Domino’s margins impacted by customers changing their menu habits during lockdown

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Domino’s Pizza said its margins have been impacted by consumers buying a higher proportion of sides and desserts during lockdown.

The company has been one of the few chains to trade right the way through the global pandemic, with an increase in delivery sales during the last three months more than offsetting a lack of sales from collection.

Domino’s said it had seen a change in consumer purchasing behaviour and average basket composition while customers have remained at home.

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Although an increased appetite for more side dishes and desserts has boosted its sales performance, the company said the shift in buying patterns had affected its margins.

Like-for-like sakes in the UK actually ticked up 5% between 23 March to 14 June, a time when most other operators were completely shut or operating makeshift takeaway and delivery services.

Throughout the lockdown, Domino’s has served customers with entirely contact-free delivery and ceased in-store collection.

With measures beginning to ease, it is now seeing a gradual re-introduction of contact-free collection across the system, although it expects this to take some time to recover to prior levels.

Domino’s has rationalised its menu offering in order to ensure safe in-store operations for staff and its supply chain has maintained full availability to stores throughout the period.

It has re-routed all store deliveries to stop two-person deliveries, ensuring branches are closed during restocking, changing its supply chain shift patterns and paying salary premiums.

Payment terms for franchisees have been changed so that cash passes through the system quicker.

CEO Dominic Paul said: “I joined the group at a time of unprecedented trading conditions and have spent my first few weeks as CEO becoming fully immersed in the business.

“Throughout this crisis we have focused on looking after our people and working together with our franchisee partners to safely serve our customers and help our communities. I am proud of the performance of our system during this period, and that the vast majority of our stores have remained open.”

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Andrew Seymour

The author Andrew Seymour

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