* To invest 20 mln pounds into business
* Franchisees required to open 45 new stores per annum
* Raises medium-term sales forecast
* Shares jump more than 20% in London
(Writes through with detail, shares)
By Pushkala Aripaka
Dec 16 (Reuters) - Britain's Domino's Pizza Group
has struck a deal with its franchisees in the UK and Ireland
over profit sharing, ending more than two years of negotiations
and sending its shares more than 20% higher.
The chain, a franchise of U.S.-based Domino's Pizza Inc
, will invest about 20 million pounds ($26.53 million)
into the business as part of the agreement that is set to run
for three years from Jan. 3.
The resolution includes renewed food rebates for
franchisees, and requires them to open at least 45 new stores
per annum over the next three years.
Domino's UK said the deal received the support of
franchisees representing over 99% of its UK stores, which total
more than 1,100, its 2020 annual report https://investors.dominos.co.uk/system/files/uploads/financialdocs/2020-annual-report-web-edition.pdf
showed.
The British chain had been struggling for years before the
pandemic as it also sought to appease disgruntled franchisees.
"Despite a long history of strong performance, the Board
recognises that in recent years DPG has lagged comparable
Domino's businesses around the world," the company conceded,
adding that the resolution unlocks an issue which held it back.
"We saw first-hand through the pandemic how, when we work
together, we win together ... the resolution ... can unleash the
power of the Domino's brand," CEO Dominic Paul said in a
statement.
The chain has seen strong growth in the past year as
pandemic restrictions led to a surge in demand for pizza
deliveries, and outdoor dining was reopened as curbs were
gradually eased.
However, the swiftly spreading Omicron variant could upend
that growth, with Britain on Wednesday recording its highest
number of new daily coronavirus cases https://www.reuters.com/world/uk/uk-reports-record-daily-covid-cases-with-omicron-spreading-rapidly-2021-12-15
since the start of the pandemic.
Still, the chain expects to reach at least the upper end of
its medium-term target of 1.6 billion to 1.9 billion pounds in
system sales, on hopes of a boost from the agreement.
($1 = 0.7540 pounds)
(Reporting by Pushkala Aripaka in Bengaluru; editing by Rashmi
Aich and Jason Neely)
Dominos (DOM)
