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Thu 5th May 2022 - Update: Domino’s, AB InBev and consumer spending
Domino’s Pizza Group reports ‘strong’ first quarter but sees impact of VAT rise, orders grow 5.5%: Domino’s Pizza Group has reported “strong” trading in the first quarter with like-for-like system sales, excluding the impact of the increase in VAT and excluding splits, growing 3.9%. Orders grew 5.5% in the quarter despite a strong comparative “reflecting the stimulus to our delivery business last year from lockdown restrictions”, the company said. Order count growth in the quarter was driven by the recovery of collections, which grew 45.4%. The company said it continues to expect FY22 underlying Ebitda and earnings per share to be in line with current market expectations. The group stated: “Trading in the first quarter was strong, aided by our first national price campaign for several years, made possible because of the resolution with our franchisees. Collections, which is our most efficient channel from a labour perspective, have continued their recovery and grew 45.4% in the quarter, and across the quarter were at 95% of 2019 levels. As expected, given the lockdown comparator, delivery orders were 4.5% lower than the prior year. Pleasingly active customer growth continued its momentum and increased 4.0% compared with the same period last year. For the first quarter of FY22 the VAT rate on hot takeaway food was 12.5% compared with 5% in the first quarter of FY21. If the sales price to the consumer were to have been unchanged then the VAT rate increase would effectively deliver a reduced system sales value compared with the same quarter last year, which flows through to like-for-like system sales performance. Consequently, as a result of the higher rate of VAT in the quarter, UK & Ireland system sales were £365.9m, down 1.5% on the first quarter of last year. Excluding the impact of the increase in the VAT rate, system sales increased 4.9% in the quarter. Like-for-like system sales, excluding splits, were down 2.4%, again reflecting the higher rate of VAT in the quarter. As at 4 May 2022 we have opened nine new stores this year, by seven different franchisees, and remain on track to open at least 45 new stores this year, which would represent a circa 4% increase in our stores versus our 2021 year-end store count of 1,227. In-line with our capital allocation framework, which is to use the free cash generated by the business to optimise shareholder returns, we have completed £24.2m of the £46m share buyback announced at the full year results in March.” Chief executive Dominic Paul said: “We have momentum in the business with growth in order count and customer numbers, and are continuing to work closely with our franchisees following our resolution late last year. Our first national price campaign in a number of years has been a great example of what we can achieve when we work together. Our ambition is to consolidate our position as the nation’s favourite pizza brand and believe the time is now right to see whether we can reach an even broader customer base. On this basis, we have also commenced a trial that will enable customers in a small number of locations across the UK and Ireland to order Domino’s via the Just Eat platform but delivered by Domino’s drivers, making the most of our unrivalled network of best-in-class delivery drivers. It’s no secret that inflation is a key challenge for everyone at the moment and the current consumer environment is challenging, but our scale and integrated supply chain, as demonstrated in the covid downturn, mean Domino’s is well-placed to navigate the current conditions. What’s more, at a time when family budgets are under pressure, Domino’s remains an affordable treat everyone can enjoy, and we’re redoubling our focus on offering our customers the best possible value this year. We remain focused on accelerating the sustainable growth of the system, and working together with our franchisees to deliver a better future through food people love.”

More than 2,000 people now taking advantage of Propel Premium benefits: More than 2,000 people are now taking advantage of the vast range of benefits offered to Propel Premium subscribers. Around 1,600 people have signed up in the last 12 months as Propel has added three information-packed databases that are published monthly to the list of benefits. The databases include The New Openings Database, which is produced in association with StarStock, and the latest release will show the details of 309 newly announced site openings and upcoming launches when it is published tomorrow (Friday, 6 May), at midday. The database shows the details of which company has opened a site, or its plans to open one in the future. It will have details on what type of site it is and its location, and a website link to the businesses so you can find out more about them. It is published on a monthly basis. The next edition of the database features expanding restaurant and bar concepts, niche cuisine, regional pub operators and growing hotel and leisure concepts. Premium subscribers will also receive a 13,610-word report on the new additions to the database. Premium subscribers also receive access to three other databases. The latest Propel Multi-Site Database, which is produced in association with Virgate, was sent to Premium subscribers last Friday (29 April). The database contained 31 new companies, bringing the total number of businesses listed up to 2,439. The 90 sites run by those 31 new additions means the entire database of sites has reached 65,197 sites. Premium subscribers also received a 2,607-word report on the new businesses added. The go-to database provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. There is also a synopsis of what the business does and significant news associated with it. Premium subscribers also receive the Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also have access to the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and updated every two months. The first edition features 100 companies, providing insight on the offer, locations, cost and other key details, and provides 27,000 words of content. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

AB InBev profits from higher beer prices: Stella Artois brewer Anheuser-Busch InBev (AB InBev) has seen its profits boosted by price increases in the US and Europe, which compensated for soaring expenses. First-quarter earnings before interest and other items rose 7.4% on an adjusted basis, the company said. Revenue increased 11.1% in the quarter of 2022 compared with the previous year. Total volumes grew by 2.8%, with own beer volumes up 2.2% and non-beer volumes up 6.0%.In Europe, which includes the UK, revenue grew by the “high-teens”, with mid-single digit growth in volumes. The company stated: “Top-line grew by mid-single digits compared with the first quarter of 2019 despite on-trade volumes not fully recovering to pre-pandemic levels. We continue to drive premiumisation across Europe, with our premium and super premium brands making up more than 50% of our revenue and delivering mid-teens revenue growth.” Of its UK and Ireland business, Brian Perkins, Budweiser Brewing Group president, said: “This quarter, consumers continued to choose our portfolio of leading premium and super premium beer. Looking ahead, we are fully invested in realising our ambitious future growth plans, as we continue to invest in our people, innovation pipeline, customer service and portfolio. We prioritise making a meaningful, positive impact in the world as we are committed to brewing the most loved drinks portfolio in a way that protects our planet and the people in it.”

Consumers shrug off inflation and keep spending: Consumer spending remained robust in March despite inflation at a 30-year high eroding the value of pay packets. The Times reports net consumer credit rose by £1.3bn, above the £1bn average of the previous six months but below the £1.6bn recorded in February, according to the latest data published by the Bank of England. The rise in spending was driven by an £800m rise in borrowing on credit cards. Inflation reached 7% in March, and could hit double digits later this year, the Bank warned. The figures are the first to capture the period after Russia’s invasion of Ukraine at the end of February. The economy had begun to recover after the lifting of covid restrictions in late January before the war pushed prices up even further and created uncertainty for consumers and businesses. The data shows that households were still willing to spend, according to Paul Dales, chief UK economist at Capital Economics, the consultancy. “Part of the strength may be because some households are having to borrow as higher inflation means their incomes aren’t stretching as far,” he said. “But most of it probably reflects a continued willingness to spend.” Households continued to add to their savings, with bank deposits rising by £6bn in March, in line with the average over the past six months. The savings figure is higher than the average of £4.9bn saved per month before the pandemic, which means that the value of “excess” savings accumulated during the pandemic rose to £186.4bn, up from £185.3bn in February.

Britons buy less meat as prices rocket: Shoppers are cutting back on alcohol, meat, fish and poultry as household budgets come under pressure from the crisis in the cost of living. The Times reports Britons spent 7.8% less on chicken, beef, pork and fish in the past four weeks than they did a year ago and, in further signs that people are choosing to buy less expensive products, the volume of meat, fish and poultry fell by 13% last month, according to figures by Nielsen. Households face a squeeze from a big increase in the cost of filling up a car and from rising energy and electricity bills. Consumer sentiment has worsened significantly amid warnings that inflation will keep rising and that energy bills will go up by another £800 this autumn as the price cap increases again. About four in ten households are finding it difficult to pay energy bills, while 44% said they had to spend more on their usual groceries, according to recent official figures.

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