Domino's wage increases to eat into revenue

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Inside Franchise Business: Wage increases a challenge for Domino's?Pizza franchise giant Domino's is denying an increase in staff wages will lead to more loss-making stores.

CEO Don Meij rejects union claims that Domino’s has been saving $35 million to $50 million a year on wages by sticking to an expired 2009 enterprise agreement.

Last week the Fair Work Commission ordered the old agreement be terminated by January 24 next year and for workers to be paid award penalty rates and casual loadings.

Meij maintains that the increased wages of delivery drivers and store staff across the group’s network in Australia will account for two per cent or less of sales, however the company has not given a dollar figure.

“The franchisees will be fine,” Meij told AAP ahead of the group’s AGM on Wednesday.

“The penalty rates on the weekend and late nights are the only variables that have been changing and they haven’t changed a lot.”

At the AGM Meij unveiled ongoing strong sales growth for the first 17 weeks of 2017/18.

Australian and New Zealand stores had 4.45 per cent same-store sales growth, Europe 8.48 per cent and Japan, which usually has flat or lower sales, rose 0.12 per cent.

The group maintained full year guidance for Australia and NZ of seven to nine per cent sales growth, and zero to two per cent for Japan.

However, it upgraded Europe sales growth forecasts from five to seven per cent to six to eight per cent after teething problems in France were fixed.

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