Domino’s online ordering app fails French test
Speaking to investors this week, Domino’s CEO Don Meij said weak sales in France were a key reason the pizza giant missed its full-year profit expectations.
Domino’s, which operates in eight countries, failed to meet its same-store sales targets in Australia, New Zealand, Europe and Japan for the 2017 financial year.
The biggest miss was in Europe, where same-store sales growth was about half what the company forecast for 2016/17: 2.8 per cent, compared to a forecast of between five and seven per cent.
Meij said the fast food business faced six months of online ordering troubles in France and that its value range that did not resonate with French customers.
“We had some address input issues with French abbreviations and slang so customers would be coming to our site and it would be telling them that we weren’t available to them,” Meij said.
According to an article published in the Wall Street Journal, the online ordering app had trouble understanding the way apostrophes are used in the French language (the app is the same as the one used in Australia).
While Meij said the problems have since been resolved, the story remains a cautionary tale of the hurdles retailers face as they set their sights on global growth.
Australia and New Zealand – Domino’s largest market by earnings – had a 13.6 per cent lift in same store sales, below its forecast of 14 to 16 per cent.
Domino’s blamed the decline on a drop in phone orders, caused by a lack of advertising of changes to its telephone number.
The company made a net profit of $102.9 million in the 12 months to July 2, up 25 per cent on the previous year, while earnings rose 28 per cent to $230.9 million.
Both profit and earnings missed Domino’s guidance of 32.5 per cent growth, issued in February after a strong first half performance.
The company expects net profit to increase by around 20 per cent in the 2018 financial year – its weakest pace in four years.
More than $850 million was wiped from Domino’s market value following the forecast, while allegations of staff underpayments have weighed on Domino’s shares since the issue emerged in February.
The company yesterday said it had recovered $1.1 million in unpaid wages and superannuation from its probe into staff complaints and an audit of stores across Australia.
It also announced a $300 million share buyback, which will be funded through new and existing debt facilities.