Domino’s reports new store pipeline circa 75% larger than last year, current trading ‘encouraging’ following record first quarter sales and orders: Domino’s Pizza Group has reported an encouraging start to its second quarter with like-for-like system sales (excluding the change in the VAT rate) up 10.9% and orders up 5.9% in the first four weeks “in a challenging consumer and inflationary environment”. It has seen an acceleration in new store openings with 15 year to date, versus nine in the same period last year. The new store pipeline is now circa 75% larger than the comparable pipeline in FY22 and more than 30 different franchisees have stores in development. It comes as the business reported record first quarter orders and app customers “driving growth in sales and continued market share gains”. Orders were up 2.8% year on year to 18.0 million. Collection orders were up 23.0%, with delivery orders “continuing to improve on the previous three quarters”, down 4.9% Like-for-like system sales (excluding the change in the VAT rate) were up 10.7% in the period. System sales increased 5.6% to £386.6m. It said excellent digital progress continues with 6.8 million active app customers, a 27% increase on the same period last year. App orders as a percentage of online orders was 64.3% versus 48.5% in the previous year. The group said it made continued gains in the UK takeaway market with share at 7.8% in the quarter, up from 6.4% the previous year “despite the challenging market”. It said there has been a material improvement in average delivery time “as a result of our franchise partners’ focus on service”. The group said as a result of strong momentum, continued successful execution of the strategy and confidence in the business, a new £20m share buyback programme will begin immediately. The business said it has continued confidence in meeting the guidance provided at the FY22 results in March. The company stated: “Alignment with our franchise partners has enabled us to offer customers compelling value such as the ‘Price Slice’ deal with £8, £10, £12 deals for small, medium and large pizzas. This was a strong contributor to our performance in the quarter. Our franchise partners have worked tirelessly to deliver improved service to our customers, and this has resulted in average delivery times improving by two minutes compared with the same quarter last year. The first quarter of 2023 was our first full quarter of enjoying the benefit of being fully rolled out on the Just Eat platform. We are now focused on continuing to drive incremental orders and, in FY23, look forward to a full year benefit of being on the platform. We have rebuilt our new store opening pipeline with our franchise partners and have opened 15 new stores in FY23 with nine different franchise partners, compared with nine new stores in the same period in FY22. We currently have six stores under construction and more than 35 with approved planning permission. Our pipeline is circa 75% larger than the comparable pipeline in FY22, more than 30 different franchisees have stores in development and we continue to expect new store openings in FY23 to increase the total store estate by mid-single digits percentage points. This year we have made good progress with our technology projects to deliver a new ecommerce platform and ERP system. The projects are on track and the one-time investment in these projects will be largely complete by the end of FY23. Operating expenditure in 2023 is elevated by circa £9m of one-time spend related to these projects which will not repeat in 2024. Capital expenditure in 2023 is similarly elevated by circa £5m of one-time spend which also not repeat in 2024. Completion of the disposal of our German associate will occur in June 2023 and at that point the proceeds generated will be flowed through our capital allocation framework.” Interim chief executive Elias Diaz Sese said: “We have delivered record first quarter sales and orders thanks to the immense hard work of our franchise partners and colleagues in executing our strategy and our relentless focus on giving customers the best possible quality, value and service. While this year has started well for Domino’s, there continues to be uncertainty in the economic environment with household budgets likely to remain under increasing pressure. However, we continue to be excited about the many opportunities we see for Domino’s in 2023 and beyond as we continue to work towards our purpose of delivering a better future through food people love. We are well placed to succeed as we accelerate the execution of our strategy. We are focused on improving our franchise partners’ profitability and we have made good progress in investing in the business and driving operational efficiencies. Our digital strategy continues at pace, and we continue to offer our customers strong national value campaigns, which are particularly important as they continue to feel pressures on their household budgets. We are continuing to grow our collection business and are aligned with our franchise partners who are making great progress with their focus on service. Combined with the benefit of new store openings, the Just Eat platform roll-out and further product innovation, we remain confident that our resilient, asset-light business model will deliver market share gains, further financial and strategic progress, and increased returns for our shareholders.”