Hello, good morning, everybody, thank you for joining us this morning for our half year 2023 results presentation. My name is Elias Diaz-Sese. I am the Interim Chief Executive Officer at Domino's Pizza Group, and I am delighted... He's sitting on the back, but I am really delighted to be joined today by Andrew Rennie, my partner and our new Chief Executive Officer. Today is Andrew's first day with us at Domino's. Welcome, Andrew. He will formally take over as CEO of the business on Monday, August the 7th. He has definitely pizza sauce on his blood. He's been on this business and this brand for the last 30 years, and most importantly, 10 out of those 30 years, he was one of the most successful multi-unit franchisees of the business over there in Australia.
Yeah, I guess that, we couldn't have found a better partner, Andrew, in order to be leading this brand, this business, moving forward into the business. Welcome. I know that, he can't wait to get started, so he will-- you will have the opportunity to meet him later on the coffee break. I will, obviously, stepping down, with mixed feelings, to be very frank, because I have had a great time from that perspective. I will remain on the board as a non-executive director, fully committed, as I have a significant family shareholding on this business. I am fully committed from that point of view. I'm not going anywhere. With the business extremely well-positioned from a future growth.
I am obviously also delighted to have my partner, Edward Jamieson, as CFO of the company, and Will MacLaren, our Head of Investor Relations. Let's, let us turn to the agenda of today on slide 2. I will give you a short overview of the continued progress that we have been making this year before handing over to Edward, who is gonna be taking you through our financial performance in detail. I will then take you through the excellent progress that I believe that the team has done with our 2023 strategic priorities before we conclude with a Q&A with all of you. Let me go to the next slide. We have definitely, I believe, delivered a very strong first half of 2023, with continued growth in orders and in sales.
I think that the momentum that we discussed back in March, that we saw in Q4 last year and definitely in Q1 this year, has accelerated. This is the testament to two things. Number one, complete alignment with our franchise partners on the direction that we are taking and working and growing on the, on the same direction. Second, this acceleration of our strategy that, if you remember, I was maniacally focused together with the team to get it done. Before any other thing, I would like, because I know that many of them are on the webcast, I would love to personally thank all of my partners, franchise partners, for a great collaborative work in my time as interim CEO with me and the whole Domino's Pizza Group.
We will not be here without the great effort of them and their teams. I laid out five clear strategic priorities at the start of the year, these have been the ones that have delivered the growth that we have seen. I will talk about this later on in the presentation, but particularly, I would love to spend some time also later on, on the great and exciting acceleration that we've been taking in terms of store openings, where we have just had our best quarter in the last five years and the third quarter ever in the history of Domino's in the UK and Ireland.
With all of this and such a great leader taking over, the role, I couldn't be more confident in the many opportunities that we have for the rest of this year and also, for the years to come, as we continue to be working towards our purpose to deliver a better world, through people, through food that people love. Now, I'm gonna hand it over, to my partner, Edward, who is gonna be taking you through our financial performance in detail. Edward?
Thank you, Elias. Good morning, everybody. It's a pleasure to be here this morning and to present the 2023 half year financial results and update you on our outlook and guidance for 2023. If we can move to slide 5. Yep. Great. The first half of this year saw 35.4 million orders, an increase of 2.8%, with like-for-like sales up 9.7%. In turn, this led to a 19.6% increase in our revenue, an 8.2% increase in our underlying EBITDA, and strong free cash flow in the half. This has enabled us to increase the interim dividend by 3.1%, and following the disposal of Germany, we will return the disposal proceeds of GBP 70 million to shareholders through a new share buyback program.
Let me now go through our performance in more detail. Turning to the next slide, let me start with system sales and order counts in 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 7.9% in the half, with both delivery and collection contributing to the growth. Overall, total orders in H1 were up 2.8% on last year, with the decline in delivery orders more than offset by the growth of our collection business. Collection orders were up 20% in the half and are now at 120% of 2019 levels. Delivery order count was down 4.4% in the half.
The trajectory has continued to improve from Q2 last year, when deliveries were down 12.1%, and they were only down 3.9% in Q2 this year, a marked improvement from Q2 and Q3 last year. We continue to target returning delivery orders to growth this year. In the chart on the right-hand side, you can see the quarterly profiles of our like-for-like sales performance, excluding the impact of VAT in blue, and secondly, order count in green. I'm still referring to an ex-VAT number, as Q1 last year still had a reduced rate of VAT. Here you can see our performance over the half. Trading was strong as a result of effective national value campaigns, operational service excellence from our franchise partners, growth in collections, and the incremental benefit of being on the Just Eat platform.
Let me walk through system sales and our revenue in more detail. As I've just said, system sales increased 7.9% in the half. If you adjust for the lower rate of VAT in Q1 last year, system sales were up 11.2%. Our revenue was GBP 332.9 million, a 19.6% increase on H1 last year. This was primarily driven by a 23.6% growth in our supply chain revenue as a result of increased volume, new store openings, and the pass-through of food costs. National Advertising Fund and e-commerce expenditure was up by GBP 7 million in the half, driven by an increase in system sales and increased marketing spend in the period.
Our NAF represents 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 to offer our customers compelling value. EBITDA margin as a percentage of system sales increased by 10 basis points in the half. The majority of our EBITDA comes from the supply chain center through procurement, manufacturing, and distribution of products to stores. In H1, we maintained outstanding service levels with 99.9% availability and 99.8% accuracy. This is due to the commitment of our supply chain colleagues working collaboratively with our franchise partners, I would like to thank all those who helped deliver this outstanding performance. Our EBITDA from the supply chain in the half was GBP 66.7 million, an increase of GBP 16.3 million compared to the prior half year.
Royalties increased by GBP 1.5 million, driven by an increase in system sales. Net overheads increased GBP 2.8 million. This was driven by investment in store growth through incentives as well as investment in talent. Corporate store EBITDA reflects the disposal of 5 stores towards the end of last year. This resulted in underlying EBITDA before technology costs increasing by 16.5%. I'll come back to touch on the technology platform cost in a couple of slides. In June, we received the proceeds from our disposal of our German associate. This was the final act of our exit from international markets. Let me walk you through the impact. Firstly, we received GBP 79.9 million, which comprised GBP 70.6 million of disposal proceeds and GBP 9.3 million repayment of a loan.
As we received this in June, net debt at the end of the half was GBP 171.4 million, giving leverage of 1.33 times, which is below our target range of 1.5-2.5 times. The profit on disposal was GBP 40.6 million. In the presentation of our results, we have removed this from underlying measures to give a better indication of the performance of the business. We include the GBP 40.6 million in our statutory profit disclosure. As a reminder that following the exercise of the option on the 9th of November, 2022, we no longer receive a contribution from Germany to our EBITDA.
In the first half of last year, we received an EBITDA contribution of GBP 1.8 million, which was then GBP 2.4 million for the full financial year. Let me walk you through the movement on EBITDA. The net effect of increased volumes, pricing growth in our supply chain, and franchisee investment, such as new store incentives, was an increase of GBP 11.6 million. We made a GBP 2.3 million profit on the sale of a freehold property. The GBP 1 million revaluation of our Shorecal joint venture in the first half of 2022 did not repeat in the first half of this year, and as I just mentioned, we did not receive any contribution from Germany. This resulted in underlying EBITDA before technology platform costs of GBP 74 million.
When the one-off technology platform costs are taken into account, underlying EBITDA was up 8.2% to GBP 68.7 million. Before I go into the income statement, I want to update on our technology platform investments. As I laid out earlier this year, in 2022, we started investment projects to develop and implement two new cloud-based IT systems, an e-commerce platform and an ERP system. As we've previously communicated, both systems are part of our investment in growth, and the e-commerce platform is part of our growth investment framework, announced with our franchise partners in December 2021. The accounting treatment of these costs is simply a reclassification from capital expenditure to operating expenditure. Therefore, this treatment has no impact on cash.
The total costs recognized in underlying profit before tax relating to these investments was GBP 6.3 million in the first half of this year. With an EBITDA, costs of GBP 5.3 million have been recognized, of which GBP 3.7 million relates to the ERP and GBP 1.6 million relates to e-commerce platform. These represent costs spent on the development of these assets, which are expensed through the income statement rather than capitalized as intangible assets as they relate to cloud platforms. For the ERP, this represents the full spend on the project in the half. For the e-commerce platform, this relates to the percentage spent on the cloud-based element of the project. An additional GBP 2.9 million has been recorded in capital expenditure relating to the e-commerce platform. Within amortization, a total further cost of GBP 1 million is recognized.
These implementation costs are one-off in nature. When the e-commerce platform and the ERP system are complete, there'll be no more technology platform implementation costs impacting EBITDA. There's no change to our guidance that we expect to incur certain GBP 9 million of implementation costs in FY 2023, with the remaining ERP implementation expenditure expected to be in the low single-digit millions range in FY 2024. Moving to the bottom half of the income statement. As guided, depreciation and amortization increased to GBP 10.2 million in the half. This includes GBP 1 million of amortization and impairment as a result of the technology platform costs I talked about earlier. Finance costs were higher in the half due to lower levels of interest rates in the first half of 2022.
As a reminder, in July last year, we successfully refinanced existing bank debt facilities at favorable rates with a GBP 200 million private placement facility fixed at 4.26% and a GBP 200 million revolving credit facility. Both of these are in place until July 2027. Taxation increased to GBP 11.3 million, which delivered profit after tax of GBP 39.6 million and flat EPS of GBP 0.095 per share. Let me touch on franchisee trading. On this slide, we've shared franchisee trading estimates in the first half in order to provide a view of the health of the entire system. The numbers are extracted from submissions from our UK franchisees. We aggregate the submissions to derive these averages. The numbers on the chart have been adjusted for VAT.
As for the first quarter of 2022, VAT in the UK was at 12.5% before reverting to 20% from the 1st of April 2022. Our franchisees continue to work tremendously hard in challenging market conditions, and their trading performance has been impressive. As you know, our number one priority this year is to focus on franchisee profitability, and we're making good progress here. Average store EBITDA for all UK stores for the half was approximately GBP 76,000, equivalent to a 13% EBITDA margin. Only a slight decline versus the first half of last year, despite significant inflationary pressures. Franchisee profitability in 2019 before the pandemic was GBP 70,000 per store, equivalent to a 14% EBITDA margin, so franchisee EBITDA in 2023 was ahead of these levels. Elias will talk more later about our focus on this key area.
Our business model generates strong free cash flow. Let me focus on working capital. We had a working capital inflow of GBP 10.2 million, compared to an outflow of GBP 11.2 million in the prior year. This was primarily due to the reversal of the prior year working capital outflow, with a decrease in debtors and inflow relating to the timing of creditor payments at year-end, and lower inventory levels due to higher stock holding at year-end. We continue to expect a net working capital inflow for the full year. Overall, we delivered GBP 56.2 million of free cash flow in the half. You'll now be familiar with this slide, as we first introduced this in March 2021 and update you every 6 months.
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 1.5x to 2.5x. Working within these parameters, we will allocate cash in a disciplined way. As I previously mentioned, we generated GBP 56.2 million of free cash flow in the half. Let me walk you through how we're using this cash. Firstly, we continue to invest in the core business to drive long-term, sustainable growth. To that end, we invested GBP 11.3 million in capital expenditure in the year. We will maintain a sustainable and progressive dividend. We'll pay an interim dividend of GBP 3.3 pence.
Finally, we look to return surplus cash to shareholders. We announced a GBP 20 million buyback in May and have executed GBP 13.9 million of this program so far. Today, we've announced a new GBP 70 million share buyback, which will start when the existing GBP 20 million program is complete. We started the year with GBP 253.3 million net debt. As I said, we received GBP 9.3 million, which was a repayment of a loan from the German associate, and GBP 70.6 million in proceeds. This represents the final receipt of cash from Germany. We also received GBP 4.4 million from the disposal of a freehold property. Here you can see the cash outflows in the half.
CapEx of GBP 11.3 million, GBP 28.3 million paid out in dividends, and GBP 19 million in share buybacks and some purchases on behalf of the employee benefit trust. This resulted in net debt at the half year of GBP 171.4 million, giving leverage at the end of the period of 1.33 times, which, as I've already explained, is due to the timing of receiving the proceeds from the German associate. Our priority will always be to invest in the core business. We continue to expect CapEx this year to be circa GBP 25 million, as we invest more in our system to drive sustainable and profitable growth. To be clear, CapEx this year is elevated by a one-off circa GBP 5 million pound spend, as we're in an investment year.
In the first half of the year, we spent GBP 11.3 million on CapEx. This was on the technology platforms I've talked about, on enhancing our digital capabilities, and on continuing to invest in our outstanding supply chain with the redevelopment of our capacity in Ireland, an area where we see significant opportunity for store growth. We've also been installing solar panels across our supply chain centers. Turning now to current trading and guidance. Trading momentum is encouraging in the first three weeks of H2, with like-for-like system sales, excluding split stores, increasing by 7.9%, with total orders up 2.3%. While the market and consumer backdrop remains uncertain, as a result of the strong first half performance and this momentum, today we're raising our guidance.
We now expect to deliver FY 2023 underlying EBITDA in a range of GBP 132 million-GBP 138 million. On the slide, you can see our technical guidance for FY 2023. You'll note we now expect net interest to be in the region of GBP 14 million-GBP 16 million this year, with year-end net debt of GBP 205 million-GBP 225 million, lower than our previous guidance. Thank you, and let me now pass you back to Elias.
Thank you, Edward. Much appreciated and much appreciated your partnership during the last year. It's been busy, but good fun. As Edward has explained, we have delivered a strong first half of the year from a performance perspective, frankly, in a very challenging market. Again, as I said at the beginning, we believe that this has been the result of a great alignment since we reached our agreement with our franchise partners back in December 2021, what is bringing us to record order count, as well as solid sales and EBITDA results. Now, the focus on five strategic priorities has been key for all of this. Let me, let me run you through the excellent progress that we believe that we have done in this half on this.
The first one that I wanted to run through is market share gains, where we have seen in Q2 us increasing our share of the UK takeaway by 70 basis points. Interestingly enough, if we compare to 2 years, it's already 130 basis points up to 7.3 for the quarter, 7.5 for the year. Relevant growth from that perspective, that in very basic terms, has been the outcome of a few initiatives. Number one, value. Number two, digital acceleration. Our growth in collections, that continues to be going in an extraordinary direction. Remember, this was one of the strategic pillars that we had from 2 years ago. Our partnership, we just did, obviously, and then definitely once more, executing in collaboration with our franchise partners.
Now, let me give you a little bit more of detail behind this, right. If you remember, when I was here back in March and I presented the results then, I outlined five key areas of priorities that the team, together with the franchise partners, is fully aligned behind in order to be executing. I would like to spend a little bit more of time on, on, on sharing with you the exciting progress that we are doing on all of them. Let me start by the first and the most important one. I said it in March, and I will repeat right now, franchisee profitability and our organization. As I said in March, our number one priority is franchise profitability.
In the first half, our franchise partners have seen GBP 6,000, I repeat, GBP 6,000 increase in the store average EBITDA, vis-a-vis, prior to COVID, 2019, and more or less at the same level as 2022, in what has been the most challenging year ever from an inflationary perspective. Obviously, there is far more to do, but there has been some good progress happening. What has happened? I think that that's the important thing, right? The first thing that has happened is that we have supported our franchisees this first half of the year with a very intense program from a national training perspective. We've brought shows across the country that we were not doing before from that point of view, that were just focused on improving service and product quality.
This is key. The alignment has been excellent from that point of view. We have also shared. Remember, this was one of the elements of our agreement with our franchise partners back in December 2020-21. We have shared incentives for them to open more stores. That's the result that you are seeing. Also, we have continued to be sharing the food cost rebate mechanism that we agreed back in December 2021, in order to incentivize order count growth moving forward. The roadshows, as I was saying before, have been very much embraced by all of the franchise partners. Our second roadshow had 1,150 store managers attending, which is probably the highest attending roadshow that we have done ever.
We have obviously continued to be working very closely with our suppliers. In such an inflationary moment, it was critical for us, right? From two big elements. Number one, obviously, to have optimal stock cover, but most importantly, to make sure that wherever possible, we minimize cost inflation to our franchise partners. I will say that our world-class supply chain has demonstrated again that they are where they are, and that they deliver an outstanding performance. Also, very importantly, I started to be sharing this in our March meeting. It has been very important for us to have a big amount of focus this first half on ensuring that our organization is in the best possible shape in order to support franchise partners' growth. We have made significant progress on this.
Let me give you the 3 most important elements of this. Number 1, as I said at the beginning, we have announced our new partner and the new leader of this organization, Andrew Rennie. Number 2, earlier in the year, I announced that we had reshaped our executive leadership team in order to ensure that we were going to be leaner and that we were going to be making faster decisions with a far more entrepreneurial approach. Very recently, point number 3, we have also undertaken a wider review of the entire organization, and we have restructured the organization to focus on mainly 3 things. Number 1, agility. Number 2, making sure that we are focused on the 5 priorities and only on those 5 priorities.
Number three, increasing profitability, ensuring that we are far more nimble in the way we do operate. As part of this review of the organization, we have prioritized talent development to nurture and develop future leaders of the business. For example, as a consequence of that, we have promoted our partner, Nicola Frampton, to be the Chief Operations Officer of the company. I believe that because of all these changes, together with our franchise partners, we are now able to act far more quickly, far more quickly to the changes in the market that we are seeing. Very glad to see this happening. Turning to the next priority. Secondly, value for money. At Domino's, as you know, we've been sharing this, we are laser focused on offering good value, great food, and an excellent experience.
As I laid out in March, there are 3 components to this value for money. Number 1 is service, that we sometimes we forget, but it's so critical from that perspective. It's the number 1 driver for customer satisfaction and frequency growth, not only in the restaurant industry, the same in the retail industry. Customer service performance, including average delivery times and percentage of deliveries on time, has improved in Domino's on the 1st half of the year. We are already at under 25 minutes, which is 1 minute less than last year. Again, results of everything that we've been sharing before from a road shows perspective, and we are focused on continuing to be improving this delivery experience, not only for our customers, but also for our franchise partners.
That is why we have already rolled out this enhanced GPS solution that I mentioned on the first meeting, already by 1,179 stores that will be deployed by the end of the year. Great progress from that perspective, that is gonna be allowing us a far more efficient route planning for our drivers, much more efficiencies at the store level, and definitely a much more accurate delivery time expectation for our customers that will be able to be seeing where the driver is from that perspective. Again, all this work, together with the commitment of our franchisees, has allowed us to bring a 4% improvement on OSAT, which is customer satisfaction. Second point, value.
Remember, it was extremely important for us to continue to be bringing these value platforms in order to fight against the cost living crisis that we've been seeing. We launched this Price Slice deal, 8, 10, 12 price points value platform for a small, medium, or large pizza. GBP 12, feeding 4 people. We thought that that was great value. That was three and a half months that we had this promotion, and then we launched our 50% off deal if you come through the app. Again, continue to be building momentum from a value perspective. Last but not least, product. I'll be very brief on this one, but this strategy of less is more has been paying off.
We launched this new pizza that was our Ultimate Chicken Mexicana that has been the most successful one we have done in a long time, 667,000 pizzas, and it's been definitely a great hit from that point of view. We have continued to be working not only on dinner and late night, but we have also been working hard in order to be improving our position at lunch and food to go perspective now that we are seeing collection growing that much. That's why we continue with our 650 calories pizza. We continue to be bringing new flavors from a wrap point of view.
We are on test right now with a new line of French fries that is possibly the best quality for delivery that I have seen in many, many years, or we are doing our Italianos in the Republic of Ireland with toppings like goat cheese and prosciutto. Not forgetting our DomiShakes, that are extraordinarily performing right now at the stores with a great sponsorship and partnership with both Oreo and Biscoff. Hopefully, you will have had already the opportunity to try these products. If not, I encourage you to do it. We really believe that there are good opportunities here, and definitely lunch is an occasion that we want to continue to be fighting for. Now, let me turn to the third and more and critical opportunity and priority for the team, digital. We have already 90......
percent of our sales on digital, right? As you heard, well, 90%. Our app is key for this, for this super strategic digital strategy. The first half of the year has been has seen a radical step change from that perspective. This slide speak by itself, but let me reinforce a few, a few points within this slide. The first one is the fact that we have increased already 46% compared to H1 last year on active app customers, but also versus Q1, we are already at 16%. We have almost 8 million active app customers. Number two, the new customers to Domino's, who first order was through the app, has increased 120% versus H1 last year, sorry.
Our app orders, as a percentage of digital orders, for the quarter, was already up to 75.2. Remember, I told you that Q4 last year was 59%. The first half is 69%, Q1 is 75%, and we are, last week, at 81%, 30 basic points better than last year. Definitely our app is going into the right direction, and our downloads are already 140% higher than last year. This is critical for us. Why is it critical? We have seen over the last 12 months, that all those customers that were coming through the app, their sales were, dual at 43% higher sales than the customers that were coming through the website.
Not only on sales, also on frequency, where their frequency was 51% higher than those customers that were coming through the app. Attracting more customers through the app is gonna continue to be one of our priorities in 2023 and beyond, but definitely an excellent progress from Nick Bamber, our head of digital, and his team on this arena for sure. Let me move to our fourth priority, convenience. There were two elements on this one. Number one was our partnership with Just Eat, and number two was increasing our store openings. Let me start by the first one.
We've been already for 2 quarters on our partnership with Just Eat, and we are seeing this incrementality that I mentioned on the previous meeting, to continue to be going forward, and we're really looking forward to see a full year benefit of this platform. Also, as you may have read, the following Domino's Pizza Inc.'s global agreement with Uber, we expect to start the trial in some stores in H1 of next year. We will follow a data-led trial, exactly the same as what we did with Just Eat. If you remember, we started with a 100 stores trial, then we moved to 300, and then we launched. We'll do exactly the same. Yeah, those customers that go through the, that trial will be able to also get our products through Uber Eats.
Now, the pizzas will be delivered by us directly, exactly the same as with Just Eat, because, as you know, nobody, absolutely nobody delivers like us, right? We are the only ones controlling that supply chain that goes from manufacturer into the step door of our customers, and we will continue to be doing so. That's a unique selling proposition for sure in the industry. Point number two of this convenience, I am extremely proud of the progress that we have made on new store openings. Q2 was our highest, as I have said before, number of openings in a quarter for 5 years. Again, another great example of collaboration and everyone rowing on the same direction between our team and our franchise partners. We opened, on the first half, 29 stores, by today, 30, and we have already 6 stores under construction.
Those 29 stores compared to 12 last year. Those 29 stores were opened by 11 franchise partners, while last year they were opened by seven. This acceleration is obviously because of the fact that the pipeline has been continued to be grown with together with our partners, but also because everyone is seeing a huge opportunity here to continue to be growing our store estate in the UK and Ireland. As I said, six stores under construction and a further 25 stores already today with planning permissions approved, which, as you know, is one of the big hurdles in order to be able to be opening these stores. Which makes a total of at least 60 stores with a very clear path to happen this year, already at the beginning of the month of August.
Very exciting from that point of view. 70% larger pipeline than last year, 60% of that pipeline with planning approval. Again, an arena where we believe that there has been a great progress from that perspective, not forgetting that we have already 25 stores in the pipeline for next year, and we are growing this pipeline as we speak. Great progress from Neil Andrews and the rest of the development team also in this arena. Now, let me turn to the next slide and our last enabler from a strategy perspective. Edward has explained to you already in some detail about the investment we are making, their one-off nature and the accounting, the accounting treatment of these technology platform projects. I want to reiterate a few points that I believe that are important from a business perspective.
Number one, our e-commerce platform implementation is on track, and it is expected to be completed by the end of this year, 2023. This will enable us a critical avenue of growth for the future, because it's going to enable us to offer our loyalty program to customers in 2024. Yes, can you imagine? We don't have loyalty yet, right? This is a huge, again, as I said, growth avenue for us in 2024 and beyond, under the leadership of Andrew and the team. Secondly, our new ERP program, replacing our 2016 system, will enable us also to improve processes and efficiencies across the company, but most importantly, between operations and supply chain, which, as you know, is critical for us, and again, remains also on track for launch in the first half of next year.
Coming to the end of my presentation, as some of you will know already, our corporate purpose is to deliver a better future through food people love. Earlier this year, we have communicated, we have been very pleased to not only communicate, but also publish our Connect the Dots sustainability strategy, which sets out our approach on 5 focus areas: customers, our people, environment, sourcing, and communities. As our focus areas include giving customers more choice, such as the testing that we've been doing. I have communicated already with the 650 calorie Chicken Little Pizza, but also minimizing the impact on the environment, such as we did with the opening of our first low carbon opening in Hammersmith.
We continue to be making sure that we connect purpose to pizza as much as we can and wherever we can across the business activities. We are looking forward to our first sustainability report, which will be published early 2024. In summary, the execution of the strategy and alignment with our franchise partners has delivered growth in sales and in orders, also has allow us to maintain broadly store profitability, excluding BAT, versus last year. Our focus on the five priorities have also delivered a strategic progress with a step change, I would say, radical step change on digital, new store openings, and 16.5% improvement in our EBITDA versus last year, if we exclude investments, one-offs on te. The consumer environment remains challenging.
We won't shy from that. We are very confident that if we remain focused on our priorities, we will be very well placed together with our franchisees, one, to deliver further returns to our shareholders, as we have been doing, but also to make sure that our franchise partners continue to be seeing returns growing this year and beyond on their stores. I have loved my time as Interim CEO, leading this amazing brand in the UK and Ireland with this very unique franchise team and team in DPG. Now I return to my non-executive role with real and sustainable momentum across the system. I believe that we have a very strong platform for future growth under the great and very unique leadership of my partner, Andrew Rennie. Now, thank you very much for listening.
I would like now to turn the meeting over to Q&A. I would really appreciate it once that you get the micro, you could state your name and your institution from that perspective for those in the webcast. Thank you.
Rich?
Hi. Thanks very much. It's Richard Stuber from Numis. 3 questions, please. The first one is, could you talk a little bit more about price rises you've seen in the first half of the year, and also when you expect orders, like-for-like orders to get back into, into growth? The second question is, I guess you talked about sort of the average EBITDA per store, per franchisees. Could you talk a little bit more about how the recent store openings EBITDA have been, and therefore what the returns on new store openings have been for, for franchisees? The third question is, you talk a lot about sort of the IT systems that you are putting in place.
Have you seen any benefits from them already, or would we see most of the benefits coming through from FY 2024? Thank you.
Sure. Thank you very much for the questions, Richard. Obviously, three parts to the question. Let me run through again, my response against each of those three points, and then I'll, I'll pass over to Elias Diaz-Sese to see if there's anything he want to add. I think your, your, your first one was about, sort of, was about pricing. I think the, the place to start is that, again, if we start with orders, look, we're seeing, you know, obviously strong, robust, sort of order growth, 2.8% in the first half, 2.3% in, in, in Q3 to date, and that's driven by the strategic process, the progress that we're making, the levers that we're driving. You know, that's because we're continuing to, to grow market share. We're continuing to attract new customers.
If you then play that through into pricing, you can see that, and you'll see from the, the, the, the tables in our, in our pack, that you can see that like-for-like growth is primarily coming through sort of in price. That's a function of food cost inflation being passed through to customers like other QSRs, and obviously the fact that there is delivery charge within there. You know, we remain relentlessly focused, sort of on ensuring that we have compelling value for consumers. If I move through then into a question around average EBITDA per store, while we don't disclose details of individual store performance, what I can say is... we have been sort of extremely pleased with the performance of many of our recent store openings.
We've seen some very strong numbers there as we as we roll out in, in new areas of the country, as we particularly roll out areas into areas where there's less competition, for example, in areas with lower address counts, and we are seeing some, some really strong momentum from day 1 in those. I'm, I'm personally very pleased by what I see there in, in terms of performance. Thirdly, on the IT systems, no, we haven't seen any benefits yet from those.
We are, you know, those projects are in sort of implementation, so the e-commerce platform will complete at the end of this year, and will then enable us to build products such as loyalty, as Alexis referred to, to, to derive benefits in 2024, with the ERP program then being on track to launch in H1 2024. I think those are the, sort of to the 3 parts of the question, those were the 3 elements that I wanted to land. Alexis, if there's anything you'd like to add on any of those 3 elements, please, please feel free.
I, I think you have touched on everything, but I will add a couple of things. You're talking about when to expect those orders from a like-for-like perspective to continue to be growing. You, you, you see total orders growing already. It will be difficult for you to see any other company that has disclosed numbers with order count growing from that perspective. I really believe that with the growth that we are seeing from an app perspective, very soon you will be seeing that going in a very different situation from that perspective. Why do I think so? Remember, we ended Q4 last year at 59% of the orders, digital orders through the app. The first quarter, was already...
Sorry, the first half is at 69, Q2 is at 75, we are already at 81%. That, that, that growth that you are starting to be seeing at 51% of frequency growth gives me the very clear path that I believe that that will be coming very soon. That's point number one. Point number two, link to what Edward was saying, yeah, loyalty will be coming next year, right? That's why we, we, we are extremely excited by the fact that we will be having this e-commerce platform implemented by the end of the year. That is gonna be allowing us to bring loyalty, right? We're probably the only company in the industry right now that doesn't have a strong loyalty program from that perspective.
The avenue of growth from that point of view, when you get it right, is, is critical and fundamental. I was thinking yesterday, right, when the U.S. launched loyalty over there, they increased on year one, 1.7 times their frequency from that perspective. I really believe that between app, I'm not talking about the basics of the business, value or, or operations, right? With the app and loyalty, definitely those orders will continue to be growing at even a higher step after this 2.8 that you have seen.
Alex?
Hi, it's Alex from Panmure Gordon. I've got three questions, if that's okay. You highlight the uncertain consumer backdrop in the outlook statement. Have you seen any changes in consumer trends? Second question is on cost inflation. Greggs this morning said that it's starting to ease. Just any comments? Appreciate it's a different business model, but any comments, and that would be great.
Yeah.
Then finally, on the slides, the UK market share dropped between Q1 and Q2. Just any comments on that would be great. Thanks.
Yeah. I'll, I'll take the first two, and you take a little bit of the market share. Let's go through, through consumer trends, right? The, Well, obviously there has been a great reception to the value platforms that we have launched. That's the first one. The second one that I would say is collection. We are already at 42% of our orders through collection. 42%, we are still seeing 20% of growth this year versus last year. The most important thing on this collection is that with real data, we are seeing minimum, minimum cannibalization between the delivery customer and the collection customer, which was a big concern that we had. Even in the U.S., our colleagues in the U.S., were very clearly saying that these were very different consumers.
That's what we are seeing right now. I would say that the reason for this growth in collection, you know, you've been here for the last two years, this has been a very clear area of focus for the team on many different angles, right? It doesn't happen in 24 hours. It happens over time, right? The team was first extremely focused on getting alignment with the franchise partners. Number two, bringing awareness. Number three, making sure that the operational was there, that the systems and the process were there to execute at the store level without having a problem with delivery. Fourth, value for money. We have launched two huge campaigns on local marketing that has been very much aligned with most of the franchisees across the country.
The first one, GBP 7.99 for a medium pizza, two toppings. The second one, GBP 9.99 for a large pizza, two toppings. Even better price than the GBP 8, GBP 10, GBP 12. Obviously, we have seen that increase from that perspective. I guess that the immediate question that could come is: Okay, but delivery is going down? Yes, but the trend is up. Q3 last year, we were as between -12% to -15% down on delivery. The total year last year was -10%. Q4 last year was already at -5%. We started Q1 this year, help me here, at, I think it was at -4.9%.
Yeah.
We are already in Q2 at -3.9. I think that the initiatives that we have launched are starting to be having a good positive impact on delivery, too. Cost inflation, yes, we are seeing the same? Yes, we are seeing the same. We are seeing a stabilization from a cost pressure from that perspective. Obviously, it has also been a great work by the procurement and the supply chain team. I, I, I told you in previous meetings, right, our 6 largest ingredients, with the suppliers of our 6 largest ingredients, we are the largest supplier of, of, of these companies from that point of view, and obviously, we are growing more than our competitors, so obviously, we have a very strategic long-term partnership, right?
For example, with our cheese supplier, we have seen month after month, already for a few months, a decrease of food cost. That has obviously been extremely positive for us, considering how important is cheese, right? Now, I will say here, I think that we, we can't relax, we can't be complacent from that perspective, because we are seeing also still some inflationary pressures, pressure on some categories. For example, meat, pepperoni, where immediately, we've been working very hard with our supplier partner, but also, continuing to be approving alternative suppliers in order to not relax for a second and give the best possible price to our, to our franchise partners. You want to take the market share?
Sure, I'll add just a couple of points on that. As earlier said, you know, there's, there's, there's variability between different categories. Overall, broadly stable, but categories like dairy, there's, there's some signs of, of deflation, and obviously, we will pass deflation as well as inflation onto our, onto our franchisees. It's important to remember on cheese, as, as a number of you, already know, that's a cash sort of margin, so in fact, our take from that, doesn't change. That's a, that's a little bit about, what we're seeing on, on deflation. We move on into market share. Market share tends to work best because of, inevitably because of sort of seasonality and sort of cuisine to really compare on a year-on-year basis.
I think if you look at that slide that you're referring to, you can see the trajectory this year is similar to the, you know, is similar to what you've seen sort of in previous years. So yes, there is some change between Q1 and Q2, but really, the most important piece is to look at the year-on-years, because that adjusts for the or corrects for the seasonality.
Dara?
Hi. Daragh O'Sullivan, Jefferies. Thanks for taking my questions. I was wondering if you could comment on the white space opportunity in the UK and Ireland. Edward, you mentioned that there you see an opportunity in Ireland, particularly, so any.
Yeah
... comments on that would be appreciated. Then on the new store openings, I was wondering if you were able to give us an indication of what the split is between new franchisees and existing franchisees opening stores?
Yeah. Very good. Let me start by white space. I, I, I guess that the best way to summarize this answer will be, if we take the penetration of the Domino's brand in a very successful market for us, that my partner, Andrew Rennie, knows very well, which is Australia, the penetration of the brand is over 1 store per 29,000 people. 1 store per 29,000 people. We are today at, here in the UK and Ireland, at 1 store per 53,000 people. There you have the white space. I really believe, I strongly believe, that there is a huge opportunity in this market for Domino's to be extremely successful this year and the next years to come, if we continue to be aligned, which we will, under the leadership of Andrew on development. Do I have facts to support this?
I do. I do. This year, our franchise partners, I can give you many examples right now. The first one that comes to my mind is the latest opening of my franchise partner, Ricky Kandola, the Escape Group, one of the openings that they have done. Our average per store, in terms of addresses in this country, is 22,000. We capture 22,000 addresses per store in this country. He has opened, very recently, a store at 7,000. He's selling GBP 40,000 a week. GBP 40,000 a week. I, I do believe that there is a huge opportunity for us to tackle new territories that are white space, where nobody's delivering, and that's what we want to tackle from that perspective. That's point number 1. Point number 2, there is still a lot of white space on splitting.
That's, that's Andrew's, that's Edward's point. Our addresses per store in Ireland are even, even higher, from that point of view. Profitability is higher. We are number two, we are not number one, so there is a huge opportunity for us to continue to be doing openings over there under the leadership of Andrew. That's why we have invested in Naas, our supply chain manufacturer over there. I think it was GBP 11 million in order to be making sure that we capture the opportunity growth that we have there. That, that, that's regarding white space. The, the, the next one was regarding new store openings, right?
It was about new, how many were coming from new versus existing franchises.
Look, most of it are existing franchises. We have 64 franchises right now in the market. Most of them are existing franchises. We have been extremely successful over the last year on career development for our store teams. What do I mean by that? We saw last year that there was a lot of tension and there's less competition to recruit talent for our stores, and what we desired with our franchisees was to offer a career development path. What we are doing is a program called Homegrown Heroes, by which our franchisees identify extraordinary talent at their stores that don't have the opportunity to grow within their structure, and that we support for them to become a franchisee.
We have had four openings with these Homegrown Heroes last year. This is a program that I am completely sure that Andrew, together with Nicola Frampton, will continue to be pushing hard on the next months as last years, because it's a great avenue for growth, right, for the future. Some of our franchisees that right now have hundreds of stores were driving bikes at the beginning when they started their history within the Domino's business, right? I think that, yeah, that's, that's a little bit of the speed and the reason behind it.
Thanks.
Thank you, Dara. Yes, please.
Hi, team. It's Anubhav Malhotra from Liberum. Can I just ask on the GBP 70 million buyback that you are announcing today? I mean, you got that cash a while back. How, how was the decision made in terms of the opportunities that you thought about? Did you think about maybe potentially inorganic opportunities in terms of adding a new brand, maybe? Or maybe even organic opportunities in terms of opening new stores, given you have a lot of opportunity in Ireland, for instance, you have a minority stake there in one of your partners. How did that decision was made? What all was explored, what was not? Maybe another question on new store openings. How much, at the moment, are being done via splits, and how much are going into virgin territories?
If you would give that number to me, that would be helpful. Thank you.
You want to start with buybacks?
Sure. If I start with sort of buybacks, then I'll hand across, Elias, you can, you can comment on the splits and virgins on the stores. The GBP 70 million share buyback, look, what we as a board, we apply the capital allocation framework. You know, we've talked to you obviously consistently since March 2021 about the four principles sort of of those. Obviously, we look at, you know, investment opportunities within the business, and then we work through the dividends and other opportunities. Look, as a board, we continue to look at all opportunities. I think the point that's really important is that we've got very strong free cash flow generation.
We have the ability within the sort of, you know, performance and profile of our business, to both invest in the business and drive it forward for sustainable long-term growth and to return surplus capital to shareholders. In this case, you know, as a board, we assessed that and debated it and decided carefully and have announced the GBP 70 million buyback of those proceeds today.
Yeah, just before I go to the other question, priority of the team is the UK and Ireland and Domino's. That's, that's, that's the priority of the team at this particular moment. Again, I just mentioned the opportunity that we have is still from a store opening perspective. Let me go through a few more, right? Loyalty, huge opportunity from that point of view. The app, we just started, huge momentum, but we just started. We need to continue to be reinforcing CRM from that point of view. Our technology platforms, they will be done, one in November, the other one on H1 2024. Lots of work to be done from that perspective. There, there is still a lot to be done, right?
Andrew will correct me, but I think that we still have, or we have approximately 20 minutes delivery in, in, in Australia. Room for us to continue to be doing lots of openings and continue to be doing lots of work in order to be capturing growth from that perspective. That's, that's, that's on the first one. On the second one, quite frankly, Will, I don't remember the names, the numbers exactly between a split and, and, and, and new territories. We'll, we'll share later on. Most of them, I believe, there have been splits. Quite frankly, we are pushing both of them, so we, we could give the number later on, that would be great. We're pushing both of them.
The new territories is an area that, probably we should have put a little bit more of focus in the past, and we haven't. That one is definitely one that we are pushing hard, but at the same time, splitting, right? We have a franchisee that bought the business in Brighton, right?
Yeah.
And that has already splitted that city a lot over the last 12 months in order to continue to be growing. The penetration in that market now is going, is going very well. Very recently, one of our partners opened a store 250 in Telford, right? Very soon, we'll have six stores in Telford. Profitability growing and penetration growing, right? Who was gonna tell us that we were going to be able to have six stores in Telford, right? We'll push both, we'll get the Sorry. I have to put my glasses on.
I, I can... I don't need to put my glasses on. It's 21, 21 splits and 8 greenfield new territory.
Thank you, Will.
Great. Well, I think that concludes today then, unless there's any final questions.
Please, go ahead.
Anubhav Malhotra again from Liberum. I just wanted to ask on the cannibalization point that you were making about collection not cannibalizing deliveries. Now, you don't have a loyalty app at the moment, so I, I see the delivery order count is down. I see that the number of customers are up, which suggests to me that the frequency is down. I'm wondering if collection is really cannibalizing that, because, because of lack of loyalty app, you don't really know which, what is the-- who is the customer who's coming in to collect, because they're not scanning at the till like they do for other brands, so maybe?
The data that is telling to us that that's not the case, but you're right, we'll know far more with loyalty. We'll grow far more with loyalty from that point of view. This said, again, yes, delivery frequency is slightly down. Yes, it is. Again, as I said before, right, it's going on the right direction. One of the biggest concerns that I had when I joined the business back in end of Q3, beginning of Q4 last year, was that one. You remember, I remember one of your notes was already at minus 15% on Q3, right? We are at Q2 at minus 3.9, right? If you see the results of the aggregators, that's not the case, right?
We are starting to be having an impact from that point of view on that. Again, lots to be done, and loyalty definitely will be a good help from that point of view. That's why it's so important for us that we get this e-commerce platform in place, and that we bring loyalty to the customers that we believe is gonna be continue to be bringing that delivery frequency up, without forgetting, again, app customers, right? During the last 12 months, 51% more frequency for our customers coming through the app, vis-a-vis customers coming through the web. I told you, right, 59% of our customers were coming through the app in Q4. We are already at 81% last week, from a 90% of digital sales. I think that you will see that growth coming. When?
That's what I ask my team every single day. But, but it's starting to be coming, because we are seeing that result, and, and we believe that that, that will continue. Thank you. Look, thank you very much, all of you, for coming. We'll, we'll be here to have a coffee if you want. We'll have Andrew also here, and thank you very much for everyone on the webcast, for attending today's meeting. Thank you. Thanks a lot.