Domino’s Pizza profit sliced by £3m Budget tax hit
Domino’s Pizza has forecast a £3m tax hit from the Budget as the firm targets a push to open hundreds of new stores across the UK.
“As with other major employers in the UK, the recent UK budget has significantly increased the cost of labour for both Domino’s Pizza and our franchise partners, who are particularly impacted,” the company said in a stock exchange notice today.
“Although we have identified specific mitigation plans, we now believe that the annual impact for Domino’s Pizza will be £3m per annum from full-year 2025 onwards.”
Domino’s Pizza currently has over 38,000 employees across its franchises, which will be affected by October’s Budget that hiked national insurance rates for employers.
The announcement came as part of a new profitability and growth framework from the pizza franchiser, with the company targeting the rollout of hundreds of new stores.
The firm is aiming to have at least 1,600 stores delivering £2bn of sales by 2025, and 2,000 stores delivering £2.5bn in sales by 2033.
It currently has more than 1,350 stores across the UK and Ireland.
It aims to achieve its ambitious targets through spending between £3m-£4m a year on marketing, digital investment, and incentivising new store franchises to open.
Domino’s also announced £4m-£5m in spending every year towards “the continued stability and innovation of our technology platform, strengthening our cyber security and the commencement of the process of increasing our supply chain capacity”.
As a result of the Budget and increased investment, Peel Hunt analysts cut profit before tax forecasts for the company by around 11 per cent.
The company’s stock price fell 3.3 per cent following the announcement. It is down by almost nine per cent since the start of the year.
Domino’s Pizza was spun out of its American owner in 1993, before listing on AIM in 1999 and joining the FTSE 250 in 2008.