The Business Herald’s markets and banking reporter.

Junk food wars - who's winning in New Zealand?

Kaedyn Stops (21, left) and Liam Stops (20) own a Domino's store in Rotorua. Domino's has reported big market share gains. Photo / Daily Post
Kaedyn Stops (21, left) and Liam Stops (20) own a Domino's store in Rotorua. Domino's has reported big market share gains. Photo / Daily Post

Domino's is snapping up market share from not only its pizza-selling rivals but also players in the wider fast food sector including burger chains, its chief executive says.

The ASX-listed company, which recently opened its 100th New Zealand store, today reported a 44 per cent lift in underlying annual net profit to a record A$92 million ($98m), which was well ahead of guidance.

Total network sales reached A$1.96b ($2.1b), a 32.7 per cent lift on the same period a year earlier.

While the overall pizza market is posting annual growth of around 2 per cent, Domino's reported full-year same store sales growth of 14.8 per cent for Australia and New Zealand and 10.9 per cent for the group as a whole.

NZX-listed Restaurant Brands - which operates Pizza Hut, KFC, Starbucks and Carl's Jr - reported more modest same store sales growth of 5.3 per cent for its stable in the last financial year.

And Pizza Hut's same store sales grew by only 2.6 per cent.

Domino's chief executive Don Meij said around one-third of Domino's growth was being achieved through market share gains from its direct competitors and expansion in the overall pizza category.

But the rest, he said, was coming from market share gains outside the pizza market.

"Whether it be hamburgers, fried chicken, sandwiches ... we're picking up bits and pieces from all of that," Meij said.

"In New Zealand we're into our fourth year of double-digit growth so we're having a fantastic time."

The company holds the master franchise rights for the Domino's brand in Australia, New Zealand, France, Belgium, the Netherlands, Japan and Germany.

It has been investing heavily in refurbishing older stores and developing new technology including online ordering, GPS driver tracking systems and even pizza delivery robots that Meij expects will come into use in the next 12 months.

Domino's has also begun using e-bikes to deliver pizzas on both sides of the Tasman.

Meij said Domino's had lifted the projection for its future store count across Australia and New Zealand from 900 to 1200 outlets in order to take advantage of the "huge market opportunity".

The company is targeting opening another 100 stores in this country.

Domino's also announced today that it was preparing for its broadest menu expansion since 2008 in Australasia.

"What you're going to see in New Zealand is an upgrade to our existing pizzas - some of the bigger sellers in New Zealand are going to be enhanced with better quality and better taste," he said.

"You're also going to see some new pizzas added to the menu which will be very exciting ... and some new side items."

Meij said he couldn't give details on the new items, citing commercial sensitivity.

The company gave guidance for net profit growth of around 30 per cent in the 2017 financial year, with same store sales growth across Australia and New Zealand expected to slow to 10 to 12 per cent.

Domino's shares, which have gained 77 per cent in the past year, recently traded down 3.4 per cent at A$74.26.

- NZ Herald

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