Domino’s Pizza Profit Dip

Domino's Pizza has reported a slump in half-year profits after taking a hit from soaring costs despite raising prices for franchisees and introducing a delivery fee.

The UK pizza delivery chain reported a 16.3pc drop in underlying pre-tax profits to £50.9m (€60.8m) for the six months to June 26. This comes in spite of moves to offset rising ingredient prices and other cost pressures, including the launch in March of a delivery fee of between 99p and £2.50.

The company said it increased prices for its franchisees, but this was on a "lagged basis", meaning that the full benefit will not be felt until the final six months of the year. The group is expecting profits to be weighted towards the end of the year and kept its full-year guidance unchanged.

Domino's said it is boosting marketing spend "significantly" to attract more customers, having seen like-for-like sales excluding so-called split territories drop 6.4pc due to the increase in the UK VAT rate. As part of the deal unveiled in December, the group said it had agreed to invest £20m over the next three years, with franchise owners agreeing to increase the speed of new store openings.

It also recently completed an exit from all directly operated international markets to focus on the UK and Ireland.