Domino’s recently announced that Don Meij, CEO of the company for the past 22 years, will retire. The Board announced the appointment of Mark van Dyck, as CEO. He is an executive with experience at Compass Group and within the Coca-Cola system. Mr van Dyck presented a sensible approach to improving profit margins, but it will take time as improving franchisee profitability is a first-order priority in our view. 

Australian retail sales rose 4.0% in August 2024 year-on-year. This was an acceleration on the 2.6% growth in July with online outperforming at 12.0% growth. Dining-out slowed, but supermarkets were strong.  Afterpay Day, Father’s Day and better weather supported liquor, recreational goods and clothing spend. Pharmacy continues its strong sales growth. We expect sales growth to be softer in the next two months ahead of Black Friday promotions in November.

Australian supermarket sales are at a record low as a share of total food spending. Dining out is winning share of spend and the same is true for the US and NZ. Our research shows that employment growth, inbound tourism and savings tend to be well correlated with dining out spending and all still point to solid growth. Supermarket prices have also risen faster impacting its relative affordability. Dining out is bound to slow, more so in 2024 than now and unfortunately for supermarkets any uptick in volume may be more than offset by a fade in inflation.