Domino's Pizza Group

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Domino's Pizza Group plc
Type Public (LSE: DOM)
Industry Foodservice
Founded 1985
Headquarters Milton Keynes, England, UK
Number of locations 810[1]
Area served United Kingdom, Ireland, Germany and Switzerland
Key people Stephen Hemsley (Non-executive chairman)
Lance Batchelor (CEO)
Products Pizza, sides, desserts, drinks
Services Master franchisee for Domino's Pizza branches in the UK, Ireland, Germany, Switzerland, Liechtenstein and Luxembourg.
Revenue £240.5 million (2012)[2]
Operating income £47.2 million (2012)[2]
Profit £30.3 million (2012)[2]
Employees 20,000 (2012)[3]
Website www.dominos.uk.com

Domino's Pizza Group plc is a United Kingdom-based master franchisee of international fast food pizza delivery chain Domino's Pizza. The company holds the exclusive right to own, operate and franchise branches of the chain in the United Kingdom, Ireland, Germany, Switzerland, Liechtenstein and Luxembourg. The firm’s shares are listed on the London Stock Exchange and are a constituent of the FTSE 250 Index as of June 2008. Domino’s Pizza Group is the largest master franchisee in the Domino’s system, measured by retail sales and store profits.[4]

In April 2011, the Group acquired a majority stake in the franchise for Domino’s Pizza stores in Germany.[5] On 24 September 2012, Domino’s Pizza Group acquired Domino's Pizza Switzerland AG, which provides the company with the exclusive right to operate and franchise Domino's stores in Switzerland, Liechtenstein and Luxembourg, as well as an option to acquire the Master Franchise Agreement for Austria.[6]

History

See also: Domino's Pizza

The Domino's Pizza company was founded in 1960 by American entrepreneur Tom Monaghan as a single pizzeria in Ypsilanti, Michigan. Through franchising, the firm had opened 200 American locations by 1978. The first British branch opened in Luton in 1985, with expansion into Ireland following six years later, with a store in Dublin.[7]

The master franchise for the British Isles was sold off by the parent company in 1993 to Domino's Pizza Group, a subsidiary of the International Franchise Systems holding company controlled by sibling investors Colin and Gerry Halpern.[8] The company partially floated its shares on London's Alternative Investment Market in 1999, by which time it had expanded to a network of almost 200 branches (of which all but eight were franchises).[9] Certain investors such as Colin Halpern and property entrepreneur Nigel Wray[9] retained significant stakes at this time.

The company opened its 400th store in Wadsley Bridge, Sheffield in November 2005,[10] with the 500th following in late 2007 in Hatfield.[11] The Domino's share transferred from AIM to the main market of the London Stock Exchange in May 2008,[12] and was promptly added to the FTSE 250 Index at the next quarterly review the following month.[13] In 2009, Domino’s 600th store opened in High Holborn and the company’s first mobile unit took to the road, attending its first festival at Download. The 700th store opened in Willesden in 2011.

Germany

In April 2011, the Group acquired a majority stake in the exclusive master franchise to own, operate and franchise Domino’s Pizza stores in Germany.[14] There are currently ten stores in Germany[15] and Domino’s plans to open 400 in the next ten years[16]

The first German store opened in Berlin in 2010 and today, the company has five in the city. Other store locations also include Bonn and Aachen. The Domino’s store in Cologne was one of three stores opening on that day which were recognised as the 5,000th international store for Domino’s Pizza Inc. The other two 5,000th stores were Rio de Janeiro, Brazil and Penang, Malaysia[17]

Switzerland

The first Swiss store opened in Geneva in March 2000. There are currently 12 stores in Switzerland with other locations including Basel, Winterthur and three in Zurich. Domino’s plans to open a further 25 stores there over the next five years

Operations

As at 31 March 2013, there were 810 stores in the UK, Republic of Ireland, Germany and Switzerland. Of these, 626 stores are in England, 51 are in Scotland, 32 are in Wales, 20 are in Northern Ireland, one is on the Isle of Man, two are mobile units, 48 are in the Republic of Ireland, 20 are in Germany and 10 are in Switzerland. An ultimate total of 1,200 branches across the region by 2021 is targeted by the company.[18]

Prospective franchisees are required to pay approximately £280,000[19] to the parent company for the right to operate their own Domino's Pizza outlet.[7][20] Once established, the group also provides other services for the franchisee including production of dough, sourcing and delivery of ingredients and training.[20] The group also delivers IT, advertising and other administrative services on behalf of the franchisees.[20]

Domino’s has a central commissary system which makes dough and supplies this and other fresh ingredients to each store. Domino’s commissaries are located in Milton Keynes, Penrith and Naas in Ireland[20]

Financial information

Domino’s Pizza Group financial results.[2][4][21][22][23][24][25]
Year to December 1 System sales (£m) Revenue (£ million) EBIT (£m) Earnings per share (p)
2012 598.6 240.5 47.20 19.04
2011 530.6 209.9 42.64 16.65
2010 485.3 188.1 38.46 15.4
2009 406.9 155.0 30.99 21.45
2008 350.8 136.0 24.48 10.12
2007 296.3 114.9 20.21 8.38
2006 240.1 95.0 13.7 6.2
2005 200.7 81.7 10.4 5.1
2004 174.3 74.2 9.1 4.1
2003 142.3 61.6 6.0 2.8
^1 - Accounts to 2005 prepared according to United Kingdom Generally Accepted Accounting Principles. Accounts from 2006 onwards prepared according to International Financial Reporting Standards.

Shareholder structure

Many of the principal shareholders of Domino’s Pizza Group are individuals connected with the company including long-term investor and non-executive director Nigel Wray and former owner Colin Halpern. As of 25 December 2011, major franchiser[26] Moonpal Singh Grewal holds 3.7% and executive chairman Stephen Hemsley owns 2.4%. Institutional shareholders include Barclays Stockbrokers(4.7%) and Standard Life Investments(4.7%).

A further 0.35% of shares are held in treasury stock by the Domino’s Pizza Group Employee Benefit Trust.[27]

Products

Domino’s pizzas are made by hand from scratch to order. Its most popular pizza is the Pepperoni Passion.

In June 2011, Domino’s launched a new fresh dough Stuffed Crust. The original Stuffed Crust has since been followed by new variations including Saucy BBQ Stuffed Crust and Mexicano Stuffed Crust.

In August 2011, Domino’s launched a new Gourmet range, which features a new fresh thin crust base.

Nutritional information on all Domino’s products is listed on its Take a Fresh Look website - www.takeafreshlook.co.uk / www.takeafreshlook.ie.

In May 2012, Domino’s signed up to Out of Home Calorie Labelling Pledge, which is part of the Government’s Responsibility Deal. This saw the introduction of calorie information on Domino’s main ordering website.[28]

In June 2012, the company signed up to the Hospitality and Food Service Agreement managed by WRAP (Waste and Resources Action Programme), the Government-funded organisation responsible for improving waste reduction and recycling.[29]

In November 2012, Domino’s launched a gluten free pizza in its UK and Republic of Ireland stores, accredited by Coeliac UK.[30]

Labour issues

In 2007 the current affairs programme Newsnight reported on the alleged poor treatment of Domino's Pizza employees.[31] Workers at one franchise claimed to be victims of "modern day slavery", according to union T&G Unite, with money unlawfully deducted from the workers' pay sometimes leaving workers being paid nothing or even made to pay the company. Some of the deductions made by the company included the costs of insuring the cars used to deliver pizzas, and one worker was deducted all her wages for the first week of work because the franchise designated it "unpaid training".[32] Then-CEO of the company Stephen Hemsley denied that such issues were systemic within the franchise network.[31] Domino's Pizza Group's operations in the UK extensively use zero-hour contracts.[33]

Sponsorship

Domino's Pizza was the sponsor of episodes of The Simpsons on Sky1 between 1998[34] and 2008. In 2007, Ofcom introduced a ban on fast food advertising around programmes aimed at under-sixteens,[35] so the advertising was dropped for a brief period but later resumed. The advertising subsequently became more brand focused, rather than promoting specific products.[36] In October 2008, the company announced that its sponsorship of the show would come to an end.[37] The firm has also sponsored episodes of The Simpsons on Channel 4 (which were previously sponsored by Pizza Hut). In 2006, Domino's launched products based on the show such as the "Homer's Hot Stuff" pizza, along with TV advertising featuring the characters. Domino's has also sponsored the second, third and fourth series of Britain's Got Talent.[38] Orders received on the night of the 2008 final were around a third above those of a typical Saturday night.[38] In 2011, Domino’s sponsored Red or Black – a new game show presented by Ant and Dec.[39] 2013 has seen Domino’s sponsor ITV’s Off Their Rockers, which comes hot on the heels of the brand’s January sponsorship of the popular Splash! and signals a commitment of the brand supporting peak-time family shows.

Digital strategy

In 1999, Domino’s launched online and interactive ordering.[40] In 2007 Domino's became the first pizza company in the UK to launch a service that allows customers to order pizzas by text message.[41] In 2010, it launched a widget for social network sites, allowing any user with a blog, Facebook or MySpace account to promote Domino’s Pizza and receive a cash reward every time an order is placed through the widget.[42] Domino’s iPhone ordering app was introduced in 2010 and took £1 million in its first three months.[43] In 2011, the company launched Android and iPad apps.[44][45] A Windows Phone 7 app followed in 2012.[46]

The growth in e-commerce continues apace with 61.9% of all UK delivered sales (2012: 49.8% of UK delivered sales) coming via the internet. Sales taken through all online platforms were up 38.4% to £82.4m (2012: £59.5m) and, of this, 25.2% was taken through a mobile device (2012: 16.4%).[18]

Domino's Pizza UK was the first retailer to switch on Pennies, the electronic charity box, allowing customers to round-up their orders and donate the change to charity when they order online. They launched with Pennies in November 2010, and by February 2012 their customers had donated one million times, raising more than £230,000.

References

  1. ↑ Quarter One Interim Management Statement. Domino's Pizza group http://www.dominos.uk.com/media_centre/pdf/Q1%20IMS%202013%20FINAL%20%2003042013.pdf |url= missing title (help). Retrieved 2013-04-04. 
  2. ↑ 2.0 2.1 2.2 2.3 "Preliminary Results 2012". Domino's Pizza UK & IRL. Retrieved 24 March 2013. 
  3. ↑ "About us". Domino's Pizza UK & IRL. Retrieved 9 April 2012. 
  4. ↑ 4.0 4.1 "Domino’s Annual Report 2011". Domino’s Annual Report 2011. Retrieved 2 February 2012. 
  5. ↑ "Domino's capitalises on German appetite". 28 April 2011. Retrieved 3 February 2011. 
  6. ↑ "Quarter Four Trading Update". Domino's. Retrieved 8 January 2013. 
  7. ↑ 7.0 7.1 "Domino's serves up 25% profit surge". This is Money. 25 July 2006. Retrieved 22 June 2008. 
  8. ↑ Murray-West, Rosie (17 May 2001). "Wray grabs a larger slice of Domino's". The Daily Telegraph (London). Retrieved 22 June 2008. 
  9. ↑ 9.0 9.1 English, Simon (18 October 1999). "Domino's Pizza scoots to market". The Daily Telegraph (London). Retrieved 22 June 2008. 
  10. ↑ "Domino's Pizza Opens UK and Ireland's 400th Store" (Press release). Domino's Pizza UK & IRL, PR Newswire. 1 November 2005. Retrieved 23 June 2008. 
  11. ↑ "Christmas Trading Update". Domino's Pizza UK & IRL. 8 January 2008. Retrieved 23 June 2008. 
  12. ↑ Dawber, Alistair (19 May 2008). "Small Talk: Domino's savours its move to the main market". The Independent (London). Retrieved 23 June 2008. 
  13. ↑ "Ferrexpo and Petrofac to join FTSE 100 as Home Retail and Persimmon ousted". AFX News (Forbes). 11 June 2008. Retrieved 23 June 2008. 
  14. ↑ "Domino's capitalises on German appetites". FT. Retrieved 12 April 2012. 
  15. ↑ "DOMINO’s sees sales grow over 5%". Hospitality And Catering News. Retrieved 23 July 2012. 
  16. ↑ "Dominos Pizza acquires German franchisee". Sharecast. 
  17. ↑ "Domino’s Pizza 5,000th store opened outside of the U.S.". http://www.franchiseworld.co.uk. Retrieved 2012. 
  18. ↑ 18.0 18.1 "Quarter One Interim Management Statement". Domino's pizza group. Retrieved 2013-04-04. 
  19. ↑ "Franchising". Dominos. 
  20. ↑ 20.0 20.1 20.2 20.3 "Information pack". Domino's Pizza UK & IRL. Retrieved 23 June 2008. 
  21. ↑ 's_2010_AnnualReport_FINAL.pdf "Annual Report 2010". Domino's Pizza UK & IRL. Retrieved 26 January 2012. 
  22. ↑ 'sPizzaPreliminaryResultsforthe52weeksended27December2009.pdf Preliminary Results 2009
  23. ↑ "Financial performance: Five year summary". Domino's Pizza UK & IRL. Retrieved 23 June 2008. 
  24. ↑ "Annual Report 2005". Domino's Pizza UK & IRL. Retrieved 23 June 2008. 
  25. ↑ "Annual Report 2003". Domino's Pizza UK & IRL. Retrieved 23 June 2008. 
  26. ↑ "Dominos Pizza acquires German franchisee". Sharecast. Retrieved 27 April 2011. 
  27. ↑ "Share information: Major shareholders". Domino's Pizza UK & IRL. 29 January 2010. Retrieved 31 May 2010. 
  28. ↑ "Delivery plans from partner: Dominos Pizza Group Ltd". Public Health Responsibility Deal. Retrieved 1 May 2012. 
  29. ↑ "BHA signs up to Hospitality & Food Service Agreement". British Hospitality Association. Retrieved 28 June 2012. 
  30. ↑ "Gluten morgen... why everyone is saying no to wheat". Evening Standard. Retrieved 21 November 2012. 
  31. ↑ 31.0 31.1 Shankleman, Martin (27 September 2007). "Domino's staff claim exploitation". BBC News. Retrieved 28 September 2007. 
  32. ↑ Shankleman, Martin (31 July 2007). "Domino's workers in 'slavery' row". BBC News. Retrieved 28 September 2007. 
  33. ↑ Simon Neville (6 August 2013). "Burger King and Domino's Pizza also using zero-hours contracts: British Retail Consortium calls on employers to act responsibly amid revelations about fast food chain workers". The Guardian. Retrieved 8 August 2013. 
  34. ↑ "Domino’s Pizza is 20!". Domino's Pizza UK & IRL. Retrieved 24 June 2008. 
  35. ↑ Thelwell, Emma (24 July 2007). "Simpsons loss cannot spoil Domino's winners". The Daily Telegraph (London). Retrieved 22 June 2008. 
  36. ↑ Charles, Gemma (1 April 2008). "The Marketing Profile: Robin Auld of Domino's Pizza". Brand Republic. Retrieved 13 July 2008. 
  37. ↑ Sweney, Mark (15 October 2008). "Domino's on its last slice of Simpsons". The Guardian (London). Retrieved 28 November 2009. 
  38. ↑ 38.0 38.1 Gallagher, Rosemary (7 June 2008). "Want a pizza the franchise action?". The Scotsman. Retrieved 22 June 2008. 
  39. ↑ "Domino's Pizza in £1m plus Red or Black? Ant & Dec deal". The Mirror. Retrieved 28 June 2011. 
  40. ↑ "Dominos sees online effect with orders". Thisismoney. Retrieved 29 September 2010. 
  41. ↑ "Domino's Pizza by TXT service is dangerously good". cnet.co.uk. 20 August 2007. Retrieved 25 May 2010. 
  42. ↑ "Dominos Facebook widget helps pizza fans earn a crust". Daily Mirror. 13 May 2010. Retrieved 25 May 2010. 
  43. ↑ Wearden, Graeme (5 January 2011). "iPhone app helps Domino's smash sales forecasts". London: Guardian.co.uk. Retrieved 5 January 2011. 
  44. ↑ "Domino’s Pizza tops £10m in mobile sales and launches Android app". www.internetretailing.net. Retrieved 1 June 2011. 
  45. ↑ "New Domino’s iPad app makes mobile pizza orders easier". www.quickbitemagazine.co.uk. 
  46. ↑ "Domino's Delivers App to Windows Phone 7". mobilemarketingmagazine. 

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