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Friday, 15 February, 2002, 16:51 GMT
UK economy fails pizza test
Pizza
Too many pizzas could be bad for the economy
Unemployment has shown a surprise drop, the High Street boom has driven prices higher, yet all may not be well with the UK economy - if the pizza test is anything to go by.

While the country's Domino's Pizza operator has publicly credited store refurbishment, a TV advertising campaign and a drive for quality for surging sales, chief executive Stephen Hemsley admitted darker economic forces may also be at work.

"There is some evidence that our sector is counter cyclical," he told BBC News Online.

"The idea is that when the economy slows people trade down from restaurants to home delivery.

"They want to reduce their expenditure on food, but don't necessarily want to cook, or can't suddenly learn how to."

Figures next month are expected to show the sector grew by up to 8% last year.

Swat team

But Mr Hemsley credited a strategy which has included the creation of a troubleshooting team named "Flawless Execution" for his company's ability to beat the industry average, and report like-for-like sales up 21.4% last year.

Trading update - Domino's Pizza
Pre-tax profit: �3.1m (+31%)
Like-for-like sales: +21.4%
Turnover: �43.8m (+35%)
Employs 5,500 people in own and franchised stores
Served 1m households
Data: Year 2001

The role of the 20-person team is "much as the name suggests... to ensure that the Domino's system is executed flawlessly in all our stores", the firm said in its results statement.

The firm ensures all its stores, including franchised outlets, are refurbished or rebuilt every five years.

"All our units must convey the image and appearance we want," Friday's statement said.

Mr Hemsley said: "If we are going to have an effective marketing or TV campaign, which we have, we need to ensure that the stores are capable of handling the extra volume of orders."

Growth target

The firm, which covers the UK and Irish markets, delivered pizzas to more than 1 million households last year from its 237 outlets.

And it has targeted reaching 2.5 million households - about 10% of the total in the UK and Ireland - from 500 stores by 2006.

"We think that's well achievable," Mr Hemsley said.

Excluding areas such as sparsely populated regions, where pizza delivery would prove uneconomic, the firm believes there is a potential market of at least 10 million households overall.

"At the moment we are only serving 10% of those," he said.

He reported that trading had been "strong" so far this year, with like-for-like sales up 20.5%.

In the City, the upbeat report failed to surprise traders, who had marked Domino's Pizza shares down 4.5p to 73p by the close of play on Friday.

The shares have, nonetheless, proved among London's better performers since falling below 40p in February last year.

The firm operates the UK and Irish Domino's Pizza master franchise.

The US-owned brand, which traces its history back more than 40 years, has been brought to 64 international markets.

See also:

03 Jan 02 | Business
Pizza chain sees topping year
02 Sep 01 | Business
Investors turn to beer and pizza
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