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Morning Briefing for pub, restaurant and food wervice operators

Tue 7th May 2019 - Update: Domino's Pizza and Budweiser Brewing Group
Domino’s Pizza reports UK like-for-likes up 3.1% in First Quarter, weak international performance: Domino’s Pizza has reported group system sales were up 4.5% in the 13 weeks to 31 March 2019. The UK market saw like-for-like sales up 3.1% – online sales were up 8.5%. A total of 11 stores have been opened year to date, of which seven were in the UK, taking the group total to 1271. The company’s Warrington supply chain centre now serving 449 stores. Within its international division there was a weak system sales performance and the Quarter One operating result was below last year. Of international performance, the company stated: “We no longer expect a break-even out-turn this year.” Chief executive David Wild said: “With continued like-for-like growth, the year has started well across our core UK and Republic of Ireland markets, which account for 90% of our business. Our digital expertise remains a key driver of customer engagement, with online accounting for a record 81.7% of total sales in the UK. We remain in open and ongoing dialogue with our UK franchisees, actively exploring win-win solutions for stimulating growth and new store openings. Internationally, performance remains disappointing and trading visibility is limited. As we outlined at the full year results, we have new management in Norway, Sweden and Switzerland, and a heightened focus on store level performance. However, given persistently weak system sales in all our International markets we no longer expect this part of our business to break-even this year. We are therefore further tightening our focus on International costs and capital deployment. We will provide a further update at our first half results.” Of the UK and Republic of Ireland, the company stated: “UK and ROI system sales were up 4.8% in the quarter. In the UK, system sales were up 4.7%, with like-for-like growth, excluding stores in split territories, of 3.1%, maintaining a consistent pace of two-year like-for-like growth with recent quarters. Like-for-like order volumes were down 2.7%, items per order were up 0.7% and price was up 5.1%. Online sales growth continued to be very strong at 8.5%, with online accounting for 90.5% of delivery sales and a record 81.7% of total sales. Four new stores opened in the UK during Q1, along with one planned store closure, taking the total to 1,106. This compares to nine store openings in Q1 2018. Since the end of Q1, we have opened a further three stores. A healthy pipeline of new stores remains, however openings continue to be impacted by ongoing franchisee discussions. We continue to engage actively with franchisees to support volume-driven growth and new store openings. Product innovation remained strong during the period. Our new range of Delight pizzas, containing fewer than 650 calories, has been well received and we have now sold more than 1.6 million Cheeseburger pizzas, one of our most popular pizzas ever. Republic of Ireland system sales were up 7.4% in local currency, and 6.8% like-for-like. Online sales were up 18.5%.” Of its international market, the company added: “International system sales were up 1.1% in local currency, similar to the Q4 2018 rate of 1.5%. This performance is disappointing, and trading visibility remains limited. We have tightened our capital deployment and the immediate focus of the new management team is on improving performance across the existing estate, against a challenging market backdrop. In Switzerland, local currency system sales were down 1.1%, with like-for-like sales down 8.4%, against a strong prior period and trading challenges for stores in the Geneva area. In Iceland, local currency system sales growth was 3.0%, an improvement on the previous quarter as we benefited from the two stores opened in Q4 2018. Like-for-like sales were down 4.6%, impacted by a weak market overall. In Norway, we have a total of 55 stores (Q1 FY18: 56 stores). This is made up of 12 Dolly Dimple’s stores (Q1 FY18: 23 stores) and 43 Domino’s stores (Q1 FY18: 33 stores). Local currency system sales growth in Domino’s-branded stores was up 12.9%, driven by the ten store openings and conversions year on year. Total system sales in Norway were down 1.0% in local currency, below our expectations. We are developing a comprehensive turnaround plan for our business in Norway, which will be implemented in Q3, with the financial benefit delivered from Q4. In Sweden, sales growth from our nine stores was 15.6% in local currency, driven by three new stores opened year on year. The trading performance of our German associate was solid, with the Hallo Pizza conversions nearing completion.”

Budweiser Brewing Group UK&I reports strong First Quarter: Budweiser Brewing Group UK&I has reported a ‘strong’ First Quarter. Paula Lindenberg, president, Budweiser Brewing Group UK&I, said: “Our UK business has had a strong start to the year, as we continue to deliver volume growth and market share gains, with both Budweiser and Bud Light growing double digits. We have unveiled our new name Budweiser Brewing Group UK&I, moved to our new London offices and announced renewed ambitions, which include creating a nation of smart drinkers and championing Britain’s iconic beer culture. We are seeing no-alcohol and low-alcohol beer growing at nearly twice the rate of higher-strength beer in the UK, indicating that our efforts to foster smart drinking are paying off. Our latest addition to our no-and-low alcohol beers, Michelob ULTRA, has had a great start to the year as we undertook nationwide sampling and partnered with Virgin Sport, capturing the growing wellness trend and creating a wholly new category for beer. Following a successful off-trade launch, we are now introducing the brand in 73 calorie, 330ml bottles in the on-trade, so more Britons can balance working out with going out. At the beginning of this year we announced Raising the Bar, our new scheme that shares our draught equipment under the bar with small brewers for free in pubs where we are lead brewer, underlining our commitment to the on-trade. We’re pleased that larger brewers are now on board with the initiative, so pub-goers get a great range of beers and ciders, as well as the highest quality pint, while smaller brewers and publicans get a simpler, fairer system. Looking ahead, we are preparing for an epic summer of sport. Budweiser is getting behind the England Women’s football team in their FIFA Women’s World Cup 2019 bid, while Bud Light continues to be the Official Beer of the Senior England Men’s Football team. Stella Artois is also bringing the perfect serve to this year’s Wimbledon, as well as continuing its partnerships with Ascot and The Open. The summer is a huge time for beer sales and we will be focused on growing the category, supporting our customers and delighting consumers with some of the nation’s most loved beer and cider brands.”

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