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Domino’s Pizza Enterprises Ltd workers to stay on fast food industry award

Domino’s Pizza Enterprises Ltd (ASX: DMP) have made an announcement this morning about the wage agreement for Domino’s workers.

The company had been looking to get approval of a new Enterprise Bargaining Agreement (EBA). However, today the pizza giant announced that Australian employees will remain on the Fast Food Industry Award.

Nick Knight of Domino’s said that since January the award has provided certainty and stability to team members and franchisees with labour costs within forecasting, which includes paying employees weekend and public holiday penalty rates.

Domino’s said that the wages on the award were similar to those in the proposed EBA, and today’s announcement was not one driven by cost, but to eliminate uncertainty.

Mr Knight said “We are proud to be the first large company in our industry to be on the Modern Award, which ensures Domino’s is a rewarding place to work – whether people are looking for their first job or are hoping to build a career, Domino’s can help pave the way.

“We were prepared to pursue a new EBA because it provided additional benefits for employees, which was supported by our team members in a ballot earlier this year.

“We are still strongly committed to achieving additional benefits and security for our employees but believe this can be achieved more efficiently through input into the current four-yearly review of the Modern Award being conducted by the Fair Work Commission.”

Foolish takeaway

The sooner Domino’s can put this wages story to bed the better. It has been a continuous bad news cycle for the company, so hopefully it can draw a line under this.

The market appears to like the news with the share price up 1.43% today.

If Domino’s can achieve its long-term growth aspirations of higher profit margins and more stores then it could be a buy today, but I’m wary at the moment because profit growth has dropped off recently. It’s currently trading at 22x FY19’s estimated earnings.

For now, I’m steering clear of Domino’s and instead I’m looking at one of these top stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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