Domino’s Pizza’s largest Irish franchise business, built up by two brothers from Northern Ireland, recorded a 35% fall in pre-tax profits despite selling and delivering €2.5m (£2.1m) worth more food and drink in 2023 than in the previous year.
Shorecal, established by Charles and Adrian Caldwell, reported revenue of over €64.4m (£54.3m) in 2023, up 4% on the previous year, according to recently published results.
Pre-tax profits at the pizza business fell to €5.6m (£4.7m), down from €8.6m (£7.2m). The cost of sales at Shorecal drove the decline in pre-tax profits, rising to over €45.9m (£38.7m) in 2023, up almost €4.5m (£3.8m).
Dividends paid at Shorecal fell from over €20.2m (£17m) in 2022 to €3.8m (£3.2m) last year.
In March, UK-listed Domino’s Pizza Group acquired the remaining 85% shareholding in Shorecal in a deal worth up to €72m (£60.7m).
The move was part of a growth plan that Domino’s Pizza Group (DPG) outlined last December.
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It will allow DPG to accelerate growth and materially increase the store count in Ireland, with Shorecal’s existing management team, including CEO George Bertram, remaining in place to help oversee growth.
The acquisition was based on what DPG said was an “attractive multiple” of eight times Shorecal’s earnings before interest, tax, depreciation and amortisation. It expects the deal to be earnings accretive in the first year and “significantly accretive” in the long term.
Charles and Adrian Caldwell, who led the Shorecal business, did well out of the deal. The Irish Independent previously reported that the Caldwell family benefited to the tune of €44m (£37m).
In 2019, DPG bought its 15% stake in Shorecal for €12.5m (£10.6m). That transaction valued Shorecal at just over €83m (£70m).
Some of the Shorecal pizza outlets in Ireland have been among the busiest Domino’s outlets in the world.
As of March, Shorecal operated about 34 of the 99 Domino’s stores across the Republic and Northern Ireland.
When announcing the acquisition, DPG chief executive Andrew Rennie said the group believes there is a “significant opportunity” to grow in Ireland.
“Our asset-light and highly cash-generative operating model enables us to invest to drive growth, both in our core UK and Ireland business and also in additional growth opportunities,” he said.
“We are committed to an asset-light business model and our strategy will centre on acquiring, strengthening and then ultimately redistributing stores in the estate.”
For 2023, DPG posted a 3.6% rise in underlying core profit to £138.1m.