Pizza-Loving Britons Get Online to Send Domino's Sales Soaringby
Full-year results to exceed company's previous expectations
More than 75% of pizzas delivered this year ordered online
As time-conscious Britons cook fewer meals and order more takeaways online, Domino’s Pizza Group Plc is reaping the benefit.
The food chain’s U.K. sales rose 21 percent to 200 million pounds ($306 million) in the 13 weeks ended Sept. 27, a performance that means full-year profit will be higher than it had envisaged, the Milton Keynes, England-based company said Wednesday. Its shares surged as much as 20 percent to a record.
Key to Domino’s growth has been an investment in online platforms that has allowed it to capitalize on the U.K.’s changing eating habits. More than 75 percent of the pizzas delivered by the company this year have been ordered online, and more than half of those were placed through its smartphone app.
“They have nailed their app, it’s market leading," Sahill Shan, an analyst with N+1 Singer, said by phone. “The more people that migrate to online ordering, the more they’ll spend."
Domino’s shares gained 14 percent to 1,016 pence at 9:52 a.m. in London, after rising as high as 1,064 pence. That extended the stock’s advance this year to 44 percent and boosted its market value to about 1.7 billion pounds.
Takeaway meals are becoming more popular among Britons, who have more money in their pockets, yet less time to spend it. Just Eat Plc, the U.K.’s biggest online food-delivery company, reported a 52 percent rise in orders in the first half of 2015, while research conducted by Nationwide Bank found Britons on average buy three takeout meals a month. By contrast, supermarket sales grew just 0.9 percent in the 12 weeks to Sept. 13, according to data from researcher Kantar Worldpanel.
Domino’s said U.K. comparable sales rose 15 percent in the latest 13-week period, also boosted by cool, wet summer weather. The company gets about 90 percent of revenue from its home market, and has smaller operations in Ireland, Switzerland and Germany.
“The business is clearly in rude health," Nick Batram, an analyst with Peel Hunt, said in a note. “We expected a good third quarter, but this was even better than we had hoped." Batram raised his recommendation on the shares to add from hold.