Domino's pizzas to get smaller, more expensive in bid to shake-up its image

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Some pizzas are getting more expensive and some are likely to get smaller as Domino’s tries to shake off its image as the home of dirt-cheap pizzas.

The fast-food giant’s new menu is slated for public launch this weekend but a leaked copy, obtained by Fairfax Media, shows seven new pizzas, most with an increased price tag.



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The new menu is an attempt by the company to reposition its brand, shrugging off its reputation as a maker of low-priced pizzas.

In a document sent to franchisees the company said the new menu would help emphasise quality and freshness over price.

“The key focus points for this new campaign will drive a quality halo for the whole brand, ensuring that as a brand Domino’s stands for more than just cheap $5 pizzas,” the company said in the document.

The move comes at a time when the company is also reportedly also seeking to reduce the size of its pizzas. It also follows a Fairfax Media investigation in March that found hundreds of staff across four states had been underpaid, with store owners blaming the franchisee model.

The company insisted its franchise model was profitable but admitted it was aware of around 2400 workers who had been underpaid over three years.

Domino’s franchisees are also the subject of more than 20 investigations by the workplace regulator, the Fair Work Ombudsman. 

Under the revamp the “Chef’s Best” range, which typically includes pizzas that sell for $12.95, will be removed. Instead, there will be a new “Premium Range” selection included, which includes six new pizzas selling at a recommended price of $15.90 each.

Domino’s pizza prices differ depending on the store. The premium pizzas will however become amongst the most expensive pizzas on the menu.

Domino’s said in a statement the premium range would be larger and have “noticeably more toppings than the Chef’s Best range”.

“Our ongoing focus is to satisfy more customers, and ensure our franchises are profitable and sustainable,” the company said.

The key focus points for this new campaign will drive a quality halo for the whole brand, ensuring that as a brand Domino’s stands for more than just cheap $5.00 pizzas.


Internal document

One casualty of the new menu in NSW will be the traditional Margherita – a pizza style that dates back to the mid-19th century.

Some items appear to be increasing in price under the new menu with the “Chicken and Camembert”, which typically sells for around $12.95, increasing to $15.90.

But as prices go up, pizza sizes are expected to go down. Domino’s is reportedly shrinking the size of its pizzas in a bid to ease the financial pressure on franchisees.

In July, Deutsche Bank analyst Michael Simotas reported that “Domino’s is planning to reduce the size of its pizzas to provide additional cost relief”.

Domino’s has neither confirmed nor denied the claim.

However, Fairfax Media has seen evidence franchisees are being told to buy hundreds of new “classic pan” pizza pans. In one email franchisees are being asked to buy 30 per cent more pans than they typically use on Fridays – often the busiest night of the week.

Each week the company sells more than a million pizzas across Australia. Figures seen by Fairfax Media show during one week in July the company sold more than 580,000 pizzas in NSW alone.

The company confirmed franchisees are being asked to buy new pans.

“There will be an investment by stores in new pans as part of the new menu introduction, later this year,” the company statement said.

It comes at a time when the fast-food giant is being accused of taking a large slice of franchisee profits.

In May, Deutsche Bank downgraded Domino’s to a “sell” rating, and said store owners were getting a raw deal compared to their UK and US peers.

In June Citi also downgraded the stock to “sell” and said “Domino’s needs to share more with franchisees”.

A Fairfax investigation revealed in February between 4 per cent and 21 per cent of Domino’s businesses in NSW were operating below break-even point, based on six weeks of sales data.

At the time Domino’s said the figures were “materially incorrect,” and insisted its businesses are profitable.

Domino’s share price has fallen 18 per cent in 2017 and closed on Tuesday at $53.

 



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