Covid-19 lockdown drags down Domino's Pizza Irish sales

Covid restrictions have dented Domino's Pizza sales in Ireland.

Pizza delivery company Domino’s saw its Irish sales drop by nearly 4% in the first half of the year due to the negative impact of Covid-19 on consumer spending and Ireland’s earlier move into lockdown.

Combined sales for its core UK and Ireland business grew by 5.5%, year-on-year, in the six months to the end of June to just under £630m (€700m). 

However, underlying pre-tax profits were down 4.6% at £47.6m and operating profit tumbled by nearly 3% compared to the first six months of last year.

For Ireland alone, where Domino’s has 54 outlets, like-for-like sales fell by 3.6% year-on-year.

“We saw a weaker performance in Ireland, against a strong comparative. Ireland entered lockdown earlier than the UK and we saw a more pronounced impact on consumer spending,” the company said.

“Ireland was also disproportionately impacted by stopping cash payments and, outside of Dublin, by the switch-off of collection. When lockdown restrictions eased, we quickly reintroduced collection, including car-side collection, and we have seen an improvement in trading as a result,” it said.

As much as 95% of Domino’s sales are generated in its UK operations, which performed strongly in the second quarter of the year.

“Our business in Ireland is a much smaller part of the group, accounting for 5% of system sales, and the relatively small size of our Irish business means that sales are inherently more volatile,” the company said.

Earlier this year, Domino’s reported a 1% drop in like-for-like sales in the Republic for 2019, albeit seeing a 2.6% increase in the fourth quarter. The company also said, last year, that it has long-term plans to open a further 25 outlets across the island of Ireland in the coming years.

The UK’s lockdown helped Domino’s as it led to more British consumers ordering food to their homes and resulted in a 23% rise in home deliveries. However, total orders fell 5% due to a 44% slump in collections.

Domino's chief executive Dominic Paul also cautioned on the future.

“While trading in the first few weeks of the second half has been encouraging, it is too early to conclude on how consumer behaviour will evolve.

"The macroeconomic, consumer and competitive backdrop for the second half of the year contain considerable uncertainties. Our system demonstrated responsiveness and agility in meeting the challenges presented through the lockdown period, although that did come at some inevitable and, in certain areas considerable, incremental costs," he said.

He said Domino's relationship with its franchisees remains "challenging" and will take some time to resolve.

Domino’s also said its deferred 2019 dividend would be paid in September, while it reviewed a total payout for the current year.