Posted on 11/01/2007 2:46:27 PM PDT by bruinbirdman
The cost of a Domino's Pizza is set to rise as the company passes on the spiralling price of mozzarella cheese to its customers.
Favourites such as the 'Pepperoni Passion' and 'Meateor' will be about 3.7pc more expensive in the New Year, after Domino's has adjusted menu prices to deal with the rising cost of the stringy cheese, a key component of nearly all pizzas.
The cost of mozzarella has risen by more than 50pc or £1,060 per tonne since June, taking a bite out of group profits with a one-off cost of £450,000. The increase has been driven by an unprecedented hike in the cost of milk.
Domino's has not yet been able to pass the price hikes on to customers because of what chief executive Stephen Hemsley described as " the extraordinary rapid increase in the cost of cheese."
The company is usually able to maintain price stability and predictability by agreeing annual price contracts with its suppliers.
In March however its cheese supplier Dansco went into receivership and although it was quickly taken over by Saputo, Domino's lost out on its fixed price contract and was forced to renegotiate at a time of rapid price inflation.
As a result Domino's didn't have enough time to pass on the cost to its franchises, which would have needed about eight weeks notice to change their menus.
The price of wheat has doubled since December to £227 per tonne, which will hit Domino's in January when its fixed price contract is renegotiated.
The combined effect of the cheese and flour rises will be a 3.7pc increase in the price of a Domino's pizza. According to the company the average Domino's bill is £13.50 for 2.2 people. About £10 of that is spent on pizza, translating to an average cost increase of 37p per order.
Mr Hemsley was speaking as the company gave a third quarter trading update and details of a senior management reshuffle.
He said that a 14.2pc increase in like-for-like sales in the 13 weeks to September 30 had "more than taken care" of the increased costs of cheese, and that Domino's was still on course to meet analysts' full-year forecasts.
"The underlying business is going like a train. The food price shenanigans are a bit of a side issue and the bad news is out there now," he said.
Domino's capitalised on interest in the rugby World Cup with the launch of a new pizza called 'The Scrummy.' "Meat pizzas do well," said Mr Hemsley, "and we thought there would be a lot of testosterone-charged men watching the rugby so we launched it as a guest pizza with six meats."
Executive chairman Colin Halpern will retire on December 31 and take up the position of non-executive vice chairman. Mr Hemsley will take over as executive chairman, and deputy chief executive Chris Moore will step up to the chief executive role.
Domino's opened 10 new stores in the third quarter, taking the total number to 480.
Coincidence...
>>Note: Food prices are not included in inflation calculations.<<
Neither is the cost of buying a home, making the numbers completely meaningless.
Domino’s makes one bland, NASTY pizza.
Let me fix that for you: "Food prices are not included in inflation calculations that do not include food prices."
“one bland, NASTY pizza”
Which one is it?
The customer is just going to have to eat it on this one.
10,000 years from now, when archaeologists did that bra up, what kinds of study grants do you suppose they’ll be asking for?
all of them
LOL! Ain’t that the truth. I was back in PA about 2 months ago staying with some relatives and they wanted to get some pizza. I thought fantastic, now I can get some good pizza (Denver is a good pizza free zone, meaning no good pizza here). I figured yeah, Louigi’s, Gino’s or some good old wop name pizza place. They came home with Pizza Hut with that Dow chemical cheese inside the outer crust. What a bummer.
How hard is it to make a decent Pizza?
I find myself in front of a Dominos pizza about once every 8 years and it and always tastes like cardboard and usually ends up right in the trash.
How these places get repeat customers and stay in business is beyond me.
“...what kinds of study grants do you suppose they’ll be asking for?”
Grants to study “Smart, Sexy Women from Wisconsin,” LOL!
Remember your “nasty and bland” crack? If it ain’t bland it won’t sell on a national level. To me the pizza sauce is 98% of a great pizza. Good spicy sauce. Won’t find that at any national pizza chain. Even in Chicago with all the WOPS there and great pizza these knock off national chains still have tons of stores there. Freakin nuts.
Yeah, I know “Bland” sells. That’s why i can never get a decent bowl of chilli anywhere.
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