Domino's CEO steps down amid talk of tensions over direction

(Sharecast News) - Domino's Pizza said chief executive Andrew Rennie was stepping down by mutual consent with immediate effect amid reports of tensions with the board over the company's future direction as consumers become more cost and calorie conscious. Chief operations officer Nicola Frampton has been appointed as interim CEO until a permanent appointment is made, the company added on Tuesday. The company is also without a permanent finance director until new appointee Andrew Andrea starts in March.

Rennie, who took over as boss in August 2023 and has worked for the fast food outlet chain for 20 years after starting as a franchisee, told the Financial Times earlier this month there was not "massive growth" left in the UK's pizza market, and outlined plans to bet on fried chicken and pursue a second brand acquisition in a bid to return to growth.

Frampton is also an independent non-executive director of Frasers Group and also worked for bookmaker William Hill as UK retail managing director.

"The board believes that there are a number of opportunities to drive further growth and value creation in Domino's core business," said chair Ian Bull in a statement.

"We are focused on identifying the right CEO to lead the disciplined execution of that growth strategy . . . underpinned by a rigorous focus on shareholder returns." Domino's also said it was postponing its capital markets day scheduled for next month.

The company earlier this month said orders dipped by 1.5% in the third quarter. It also warned In August that the takeaway market had "become tougher" as it blamed weaker consumer confidence in the run-up to the government's Budget and rising wage costs for weaker-than-expected sales and a 15% drop in half-year profits.

Competitors are also feeling the heat, with Pizza Hut announcing the closure of 68 restaurants a month ago, after the company operating its UK outlets fell into administration.

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Shore capital analyst Katie Cousins said Rennie's departure was "unexpected and, in our view, and a loss to the business given the wealth of experience that Mr Rennie brought".

"The group is now in a period of interim CFO and CEO ... this is clearly not an ideal situation ahead of the planned capital markets day, and so it makes sense that this event will now be rescheduled," she wrote in a note to clients.

AJ Bell investment director Russ Mould said: "It says a lot when a veteran of the Domino's Pizza empire is deemed not good enough to run the UK version of the company. This looks like a situation where the board are sending a message to the market that something radical must change."

"Andrew Rennie took the top job two years ago, bringing oodles of experience from running the pizza group in various parts of the world. One could call him a pizza lifer, having opened his first franchise Domino's store in his mid-twenties."

"Rennie helped to smooth relations with disgruntled franchisees, and drive efforts to make lunchtimes less quiet through broadening the product range to include wraps."

"However, the market doesn't seem to think it is the right thing to do, given the two-year slide in the share price. Domino's is trying to adapt with the times as competition for fast food is intense, and consumer tastes are evolving."

"Healthier eating habits, as well as appetites being diminished by weight-loss drugs, means Domino's is in a precarious position. Greasy pizzas might be everyone's dream after a few pints in the pub, but they're increasingly off the menu for many other people."

Reporting by Frank Prenesti for Sharecast.com