It’s fair to say the pandemic has been horrific for most people but kind to Domino’s Pizza. It has benefited from more people wanting food delivered to their home, as well as a temporary reduction in VAT.
While competition has intensified from the likes of Just Eat and Deliveroo helping more restaurants to deliver food, Domino’s has benefited from incredible brand strength and already has a delivery system that works like clockwork.
“The latest trading update shows that people are still hungry for its pizzas, with sales continuing to grow. That’s important as Domino’s faces a big test as Covid-related tailwinds start to fade,” said AJ Bell’s Russ Mould.
“People are now able to go to restaurants again, and that Saturday night in watching Netflix with the family has got a bit monotonous, so there is temptation to get out and about in pubs and bars. Forget the pizza at home, we’ll grab a bite to eat in the pub or a kebab at midnight.
“That puts pressure on Domino’s to start doing something more creative to keep its sales moving upwards. There are only so many variations you can have on a pizza topping that product innovation doesn’t come easy, so it’s down to promotional deals to capture customers’ interest. Domino’s can push up prices, but its pizzas have always been quite expensive versus the competition, so there is a risk that households look elsewhere. And that’s a big risk when you think the overall cost of living is shooting up.
“If your energy bill is racing upwards and the weekly food shop is starting to become a lot more expensive, an easy way to save money is to cut back on treats like Domino’s. Therefore, life could get a lot tougher for the business in the coming months.”