Domino’s hikes pizza prices on Sundays to cover penalty rates

Dana McCauley
JANUARY 10, 2017
news.com.au
YOUR pizza craving just got more expensive, with Domino’s introducing a pesky surcharge to help cover workers’ penalty rates.
Australia’s largest pizza company this week began tacking an extra 10 per cent onto all Sunday orders, in what it says is a move designed to cover the cost of a voluntary increase to workers’ pay rates.
Domino’s said the pay increase and surcharge were among a number of pricing models successfully tested on customers, and agreed on by franchisees.
But pizza lovers have responded with incredulity and outrage, blasting the chain on social media for what they see as a blatant cash grab.
“How is it the customer’s responsibility to pay penalty rates?” Rowan Oldmate wrote on Facebook, pointing out that the business made millions of dollars in profits each year and was happy to splash out on hi-tech publicity stunts.
“You’ve just lost a family of customers and we will be visiting our local independent pizza store, not Domino’s,” he said.
Domino’s, which almost doubled its full-year profit in Australia to $92 million in the 2015-16 financial year, counts itself as a tech company rather than just a food business.
Last year it unveiled robot delivery prototype Dru and began a drone delivery trial in New Zealand, along with technological advancements designed to speed up delivery times.
The prospect of higher wage costs had loomed over Domino’s for more than a year as pressure mounted to bring its pay scale into line with industry standards, amid reports of teenage delivery drivers paid as little as $14.51 per hour.
A Deutsche Bank report predicted in July that introducing penalty rates would have “a significant effect” on stores’ profitability.
‘PAY IT YOURSELF’
But customers had little sympathy for the retailer, arguing that the company should wear the cost of the wage increase.
“Pay your own staff what they deserve, don’t dump it on your customers,” wrote Jarrad Brownnutt.
Carla Burgess posted that she was switching to archrival Pizza Hut, while Patrick Tuohy dubbed the new pricing “pathetic”.
“Because of this, not only will I not order Domino’s on Sunday but I will not be ordering it at all,” he wrote.
“You are a take away food place, you are the one who wants to open on Sunday. Charging extra on public holidays is one thing but now Sundays. How does go shove your pizza sound.”
Another customer claimed to have done a telephone survey of Domino’s stores on Sunday, and found that some staff were not being paid their extra 25 per cent.
The chain’s social media representative asked for further details and promised to investigate, writing that “we will have proactive checks to ensure all of our employees receive the additional wages, but if you would like to PM or email us any stores you are concerned about we will pass this on to senior managers.”
Adult casual in-store workers should now be paid between $29.16 and $29.97 an hour on Sundays, while drivers should get $26.04 an hour, plus $2.27 per delivery.
‘BUSINESS AS USUAL’
Domino’s is expecting to finalise negotiations with the Shop, Distributive & Allied Employees trade union in the first half of 2017.
“As the negotiations have taken longer than anticipated, largely due to the significant disruption in the industrial relations environment, we have voluntarily increased the rates paid to all drivers and instore employees across all 633 Australian stores,” a company spokeswoman said.
Chief executive Don Meij commented on the looming wage increases last July, saying the company was “well and truly ready” to weather the extra cost.
“Increases are not nice and you just want them to go through, and there’s a bit of anxiety about this,” Mr Meij told Fairfax Media at the time. “But this is business as usual. We’ve built this in.”
Deutsche Bank concluded that while penalty rates would represent “a significant cost impost”, potentially hitting profits by as much as 24 per cent, its analysts predicted that Domino’s would survive thanks to its tech-focused push to increase sales.
“We don’t believe this will break the business given technology and product development should drive continued sales momentum,” the report said.
dana.mccauley@news.com.au