Domino’s is cutting 200 jobs after CEO Don Meij admits the pizza chain made a big mistake before profits plummeted nearly 75 percent
- The CEO says Domino’s didn’t get the “value equation” right
- A major mistake had led to a sharp drop in pizza orders
Domino’s will cut 200 jobs across Australia and abroad after the pizza chain posted a 74 percent drop in full-year net profit.
CEO Don Meij, who started out as a delivery driver for Domino’s, said the company has misunderstood the “value equation” in the fight against inflation.
The pizza chain had introduced a seven percent delivery fee to counter the increased costs, which led to a sharp drop in the number of pizza orders.
“Due to the speed with which we had to respond to inflation… some of the changes we made, including the introduction of delivery charges, did not resonate with some customers and over time they ordered less,” he said.
Mr Meij said the company has ‘heard this feedback loud and clear and has now phased out most of these fees’.
Domino’s CEO Don Meij has admitted the company made a big mistake when the pizza chain announced a massive 74 percent drop in full-year net profit. The photo shows a woman eating pizza
Mr Meij (pictured), who started out as a delivery driver at Domino’s, said the company didn’t get the ‘value equation’ right when responding to inflation
He said customers accepted certain pricing decisions, “such as slightly increasing the price of our discount range.”
Domino’s introduced delivery charges — which were capped at $5 per order — in July 2022 as inflation pushed up food, labor and energy costs and decided to pass on some of the increases.
But the fee deterred customers who were themselves battling cost-of-living pressures.
The delivery fee was dropped in June, with the fast food giant calling it a “victory for our customers and franchisees.”
Mr. Meij said Domino’s is “still actively working to rebalance the value equation – this means getting the right products, service and image for our customers, not just reversing price increases.
“We believe we can deliver both great value for our customers and great profitability for our franchise partners.”
Not wanting to scare off customers again, the CEO promised that there would be no more unexpected delivery costs.
“I want to make it clear to our customers that they are facing pressure on the cost of living: we do not expect to pass on any price increases this year.
“We encourage customers who haven’t ordered recently, or who haven’t tried us before, to put us to the test and see what great value Domino’s delivers,” he said.
The chain is also diversifying its options and has had success with new pizzas such as the doner kebab pizza in Germany and the pasta-wrapped pizza range in Australia and New Zealand.
Crispy fries were first launched in Europe and are now also being rolled out Down Under.
“Our mantra is ‘differentiation is the guardian of profit’ – and everything we do is designed to get done,” said Mr. Meij.
Domino’s delivery fee (pictured) was dropped in June, with the fast food giant calling it a “victory for our customers and franchisees”
This also applies to the humble pizza box, which customers will see has not only been updated, but also given a complete redesign, making it stronger and ensuring that your meal is even hotter and fresher on arrival.
Mr. Meij said that Domino’s will cut back its support office staff by 20 percent, or about 200 people in its global operations.
This follows the closure of all its Danish stores in June, and the closure of a further 70 underperforming stores worldwide.
After the seven percent reduction in delivery costs, sales in Australia and New Zealand rose by 6.6 percent since July 1.