Britain's Domino's Pizza Group expects lower orders and sales growth in the first quarter as it holds back on marketing spend to support the launch of a loyalty programme and other initiatives later in the year.
Its shares fell nearly 7% in early trade after it pointed to a slow start to the year.
Cost Of Living Crisis
The local franchisee of US-based Domino's Pizza Inc had raised prices to keep up with higher raw materials costs but deliveries have fallen as customers grapple with the cost of living crisis.
However, it said full-year earnings are still seen in line with expectations.
2028 Targets
The group is targeting £2 billion in sales by 2028 as it increases the number of stores to 1,600, and £2.5 billion (€2.28 billion) of sales by 2033 from 2,000 stores.
Domino's Pizza Group, which currently has 1,319 stores in the UK and Ireland, posted sales of £1.5 billion (€1.37 billion) for the full year ended December 31. Underlying core profit rose 3.6% to £138.1 million (€126.3 million).
Total orders rose just 1% for the year, with a 13.3% rise in its collections business offset by a slump in deliveries as customers looked to save on delivery charges.
Inflation
In October, Domino's Pizza posted a surprise drop in its quarterly same-store sales, as higher menu prices and delivery charges discouraged inflation-weary consumers from ordering at the restaurant.
The company's same-store sales in the United States fell 0.6% in the third quarter, compared with analysts' average estimate of a 0.14% rise, as per IBES data from LSEG.
Promotions
Higher delivery charges and several rounds of price hikes have discouraged inflation-weary consumers from ordering at the restaurant. In response, Domino's has offered promotions such as the 50% week-long online discount and the 'Emergency Pizza' program to gain traction.
The company in September also revamped its loyalty program, offering more redeemable points to members to improve order frequency. That has driven increased redemptions on the rewards program, the company said.
Article by Reuters, additional reporting by Hospitality Ireland.
