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US pizza chain Domino’s announced that its Europe franchises had suffered weak sales.
Sales of Domino’s Pizza Group plc, the restaurant’s European arm, struggled in Germany, Iceland, Liechtenstein [LIK-tuh n-stahyn], Norway, Sweden, and Switzerland. In the first quarter of the year, the restaurant earned £25.1 million, which was a 2% decrease from last year’s £25.6-million sales. Because of the disappointing results, the company is no longer hoping to break even the whole year.
Domino’s Pizza Group plc CEO David Wild attributes the loss to expensive operating costs and high expenditures, especially in Norway, Sweden, and Switzerland. On top of these, the company is on bad terms with its franchise owners because they are demanding a higher share of profits.
Despite the issues, the company is sticking by its European franchises. It has dispatched new management to improve the efficiency of its international stores. The company is negotiating also with its franchisees about terms of ownership.
On a positive note, the sales of Domino’s Pizza Group plc remain strong in the United Kingdom, where it is headquartered. This success was driven by the pizza chain’s four new stores and robust online sales. Because of these, Domino’s Pizza is still the most popular takeout food in the United Kingdom, with a 4.8% sales growth in the first quarter of 2019.
However, its popularity is being challenged by delivery firms such as Uber Eats and Deliveroo. Through these delivery services, Domino’s rivals can now deliver products straight to customers, as well. Nonetheless, Domino’s Pizza is confident that its brand, reputation, and profitability will protect it from losing against competitors.