Jack Cowin’s Domino’s loses 10 per cent of customers after dumping discounts in move to ‘everyday low price’

Domino’s billionaire executive chair Jack Cowin says its move to dump heavy promotions and popular discount vouchers is paying off despite losing 10 per cent of customers who have stopped buying its pizza.

The embattled pizza giant has moved to an “everyday low price” model, where it does not run regular discounts and promotions and instead offers consistent, competitive pricing.

It is a model that has worked well for Wesfarmers-owned Bunnings.

The decision has shown immediate results, Mr Cowin said. Domino’s on Wednesday revealed it had swung back into the black, recording a $40.9m net profit in the half-year ended December compared with a $22.2m loss a year earlier.

Speaking to The Nightly, Mr Cowin said while the move would impact sales — which fell 5.5 per cent to $1.1 billion in the first half — in the short-term, it would make franchisees profitable in the long-term.

Domino’s noted franchise partner profitability increased to its highest level in three years.

“The objective was can we make more money for the franchisees at the store level . . . and that has positively worked,” Mr Cowin, Domino’s biggest shareholder with nearly a 26 per cent stake and also the founder of Hungry Jack’s, said.

“You lose the people that will only go if they get a super heavy discount, they’re price driven . . . but we’re not making any money on those so it doesn’t really impact the company.

“WA became a test market in which we said, ‘Ok we’re going to change the philosophy to having profitable promotions rather than giving the shop away and running sales for sales sake’.”

Domino’s operates more than 3500 stores across Australia, New Zealand, Europe and Asia.

In Australia and NZ, revenue fell 8.3 per cent to $362.7m, while earnings fell 9.3 per cent to $61.5m. Same-store sales declined 4.7 per cent in the half.

“Australia and New Zealand undertook a deliberate reset to strengthen franchise partner unit economics and simplify pricing architecture,” Domino’s said.

“The region reduced reliance on national discounting and prioritised profitable orders and sustainable returns.”

Domino’s was the worst performer on the ASX on Wednesday, closing down 11.1 per cent to $19.27.

It has fallen from a high of more than $160 during the peak of COVID, when takeaway pizzas were in high demand amid extended lockdowns.

Domino’s will pay an unfranked dividend of 25¢ a share, down from 55.5¢ a year earlier.

eToro market analyst Josh Gilbert said Domino’s delivered a result where fewer pizzas were sold, yet the business was in better shape that it was a year ago.

“Domino’s business model only works if franchisees are making money, because profitable franchisees open more stores, invest in their operations, and deliver a better customer experience,” he said.

“The fact that the company deliberately sacrificed earnings in Australia to redirect savings back to franchise partners tells you exactly where management’s priorities lie right now.”

The pizza giant earlier this month tapped former McDonald’s Australia and New Zealand boss Andrew Gregory to take on the top job after Mark van Dyck’s abrupt exit.

Mr Gregory’s appointment comes amid a period of turmoil for Domino’s, currently being led by Mr Cowin following Mr van Dyck’s resignation last July after less than a year in the role.