DON MEIJ ON PIZZA HUT: THEY WON'T BE OUR BIGGEST COMPETITOR

Written on the 26 September 2016 by James Perkins

DON MEIJ ON PIZZA HUT: THEY WON'T BE OUR BIGGEST COMPETITOR DOMINO'S Pizza (ASX: DMP) CEO Don Meij has rubbished talk that a new enterprise bargaining agreement will halve existing franchisee profits and says a merged Pizza Hut-Eagle Boys will not be his company's main competitor.

A Deutsche Bank analyst has claimed that an updated enterprise bargaining agreement will cost Domino's Pizza franchisees $30 million and that head office will have to step in to support some stores.

"That was one analyst and is completely incorrect from our point of view," Meij tells Business News Australia.

"We have been preparing for this since 2008 and have already absorbed some of the increases. It will definitely be a large increase, but it has been overstated and continually dredged up as part of telling the Domino's story.

"I said this report was inaccurate back in June."

The Fair Work Ombudsman has delayed its decision on Sunday penalty rates until December, preventing a final deal to be reached with Domino's staff.

Meij says the Brisbane-based company already provided a "sizeable" pay increase in July in anticipation of the decision.

He declined to share how much the new agreement would cost, saying that it would "give away our hand" but, "we are planning for the worst".

"Even with that increase, our franchisees are expected to have a record year."

Domino's launched its new menu last week and Meij says the pizza chain will hire an additional 2,500 staff within existing stores as a response to its popularity.

This is in addition to the 1,000 new staff the company will hire in new stores that will open between now and Christmas.

This rapid expansion comes as new Pizza Hut owner Allegro Funds holds talks with Eagle Boys franchisees to create a stronger competitor to Domino's. Allegro reportedly hopes to add 60 of the 112 franchisees to the Pizza Hut network, to grow it to 400 stores.

"From a franchisee point of view, those competitors have been asleep, so now we are a bit more aware of them. However, this market is so big you can't have everyone eating Domino's, there has to be others," says Meij.

Once again, he says the level of competition that will come from the new Pizza Hut has been "overstated" and cited NPD Group's CREST report as the best breakdown of the foodservice industry.

"Domino's has 32 per cent of the market and combined, Pizza Hut and Eagle Boys will have less than 10 per cent of the market, and that is very low."

Meij sees his biggest competitors as the burger and fried chicken chains and other quick service restaurant operators that are still many times the size of Domino's.

The company's investments in technology that allow faster and more precise pickup and delivery times has put Domino's in competition with burger chains such as McDonald's that have traditionally been a quicker option for fast food.

"It is all about new technology alongside our new menu, which gives people an alternative to sitting in a drive through. Why would you go to a drive through when you could have any food delivered in 10 minutes?

"We are seeing the most extraordinary growth in Domino's history, it is incredible. The market is huge.

"Right now, the proposition for Domino's to double its existing store count is not a dream, it is there to execute - we want more stores on the ground to get closer to our customers."

Domino's is trading steady on the ASX today, up just 0.06 per cent at $71.780 per share. The company has enjoyed a dream run over recent years and has almost doubled its share price in the past 12 months.



Author: James Perkins Connect via: Twitter LinkedIn

Latest News

BRISBANE VFX PRODUCTION COMPANY CLEANS UP AT MAJOR INTERNATIONAL ADVERTISING AWARDS

AUSTRALIAN production company Alt.vfx has broken records in global advertising, becoming the first business to win...

CYCLONE DEBBIE FORCES MINE, RAIL AND PORT CLOSURES AS IT WREAKS HAVOC IN QUEENSLAND

COAL and gold mines in north and central Queensland are being seriously impacted as Cyclone Debbie makes landfall ...

FLYING START TO 2017 PASSENGER NUMBERS FOR GOLD COAST AIRPORT

RECORD numbers of travellers used the Gold Coast Airport (GCA) in January this year, continuing a five-year trend ...

SUNCORP SAYS IT'S 'COVERED' AGAINST FINANCIAL COST OF CYCLONE DEBBIE

INSURER Suncorp (ASX: SUN) says it is "well protected" against the financial impact of Cyclone Debbie th...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter