Domino's savours 30pc profit increase

Domino's Pizza, which claims to be outselling its main rival Pizza Hut, will put even more heat on with lower prices later in the year, already undercutting both pizza and some fish and chip meals.

Domino's is about to renew its contract with Fonterra, which supplies the cheese for the pizza giant on both sides of the Tasman. Domino's said the move should see pizza prices fall.

Australian-based Domino's yesterday posted a A$15.4 million (NZ$18.8m) profit for the year, up almost 30 per cent on the previous year.

Same-store sales across the group were up 4.6 per cent.

The pizza group has 77 stores in New Zealand and aims for 85 stores soon, but does not give revenue and profit figures for this country, because of its rivalry with Pizza Hut.

Domino's chief executive Don Meij said he was "pretty confident we sell more pizza than Pizza Hut in New Zealand" and its prices were also better value.

In the last financial year, same-store sales at Restaurant Brands-owned Pizza Hut were down 6.5 per cent and it has struggled for years since the arrival of Domino's.

Pizza Hut has 93 stores, but their average store sales were significantly lower than Domino's, Mr Meij said.

Domino's group-wide sales of A$676m spread over 776 stores in five countries, suggest average annual sales of around A$870,000 a store.

That implies New Zealand revenues could be around NZ$80m a year. Mr Meij said he was happy with progress in New Zealand.

"From an earnings point of view, it is one of our strongest markets," he said, with better profits than in Australia like for like.

Mr Meij said it did not compete with the likes of Hell Pizza, whose prices were twice those of Domino's.

"You are spending $40 at Hell and $18 to $20 at Domino's and you are getting less it is a different occasion," Mr Meij said.

Domino's says it is now a consumer "staple" and sales have held up despite the recession. When it started in New Zealand it aimed to compete on price with fish and chips as the staple takeaway.

"In fact, fish and chips is now often more expensive than pizza," he said.

Food Fight: Domino's large pizza: $7.90 pick up; Pizza Hut large pizza: $10.90 pick up

- © Fairfax NZ News