Domino's Pizza is ruing missteps in its pricing strategy after lower margins sliced full-year profit by 25.7 per cent.
The Australian-based pizza chain, which also operates franchises in Europe, Asia and New Zealand, on Wednesday reported net profit after tax fell to $122.6 million while earnings before interest and tax dropped 23.3 per cent to $201.7 million.
Overall sales grew 2.2 per cent to $4.0 billion but this was relative to an additional 395 stores opening worldwide, with same-store sales sliding 0.2 per cent.
Chief executive Don Meij says higher labour, ingredient and energy costs weighed heavily on margins and were exacerbated by some suppliers declaring force majeure on supply contracts at short notice, meaning the company did not always get the "value equation" right.
"The scale and pace of these increases meant Domino's leadership needed to adjust our pricing and cost base faster than in our history," he said.
Some price increases passed onto customers, such as a delivery service fee in Australia and New Zealand, "did not resonate with more price conscious customers" who reduced their purchase frequency.
While delivery fees were subsequently removed, some price increases - including on the value range - were accepted by consumers and remain in place.
"While we did not always get our pricing right, our decisive action ensured the sustainability of more than 1000 small business owners whose livelihoods rely on the Domino's brand," Mr Meij said.
"I want to be clear to customers facing cost of living pressures, we do not expect to pass on pricing increases this year."
In June, the company announced it would exit the Danish market, shuttering its 27 stores in the Scandinavian kingdom, as well as an additional 65 to 70 corporate stores globally. It anticipates these decisions will save the company $50-60 million in the next financial year.
These closures were more than offset by the purchase of 287 stores in Malaysia, Singapore and Cambodia as Domino's heads towards its goal of 7100 stores in the next decade.
Domino's announced a full-year dividend of $1.10 per share - a 29.7 per cent drop from the previous year.