Okay, good morning everybody. Thanks for coming through this morning with this lovely weather, which we love because it's great for pizza. We call them free vouchers from heaven. So, appreciate you spending time with us this morning for our 2023 results. My name's Andrew Rennie. I'm the Chief Executive Officer of Domino's Pizza Group. And on my left here, I'm also delighted to be joined by Edward Jamieson, our CFO, and Will MacLaren, our Head of IR. If you come with me on page 2, we'll talk about very briefly I'll give a overview of our strategic progress so far before I head over to Edward to go through the numbers, and then I'll come back and talk about the greater business in more detail.
First of all, we're very proud of what the team and our franchise partners have been able to deliver: strong EBITDA growth again this year. Our franchisees are incredibly managing their stores incredibly well through, you know, if you look back at the year that was 2023 and all the challenges with utility and gas prices and utility, commodity prices, etc., it was a tough start to the year. They managed it exceptionally well, and we're able to grow profitability for their stores, above the 2019 numbers, which is quite impressive. Not only that, they also delivered the best store growth in five years. And as you'll hear more about later on, we intend to we actually beat that again this year. So the business really is in growth mode, which is what I'm here for.
We've also upgraded our medium and long-term store targets. A lot of data, a lot of thought, and a lot of work has gone into that, so it's a number that's driven on hard data. So we're excited to talk a bit more about that today. And also we'll be talking about the acquisition of 100% of the shares in Shorecal, which are already a partner over in Ireland, which has been a great partnership for us, and we look forward to talking more about that a little bit later on. So all in all, we've got a clear plan to deliver earnings and cash flow growth for our shareholders, but it's a real team effort. So with that, I'll pass over to one of my key team members, Edward, to talk more about that. Thanks, Edward.
Thank you. Thank you, Andrew.
Thank you, Andrew. Good morning everybody. It's a pleasure to be here this morning and to present the full 2023 full-year financial results and to update you on our outlook and guidance for 2024. Firstly, I'm pleased to report that the successful execution of our strategy is clear in our headline financials. 2023 was another year of like-for-like sales growth, improved orders, and increased returns to shareholders. 2023 was also a 53-week year, and as we go through the financial results, I'll refer to 52-week growth rates for a better comparison with 2022. Like-for-like sales, excluding VAT, were up 5.7% in the year, ahead of the prior year, with continued order count growth in an uncertain market. Our revenue increased 11.1%, and we're pleased to report underlying EBITDA of GBP 138.1 million, at the top of our guidance range.
Free cash flow increased by GBP 18 million to GBP 97 million, driven by strong trading and working capital management. Underlying earnings per share declined to GBP 0.18, largely driven by an increase in the corporation tax rate and higher interest costs. Finally, we've increased the full-year dividend by 5% for the year, in addition to GBP 90 million of share buybacks announced in 2023, which have now been completed. Turning to the next slide. Let us go into System Sales and order count in a little more detail. Starting on the left-hand side, we've split out the impact of sales and orders between collection and delivery. System Sales grew 5.8%, with increased sales in both delivery and collection in the year. The 53rd week was strong, which reflects the inclusion of Boxing Day and New Year's Eve in the final week.
Overall, total orders were up 1% on the prior year, with the decline in delivery orders more than offset by the growth of our collection business. Collection orders were up 13.3% in the year, and we continue to see a material opportunity to grow our collection business further. As a reminder, in line with other international markets, we see the potential for this to be close to 50% of orders. Delivery order count was down 4.8% in the year, and we're focused on returning our deliveries to growth. Overall, our like-for-like sales increased by 5.7% last year, which is ahead of the prior two years. As I mentioned on the previous slide, system sales were up 5.8%, driven by new store openings, increased orders, and price. Reported revenue increased 11.1%.
This was driven by a 14.4% growth in our supply chain revenue, with a smaller increase in royalties on system sales. Corporate stores revenue declined 10.2%, primarily due to the sale of five corporate stores at the end of 2022. Our national advertising fund and e-commerce expenditure increased 11.2% in the year. Look, this is a significant competitive advantage for the Domino's system, as it gives us and our franchise partners real scale as we continue to strengthen the brand and offer our customers compelling value. Looking at EBITDA margin as a percentage of system sales, this remains stable at 8.8%. I'm pleased that our technology platform projects are largely complete and that the costs in 2023 were in line with guidance. Our new e-commerce platform will create significant capabilities for our digital channels, remove constraints for our franchise partners, and ultimately provide an enhanced experience for our customers.
Importantly, it also results in a more secure and resilient platform to seamlessly scale for our next stage of growth, and the cutover of the various channels is in progress. The ERP system will deliver efficiencies and process improvements and will complete this year in 2024. Now, turning to the next slide. The majority of our EBITDA comes from the supply chain center, through procurement, manufacturing, and the distribution of products to stores. In FY2023, we maintained outstanding service levels, with 100% availability and 99.9% accuracy. Once again, this is due to the commitment of our supply chain colleagues working collaboratively with our franchise partners, and I'd like to thank all of those who helped deliver this outstanding performance. Our EBITDA from the supply chain increased 24.9% compared to the prior year. This increase was primarily driven by food costs and increased volume.
Net overheads were around GBP 11 million higher than the prior year, driven by expenditure on new store incentives, investment in talent, and general cost inflation. Corporate store EBITDA was lower, largely driven by the sale of five corporate stores towards the end of 2022. This resulted in underlying EBITDA before technology costs and Germany increasing by 8.3% in the year, with underlying EBITDA at the top of our guidance range of GBP 132 million-GBP 138 million. Let me briefly walk you through the year-on-year movement. Last year, we reported underlying EBITDA of GBP 130.1 million. Our underlying trading drove an increase of GBP 12.8 million. We made a GBP 2.3 million profit on the sale of a freehold property, which was more than offset by the lost contribution from corporate stores and the non-recurring nature of last year's sale.
The prior year EBITDA benefited from a GBP 1 million revaluation of our Shorecal joint venture, which did not repeat this year. You can then see from the chart the impact that no contribution from Germany and the GBP 3.7 million increase in technology platform costs had on our EBITDA performance in the year. After taking into account a strong final week of trading, we reported underlying EBITDA of GBP 138.1 million. Moving to the income statement, the depreciation and amortization and finance costs were in line with guidance. Taxation was higher than the prior year due to an increase in the U.K. corporation tax rate from 19% to 25% in April 2023, at a one-off additional GBP 1.5 million transfer pricing charge. This resulted in a 9.7% reduction in underlying profit after tax in the period, with underlying EPS down 4.3%, the difference being driven by share buybacks.
It's worth noting that based on the FY2022 effective tax rate, underlying EPS would have been up 6%. Our asset-like business model generates strong free cash flow. Trading from operations produced GBP 138.1 million, and let me walk you through how this flows into our free cash flow. We had a working capital inflow of GBP 10.2 million compared to an outflow of GBP 17.5 million in the prior year. This was primarily due to the timing of creditor payments and cash receipts. Net interest was higher, driven by the timing of payments on the GBP 200 million of private placement notes that are fixed at 4.26%. We also incurred a GBP 11.9 million cash outflow relating to historical share-based compensation arrangements. These had been provided for in prior years, and so there was no impact on profit in 2023.
So overall, increased underlying EBITDA and effective working capital management drive a GBP 18 million increase in free cash flow to GBP 97 million. Let me run you through how we use this, given our disciplined approach to capital allocation. You'll now be familiar with this slide as we first introduced this in March 2021 and update you every six months. We have an asset-like business, which is highly cash-generative. We have this framework to ensure that effective capital allocation can amplify the benefits and returns from the cash generated by the business. We want to retain a sensible level of leverage, which we believe to be around 1.5 x-2.5x . Working within these parameters, we'll allocate cash in a disciplined way.
We generated GBP 97 million of free cash flow in the year, and let me walk you through how we use this cash. Firstly, we continue to invest in the core business to drive long-term sustainable growth, and to that end, we invested GBP 20.8 million in capital expenditure in the year. We'll maintain a sustainable and progressive dividend. We'll pay a full-year dividend of GBP O.105 , which reflects a 5% increase compared to the last year and which indicates our confidence in the business. The cost of the FY2023 full-year dividend is GBP 42 million. In the year, we received the proceeds from the sale of Germany and returned GBP 70 million to shareholders through a share buyback. From free cash flow generation, we also returned a further GBP 20 million to shareholders through a separate share buyback program.
Consistent with our growth plans and our capital allocation framework, we've today announced the acquisition of the remaining stake in Shorecal, which Andrew will talk to shortly. So we're confident that our business model will continue to deliver meaningful free cash flow growth over the medium to long term, and combined with our strategy to build a larger and more cash-generative business, we remain committed to returning surplus cash to shareholders. Here you can see how our net debt has moved in the year, the sources of our cash inflows, and our capital allocation framework in action. So we started the year with GBP 253.3 million net debt. As I've already explained, we generated GBP 97 million of free cash flow in the year. We received a further combined GBP 79.6 million from the German associate.
Here you can see the cash outflows in the year: CapEx of GBP 20.8 million, GBP 41.9 million paid out in dividends, and GBP 97.8 million in share buybacks and some purchases on behalf of the Employee Benefit Trust. This resulted in year-end net debt of GBP 232.8 million, giving leverage at the end of the period of 1.77x , within our target range of 1.5x- 2.5x . Before I turn to our guidance, I'd like to go through our 2024 CapEx in more detail. As I previously said, when discussing our capital allocation framework, our priority will always be to invest in the core business. As guided, now spending on our technology platform projects is largely complete. We expect CapEx to be in line with recent years.
In 2024, we expect CapEx to be around GBP 20 million as we continue to invest more in the system to drive sustainable and profitable growth. There are three pillars to our CapEx in 2024. Firstly, within our supply chain, we're investing in automation projects and the completion of the expansion of our capacity in Ireland. Secondly, having completed the development of our new e-commerce platform, we're now focusing on the cutover of channels and enhancing the customer experience. Finally, our investment will also be focused on developing and continuing to improve our core franchisee operations technology and our support office. Turning to current trading and guidance. We've maintained strong momentum against our key strategic priorities in the first quarter, with a rapid deployment of the Uber Eats trial and seven new stores opened, with a further 33 with plan and consent or under construction.
We expect to see some food cost inflation this year, which, in line with our model, will be passed through to our franchise partners. Last year, we proactively took action to reduce our cost base, and this will partially offset the overall impact of inflation on our cost base in 2024. As a result, we look forward with confidence and expect to deliver FY2024 underlying EBITDA in line with current market expectations, and hence delivering another year of further profit growth. The technical guidance is on the slide, and we're happy to take any follow-up questions in due course. Thank you, and now let me hand you back to Andrew.
Thanks, Edward. Okay, we come on to slide 18 now. I'd like to talk about a few things here that have been achieved in this business in the last four years, things of note.
I think a couple of standouts for me were the fact that collection orders grew 18%, but the opportunity is still much bigger than that. Today, we sit at roughly 37% of our orders are collection. I was in the U.S. only a couple of weeks ago. When I first started in this business, almost 30 years to the day, collection in the U.S. was about 2%. Today, it's 55%, and Russell said to me that he believes he can keep growing that. That means we're 20% behind where the U.S. is today, and I think the initiatives that I'll talk about soon with our launch, etc., will push us towards that 50% barrier. Now, people quite often don't understand that actually collection is actually a very profitable part of our business, and it is a different customer.
So you aren't stealing from a delivery customer. It is a totally new customer. So I'm very excited about that. And the business I come from previously, in my past life, we had a much higher carryout percentage than we have today. So I think huge opportunity to keep that growth and accelerate that growth. I think the other one too is 11% of store growth, which is admirable. But based on what we achieved last year and based on what we already have in the pipeline this year, we have, you know, complete confidence in hitting over 70. So beating that number of last year, which was double the previous five-year run rate, which gave us complete confidence to be able to come out and talk about the fact that 1,600 stores in the next few years, 2,000 stores, and it doesn't stop there.
That doesn't mean we're capped out at 2,000 stores. That means we have a clear line of sight to 2,000 stores. So even at 2,000 stores, we're still 15%-20% under-penetrated of other Domino's, large Domino's markets around the world where they are today, and they're still growing. As an example, the U.S. has been going. The brand has been going 64 years. This business next year will be 40 years old. The U.S. is still growing, and they're 24 years older than us. It just goes to show that through technology and different day parts, we can continue to grow this business for a lot, lot longer yet. If I move on to the next slide, you know, I think the other thing too is that we continue to grow market share.
You know, when we haven't really gone after it yet, this day part that we're going after is not an area that we've typically gone after. It's an underutilized part of our business. So the franchisees are fully supported behind us and really going after this lunch strategy, which I think will really help us take more market share. So we feel very confident about that. If we move on to the next slide, this for me is sort of the, I suppose, takeaway slide for a lot of people. I know that a lot of analysts in their numbers, the growth target in the marketplace was around 1,600, 1,650, 1,675, depending on who you spoke to. We're making it very clear we put a lot of research into this. We had a third-party company with 32,000 data points. We used all our own data of our own stores.
Plus, I went around and met with every franchisee. The number one thing the franchisees wanted from me was more growth. They said, "Andrew, we've got the team. We've got the desire. We've got the balance sheets. Help us find more stores." So that's what we've done. And Nicola and her team have done a fantastic job plotting where these stores are. So they're not just ambitious, sort of pluck-out-of-the-sky numbers. They're stores that we can see already with villages, with fortressing. You know, we've got stores that are so busy now, they have to open a second store, which is fantastic because it's a win-win for not only our franchisees because they're able to have better labor metrics, but it's a win for our customers because they're able to get better service, faster delivered pizzas. And faster isn't about the speed.
It's about the temperature and the quality of the pizza, which lists frequency, etc. And then on top of that, the number one reason people choose you is proximity for collection, so we get closer to our customers as well. So for me, this slide here is very important is that, it's a well it's a data-driven number. You know, it's a hard, hard number and, you know, it gives both medium and long term, and we feel very confident about that. Now, please note the plus signals behind the 1,600+ and the 2,000+ and the GBP 2 billion+ and the GBP 2.5 billion+. We don't expect you to get to those numbers and stop. You know, they're minimum targets from our point of view. They're not caps. They're minimums. So we do have a lot of confidence in going after those numbers. Next, come with me on slide 21.
You know, really, really proud of being able to buy this business. This business has notoriety globally. The job that Adrian and Charles Caldwell have done in that business has been fantastic. They've been great ambassadors for the brand. We truly wish them well. They've been great partners to deal with. We feel, you know, like we have a legacy to perpetuate here. We've got an incredible team led by George, on the other side in Ireland and Northern Ireland. We really find it's important to help drive the strategy in that country that we put our money where our mouth is. So we're really confident of taking our shareholding from 15%-100%. We've also got, obviously, Stoffel Thijs, who came from Germany. He's been a 27-year-old Domino's who knows how to help drive these businesses.
So his task, to start with, is part of that project to drive this business forward. Attractive multiple. It's going to be accretive, but it's more about 25 because we want to get the business. We want to do some investments to set the whole country up for success, not just this one investment. So really, really happy to be part of that acquisition. Again, this goes back to the framework we spoke about in December about focusing on the core first. This is an important part of that first step of that core, and, you know, really proud to be able to bring that to you today. If you come with me on the next slide, 22, you know, why did we buy it? I mean, one of the first reasons is that Ireland is 50% less penetrated than the U.K. today in terms of Domino's stores per capita.
So we think that having our full investment in Ireland, having our focus, not only helps this business but helps the other franchisees as well. The Domino's brand is very strong in Ireland, some of the most busy stores in the world, some of the most profitable stores in the world. We think we can multiply that, you know, possibly doubling that business over there in the very short term. So we've got a great, we've invested in our commissary over there. So this is another way that we're leveraging shareholders' investment over these last years. We're going to synergize those investments along with the technology, of course. So we feel really, really positive about, you know, where we're going with that investment and why we've done it. I think it validates, again, we're focusing on the core first. Again, this is our, our framework here.
You know, I look at this every day. It's actually the screensaver on my phone. That's how important it is to me. And the number one thing for me, I wake up every day thinking about how do we make sure our franchisees and I can show you the phone to prove it if you like. There it is there. Is that franchisee profitability, having been an ex-franchisee, is so important. We're in a partnership here. Our franchisee profitability leads to more stores. And guess what? You're seeing more stores open last year, double the amount. You're seeing even more stores opening this year. The reason is that franchisees' profitability is in a good place, but we're never happy, right? So we're continually pushing that.
And one of the things that gives me great confidence is that we all know the minimum wage is a steep curve this year for every retailer. We embrace that. We've got a strategy behind that. We've got technology behind that that will not only roll over that, but I also think that will actually improve profits again this year for franchisees, even taking that into account. And we've got to remember too, a lot of those people that are benefiting from that are our employees. That makes us very happy. They're also Domino's Pizza customers. So we also benefit from that as well. Value for money, as I'll talk a little bit later on about, but as an example, for the first time in the history of this business, we're going to be going out with a GBP 4 price point. Never happened before. So GBP 4 at lunch.
We've got our Cheeky Little Pizzas, which are under 600 calories. We've got our Wraps under 450 calories. We've got fries. We've got our incredible cookies. And who hasn't heard about our cookies lately, right? These are the great Creme Egg story, of course, but our everyday cookies as well. You can buy two of those. You can buy a small serve of chicken. We've never had those things on offer before, ever. So that's quite exciting for our customers, and our consumers, of course. Particularly in this market, I think our consumers need value, and we're supplying the value in a very profitable way because by going after this daytime segment we haven't done before, it actually sweats our assets much better for our franchisees. Our digital platform is now constructed.
We're now at the ability we're able to start rolling out a few of the exciting ideas and projects that we've had on the sort of back burner for some time now. So I'll be able to report more about those and their success come in August. And convenience. You know, one of the biggest things for convenience is proximity to the customer, not only in terms of collection that we're closer to them, but when we get closer to them, we can deliver in a faster way and give a much better product. And I really do believe that we have the best delivery pizza the best delivery business of food bar none in the U.K., and it's only getting better, shown by our better delivery times last year.
So, franchisee profitability, as I said, was ahead of 2019, which is the best comparable with an apples-for-apples, 9% ahead. You know, we'd like to do that again this year. We have some initiatives in place that if everything goes in our favor, we think we could do that or maybe even better that. We think they did a fantastic job. You know, as I said before, the utility costs, etc., that were faced with, you know, the team worked really hard. And I'll, you know, give a lot of credit here to our training department. They trained and trained and trained and trained thousands of employees throughout the year how to be more efficient, how to give better service, and they paid off in spades. They really did.
You know, it's hard to describe to some people about what it means to be a Dominoid, but in Tom Monaghan's speak, it's about saving seconds, about saving steps inside the store. Every minute counts. You know, there's incredible passion to save every second for the customer, and we're hell-bent on that. One of the reasons I was in the U.S. a couple of weeks ago was looking at some new technology they have that can save us two or three minutes in store. Now, that's huge in our business. So we're looking to deploy those assets over the next few years. Continued alignment. You know, I can't thank the franchisees and our team enough. You know, this is a different leadership team and a different board.
You know, it's a completely different space to where this business was some years ago, which I'm very proud of and will never stop working at. But, you know, they're not only colleagues for me there. A lot of them are my friends. So we work very hard every day. We work together. And the thing that really impressed me was this second generation of coming through, is that the hunger from the franchisees today and the desire for them to have growth for their children when I talk children, I'm talking 25, 35-year-olds who want the next 20, 30 years of growth like their parents have had. So the way I think about this business is setting the pillars up for the next 10, 20, 30 years of growth. As I said, next year, we're 40 years old. U.S. is 64 years old.
There's no reason why we can't grow for the next 20, 30 years at least. Value for money. The number one reason consumers, I think, buy from anybody is value. And I think the most important thing is value isn't just price. Value is product, service, and images well divided by the price. So for us, it's really important to make sure it's a really good product, a really high-quality product. You know, I'm really proud of the fact that we could have taken shortcuts, taken cheaper products to lower the price, etc., but that's not what we're about. We're about supplying the best product in the marketplace, even against, you know, the trends of food pricing, etc., making sure that we deliver it on time and as fast as possible. We measure this metric down here is delivered on time.
It's a metric I'm really focused on because to me, it's about, again, what Tom Monaghan brought out was the old days of 30 minutes or it was free. We don't talk about that anymore for legal reasons, etc. We want to make sure the safety of our team. But internally, we talk about it every single day. In fact, we give away awards every month to stores that have 100% of their deliveries under 30 minutes. So not one delivery in a whole month is delivered to a consumer over 30 minutes. And we have many stores in that category now, and we intend to get much more this year. So really happy with that.
Our technology with GPS is really helping to achieve those goals and getting much more data points so we can actually give franchisees great feedback, which they love, which they can go back and help then train their team to do a better job as well. The next one is, you know, value for money in terms of price, right? The service is the most important part, but price is important to our consumers, particularly in the current environment. We're very happy that we've got our price what we had the Price Slice. We've now moved that to a weeknight steal, so GBP 8, GBP 10, GBP 12 ., Monday to Thursday. Incredible value for an individual, a couple, or a family. Our franchisees are fully supporting this and are doing very, very well.
As I said before, you know, the lunch GBP 4 deal is, you know, we say, "Give us four." It's only a few weeks away from launch. So we're very excited about that. And part of the reason why we held back marketing in January was to be strategic, to apply to great initiatives like this, also to the loyalty that we'll be launching this year, also to the Cream Eggs, the innovation, the Carbonara pizzas. The list goes on. You know, we really do have an incredible marketing and innovation team as well that's got we've actually got a whole calendar booked out for the next two years already in place. It's quite incredible. So these things, I'm very excited about. You know, as I said before, innovation's been doing a great job.
You know, I think, you know, I don't need to speak about the Cream Egg cookie too much, but on the other side, we're launching more healthier products as well. So we want our consumers to have choice when they come to us. It's not just all about, you know, having their favorite treat. It's also being able to have a guilt-free purchase as well. The Wraps are now in all stores. We're very excited about what the Wraps are doing for us. The Italian range in certain stores. The Mexicana incredible pizza went very, very well for us, and Loaded Fries has been very successful as well. So the innovation won't stop. If we come through to slide 28 now, just a little bit on the digital acceleration. I mean, it's quite incredible that three-quarters of our business now effectively is on app.
You know, that growth will continue, but it's been a steep growth curve. Some people have mentioned the fact that the app downloads are a bit slow, but what we have to remind people is that we're also on Just Eat. We're also now 630 stores on Uber. People can also order online directly. People with collection typically come and order over the counter, so they don't use an app sometimes. So there's so many channels that people can go through. You can't just measure off one device. But, you know, with the new technology we have rolling out now, the app is very useful to be able to communicate with our customers. So really happy that, you know, loyalty is about to kick off. We've already got phase one is about to launch. There'll be three phases.
So by later this year, we'll have some really hard data to be able to share with you. But I'm quite excited about that. And what's important is that it's a data-led decision on loyalty. We don't just throw money at something. We're doing it step by step to make sure that it's beneficial for our franchisees and our consumers. It has to be a win-win. Moving forward on slide 29, spoke about it before, but I think for me, the results speak for themselves, right? 60 stores last year, basically a doubling of the previous run rate. Over 70, we will do this year. We will do. That's not an if or a maybe. We will do, and hopefully more. We have a clear line of sight of those things. So the team have been working very hard to get those 70 stores. It's not something they started yesterday.
That's something they started 6 months, 12 months, 18 months ago. So that's how far out we think. And again, the convenience that brings to consumers is quite incredible. So again, it's a win-win for franchisees and consumers. Slide 30, you know, we had a lot of success this last year with going to smaller territories, villages where Domino's has never been before, but they obviously know the brand. And the brand has such value now that when you get there, they blow the doors off. We're seeing sales in some of those villages where they only have a population of a third of the size of our average store. They're doing the sales of the national average or more in some instances. So it gives us great confidence. At the moment, we're only covering 85% of the U.K. and Ireland population.
So we've got 15% of white space. Additionally, we've got our stores where we carve out more new stores because our stores are so busy. So that gives great better efficiency for the franchisees and, of course, a better product for our customers. Slide 31, Just Eat partnership is going really well. I want to thank them. It's been a great partnership, and we continue to do well with Just Eat. The beautiful thing is the Uber Eats test is going exceptionally well. Most of it is incremental. We're in 630 stores now, which clearly shows the franchisees are behind this and loving this as well. So again, this is a whole different consumer to what we have today. So we'll nurture that, and we'll continue to grow that. And I'm pretty confident that the test results will show that we'll roll that out to the whole estate. Slide 32.
So I think this is an important side as well, is that DPG is a highly cash-generative business with a clear track record of investing in core business and returning capital to shareholders. So we returned a lot of money last year. We've returned GBP 427 million over the last three years. I think that's massive, right? But aside from that, we're going to when I asked our major shareholders, right, over 50% of the ownership of the company, what would they prefer? Would they prefer me to give the cash back to them, or would they prefer that I invest it in growth opportunities? And their number one answer for all of them was, "Hey, grow first.
If you don't find something to grow, you know, the right business that you've put a good lens over, then give it back through shareholder buybacks, dividends, etc." So that's what we're doing. As you saw today, with Shorecal, it's a good example of investing in the core for growth to help grow this business faster. We are looking at other brands. We are looking at international markets. We will do them in a very measured way, as I've said before. I have a lot of experience in international. So does Stoffel. You know, so does some of my team have worked internationally as well. Very different place, very different team to the past.
We will be doing it in a way that DPG would support us in a very healthy way as well to make sure that we have a long-term success and we go down that road. But it's something that we are evaluating very closely. As I said back in December, this is something we look at, but the core is our focus at the moment, and we'll always continue to be our focus because it's such a big part of our business. However, if we can do investments that give us long-term growth, we will look at them very closely. We have clear guardrails for growth and returns, right? The board and myself are very clear on that, and we've got a very good capital framework that we adhere to every day. So we'll update on additional growth opportunities soon, all right? Maybe sooner than later.
We'll see if they go the right way, but certainly this year, you'll see more growth initiatives coming from us. So I'm really confident on our strategy. We're an asset-light, large free cash flow business. We've got really good, strong, medium to long-term growth plans, and we're committed to returning any surplus cash we'll give back to shareholders. But first of all, growth is at the front of our minds. So we've also, you know, really clear that it's important for us and our consumers we deliver on a sustainable future. You know, our commitment to connecting the dots. We've got five pillars that we focus on: our customers, our people, the environment, sourcing, and communities. You know, as I said before, we focus on things like, you know, health for our customers, our Cheeky Little Pizzas. It says 650 calories, but the team's actually done a great job.
They're actually under 600 now. We've actually got our first sustainability report coming out in 2024, which will outline our initiatives for the next five years or so. So we're really proud of where we're taking the business with that as well because we know that's important. So in summary, 2023 was a great year and benefits of being an aligned system. The core is my focus, right? The team and myself are really focused on growing this core, as exampled by, you know, the 1,600-store target, the 2,000-store target, and then putting our money where our mouth is and investing into the business in Shorecal and Ireland. We will be recycling that capital. Typically, as I said to you back in December, is that we will be taking money that we've already got invested in corporate stores and joint ventures and recycling that.
So it's not as if we're going to start becoming an asset-heavy business. We won't. We're going to stay an asset-light business. We've got great long-term targets that are very measured and data-driven, and I think we're well placed to deliver sustainable long-term growth for everybody, so shareholders, team members, and franchisees, right? So this really is a true partnership. So with that, I'd like to throw it to Q&A. Thank you very much. Sharon's got a microphone there. I'll sit down and let her run the gauntlet.
Hi. Morning. Richard Stuber from Numis. Four quick questions, please, if that's all right. The first one is on the Shorecal. Could you say how many stores you expect to open this year and whether that's also included in the CapEx guidance? And also, obviously, you're paying for it, part equity. What was the reason for doing that rather than fully debt?
Second question is on the day part. You talked about you're underpenetrated at lunchtime. Could you say what's the market share you currently have at sort of the pre-evening and what percentage you think you can get that up to? Third question is on guidance. You talk about sort of food cost deflation. Could you say what that would be and whether that will flow through to actually lower pricing for customers? And do you also see order growth, backing growth by the end of the year? Yeah, I'll leave it at that. Thank you.
Thanks, Richard. Good bunch of questions there. I'll try and tackle them if I'm missing any, Edward, to back me up here. So I'll start from the last one first, is that, yeah, look, food definitely is deflating, as Edward said, along with our framework. We pass that on to our franchisees.
We're also passing that on to our consumers as well, as evidenced by the 8:00, 10:00, 12:00 weekday steal and the GBP 4 lunch. We're trying to make sure that not only our franchisees win, but also our customers win. Yes, we are passing that on. That then leads to more growth. Your other question is that, yes, we expect that will lead to consumer growth overall. To your question about lunch at the moment, lunch is only about 15% of our current sales. I couldn't tell you what our market share at lunch is. We don't actually measure that, but we might start doing that. We'll have a look at that. But it's a small part of our business. Other Domino's markets around the world are anywhere from 15%-25% of their lunchtime sales. We think there's definitely an opportunity to grow that.
There's no doubt about that. Shorecal, yes, the store openings that we've got planned for this year are already baked in, as is the CapEx. But where it starts to sort of, I think, have a bigger impact will be in 2025 because obviously, you know, we get this business in the second half of this year. We'll make some investments to adjust the business as we see fit and get it ready for that next stage of growth. Did I miss anything?
I thought I was just around equity, so.
Oh, why equity? Basically because the franchisee owners and our business partners there would love to have been part of want to be part of the growth story, right? They're dominoids. They believe in the bigger DPG story. So they wanted some equity as part of this deal.
That was good for us to keep some of our gunpowder dry for some potential other acquisitions. Thanks, Richard.
Yeah, hi. Douglas Jack, Peel Hunt. Two or three questions, if that's okay. How do you expect like-for-like sales to build in 2024 in light of your marketing initiatives, your comps, if that's okay? The loyalty scheme, secondly, how committed are you to that? Because it doesn't sound as though it's a definite in the statement, but obviously, you sounded more enthusiastic in the past. And then some guidance on central costs, if that's okay, given the jump we've had in the year we've just had. Thanks.
Yeah. Thanks, Douglas. I think the first point is I think it's a good question to ask about the build on like-for-likes. We're cycling some big comps Q1, Q2 last year. And as you heard me say, we held back marketing in January.
So we purposely held back there to invest later in the year. So Q1, Q2, the first half will be slower, and the back end, second half, will be much higher, I believe. So that's where it's more based on the back end of the year. And that's strategically, we think, the right thing to do. The other point you raised was around the loyalty. So yeah, I apologize if the statement wasn't clear enough. It's not a maybe. It's already underway. It's real. So Sarah and the team have already started this. We had several meetings on this some time ago now. So stage one is already underway. So we're going to stage it because I don't want to just throw money at it for the sake of it. I want to gather data that helps lead to each stage and how we go about each stage.
It's been done in a very methodical way. I've seen loyalty programs where a lot of money's been thrown at them, and it's been very costly. So we're just making sure we do it very clearly and very methodically. But we're committed to having a loyalty program. And as I said, I'll report back in August on how that's looking and what the learnings are up to that date. And I think there's capital.
Sorry if I just cover that. So actually, if you look at the 2022 sort of those central costs, they're actually a reduction, a marginal reduction from 2021. If we think about this as a sort of percentage of revenue, those costs were 6.5% of revenue, which is similar to the level we're at in 2020, 2021.
Now, importantly, what we've seen within there in FY2023 is a material step up in new store openings and those new store incentives that were in there. We've also seen some investment in IT and digital costs to support having a fully digital business. And then there've been factors like salary, inflation, some investment in talent, and some changes in share-based payments reflecting management changes. As we then look forward for 2024, we'll continue to see incentives from new store openings as those work on a three-year basis. We've got a significant focus on continuing to manage our cost base robustly, and we expect, following some of the changes we made in 2023, to see some people cost reductions in 2024, so. So overall, it's a line that we're managing very closely.
Morning. Alex Chatterton from Panmure Gordon. Three questions from me, if that's okay.
Just following on from Richard's question on food cost deflation. Where are you seeing the greatest deflation in terms of ingredients? So that's my first question. Second question, you touched on in terms of Just Eat and Uber Eats, in terms of customers being predominantly incremental. What percentage of those customers are incremental, and is the long-term aim to get them onto your app, presumably in terms of profitability? And then finally, on your medium-term targets, you mentioned a third-party kind of provider, GapMaps . What is the methodology behind that? If you could just go into a bit more detail on that. Thanks.
Sure. Look, we don't break out the commodity fluctuations. The reason being is that we have long-term contracts with a lot of our products. So I think it would be remiss of me to sort of try and give you exactly which one.
But generally, all of them have been deflating, but some back six months ago, some back maybe longer, and some are happening this year. And some also are going up as well, right? It depends on the weather. So lots of things are changing there. But overall, it's downwards. So I couldn't break them out quite honestly. Then the other point was around, it was around Just Eat, and it was around JET and Uber .
So Alex's question was around JET and Uber .
Do you want to cover the JET and Uber ?
Yeah. I mean, look, so the point is, so we don't, because there are two levers and multiple levers that we've got, we're not going to be sort of disclosing specific figures around incrementality. The point is, though, we do this in a very data-driven way.
We're able to look at that data, and we saw, as we did with Just Eat, where we saw incrementality there. The early signs are very promising on Uber, as Andrew pointed out, and we expect to see incremental customers coming into there. Importantly, remember, with Uber as well as Just Eat, it simply provides a window to reach a new customer. We control all those touchpoints. We control delivery ourselves, but it enables us to reach a customer base that we don't yet target today, hence the incrementality. Now, in the long term then, of course, we're continuing to make our app sort of more and more attractive, as evidenced by sort of the investment in product that Andrew's talked about. And we will continue to be delivering to those customers ourselves.
So our app will continue to be more and more attractive, and naturally, some of those customers may choose to move across to us. That's certainly what we'd like.
One thing to be clear, Alex, though, is that those customers are very profitable for our franchisees. It's not an unprofitable customer. It's actually a very profitable customer. So we don't need to steal them off the aggregators, etc., at all. It is a small part of their business overall, to be fair, but it is very incremental, though. So it's a partnership we actually work very well with, and it's actually good for us because it is a different consumer. And there was one more question.
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Yeah. Why?
So look, we've got all our own data, but when you use a third party, they have access to so many other data points that we don't have access to that they pay for, etc. It was important for us that we don't sort of mark our own homework as well, is that we get someone to come and validate what we're thinking and doing. Sometimes we'll use two or three different sources to make sure that we can triangulate them. It gave us great confidence in the numbers that we were thinking. It gave validation, and in some examples, it actually showed this as more opportunity than we thought.
We'll probably have to do that study again in probably two or 3 years' time because if GBP 4 lunch works as well as I think it will, that'll also open up a different day part for us, and actually, potentially, more stores will come out of that. But let's one step at a time. Thanks, Alex.
Y eah. Morning. It's Richard Sheridan from Barclays. Three questions, please. Back to food price deflation. Can you let us know roughly how much you're going to pass on to franchisees this year in terms of pound million and how much that could drive their margins higher? Secondly, from your perspective, I know you generally operate a pass-through model other than on cheese, but you saw quite strong growth in supply chain the year just gone. So how does supply chain profit look for you in a more deflationary world?
Are you still confident you can grow supply chain profit even if perhaps the margin goes backwards? Just some color on that would be great, please. And then finally, just some modeling points on Shorecal. I'm not sure when you're expected to complete, but I can see the headline EBITDA multiple of 8x. So we can work out an EBITDA number. But any help in terms of how that comes into the P&L, D&A charges, and so on, that'd be great. Thank you.
Sure. Sure. Let me touch on those. So firstly, if we talk so in terms of sort of in terms of food price deflation, say we will pass that on to sort of franchisees, we expect that to have a sort of a limited sort of impact on our EBITDA this year.
The reason for that is that when we look at our sort of supply chain EBITDA, it's a combination of obviously movements in sort of food price as well as continued operational efficiencies. We've talked about within CapEx sort of investing in automation. We continue to try to drive efficiencies out of our supply chain. And then to that point, as you pointed out, cheese, as you've said, which is obviously a major category for us, is on a cash margin basis.
And volume as well. More stores.
Yeah. And volume as well. So with more stores there. And of course, that helps our procurement there. In terms of Shorecal, if I just comment on that, we've provided the building blocks today sort of in terms of sort of EBITDA.
You'll see when you look at their sort of depreciation in their accounts at Companies House, you see it's a figure of around about sort of GBP 1.5 million. So you're able to sort of work through and get to a view there. But importantly, and as Andrew highlighted earlier, sort of this year, we expect a sort of a limited, not a significant contribution to our EBITDA this year from Shorecal because we're not going to complete the transaction at all close to the half-year. So we're going to have half a year of sort of benefit. We have transaction costs, and then we've got some investment costs this year. This is really about 2025 where we expect to see this as being sort of earnings accretive in 2025 and then significantly accretive in the long term. Sorry.
So just to clarify on the last point, half-year contribution, i.e., four based on the math you set out. Is that about right?
I think you can work through that, Richard. And then you need to do that investment and the on-costs.
Okay. Thank you.
No worries. Thanks, Richard.
And I think the other thing to remind is that it's not just about the Shorecal EBITDA. It's about the greater influence of the whole Irish market as well. So that's important for us as well, is that it's a leadership thing as well to lead the market to greater growth. So it's a knock-on effect, if you like, a domino effect. No more questions? No? Well, with that, I think probably I'd like to thank everyone for coming today. Obviously, we're going to have a lot of one-on-ones over the next few days.
Anyone who has any more questions, please feel free to reach out to us. But look, we really appreciate your time today. We feel very excited about where the business is going. We've got an incredible team, incredible bunch of franchisees, and a brand that is so strong. I feel very privileged to be part of it. So thanks very much for your time today. Cheers.