Domino's Pizza Group Experiences Decrease in Delivery Orders Amid Rising Cost of Living
Posted by Emma on 10th Nov 2023
On November 9, Domino's Pizza Group announced a decrease in meal deliveries for the third quarter. This downturn is attributed to customers reducing their orders due to the escalating cost of living.
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Michael Barera, CC BY-SA 4.0
The company, which runs and franchises Domino's outlets in the UK and Ireland, revealed a 3.7% increase in like-for-like system sales for the quarter. Despite this, total orders fell by 1.2%, amounting to 16.7 million, which led to a significant drop in stock shares of up to 6.7% during morning trading.
Domino's Pizza Group had to raise product prices for increased operational costs. This move, combined with the impact of several interest rate hikes and a slowing economy, led customers to cut back on non-essential spending.
The newly appointed Chief Executive Andrew Rennie commented, "As we look into next year, we anticipate inflation to stabilise. Our focus will remain on fostering customer and order growth, as well as ensuring the profitability of our franchisees."
As a franchisee of the U.S.-based Domino's Pizza Inc, the company reported a resurgence in total orders during the fourth quarter. This rebound has allowed it to maintain its forecast for the year's core profit.
Last month, the American parent company also reported a lukewarm performance in its delivery segment, as heightened fees deterred consumers, weary from inflation, from placing orders.
Domino's Pizza Group is still projecting an underlying core profit within the range of 132 million to 138 million pounds. However, shares in the FTSE 250 (.FTMC) index constituent have dropped by 6.1% to 348 pence as of 0920 GMT, while the index itself has seen a decline of 0.3%.
Could the diminished order volume be a factor in the recent delivery trial partnership with Uber Eats?
What's your perspective on Domino's current situation and the broader implications for the fast-food industry? Please leave your comments below.