In preparation for the UK leaving the European Union, Domino’s has spent £7 million ($8.5 million) to stockpile on pizza toppings which may not be available if there is a disruption in supply chains.
The American fast food company’s UK arm announced in a statement on Tuesday that a chaotic Brexit “increased risk of disruption to raw material supplies into the UK and foreign exchange volatility which could increase food costs.”
The company also added: “We expect the increased inventory level related to Brexit to be maintained into 2020.”
Domino’s imports a third of its supplies such as tomato sauce, pineapple and tuna from outside of Britain.
Domino’s is not the only company to be preparing for a no-deal Brexit by stockpiling; McDonald’s, KFC and Pret A Manger earlier this year joined with UK supermarkets to avoid “significant” disruptions to their supply chains.
This comes after Domino’s interim results, as the pizza chain announced that its net debt had risen from £182.7 million to £238 million. They said the extra debt had been accumulated based on their “stock building.”
Only last week, chief executive of Domino’s, David Wild announced he was to leave the company after five years leading the chain.
Many of the store owners have been demanding a bigger slice of the company’s profit with there being an increased pressure to open new stores. Many of the franchise owners who own multiple sites state that profitability has declined based on costs rising.
There has also been increased competition from chains such as Deliveroo and Just Eat, which has made investors concerned for the franchise’s future. As of last year, shares have declined by 25 per cent.
Fears of a disorganised Brexit have increased since new Prime Minister Boris Johnson has insisted the UK will leave the European Union, regardless on whether or not a deal is made to protect trade by 31 October.
British Government have been attempting to minimise shortages to assure the publics’ fear of disruption.
The main concern for many has been the impact on medical and clinic supplies, with approximately 75% being sourced from within or via the European Union.
The British Department of Health and Social Care have written to suppliers, requesting that six weeks’ worth of inventory be stockpiled.