DP Poland aka Domino's Pizza Poland (DPP ) said in a trading update today that level-for-level (LFL) system sales increased 23.5% in June 2022 compared to June 2021. Dine-in sales in particular showed strong LFL growth at 55.8% year on year (YoY) as customers returned to dining locations following relaxation of Covid-19 restrictions. Even compared to June 2019 dine-in sales were up 21.3%.
Equally impressive were delivery sales, up 9.6% YoY even as customers returned to physical locations. The trend has continued into July, with LFL system sales for the first 10 days of the month up 32.9% YoY.
Piotr Dzierżek, CEO of DP Poland, commented: "I am delighted to see the strong sales performance achieved in the first half of 2022 continuing which is a consequence of our hard work in prior months and investment in customer acquisition."
Markets welcomed today's trading update with DPP shares up 4.31% in early trading.
While today's update only detailed performance in June and July 2022 so far, DP Poland released in June final results for the year ended 31 December 21 (FY21) and for the 5 months to 31 May 2022 (H1 2022).
Like today's report, the FY21 results showed solid performance during a very challenging year for the industry. Revenue increased 3.1%, including 21% LFL revenue growth in Q4. Dine-in and delivery LFL system sales grew 9% and 4% respectively YoY, while group EBITDA swung from a -£0.2m loss to a profit of £1.1m, helping to double cash in the bank to £2.7m.
More impressively, H1 2022 results showed 25% LFL increase in revenue YTD to May 31, with a notable dine-in sales increase of 172%.
In 2021, DP Poland acquired and fully integrated Dominium SA, a domestic Polish pizza chain, for £29.5m. This nearly doubled the number of Domino's stores in the country to 121. And in June, the Company proposed to acquire Domino's Croatia for £2.4m in shares issued at 8p, expected to complete by 29 July 2022. This will expand DPP beyond Poland for the first time, adding 3 stores in Zagreb.
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DP Poland negotiated the pandemic very well in 2020/21, and has so far this year come ahead of the competition in combating inflation and the ongoing bear market. DPP stock is up 4.31% on today's news and has remained flat YTD, defying the broader downturn in equities. Results from FY21, H1 2022, and June/July so far show uninterrupted revenue growth in dine-in and delivery sales.
Additionally, during these challenging times DPP has managed to continue expanding its presence in Poland, with the acquisition of Dominium doubling its store count to 121. It has also steadily acquired stores from sub-franchisees. Management believes the current store count can be substantially increased still, not least through expansion in Croatia, should the acquisition of Domino's Croatia proceed as planned.
DP Poland's strategy prioritises driving market share, brand awareness, and aggressive M&A. Margin optimisation has been secondary to this expansion drive, with results showing it has been the correct strategy for the company so far. Scale has enabled DP Poland to take measures in combating the effects of the pandemic and soaring inflation that smaller chains could not take, such as negotiating better terms with suppliers and aggregators.
Additionally, to combat inflation in food cost and wages, DP Poland has implemented a number of initiatives, including reducing discounts, reviewing recipes to reduce food costs, insourcing of delivery from 3rd party operators, introducing minimum order value, and using more efficient delivery vehicles.
If DP Poland continues its expansion campaign, there will be further upside down the road as large capital expenditures so far begin to bear fruit.
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