Hotter competition serves up much bigger slice to Domino's

Don Meiji says competition has brought down prices and consumption has skyrocketed.

Domino's Pizza made nearly twice the profit it was expecting in New Zealand in 2005/06 as people ate more pizza when competition lowered their price.

Don Meiji, chief executive of Domino's Pizza Australia New Zealand, said yesterday reports of a "pizza war" spurred by new entrants such as Hell's Pizza were a media creation.

The listed Australian pizza-maker yesterday reported a 104 per cent increase in annual net profit to A$13.04 million ($15.64 million).

Operating earnings in New Zealand of A$1.5 million were almost double what the company expected.

"New Zealand has been our most exciting and most high-growth market out of the 28 markets we operate in," Meiji said.

The size of the pizza market was expanding and that was good for cheese supplier Fonterra.

"Three years ago Pizza Hut was a monopoly in New Zealand when they bought out Eagle Boys. They drove the prices up significantly for a product that should really be a commodity."

Domino's started in New Zealand four years ago and 15 months ago bought Pizza Haven.

"We brought the price of pizza down to its real price and consumption of pizza has skyrocketed," Meiji said.

"It is not a war; it is just a reality of bringing the proper prices to the market and that's been happening for the last three to four years."

Domino's is a franchise business in New Zealand which employs more than 1000 people. It has 58 stores and is aiming to increase that to 85.

New Zealand is expected to be the fastest-growing part of the company's Australian and New Zealand business during the next couple of years.

The company's result yesterday included news of a new image and store refurbishment programme.

"This image, called Vision 2020, will give our new, refurbished stores a more colourful, fresh and eye-catching look from the end of 2006," Meiji said.

It will be rolled out across all stores over the next seven years.

Domino's posted a 29.6 per cent rise in group revenues to A$172.9 million in the year to June 30.

The company is paying a final dividend of A6.8c a share fully franked, up 28.2 per cent on the prospectus forecast for total dividends in 2005/06.

- NZPA