Domino's Pizza Group says weak consumer confidence sliced into summer sales

The company has more than 1,300 stores in Ireland and the UK

Domino's Pizza Group has said it has opened fewer stores than expected as its franchisees have been "cautious" due to higher labour costs in "weaker" confidence.

Domino's Pizza Group has said it has opened fewer stores than expected as its franchisees have been "cautious" due to higher labour costs in "weaker" confidence.

The pizza delivery specialist warned it would miss its original profit guidance for the year as it also highlighted "weaker" sentiment among consumers, causing shares in London to plunge 16% in trading.

Domino's - which has 1,381 stores in the UK and Ireland - said sales growth has been impacted by "weak" consumer confidence in recent months. Andrew Rennie, chief executive of Domino's, said: "There's no getting away from the fact that the market has become tougher both for us and our franchisees, and that's meant that the positive performance across the first four months didn't continue into May and June.

"Given weaker consumer confidence, increased employment costs and uncertainty ahead of the autumn statement, franchisees are taking a more cautious approach to store openings for the time being."

It said this has caused a "short-term slowdown" in new stores but stressed that it expects this to pick up again next year. Domino's has opened 11 new stores so far this year and expects overall openings in the "mid-20s" this financial year. The company had previously said it expected to open "in excess of 50 new stores" this year. Last September, Domino's opened a €16m supply chain centre in Naas, Co Kildare. The 2,550 square metre centre produces, store, and ship fresh dough and ingredients to Domino’s stores across the country.

Domino's expects earnings between €150m and €160m for the year, having previously predicted earnings between €160m and €170m.

Sales grew 1.3% to £777.8m (€894.9m) for the 26 weeks to June 29. Like-for-like sales were 0.1% lower for the half-year, as a positive first quarter was offset by a 0.7% decline in the second quarter, when delivery orders "weakened".

The group added that "softer" trading improved towards the end of July.

Mr Rennie stressed that "weakness" in consumer sentiment has weighed on the whole sector, highlighting that the firm has continued to grow market share despite recent pressure.

He also highlighted that franchisees are keen for certainty over the UK government's next budget as they assess investment plans for the year ahead. "We want to see stability so that we, and our franchisees, can be confident in our investment plans," he said.