2007, the advertising budget was 15m. In 2008 it was 18m. This year we expect it to get to 20m. So you have got a double whammy in that you have an increase in the advertising budget but at a time when TV costs are falling by 20-25%. So we're getting a much bigger bang for our buck. That should certainly help. The other side of it is we have got franchisees who are continually doing better and spending more in their local markets, which in turn should help sales increase on the prior year. Those things together give us a pretty good outlook on 2009."

Moore also has a more prosaic weapon up his sleeve. All too aware that he faces tough competition in the takeaway market, namely from Pizza Hut, which plans to open a further 26 restaurants this year, he has spent his time in the driving seat at Domino's forcing down cooking times.

"Back in 2005 what we call the 'out the door time' was 17 minutes. Last year we got that down to 13 minutes. Which means if you allow for a 10-minute drive time, the average delivery time to our customers last year was 23 minutes. That in itself is competition-busting."

He also hints at further promotions online this year – an area that is becoming increasingly important in the fast food market. Online sales now account for almost a quarter of Domino's total sales, having risen by 70% in the past year.

Moore is careful to keep his latest brainwave under wraps, but confirms the company will make another assault on what he refers to as the "e-commerce" sector over the next six to 12 months.

He says: "This is the 10th year we have had an e-commerce platform. We were the first to it back in 1999. We do a number of different activities online to increase sales but there are other things we will be launching this year."

Domino's Pizza Group, as the FTSE 250 company is formally known, broke away from its American parent company, Domino's Pizza Inc in 1993, and has since granted hundreds of licences to budding UK entrepreneurs who wanted to start and grow a business but within the safety of a well-known brand.

This franchise model is expected to increase in popularity during the recession as banks shy away from funding risky start-up firms. With one in five of Domino's franchisees having sold enough Meat Feast and other pizzas to earn themselves 1m, Moore confirms the company is hardly short of applicants.

"We're got a lot of internal demand from franchisees to open up new stores," he says confidently.