ii view: Domino’s Pizza rolls the dice on chicken demand

Third-quarter trading update to 28 September

• System sales up 2.1% to £383 million
• Total orders down 1.5% to 17.1 million - prices up 5%

Guidance:

• Continues to expect full-year new store openings in the mid-20s
• Continues to expect full-year adjusted profit (EBITDA) of between £130 million and £140 million, down from a previous £146 million and the £143.4 million made in 2024

Chief executive Andrew Rennie said:

"We have delivered a solid Q3 performance with positive sales and operational momentum despite the continued challenging consumer backdrop. In particular I am really pleased with the initial results from the introduction of our exciting Chick'N'Dip brand.

“Our franchisees continue to lead the industry with fast delivery times and we continue to work with them to mitigate the impact of increasing costs and any potential impact of the UK budget on 26th November.”

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ii round-up:

Takeaway chain Domino's Pizza Group (LSE:DOM) today maintained full-year profit expectations, flagging positive initial customer reaction to the introduction of its Chick 'N' Dip and new Indian feast products.

Total third-quarter system sales rose 2.1% from a year ago to £383 million, with a 1.5% retreat in orders to 17.1 million countered by a 5% increase in prices. Trials for Chick 'N' Dip, offering chicken bites with nine globally inspired dips have traded well, with assessment for a full rollout in 2026 ongoing. The new ultimate Indian feast has accounted for 7.6% of orders since launch. 

Shares in the FTSE 250 company fell 1% in UK trading having come into this latest news down by more than a third so far in 2025. That’s in contrast to 6% gains for the FTSE 250 index and fast-food icon McDonald's Corp (NYSE:MCD) year-to-date. 

Domino’s holds the master franchise agreement to own, operate and franchise Domino's stores in the UK and the Republic of Ireland. It operates 1,388 outlets across the two nations with 18 new stores already opened and plans for a further potential seven this financial year.

Orders collected during the period rose 1.7% from a year ago, aided by an ad campaign, with those being delivered falling 3.4% and hit by broadly weaker consumer sentiment. 

Management continues to expect annual adjusted profit (EBITDA) of £130-140 million, down from a previous £146 million and 2024’s £143.4 million.

Broker UBS reiterated its ‘buy’ stance on the shares post the news, highlighting a price target of 280p per share. A capital markets day is scheduled for 9 December. 

ii view:

The master franchise holder of the US parent company opened its first UK store in Luton in 1985. Today, Domino’s delivers an average of 106 million pizzas a year. Its 13 million customers order on average 4.3 times a year. Around 9 million customers now order using its app with 75% of all digital orders placed on the app.

For investors, an increase of around £3 million per year in employment costs and concern for further tax rises come the pending UK Budget now leave franchisees more cautious regarding new store openings. The impact of US trade tariffs on the global economy as well as concerns about possible UK tax rises now overshadow consumer spending. Group net debt as of late June was up 7% versus a year ago to £307 million, while competitors such as Greggs (LSE:GRG) are also offering pizzas and competing hard via online technology for delivery business.  

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More favourably, product innovation continues, with a likely rollout of a new chicken offer come 2026. Under-penetration compared to the UK leaves management targeting growth opportunities in Ireland, including a recent share stake increase for Northern Ireland business, Victa DP. A focus on digital orders sees partnerships with Just Eat and Uber Eats being progressed, while a new automated national supply centre in Avonmouth is now being built. 

Falling total orders offers caution and, while a forecast dividend yield of over 5% might keep income investors happy, the share price trades near an 11-year low. It might mean others wait for signs of a return to stability.  

Positives: 

• Ongoing new store openings
• Product innovation

Negatives:

• Tough consumer backdrop
• Intense competition

The average rating of stock market analysts:

Buy