Domino’s reports slow start to second quarter after orders fall in first three months, at advanced stage to sell London corporate estate to franchisees: Domino’s Pizza Group has reported a slow start to its second quarter “against tough comparatives last year” after seeing orders fall in the first quarter. The group said it is at an advanced stage to sell its 31-strong London corporate store estate to a select number of existing and new franchisees. The group also revealed it has completed a £11m investment in Domino’s Pizza Poland and now owns approximately 12.1% of Domino’s Pizza Poland’s issued share capital, representing “a unique opportunity to re-enter international markets in a disciplined, capital light manner”. The company has opened 14 new stores by 12 different franchisees in its current financial year versus 15 at this point in FY23. The group said it has a strong pipeline, with 38 sites in construction or planning approved and still expects to open in excess of 70 stores in FY24. The company stated: “The second quarter is another tough comparative period. Reflecting that, trading in April was slower given the very strong comparative in the prior year. We continue to drive initiatives to improve trading momentum. Our £4 lunch offer launched in April, rounding out our offering in the lunch space at a compelling price point. We have seen continued acceleration of Uber Eats trial following strong initial results, now live in 1,170 stores across the UK and Ireland. We expect to benefit from the men’s Euro football tournament. As a result, we remain confident that our focus on our strategic priorities will deliver order count and like-for-like sales growth in FY24 and are reiterating our FY24 Ebitda guidance. Alongside investment in the core business, which remains our top priority, we have continued to focus on reallocation of capital within the corporate estate and joint ventures to improve returns and assess additional growth opportunities. As a result, the disposal of our 31 corporate stores in London to a select number of new and existing franchisees is now at an advanced stage. We will provide an update in due course. Separately, we completed a £11m investment in Domino’s Pizza Poland on 18 April and as a result, Domino’s Pizza Group owns approximately 12.1% of Domino’s Pizza Poland’s issued share capital. This represented a unique opportunity to re-enter international markets in a disciplined, capital light manner, and in partnership with a high-performing business, operated by an experienced management team.” It comes as the business reported like-for-like sales were down 0.5% in the first quarter compared with last year, with total orders down 0.8% to 17.7 million. On a two-year basis, first quarter like-for-like sales are up 8.4%. Delivery orders were down 5.0% “in a softer delivery market and we are focused on returning these to growth in FY24”. Collection orders continued to grow in the first quarter and were up 4.7%. System sales were down 0.4% to £385.1m. It said digital progress continues with a 37% increase in app customers and orders placed on the Domino’s app – up 11.3 percentage points versus last year. The company stated: “We acquired full control of Shorecal on 10 April which will unlock a significant opportunity for us in Ireland and we are now in an even stronger position to accelerate our growth, open new stores, and provide great service and great tasting products to our customers. Together with our franchisees, the focus on customer service has maintained average delivery times at 25 minutes and there has been a good progress in reducing the number of orders delivered ‘late’. In the first quarter, we launched the Cadbury Crème Egg Cookie, which was our biggest dessert launch for nearly ten years. We are committed to offering our customers compelling value and a new £4 lunch offer launched on 8 April, providing an incremental opportunity to target different parts of the day. Early signs are encouraging and we look forward to continuing to develop this offer. In January we started a trial with Uber Eats which is now live in 1,170 stores across the UK and Ireland. The data-led trial allows customers to order Domino’s Pizza via the Uber Eats platform, but the pizzas are delivered by our own Domino’s delivery drivers, which is the same approach as in our relationship with Just Eat. We will update on a full roll-out in due course.” Chief executive Andrew Rennie said: “We remain resolutely focused on executing our strategy and have made strong progress in the first quarter, both across the core UK and Ireland business and with our strategic growth ambitions. Following a slow January in part as we tactically held back marketing spend, I am pleased that we saw positive like-for-like sales and orders across February and March in an uncertain market. Like the first quarter, the second quarter is another tough comparative period but we remain confident of delivering order count and like-for-like sales growth this year and are pleased to confirm our full year profit guidance. I’m excited by the momentum we have in the business.”