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Irish Independent
06-08-2025
- Business
- Irish Independent
Domino's pizza pays out £1m in historical tax case
The figure is included in London Stock Exchange-listed Domino's Pizza Group's financial statement for the period. The group bought the 85pc stake it didn't already own in Shorecal, the biggest Domino's franchise operator in Ireland, last year in a £54.8m deal. The tax bill follows a high-profile 2023 Supreme Court judgment which classed Domino's Pizza delivery drivers working at an Irish franchise as employees. The case, which related to 2010 and 2011, centred on whether the drivers were employees for tax purposes. Karshan (Midlands) Ltd, trading as Domino's Pizza, had argued that they were independent contractors under 'contracts for service'. That resulted in an appeal by the Revenue Commissioners over a €215,718 tax bill they said Karshan owed for drivers working in 2010 and 2011. The Supreme Court ruled in favour of Revenue and held that, for tax purposes, the drivers were employees of a franchise rather than independent contractors, a decision with ramifications right across the sector. The UK-listed group's first-half accounts note a £1m outflow relating to the historical driver case exposure to the tax authorities in Ireland. Yesterday, Domino's Pizza Group cut its profit outlook, citing uncertainty from the UK government's autumn budget as a factor. It now sees 2025 underlying earnings for the year coming in between £130m and £140m. 'The uncertainty of the autumn statement and all the messaging around how tough that could be again has really slowed up consumers,' chief executive officer Andrew Rennie said in an interview. 'I think that's the only thing that's really changed.' Shares fell as much as 20pc in London, the most since 2007. The master franchise operator for Domino's Pizza outlets in the UK and Ireland cut expectations for 2025 new store openings by about half. It now sees new openings in the mid-20s, compared with its previous estimate of more than 50. Ireland remains a bright spot however, with management citing it as a 'significant revenue growth opportunity' thanks to an underpenetrated market, compared with England, Scotland and Wales. In Britain, weaker consumer sentiment, increased employment costs and uncertainty ahead of the UK budget means franchisees are taking a more cautious approach to store openings, Domino's said. 'Our franchisees want a pause,' Mr Rennie said, noting that the majority want to wait for the budget so they can better plan. The proposed new stores for this year are 'just moving slower into next year', he added. This comes as UK consumer confidence slipped in July as mounting job losses and a barrage of rising domestic bills rattle consumers. Household savings are also on the rise as speculation grows that chancellor Rachel Reeves may have to return with more tax rises in the autumn to plug a hole in her budget plans that could be as large as £30bn. 'Customers are being really careful with their pounds. I think some of them are saving more money just in preparation for what might happen,' Mr Rennie said. The company reported flat orders in the first half, and said the positive performance across the first four months of the year didn't continue into May and June.
Times
06-08-2025
- Business
- Times
Domino's Pizza shares fall after profit guidance cut
Domino's Pizza has cut its annual profit guidance, warning of weak consumer confidence and higher employment costs. Shares in the pizza delivery group dropped more than 15 per cent on Tuesday after it said it expected underlying earnings before interest, taxation, depreciation and amortisation (ebitda) of between £130 million and £140 million, down from a previous range of £140.8 million and £149.7 million. The shares fell 41p, or 16.7 per cent, to 205p in afternoon trading. Andrew Rennie, chief executive, said there was 'no getting away from the fact' that the market had become tougher. That had meant that a strong performance across the first four months did not continue into May and June. The government has refused to rule out another round of tax increases in the autumn budget despite warnings of job cuts and higher shop prices. Businesses have faced higher labour costs since employers' national insurance contributions increased in April alongside a rise in the national living wage. Retailers are also concerned about the knock-on impact of Labour's workers' rights bill on the sector. Papa John's, the Kentucky-based fast-food chain, announced the closure of 74 of its UK pizza takeaway stores on Tuesday as its UK business revealed pre-tax losses of £21.8 million. Rennie said a tough backdrop and uncertainty over tax hikes in autumn had led consumers to 'sit back on their heels', adding: 'I'm definitely concerned about more tax hikes, particularly for our franchisees.' Domino's operates a franchise structure in Britain with its UK-listed entity, Domino's Pizza Group, acting as the master franchiser. The company said average profitability at its UK stores fell 5 per cent to £77,000 over the half-year after a significant increase in labour costs, with franchisees also taking a 'more cautious approach' to opening new outlets. 'We're a small business with lots of entrepreneurs so the cost hits them much more than it does us,' Rennie said. 'We're talking tens of millions.' However, he insisted the pizza chain was well-positioned to 'weather the storm' and would not 'cut corners on services or products' in response. 'When you've been around 40 years, you want to be around another 40,' he said. 'You don't make short-term decisions that are going to hurt the business … It's a moment in time, it's going to pass.' Founded by the philanthropist Tom Monaghan in 1960, Domino's opened its first UK store in Luton in 1985. Rennie opened his own Domino's store in Darwin, Australia, at the age of 26. These days, the company delivers more than 106 million pizzas to its UK customer base each year and is listed on London's FTSE 250 exchange. Domino's reported a 14.8 per cent decline in underlying pre-tax profit for the 26 weeks ended 29 June, down to £43.7 million. On a statutory basis, profit dropped by nearly a third to £40.5 million. Group revenue increased overall by 1.4 per cent to £331.5 million, alongside a 1.3 per cent rise in wider system sales to £777.8 million as Domino's benefited from 'exceptional demand' for its Ultimate Hot Honey Pepperoni Pizza and partnerships with the delivery services Just Eat and Uber Eats. So far this year the company has opened 11 new stores with nine franchise partners.
The Independent
05-08-2025
- Business
- The Independent
Domino's profits fall as people order fewer takeaways
Domino 's Pizza Group has warned it will miss its annual profit targets after opening fewer new stores than anticipated, citing cautious franchisees and a downturn in consumer confidence. The pizza delivery business saw its shares plunge in early trading following the announcement. The fast-food giant attributed the slowdown in expansion to its franchisees adopting a "cautious" approach, primarily driven by increased labour costs stemming from the government 's recent budget. This, coupled with what the company described as "weaker" sentiment among its customer base, has led to the revised profit outlook. Domino 's joins a growing list of high street hospitality businesses, including Greggs, that have recently flagged "tougher" market conditions and mounting pressure on customer demand. The pizza chain, which operates 1,381 outlets across the UK and Ireland, confirmed on Tuesday that its sales growth has been directly impacted by "weak" consumer confidence over recent months. Andrew Rennie, chief executive of Domino's, said: 'There's no getting away from the fact that the market has become tougher both for us and our franchisees, and that's meant that the positive performance across the first four months didn't continue into May and June. 'Given weaker consumer confidence, increased employment costs and uncertainty ahead of the autumn statement, franchisees are taking a more cautious approach to store openings for the time being.' It said this has caused a 'short-term slowdown' in new stores but stressed that it expects this to pick up again next year. Domino's has opened 11 new stores so far this year and expects overall openings in the 'mid-20s' this financial year. The company had previously said it expected to open 'in excess of 50 new stores' this year. It came as the group also warned that profits would miss previous guidance due to weaker trading. Domino's told shareholders that it expects to deliver earnings between £130 million and £140 million for the year. It had previously said it was due to meet market expectations of between £140.8 million and £149.7 million. It came as the business revealed that system sales grew 1.3 per cent to £777.8 million for the 26 weeks to June 29. Like-for-like sales were 0.1 per cent lower for the half-year, as a positive first quarter was offset by a 0.7 per cent decline in the second quarter, when delivery orders 'weakened'. The group added that 'softer' trading improved towards the end of July. Mr Rennie stressed that 'weakness' in consumer sentiment has weighed on the whole sector, highlighting that the firm has continued to grow market share despite recent pressure. He also highlighted that franchisees are keen for certainty over the Government's next budget as they assess investment plans for the year ahead. He told the PA news agency: 'Our franchisees are mainly concerned about uncertainty ahead of the upcoming budget. 'We want to see stability so that we, and our franchisees, can be confident in our investment plans. 'We don't want to see an increase in the quantum of costs on small businesses because you have to make these sustainable to support any growth agenda.'
Reuters
05-08-2025
- Business
- Reuters
Domino's UK cuts profit forecast as labour costs climb, shares plunge 20%
Aug 5 (Reuters) - Britain's Domino's Pizza Group (DOM.L), opens new tab cut its forecast for annual core profit on Tuesday as higher labour costs exacerbated pain from weak customer demand, prompting its shares to slide 20%. Increases to employers' social security contributions went into effect in April. "There's no doubt that through National Insurance and all the costs, they definitely are hurting our talking in the millions," CEO Andrew Rennie told Reuters in an interview. Rennie added that the company will increase prices relative to the wider market to offset the rise in costs. The company now predicts underlying core profit to come in between 130 million pounds and 140 million pounds ($173 million -$186 million) for 2025. It previously expected to meet company-compiled market estimates of 141 million pounds to 150 million pounds. Shares in the company fell as much as 20.2% to 196.2 pence, set to mark their biggest-ever one-day percentage fall. For the 26 weeks ended June 29, underlying core profit fell 7.4% to 63.9 million pounds. As firms pass on higher costs to customers, Britons are choosing to be more conservative with their spending. The British Retail Consortium expects food inflation to rise by as much as 6% by the end of the year. The group, which operates under the umbrella of U.S.-based Domino's Pizza (DPZ.O), opens new tab in the UK and Ireland, also saw lower-than-expected store openings in the first half of the year, as its franchisees were wary of opening new stores amid higher staffing costs. It now expects new store openings to be in the mid-twenties for the year, down from a previous prediction of more than 50. Analysts said, however, that Domino's UK was faring better than competitors such as Pizza Hut and Papa John's which have shuttered outlets across the country. ($1 = 0.7527 pounds)
The Guardian
05-08-2025
- Business
- The Guardian
Domino's Pizza profits dive as people cut back on takeaways
Domino's Pizza said the takeaway market had 'become tougher' as it blamed weaker consumer confidence in the run-up to the autumn budget and rising wage costs for lower than expected sales and a slump in profits. The takeaway specialist said it now expected full-year underlying profits of between £130m and £140m, about £6m below the average of analysts' expectations. Domino's said it was taking market share but its franchise partners were being more cautious about opening new outlets because of higher employment costs. Employers' national insurance payments and the legal minimum wage were increased in April. The company opened 11 stores in the six months to the end of June, fewer than expected, and is now forecasting openings in the mid-20s for the full year. In April it said it hoped to open 'in excess of 50 new stores'. Andrew Rennie, the chief executive of Domino's, said: 'There's no getting away from the fact that the market has become tougher both for us and our franchisees, and that's meant that the positive performance across the first four months didn't continue into May and June. 'Given weaker consumer confidence, increased employment costs and uncertainty ahead of the autumn statement, franchisees are taking a more cautious approach to store openings for the time being.' He said the group was looking at more automation to help keep costs down. Shares in the UK-listed group slid more than 13% in morning trading on Tuesday as it reported flat total order numbers in the first six months. Underlying sales dipped 0.1% as it struggled to beat the strong sales last year during the men's Euro 2024 football tournament. Underlying pre-tax profits slid almost 15% to £43.7m as system sales, which include total sales made at franchise outlets and new outlets opened during the year, rose 1.3% to £778m. The poor performance at Domino's follows similar difficulties at the bakery specialist Greggs, which reported a 14% fall in half-year profits last week amid weaker than hoped for sales. It said that profits had been hit as consumers shunned pastry bakes and hot food in favour of cold drinks during the hot weather. The rival pizza franchise Papa Johns has also closed more than 70 outlets, while Pizza Hut's 140 restaurants were rescued from insolvency in January. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Katie Cousins, an equity analyst at Shore Capital, said: 'We note ongoing headwinds from low consumer confidence and slowing income tracker data, particularly for [those on low income], along with potential impacts of weight-loss injections on the sector.' Mark Crouch, a market analyst for eToro, added: 'Despite [Domino's] revenue growing and higher like-for-like sales, profits have dropped sharply, and store openings have slowed, a troubling combination for a growth-focused franchise model. 'If fast affordable food is feeling the pinch, what does that say about the broader consumer landscape? Investors may see a resilient brand, but the numbers point to structural headwinds that go beyond pizza.'
