Domino’s (ASX:DMP) adds pizza delivery charges as costs bite fast food sector

Fresh produce shortages have also forced some retailers to change their recipes – like KFC, which has been using cabbage to supplement lettuce due to rising prices. 


The chief executive of KFC operator Collins Foods, Drew O’Malley, has flagged further product price hikes may be necessary to balance rising packaging and fuel costs.

Australian retail sales hit record levels in May, up 0.9 per cent to $34.2 billion, according to Australian Bureau of Statistics retail trade figures released on Tuesday.

Café, restaurant and takeaway services had the second-biggest spending increase of any category, up by 1.8 per cent for the month – but the inflationary pressures were behind that increased spend.

“Higher prices added to the growth in retail turnover in May. This was most evident in cafes, restaurants and takeaway food services and food retailing,” ABS director of quarterly economy wide statistics, Ben Dorber said.

UBS analyst Shaun Cousin said Domino’s new surcharge would not radically change sales volumes, given that when Domino’s introduced extra charges in the past it hadn’t had much impact. However, he said the majority of the expenses that pizza makers incur are going up.

“The split of costs for a Domino’s pizza is 32% food (some hedged), 32% labour and mileage, and then other costs including royalties, rent, energy and advertising and marketing. Most of these costs are increasing,” he said in a note to clients.

Domino’s shares closed up 1.8 per cent to $70.44.

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