Live sport, staycations and vegan pizzas help Domino's UK sales soar 20%

Tom Belger
·Finance and policy reporter
·3-min read
CHICAGO, IL - OCTOBER 12:  Domino's pizza is shown on October 12, 2017 in Chicago, Illinois.  Shares of the restaurant chain fell 4 percent today despite reporting an increase of more than 8 percent in domestic same-store sales.  (Photo Illustration by Scott Olson/Getty Images)
A Domino's pizza as its UK sales soar. Photo: Scott Olson/Getty Images

Domino’s Pizza (DOM.L) sales in the UK leapt 19.6% over the summer, as staycations, the return of live sport and VAT cuts accelerated an order boom since the coronavirus first hit.

Combined revenue for the UK and Ireland came in at £342.1m ($445m) in the 13 weeks to 27 September, according to a third-quarter trading statement published on Thursday.

Delivery orders in both territories were up 11.8% with more customers eating at home, while collection orders jumped from 0.7 million in its second quarter to 3.2 million in the third quarter as its sites reopened for pick-up by customers.

But collection orders remain 60% below pre-virus levels. The pandemic has also accelerated a shift to online ordering, which now makes up 95.1% of UK orders.

The company highlighted the importance of the UK government cutting VAT on hot takeaway food from 20% to 5% in July. “This change both helped franchisees mitigate costs and enabled them to pass savings on to our customers,” it said.

READ MORE: Pub and brewing chain Marston’s blames new curbs as it axes 2,150 staff

It added: “We saw a benefit from staycations and the return of live sport on television during the period, although we also saw a headwind as competitors reopened following the national lockdown and, in September, we saw weaker demand in university areas.”

The company launched its new “vegan friendly” pizza range and a vegan dip nationally in September, after a trial. It said it had spent a year developing the new pizza to ensure it “replicates the unmistakable Domino's taste,” and told investors: “Customer response to our new vegan pizzas has been very encouraging.”

Domino's share price
Domino's share price fell on the back of the results as collection orders remain 60% below pre-virus levels.

The company announced it would create 5,000 new jobs last month, as well as 1,000 placements via the UK government’s Kickstart scheme.

Dominic Paul, CEO of Domino’s in the UK, said the company was “confident that we have operational plans in place to adapt to different levels of lockdown that may arise in the coming months.”

READ MORE: Domino’s Pizza to hire 5,000 staff in the UK as Brits eat more at home

The statement said the company expected to report underlying pre-tax profits of between £93m and £98m in its full-year, in line with consensus.

"The hunger we had for takeaways during lockdown continued unabated through the summer," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"The company’s established takeaway business model clearly has baked in benefits compared to its dine-in rivals such as Pizza Express and Pizza Hut which are still counting the cost of the pandemic and the reduction of seating in restaurants.

"However there are some hot topics which still need resolving, not least the dissatisfaction among the franchisees who run the stores about commercial terms and profit sharing."

WATCH: Domino’s profits in the US smaller than expected despite higher demand

It comes a day after delivery giant Just Eat Takeaway.com (JET.L) said it had delivered 151.4 million takeaways around the world in three months. Orders leapt during in its third quarter, up 46% on the previous year in its European and other markets.

The company, headquartered in Amsterdam, saw the highest sales in the UK. Its drivers and riders delivered 46.4 million orders in three months, or around 15.5 million a month, up 43% on the previous year.

But last week Domino’s Pizza in the US (DPZ) reported smaller-than-expected profits, blaming high costs linked to the pandemic.