Domino’s Pizza has reported its first loss in two decades, recording a $22.2 million deficit for the six months ending December 31, a stark contrast to the $58 million profit achieved during the same period in the previous year. This downturn comes as the fast-food chain plans to close 205 underperforming stores globally, primarily in Japan, in an effort to restore profitability.
Mark van Dyk, who stepped into the role of chief executive in November, stated during a recent trading update that the closures, along with a strategy to simplify its menu and packaging, are expected to save the company $18.6 million annually. “The recent decision to shut down 205 unprofitable outlets demonstrates our commitment to reinvesting in sustainable, long-term growth,” he remarked.
Despite challenges in markets such as Japan and France, Domino’s has maintained a strong performance in Australia. The company reported a 7.6 per cent rise in earnings before interest and taxes, amounting to $67.7 million during the same period.
In response to these financial difficulties, van Dyk emphasised the necessity for a more straightforward and consistent Domino’s experience to help reposition the brand for future growth. He assured stakeholders that the company is committed to capitalising on the global pizza market’s potential, even while it downsizes in less profitable areas.
Pandemic-related shifts in consumer habits and escalated operating costs have contributed to these challenges. While closing down numerous stores, Domino’s plans to continue expanding in more profitable regions. Currently, the company operates a total of 3,700 locations worldwide, including 729 in Australia.
Following the release of the disappointing half-year results, Domino’s shares plummeted over 10 per cent to $28.77, reflecting investors’ concerns about the company’s ability to turn around its fortunes. However, van Dyk remains optimistic, indicating that the company’s strategic moves are aimed at ensuring it can harness its long-term potential in the vibrant pizza market.