Domino’s Pizza Group (DPG) in the UK has announced a new five-year agreement with its franchise partners, aiming to boost sales to £2 billion by 2028 through store expansion and digital platform investment. This new framework, unanimously supported by franchisees, will facilitate shared investments in marketing and technology, along with incentives for new store openings.
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Shared Investment for Mutual Growth
The agreement, known as the Profitability and Growth Framework, outlines a collaborative approach between DPG and its franchisees. Domino’s aims to expand its network to over 1,600 stores, a significant increase from the current count. The company plans to invest £3 million to £4 million annually from 2025, in addition to a further £4 million to £5 million per year in areas like technology, cybersecurity, and supply chain enhancements.
Responding to Economic Challenges
This new framework arrives after the October UK budget introduced higher employer National Insurance contributions and a minimum wage increase. These changes raised concerns about rising taxes and business costs for franchisees. Analysts at RBC Capital suggest the increased investment outlined in the deal should alleviate anxieties about a more substantial financial reset.
Building on Past Success
The new agreement, effective January 3rd, replaces the previous deal and builds upon a 2021 resolution regarding profit sharing between DPG and its franchise partners. This new chapter signifies a commitment to long-term collaboration and growth. DPG will extend new store incentives to five years, up from the current three, further encouraging expansion.
Positive Early Indicators
Early signs indicate positive momentum for DPG. In the first nine weeks of the fourth quarter, total orders increased by 5.3% and like-for-like sales rose by 2.7%. This growth suggests a strong foundation for the ambitions outlined in the new franchise agreement. The company’s focus on digital investment and strategic partnerships positions it for continued success in the competitive fast-food market.
Conclusion: A Recipe for Continued Success?
This new five-year franchise agreement signals Domino’s UK’s commitment to significant growth and modernization. By investing in its digital platform, expanding its store network, and fostering stronger relationships with franchisees, Domino’s aims to achieve ambitious sales targets. While challenges remain in the broader economic landscape, the shared investment approach and early performance indicators suggest a positive outlook for the company’s future. The success of this new framework will depend on effective execution and continued collaboration between DPG and its franchise partners in navigating the evolving market dynamics.
