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Tue 12th Dec 2023 - Domino’s prepared to buy second brand to keep its ‘world class franchisees’ investing within the company
Domino’s prepared to buy second brand to keep its ‘world class franchisees’ investing within the company: Domino’s has said it is prepared to buy a second brand to keep its franchisees investing in the company. Chief executive Andrew Rennie, who was reviewing the outlook for the company after his first 100 days in the post, has told investors part of the company’s growth plan for its UK & Ireland estate could involve taking on a second brand as many of its franchisees have started investing in other brands, looking for growth that Domino’s is currently unable to provide. Referring to his franchisees as “world class and hungry for growth”, he argued that having another brand as part of the group might help keep these franchisees investing within the company. He added: “If I could somehow bring them back into the fold, into one group and get more synergies from being together as one, then I should consider it.” Rennie told investors that bringing franchisees that want to invest more widely back “in-house” with another brand would ensure that the money Domino’s invests in training is well spent and not working to the advantage of another business. But he emphasised that the group isn’t going to “rush out” and buy another brand for the sake of it and that there are significant “guardrails” in place of what that brand would need to look like. He said the company would look for a profitable brand that isn’t a start-up, but one that has “a significant growth runway”, and it would also look for a business with “brand and product synergies”. Rennie said: “I’m patient, I’m not in a hurry. We don’t need to do it and we’ve got plenty of growth. But if the right thing comes along, and I think it fits all those categories, we will seriously consider it.” Part of the plan will see an “experienced Domino’s operator” join as director of joint ventures/corporate estate in February 2024. Domino’s currently has 1,316 stores in the UK & Ireland, having added 60 in 2023 – almost double the number than in both 2021 and 2022. It has 31 corporate stores in London, representing circa 2% of its estate, plus joint ventures, associates and investments in over a further 135 stores. These include franchisee Full House, which has 62 stores where Domino’s itself holds a 49% share. It has a FY22 profit contribution of £3.1m and a book value at end of FY22 of £13.4m. Fellow franchisee Victa has 26 stores where Domino’s itself holds a 46% share. It has a FY22 profit contribution of £0.8m and a book value at end of FY22 of £7.5m. A further franchisee, West Country, has 14 stores where Domino’s itself holds a 50% share. It has a FY22 profit contribution of £0.1m and a book value at end of FY22 of £4.2m. Private investor Shorecal, meanwhile, has 33 stores where Domino’s itself holds a 15% share. It has a FY22 profit contribution of £1m fair value movement, and a book value at end of FY22 of £11.3m. Rennie also told investors Domino’s is looking to leverage its existing strong platform and is highly focused on driving store growth, with a new and increased store target to come in March 2024 – looking both at new territories and more stores in existing locations. It will have an increased focus on operations to drive higher customer service standards, and on improving earning and returns across the business. Rennie said the Domino’s system is now “aligned and primed for growth” with a “next generation of leaders coming through”. He said its franchisees have “deep experience, strong balance sheets and are hungry for more stores” and that delivery times continue to improve. Rennie said Domino’s already has a strong UK & Ireland footprint with “outstanding availability and accuracy” and that further efficiencies will be unlocked with a new ERP system, on track for the first half of 2024, and through automation. Levers to drive growth will include its recently announced loyalty scheme, drive-thru innovation with different daypart offers, trialling with Uber Eats and maximising opportunity with Just Eat. He sees “significant opportunity” to drive growth through increasing average order frequency and sees app customers, which continue to grow, as “more valuable and more frequent” than web-only customers. Domino’s features in the Propel UK Food and Beverage Franchisor Database, an exhaustive guide to the companies offering a food and beverage franchise in the UK available exclusively to Premium subscribers. The database is updated every two months and the latest version features 225 businesses. West Country features in the UK Food and Beverage Franchisee Database, which is the first time that profiles of the top food and beverage franchisees have been available in one place in the UK. It currently features 110 businesses, with more to be added when the latest edition is sent out later this month. 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 kai.kirkman@propelinfo.com to upgrade your subscription.


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