Domino's may supply its pizza shops with flour and cheese from the UK, but their tomato sauce, for example, comes from Portugal. With a no-deal Brexit looking more probable than ever, spending millions of pounds to stockpile seems like a good idea. Other ingredients Domino's thought it would be a good idea to stockpile include frozen chicken and all of the long-shelf-life products like tuna and pineapple.
A no-deal Brexit really threatens British importers of perishable foods with many experts saying it will cause delays at the border, whilst pushing prices up according to the Guardian. New Prime Minister Boris Johnson's government have committed to leaving the EU on 31 October 2019 – regardless of whether a deal is struck.
Domino's had this to say: “A potential no-deal Brexit carries the increased risk of disruption to raw material supplies into the UK and foreign exchange volatility which could increase food costs." Brexit throwing a wrench into the works for Domino's will be tricky, because the pizza giant is searching for new leadership in the middle of a spotty European expansion and an ongoing dispute with franchise holders over profit shares.
David Wild, the chief executive, is stepping down this year after a successor is found, with the chair of Domino's board, Stephen Hemsley, leaving the company after overseeing the recruitment of Wild's replacement. That's a tall order indeed with all of the future disruption from Brexit happening around the same time.
Franchise, Franchise, Franchise
Wild also stated that Domino's was "actively involved in detailed discussions" with franchisees in the UK and Ireland, but is wary of a resolution taking more than 6 months. He stated that, “While dialogue is continuing, new store openings are being delayed and some of our working practices are being impacted. The situation is complex, and we expect resolution will take some time, likely into 2020.”
He went on to say that operations in Europe were "very challenging and trading visibility remains limited". Sales for Domino's fell in Europe by 3.4% year-on-year in the first 6 months of 2019.
Originally a U.S. brand, Domino's opened its first UK shop in Luton in 1985. In 1993, Colin and Gerry Halpern bought the British and Irish franchise. 82% of British sales for Domino's are online, but even though there has been sales growth recently, the company's share price has been disrupted by competition from food delivery rivals like Deliveroo, Just Eat and Uber Eats.
All of this happening at the same time is a tall order for Domino's. Dealing with a potential no-deal Brexit is a challenge for any company trying to survive what looks more and more like a split between Europe and the UK.