Domino’s Pizza under price hike pressure as Ukraine war sparks wheat price surge

Domino’s, the British franchisee of pizza, has suggested customers could face price hikes, but insisted the company is “better able than most” to handle the “inflationary pressures” caused by the Ukraine-Russia conflict.

As the Eastern-European countries supply almost a third of the world’s wheat, Vladimir Putin's continued military advance have given rise to fears of global grain shortages, driving inflation.

Domino's Pizza Group Plc DOM.L who source its wheat from the UK and Germany believe they are prepared for the economic fallout and that their customers are unlikely to face the full brunt of their rising production costs.

Chief Executive Dominic Paul said in an interview: "We buy [wheat] in scale, which means we already have good, strong relationships with our key suppliers."

Mr Paul said: "I think we are better able than most to mitigate some of those inflationary pressures."

The chain was already hedged against wheat price inflation prior to the Ukraine conflict, and has continued that strategy, Paul said.

Domino's Pizza also unveiled a 46 million-pound ($60 million) share buyback programme. It reported a 12.5 percent higher annual profit, helped by a marketing campaign that boosted post-lockdown sales.

The company's media and TV ad campaign, targeting families and friends reuniting after coronavirus lockdowns, as well as England reaching the final of soccer's European Championship in July, helped boost orders, Domino's said.

The pizza company also said 2022 earnings should fall in line with current market expectations, adding that its first-quarter trading had "started well".

Shares of Domino's were down 2.6 percent at 340 pence by 0910 GMT.

Elsewhere, popular British baker and fast food chain Greggs GRG.L said costs of raw materials, energy and staff wages were rising more significantly than it had expected, and that this would limit any material profit growth in 2022.