Pizza chain chief aims broadside at rivals

“Engage the enemy more closely,” says the former submariner,quoting Lord Nelson,his hero. “That attitude drives me.”

Back on dry land,Mr Batchelor,the incoming chief executive,adds: “There’s a huge buzz about operating in a highly competitive environment.

“Strong competition keeps us on our toes,” he says,referring to the importance of responding quickly to customer orders.

It is not an approach Mr Batchelor plans to change when he takes over from Chris Moore on December 26. According to the company,the average delivery time from when an order is placed is 23 minutes.

Mr Batchelor,who was recruited from Tesco,quit the Royal Navy to enter the corporate world because life became “much less exciting” with the fall of the Soviet Union.

Domino’s has some of the best growth figures in the food industry — an average of 10 per cent like-for-like sales growth a year since 2002 — but there are recent signs of a slowdown. The shares fell 10 per cent on the day of its latest trading statement in September after it revealed like-for-like sales for the year of 2.9 per cent,compared with 12.5 per cent in 2010 in spite of the roll-out of new pizza ranges and a higher advertising spend.

The company,all of whose UK stores are owned by franchisees,said it remained on track to meet analysts’ consensus of £42.1m in full-year pre-tax profits,up from £35.2m last year.

A number of Domino’s competitors have been struggling. Yum Brands has put its Pizza Hut businesses up for sale. Papa John’s,another US import,is still establishing itself in the UK.

According to Domino’s,mid-range,single-digit like-for-like growth is the new normal. Growth could get a boost from Germany,however,which Domino’s entered this year and is at the heart of Mr Batchelor’s expansion plans. “It’s greenfield territory for us — it’s like the UK was 25 years ago where fewer people ate pizza and there were less food deliveries,” he says.

By the end of the year Domino’s will have six outlets there — five in Berlin — with plans to open another 12 next year and a target of 400 in a decade.

Are we to see Bratwurst pizzas soon?

“We have German-sausage pizzas but they like crème fraîche and asparagus too. What we have to learn is what Germans want to eat and not rush into the market and say ‘Eat this!’ because it’s what we eat over here,” says Mr Batchelor.

Apart from Germany,Mr Batchelor says there is still room for growth in Britain,where the company has 700 stores and plans for 1,200 in the next 10 years. That would equate to about one store for every 23,000 households,still well below the one Domino’s for every 14,000-15,000 households in mature markets such as the US and Australia.

Mr Batchelor hopes much of that growth will come with two pizza ranges launched six months ago,aimed at opposite ends of the market – stuffed crust and gourmet. It follows the much-hyped but relatively disappointing sales of Domino’s subs,launched in late 2010 to much fanfare,which sought a piece of the lunchtime sandwich market.

The thin-crust gourmet range in particular is targeted at what the company sees as a key demographic: “healthy but hectics” – young professionals,especially women,who might opt for a PizzaExpress Sloppy Giuseppe pizza over Domino’s Mighty Meaty.

Simon French,an analyst at Panmure Gordon,says: “I’m cautious on Domino’s in the short term. Because of the recent dry,mild weather people are more likely to go out and eat rather than stay home. There’s still expansion potential in the UK but the shares trade a significant premium to their peers.”

© 2011 The Financial Times Limited