Domino’s to invest £20m in digital acceleration
Domino’s plans to up marketing spend and invest around £20m in its digital acceleration over the next three years, as it looks to create “sustainable growth” for the business.
Domino’s has described 2021 as a “transformational” year, crediting its developments in digital and the launch of its ‘Domin-Oh-Hoo-Hoo’ campaign for order growth rising “ahead of expectations”.
The campaign, which was supported by increased marketing investment, launched in May to coincide with the easing of lockdown restrictions and was followed by the brand’s first-ever Christmas ad.
It was the first campaign under the leadership of new CMO Sarah Barron, who joined from Costa Coffee in January 2021. Her appointment also saw Domino’s bring its digital team under the remit of marketing for the first time.
The company says it is now a “truly digital-first business”, with 91.2% of sales made through digital channels in 2021. This was helped by the launch of its new app, which enables group ordering and better promotion of deals. The app alone accounted for 42% of system sales, a 2.2 percentage point increase on 2020.
To help drive its digital acceleration further, Domino’s has committed to investing around £20m over three years. As part of this it will be investing in personalisation and the development of its ecommerce app, as well as in-store innovation to enhance the customer experience and boost top-line growth.
It has also committed to increasing marketing investment to support new national campaigns and promotions, both of which have been made possible after coming to an agreement with franchisees.
The company says this resolution with franchisees will effectively re-set the relationship and “unlock significant latent potential”, as well as driving both short- and long-term growth.
Domino’s CEO Dominic Paul says the agreement will allow the company to embrace “a new era of collaboration, with the system working together more closely than ever before”.Domino’s credits ‘supercharged’ Euros campaign as profits double
Domino’s recorded an underlying profit before tax of £113.9m in the UK and Ireland for the year to 26 December 2021, up 12.5% compared to the previous year.
Total sales increased by 11.2% to £1.5bn, with like-for-like system sales up by 10.9%.
Meanwhile, total orders increased by 5.5% across the year, with deliveries performing well and collections continuing to recover, growing sequentially each quarter as the UK began to reopen post-lockdown. Collections finished the year 87% ahead of 2019 levels.
As part of the new agreement with franchisees, Domino’s has also introduced an enhanced food rebate system to encourage order growth, and a new store incentive scheme to accelerate new store openings.
Domino’s opened 31 new stores in 2021 and the company says it is on track to open a further 45 in 2022, with five already having opened their doors this year.Domino’s ups marketing investment as part of growth strategy
In return for this investment, Domino’s has asked franchisees to commit to participating in new national promotional deals focused on both delivery and collection. This enabled Domino’s to launch its first national price promotional deal for “several years” in January, which had a strong value message.
The company also wants franchisees to agree to prioritise, test and roll-out new technology and product innovations, such as GPS tracking and to test new store formats.
This is all part of Domino’s growth strategy, launched in March last year, which CEO Paul describes as one of two “major milestones” of the year, the other being its resolution with franchisees.
He says the new strategy is already delivering “outstanding” results and a “better experience” for customers.
The company says it is on track to achieve “at least the upper end” of its target to achieve sales of between £1.6bn and £1.9bn.
“This was a transformational year for Domino’s. Our performance continues to be strong, and we have made significant progress against our strategic plan, all while delivering on our ambition to return excess capital to shareholders,” says Paul.
“This year has started well, and we now have the right strategy and a strong senior team in place to continue to drive the business forward. We remain focussed on accelerating the sustainable growth of our system together, to deliver a better future through food people love.”