The pizza chain has set out a plan to drive “long-term, sustainable growth”, of which marketing investment was identified as a crucial driver.
Domino’s has pledged to “enhance” its marketing investment, describing it as a “core pillar of [its] competitive advantage” as it sets out a plan to grow over the next five years.
The Profitability and Growth Framework (PGF) was agreed between the company and its franchise partners and aims to “capitalise on its significant long-term growth opportunity”. The framework is set out, initially, to last five years, but is intended to go beyond that, with the timescale established so it can be adapted according to market conditions if needed.
The first point laid out in the framework is the business’s plans for “enhanced marketing contribution”.
“The National Advertising Fund (NAF) is a core pillar of our competitive advantage,” Dominos says in a statement laying out the new framework.
Under its previous model, established in 2021, the company’s franchise partners contribute a “substantial” 4% of system sales to the fund. That contribution from franchisees is set to continue under the new plan.
What is set to be “enhanced” is the contribution of Domino’s Pizza Group to the advertising fund. While it had pledged to increase its advertising spend back in 2021, the group had not detailed by how much. What this new framework does is commit an exact number. It will contribute a fixed percentage of 0.2% of system sales to the advertising fund.
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This fund is used to support national campaigns and promote the Domino’s brand.
Investment in value is another key focus for the brand, especially in the current environment. The group will set up a new food rebate mechanism for its franchise partners designed to increase like-for-like orders.
Speaking earlier this year, Domino’s CEO Andrew Rennie said the “number one reason consumers buy from anybody is value”, and that this has been particularly true in recent months.
The new growth framework also contains a commitment to increasing investment in digital capabilities. The brand has around 9.5 million consumers on its app and is currently conducting tests of its loyalty scheme.
This is something the brand has been cautious about rushing into.
“What’s really important is we do it really effectively. I’ve seen too many [loyalty schemes] around the world where they’ve done it, it cost a lot of money and really didn’t get the flow through into the bottom line,” Rennie told investors in August.
Despite caution around the test, the company says it is “excited by the potential to drive increased order frequency” from all its digital capabilities.
As well as enhancing its digital capabilities, Domino’s is also looking to continue to increase its physical availability. It has “adjusted” its new store incentives to maximise opportunities in areas where there are fewer addresses.
Commenting on the development today, CEO Rennie spoke about the benefits of having this framework in driving the “long-term, sustainable growth of the brand”.
“It also means we will be well placed to address the headwinds all consumer-facing businesses will inevitably face in 2025 and will ensure we are in a strong position to thrive in the years that follow,” he adds.
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