Domino’s Pizza Group has revealed it is facing a cost hit of about £3 million a year from recent Budget measures as it unveiled a new five-year agreement with franchisees.
The London-listed takeaway pizza chain said last month’s Budget move to increase employers’ national insurance contributions and further increase the national minimum wage had “significantly increased the cost of labour” for Domino’s and its franchise partners.
“Although we have identified specific mitigation plans, we now believe that the annual impact for Domino’s Pizza Group will be circa £3 million per annum from 2024-25 onwards,” the group said.
It came as the firm also unveiled a new five-year profit and sales target agreement with its franchisees, with the group targeting further store expansion and investments.
The group said the agreement got “unanimous support” from its franchisee partners and underpins its targets to grow to 1,600 stores delivering £2 billion of systems sales by 2028, and 2,000 stores delivering £2.5 billion of system sales by 2033.
It currently has more than 1,350 stores in the UK and Ireland.
Domino’s added that sales have continued to grow in the first nine weeks of its fourth quarter, with total orders up 5.3% and like-for-like sales up 2.7%, ahead of the 0.7% growth seen in the previous three months.
Andrew Rennie, chief executive of Domino’s, said: “Having a five-year framework in place provides a strong platform for the long-term, sustainable growth of the brand.”
“It also means we will be well-placed to address the headwinds all consumer-facing businesses will inevitably face in 2025 and will ensure we are in a strong position to thrive in the years that follow,” he added.
Mark Millar, chairman of the Domino’s Franchise Association, said: “Against a backdrop of significant and unexpected tax increases from the UK Budget, having a five-year framework in place provides some much-needed certainty for our members.”
Under the agreement, Domino’s said it will also invest around an extra £4 million to £5 million a year on areas including technology and cyber security, as well as boosting its supply chain capacity.
