Domino’s CEO says inflation-fighting strategy backfired

afr.com:

Domino’s chief executive Don Meij has promised that menu item prices won’t be lifted this year as the pizza chain tries to reposition as the best value operator in fast food amid intense cost-of-living pressures for households.

“This year, we don’t anticipate to be putting on menu price increases,” he said. While wage costs are increasing, they are being negated by a slowdown in inflation in food ingredient prices for cheese, wheat, flour and meat.

Domino’s Pizza CEO Don Meij said about 20 per cent in support staff roles has been cut. 

Mr Meij said Domino’s had gone too far last year to claw back sharp inflationary increases of 10 per cent to 11 per cent in food ingredients and energy costs through price rises and delivery service fee charges.

This caused a dramatic 74 per cent slide in net profit after tax to $40.6 million for the 12 months ended June 30, as some customers baulked at the increases and simply stopped ordering pizzas.

“We lost share to burgers,” Mr Meij said.

Domino’s suffered a 23 per cent slide in earnings before interest and tax to $202 million. The final dividend was slashed to 42.6¢ a share, from 68.1¢ a year ago.

The company is also cutting jobs in support staff positions, with about 200 to be axed around the world. Mr Meij said there was an overall reduction of about 20 per cent in support staff roles, including in Australia.

Mr Meij said the repositioning of Domino’s into a better value proposition was already paying off, and the company was wrestling market share back from burger chains.

Domino’s has started the new financial year with solid momentum in the first seven weeks. Same-store sales are up 6.6 per cent in Australasia and Europe, although same-store sales are off by 7.8 per cent in the