Domino’s Australia franchise’s long-serving CEO steps down, shares drop

9:03 pm Monday, November 04th, 2024

(Reuters) – Domino’s Pizza Enterprises, the franchise’s biggest operator outside of the U.S., said Tuesday its longstanding CEO was stepping down after more than two decades at the helm during which the franchise grew into a multi-billion dollar business.

Shares of the Australia-listed company were volatile in early hours, oscillating between a drop of 6% and a near rise of 4%. They were down around 6% at A$31.67 ($20.84) as of 0021 GMT.

A weak trading update also weighed on the shares. Group same -store sales fell 1.2% in the first 17 weeks of fiscal 2025, with sales in Germany, Japan, and France also declining.

Don Meij, who started as a delivery person at a Redcliffe, Queensland pizzeria that later acquired the Domino’s brand in Australia, was named the firm’s chief executive in 2002.

He led the pizza franchise operator through its initial public offering in 2005, becoming Australia’s first publicly listed pizza chain, and expanded its stores to 12 countries across Asia, Australia-New Zealand, and Europe.

However, the firm had been struggling to maintain sales in a post-COVID era in most of its markets, key being Japan where it had targeted setting up 2,000 stores over a decade but had to pull back due to weak sale volumes and high costs.

Domino’s Pizza, which debuted in Australia in May 2005 with an A$132 million valuation, grew to be valued at A$14.46 billion in September 2021 when the shares hit an all-time high. The company was valued at A$3.12 billion on Nov. 4.

“We acknowledge Don Meij’s enormous contribution & value creation since DMP’s listing but believe this development (Meij’s resignation) is positive because it paves the way for the business to make the changes required to improve unit economics & restore growth,” analysts at Jefferies said.

Mark van Dyck, London-listed food services firm Compass Group’s Asia-Pacific managing director, will replace Meij effective Nov. 6. Mark has also been an adviser to Domino’s board for the past year.

“Whilst the incoming CEO has strong credentials from the Compass Group, managing the relationship with franchisees and improving their profitability will be his key challenge,” Phillip Kimber, a retail analyst at E&P Financial, said.

($1 = 1.5200 Australian dollars)

(Reporting by Sherin Sunny and Sameer Manekar in Bengaluru; Editing by Himani Sarkar)