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Thu 4th May 2023 - Update: Domino's Pizza trading, SSP acquires North American concessions business
Domino’s reports new store pipeline circa 75% larger than last year, current trading ‘encouraging’ following record first quarter sales and orders: Domino’s Pizza Group has reported an encouraging start to its second quarter with like-for-like system sales (excluding the change in the VAT rate) up 10.9% and orders up 5.9% in the first four weeks “in a challenging consumer and inflationary environment”. It has seen an acceleration in new store openings with 15 year to date, versus nine in the same period last year. The new store pipeline is now circa 75% larger than the comparable pipeline in FY22 and more than 30 different franchisees have stores in development. It comes as the business reported record first quarter orders and app customers “driving growth in sales and continued market share gains”. Orders were up 2.8% year on year to 18.0 million. Collection orders were up 23.0%, with delivery orders “continuing to improve on the previous three quarters”, down 4.9% Like-for-like system sales (excluding the change in the VAT rate) were up 10.7% in the period. System sales increased 5.6% to £386.6m. It said excellent digital progress continues with 6.8 million active app customers, a 27% increase on the same period last year. App orders as a percentage of online orders was 64.3% versus 48.5% in the previous year. The group said it made continued gains in the UK takeaway market with share at 7.8% in the quarter, up from 6.4% the previous year “despite the challenging market”. It said there has been a material improvement in average delivery time “as a result of our franchise partners’ focus on service”. The group said as a result of strong momentum, continued successful execution of the strategy and confidence in the business, a new £20m share buyback programme will begin immediately. The business said it has continued confidence in meeting the guidance provided at the FY22 results in March. The company stated: “Alignment with our franchise partners has enabled us to offer customers compelling value such as the ‘Price Slice’ deal with £8, £10, £12 deals for small, medium and large pizzas. This was a strong contributor to our performance in the quarter. Our franchise partners have worked tirelessly to deliver improved service to our customers, and this has resulted in average delivery times improving by two minutes compared with the same quarter last year. The first quarter of 2023 was our first full quarter of enjoying the benefit of being fully rolled out on the Just Eat platform. We are now focused on continuing to drive incremental orders and, in FY23, look forward to a full year benefit of being on the platform. We have rebuilt our new store opening pipeline with our franchise partners and have opened 15 new stores in FY23 with nine different franchise partners, compared with nine new stores in the same period in FY22. We currently have six stores under construction and more than 35 with approved planning permission. Our pipeline is circa 75% larger than the comparable pipeline in FY22, more than 30 different franchisees have stores in development and we continue to expect new store openings in FY23 to increase the total store estate by mid-single digits percentage points. This year we have made good progress with our technology projects to deliver a new ecommerce platform and ERP system. The projects are on track and the one-time investment in these projects will be largely complete by the end of FY23. Operating expenditure in 2023 is elevated by circa £9m of one-time spend related to these projects which will not repeat in 2024. Capital expenditure in 2023 is similarly elevated by circa £5m of one-time spend which also not repeat in 2024. Completion of the disposal of our German associate will occur in June 2023 and at that point the proceeds generated will be flowed through our capital allocation framework.” Interim chief executive Elias Diaz Sese said: “We have delivered record first quarter sales and orders thanks to the immense hard work of our franchise partners and colleagues in executing our strategy and our relentless focus on giving customers the best possible quality, value and service. While this year has started well for Domino’s, there continues to be uncertainty in the economic environment with household budgets likely to remain under increasing pressure. However, we continue to be excited about the many opportunities we see for Domino’s in 2023 and beyond as we continue to work towards our purpose of delivering a better future through food people love. We are well placed to succeed as we accelerate the execution of our strategy. We are focused on improving our franchise partners’ profitability and we have made good progress in investing in the business and driving operational efficiencies. Our digital strategy continues at pace, and we continue to offer our customers strong national value campaigns, which are particularly important as they continue to feel pressures on their household budgets. We are continuing to grow our collection business and are aligned with our franchise partners who are making great progress with their focus on service. Combined with the benefit of new store openings, the Just Eat platform roll-out and further product innovation, we remain confident that our resilient, asset-light business model will deliver market share gains, further financial and strategic progress, and increased returns for our shareholders.”

One day to go before the next edition of The New Openings Database release, to show details on 90 new sites, 4,000-word report included: The next edition of The New Openings Database will show the details of 90 newly announced site openings and upcoming launches for Premium subscribers when it is published tomorrow (Friday, 5 May), at midday, including 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 there will also be a website link to the businesses. The database is published on a monthly basis, and the next edition features growing restaurant and bar groups, niche cuisine, and expanding experiential concepts. Premium subscribers will also receive a 4,000-word report on the new additions to the database. Premium subscribers also receive access to four other databases: the Propel Multi-Site Database, produced in association with Virgate; the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; and the Who’s Who of UK Food and Beverage.Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email to upgrade your subscription. Premium subscribers are also to be given exclusive access to the recording and slides to Propel Multi-Club Conferences. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

SSP expands presence in North America with acquisition of the Midfield concessions business: UK-based transport hub foodservice specialist SSP Group is further expanding its presence across North America by adding 40 new units at seven airports, including four new locations, through the acquisition of the concessions business of Midfield Concession Enterprise (MCE). SSP stated: “The acquisition is an important step in SSP’s strategy to accelerate its growth in North America and will give SSP a presence in more than 30 of the 80 largest airports in the USA, including for the first time at Detroit Metropolitan Wayne County, Denver International, Philadelphia International and Cleveland Hopkins International. The deal will also expand SSP’s existing presence at Minneapolis St Paul International, San Francisco International and Newark Liberty International. The acquisition is expected to complete in late summer, subject to all necessary approvals, and will further the North American team’s strategy of developing a diverse portfolio of outlets at large, medium, and small airports. In total, it is expected to contribute an additional circa $100m to revenues in our North America business, on an annualised basis. Founded in 2002, MCE is an award-winning and minority-owned concessions company, operating a portfolio of brands consistent with SSP’s focus in North America on bringing local restaurants to the airport, which reflect the culinary landscape of the region. In addition, the business we are acquiring includes a collection of boutique brands developed by MCE, which address a specific set of passenger needs, as well as featuring national and international brands with widespread recognition.” Patrick Coveney, group chief executive of SSP Group, said, “We are delighted to be expanding our presence in North America with entry into four new airports and expansion in a further three through this acquisition. The Midfield business is a strong strategic fit for SSP and is highly complementary to our existing business given the makeup of the brand portfolio and its focus on enhancing the passenger experience. We look forward to welcoming the team and their clients to SSP.” MCE chief executive Andrea Hachem added: “Since our founding at Detroit Metropolitan Wayne County International Airport in 2002, we have remained focused on steady growth, a ‘wow’ customer service programme, and a commitment to operational excellence. Our success would not have been possible without the dedication of our employees who shared our belief that if we welcomed passengers into our restaurants like we were welcoming them into our home, we would succeed. The SSP America team has been a great partner throughout this process, and we’re pleased the two companies understand how important it is to bring a regional flavour to the airport in order to achieve a world-class passenger experience.”

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