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The king of the home delivered pizza says timing is everything

YOU can tell when a business is doing well, when despite the recession, its plans to open a new headquarters five times the size of its existing base are still on track. That is the happy position Chris Moore, the chief executive of delivery chain Domino&rsquo;s Pizza, finds himself in. His new 100,000 sq ft head office and central warehouse in Milton Keynes, in the same town as the current base, is due to come into operation in the first half of next year, at a cost of &pound;27m. But in truth the numbers have been falling in Moore&rsquo;s favour for some time now, which is remarkable for a consumer-facing business in a downturn.<br /><br />Last month the business posted half-year pre-tax profits up 35 per cent to &pound;13.1m on sales up 15 per cent to &pound;196.4m, after the operation opened 23 new stores. It added it was on course to open at least 50 this year. Analysts raised full-year forecasts for the business, which sponsors the ITV hit Britain&rsquo;s Got Talent, by around three per cent to between &pound;25.7m to &pound;27m.<br /><br />Moore, a youthful-looking 50-year-old who became chief executive last January but has spent almost 20 years with the firm in a variety of senior marketing and sales roles, is clear why the business is growing at such as pace.<br /><br />He says: &ldquo;People have less money to spend on eating out at a restaurant, but want a treat and so they decide to eat in. It is also a harvest of all the time we have put into product quality and speed of service.&rdquo;<br /><br />Moore adds that a downturn is not necessarily a bad thing for the business, which has a market value of &pound;390m, because &ldquo;anything that keeps people at home is good for us. So things like the smoking ban in bars and restaurants and increases in pub prices are good for us. As is rain and snow.&rdquo;<br /><br />The numbers, again, tend to back him up as the average spend at the firm&rsquo;s 576 stores continues to rise. This year customers spent an average of &pound;16.49 per visit, last year this was &pound;16.23, and in 2006 it was &pound;14.20.<br /><br />Moore &ndash; who cuts a relaxed figure in a shirt, jumper and a pair of jeans &ndash; says that part of the reason for this rise in spending is the age profile of the home delivery pizza market, which is much broader than it was 20 years ago.<br /><br />He says: &ldquo;When I started at Domino&rsquo;s the market for pizza finished at 34. People over that age simply didn&rsquo;t order pizza. But as they have got older they have continued to buy these meals, and as they get older they can afford bigger orders. There has also been a growing acceptance of home delivery, with the growth of companies like Amazon. So now it is not such a strange thing to pick up the phone and have a hot meal delivered to your door in under 30 minutes.&rdquo;<br /><br />This growing acceptance led the business to sell 37m pizzas last year, and that means his main warehouse underneath Moore&rsquo;s compact first floor office is able to make 20,000 pizza bases in 24 hours at full tilt, which along with sauces and toppings are delivered to the stores.<br /><br />Apart from selling food to the franchises &ndash; which employ 18,000 people &ndash; Domino&rsquo;s makes money by collecting a weekly royalty of 5.5 per cent of sales from the stores, of which 2.7 per cent is sent back to the US parent business.<br /><br />In 1993 the US founding company sold off a number of master franchises in Europe and around the world to raise cash. Under the agreement with the US the UK business must also open 27 stores a year. In return, the UK firm can set its own strategy and operate pretty much autonomously.<br /><br />The stores also pay five per cent of their weekly sales into a UK national advertising budget, which Moore and his central unit of only 350 administer. This year that advertising pot is worth &pound;18m, but because of growing sales is set to rise to &pound;20m next year. Moore also recommends the stores spend between 4 and 4.5 per cent of their weekly sales on local ads, which they arrange themselves.<br /><br />Moore says a typical store owner is a 35-year-old &ldquo;entrepreneur.&rdquo; He adds: &ldquo;We don&rsquo;t look for food experience. We actively discourage corporate owners.&rdquo; Moore explains that the firm used to own some of its own stores, but when these were sold off to franchisees weekly sales soon shot up by 20 per cent.<br /><br />A potential store owner has to go through two interviews, and has to work for a period in an existing store to see if the candidate is their kind of person. He says: &ldquo;We want to see how good you are with people. We want high energy people, who are outgoing.&rdquo;<br /><br />But before all this, a potential store owner has to be able to raise &pound;260,000 to open a new store. Typically, the owner will have to come up with a third. The bank will match that, and Domino&rsquo;s leasing unit DP Capital will finance kitchen equipment, making up the final third.<br /><br />Moore says banks are still lending in this area. He says: &ldquo;If you go to a bank with a food franchise proposal that is McDonald&rsquo;s or Domino&rsquo;s they will listen to you and are willing to fund that. But if you go with another franchise in mind, or want to start up on your own, you will find that very difficult.&rdquo;<br /><br />There is no shortage of people willing to work under the Domino&rsquo;s umbrella, Moore says they get around 5,000 franchise applications a year.<br /><br />The average Domino&rsquo;s franchisee owns 4.3 stores; in 2005 this figure was 2.5 stores. The firm has actively pushed for fewer store owners.<br /><br />Moore explains: &ldquo;Too many franchisees diluted the standard and culture of the business.&rdquo; This move must have also cut administration costs. Now the business has 134 store owners for its 576 outlets, with its largest franchisee owning 58 stores.<br /><br />Domino&rsquo;s sites its stores in areas where around 40,000 households are within eight minutes drive. But Moore thinks that over the next decade this will come down to a store with a 20,000 household catchment area, due to carefully integrating new stores with existing ones.<br /><br />He points out that in mature markets like the US, where the brand began in 1960, some stores service as few as 5,000 households.<br /><br />Moore says the average delivery time is 22.5 minutes, but again believes this can come down. He says: &ldquo;Around 20 minutes would be good. Timing is a pivot of the business. The company that attracts the most customers will be the one that can deliver consistently over a long period of time. You must deliver the pizza when people are hungry, not angry.&rdquo;<br /><br />He explains that 30 per cent of a store&rsquo;s takings come between 5pm and 9pm on Friday and Saturday.<br /><br />He adds: &ldquo;You have to be able to handle that amount of business in that limited period. That&rsquo;s showtime.&rdquo;<br /><br />At the moment investors will be happy that Moore is managing to keep the Domino&rsquo;s show on the road in fine style.<br /><br /><strong>CV </strong> CHRIS MOORE<br /><br /><strong>Age:</strong> 50<br /><br /><strong>Work:</strong> He spent a decade in advertising, much of it working for McCann Erickson in Rio de Janeiro and then London. Joined Domino&rsquo;s in 1990 to set up its European marketing department. Worked in a variety of senior roles before becoming chief executive of Domino&rsquo;s UK and Ireland in 2008.<br /><br /><strong>Education:</strong> MBA, London Business School <br /><br /><strong>Family:</strong> Moore was born in Weymouth, but spent 10 years in Rio from age 17 when his father, a defence contractor, moved to work out there. He is married to a Brazilian and has three children <br /><br /><strong>Lives:</strong> Towcester, Northamptonshire <br />