Domino's Pizza profits fall 16% as inflation costs hit in Britain and Ireland 

Company owns more than 1,240 franchised and group-owned outlets in Britain and Ireland

Domino's in March introduced delivery charges to allow 'franchisees to offset some of the food and labour cost inflation which they are experiencing'.

Pre-tax profits at Domino's Pizza, which owns more than 1,240 franchised and group-owned outlets in Britain and Ireland, fell by over 16% in the first six months as escalating costs for wheat and inflation in its distribution chain caught up with the company.  

The Milton Keyes-based company does not break out the results between its British and Irish operations, but it said its underlying pre-tax profit had fallen to £51m (€61m) despite sales remaining "strong" in the period. A joint venture in the North and an associate firm in Germany contributed to the profits. 

"The main drivers were inflationary pressures on supply chain and distribution costs of £3.7m and £2.3m investment associated with the franchisee resolution," the group said, referring to the fall in underlying earnings.

Chief executive Dominic Paul claimed the company's supply chain differentiates it from rivals and "as inflation accelerates and consumer budgets tighten, these differentiators are more important than ever".

He said the company plans to increase its ad spend later this year for the soccer world cup in Qatar.  

The company in March introduced delivery charges to allow "franchisees to offset some of the food and labour cost inflation which they are experiencing", though franchise owners can decide whether or not to levy the charge. 

It has started to redevelop its Naas, Co Kildare, supply centre and said it planned to extend a delivery arrangement with Just Eat which it brought in for 136 outlets in Britain and Ireland, and "following early encouraging results we are extending the trial to approximately one third of the store estate", the company said. 

Domino's shares, which have lost more than 30% in value so far this year, fell slightly on Tuesday. Despite the fall in profits, it increased the dividend to 3.2 pence from three pence last year and launched a £20m share buyback programme.