Domino’s is axing jobs as part of a cost-cutting exercise to rebuild franchisee and group profitability.
The cost-cutting initiatives also include exiting the Danish market, closing underperforming stores and accelerating the refranchising of other outlets, and streamlining operations.
Domino’s Pizza Enterprises expects these initiatives to deliver network savings of $50-60 million in FY24 (rising to $80-94 million in FY25).
About one third of these savings will be ploughed back into the franchisee network.
Group CEO and managing director Don Meij said a staffing restructure includes simplified reporting lines, centres of expertise and centralised shared service centres.
Restructuring includes job losses
“Wherever a global function sits within a market, the majority of our leaders will now ‘double hat’ so there is one decision maker, and my role is no exception. Effective immediately I will be acting as both the group and ANZ CEO for Domino’s.”
Meij said Domino’s will cut jobs in international and Australian support offices. The Brisbane Times reported there would be 200 job losses globally.
“These decisions, while challenging, will ensure we have a stronger foundation for future growth, both for our company and our franchisee partners,” Meij said.
Domino’s released its FY23 financials revealing that group revenue increased 3.4 per cent to $2.37 billion. However underlying EBIT dropped by 23.3 per cent to $201.7 million.
Total food sales grew by 2.2 per cent because of higher menu prices and delivery fees introduced as counter-inflationary measures. Customers responded by ordering fewer meals.
“Because of the speed at which we needed to respond to inflation we didn’t always get the ‘value equation’ right,” Meij admitted.
Domino’s backs the value equation
“We have heard this feedback loud and clear and have now removed the majority of these fees. That said, some pricing decisions were accepted by customers, such as slightly increasing the price of our value range.
“We are still actively working to ‘rebalance’ the value equation – this means getting the right products, service and image for our customers, not simply reversing price increases – we believe we can deliver both great value for customers, and great profitability for our franchisee partners.”
Domino’s started FY24 with sales up 6.6 per cent in Europe and Australia/New Zealand. Across Asia, sales are down 7.8 per cent due in part to customers reducing the frequency of their purchases.
“We believe our pricing for customers now appropriately balances the costs for our stores, while ensuring we deliver customers ultimate value. The key for our improved performance in FY24 is increasing the number of customers we serve each week,” Meij said.
“I want to be clear to our customers facing cost of living pressures, we do not expect to pass on pricing increases this year,” he said.
