Domino’s franchise profits take a big jump

Australian owned and operated Domino’s Pizza franchise today unveiled a $13 million net profit after tax for 2005-06, up 104.4% on the previous corresponding period.

The profit increase was the result of better-than-expected Same Store Sales growth, strong performances from key markets, and the benefits of new technology and innovation.

The net profit for the 12 months ending 2 July 2006 was generated from total network sales of $359.4 million, an increase of 17.4% on the previous year. Same Store Sales for the year grew 4.3% on 2004-05.

During the year, the fast food franchise added 51 stores to its network, ending the period with 438 stores across Australia and New Zealand. This figure was 20 stores more than the original IPO forecast.

On 3 July 2006, the pizza franchise became the master franchisor for Domino’s Pizza Belgium, France, the Netherlands and the Principality of Monaco. These markets currently have 155 stores and will make their first profit contribution in 2007-08.

Domino’s Pizza Chairman Ross Adler said the fast food franchise would pay shareholders a final fully-franked dividend of 6.8 cents per share. This represents an increase of 28.2% over the total dividend for 2006 forecast in the prospectus.

The dividend will be paid on 29 September 2006 with a record date of 11 September 2006. A Dividend Reinvestment Plan has been activated.

Mr Adler said the store roll-out now continued across five countries, with the Domino’s franchise due to open its 600th store in the coming months.

“With the addition of the European markets, the Company now has a store expansion target of more than 1,600 stores world-wide,” he said.

During 2006-07 in Australia and New Zealand, the pizza franchise expects Same Store Sales to increase by 2.6%, with 40 new stores added to the network.

The recently-purchased European markets will make their first profit contribution in 2007-08. European market Same Store Sales are expected to climb 12% over the next 12 months as the proven business model used in Australia and New Zealand is adopted. An additional 20 new stores will also be added to the European network.

Fast food franchise CEO Don Meij said the Company had proven its ability to drive sales over the past 12 months, and had developed a program of new initiatives to ensure continued growth in the year ahead.

“Most importantly, we are launching a new image for our Domino’s Pizza stores. This image, called Vision 2020, will give our new and refurbished stores a more colourful, fresh and eye-catching look from the end of 2006. It will then be rolled-out across all stores over the next seven years,” he said.

“Following on from the recent success of new menu items, our research and development kitchen continues to work on exciting new products to extend our menu and entice additional customers. This is being complemented by customers increasingly using our mobile phone and internet ordering systems.

“As at 2 July 2006, mobile phone orders accounted for 21% of all store calls – up 5% over the past six months alone. At year end, internet ordering was also live in half of our stores and Phase Two of our internet ordering system has since been launched, including the Anticipation Clock which allows customers to track their order through the making, cooking and delivery stages.

“We have also established Domino’s Service and Supply to in-source the purchase and maintenance of equipment for all our Australian stores. This is expected to be a future profit centre for the business.”

The pizza franchise is Australia’s only publicly-listed pizza company and is the master franchisor for the Domino’s Pizza brand in Australia, New Zealand, France, Belgium and the Netherlands. Across these markets, the Company and its franchisees operate 595 stores. In Australia, the 440 stores employ more than 11,000 staff and make more than 50 million pizzas each year.