Domino’s Share Price Tumbles on Further Scrutiny by Fairwork

Domino’s Pizza Enterprises Limited [ASX:DMP] is taking some heat along with its share price, after Fairwork’s investigation found that the franchise continues to have issues with workplace compliance.

The pizza chain’s share price is sitting at $52.33 at time of writing, down 3.34% from the beginning of the week.

Findings of the investigation

As reported by the ABC, only four of Domino’s 33 stores investigated across Sydney, Melbourne, Brisbane and Adelaide, ‘fully complied’ with workplace laws.

The investigation noted that a ‘large number’ of Domino’s employees are extremely vulnerable, with three-quarters under 25 years of age and approximately half being foreigners on visas. And during one month, 20 workers had been underpaid $1,978.

In addition, the franchisees were also rather vulnerable, with 65% from non-English speaking backgrounds and unfamiliar of Australian workplace laws. This isn’t a good look for Domino’s.

Ombudsman Sandra Parker told ABC that Domino’s needs to do better.

The Fair Work Ombudsman has worked with Domino’s head office for several years to try to promote a culture of workplace compliance…

We expect better from a major network like Domino’s — it should not be up to the Fair Work Ombudsman to find and alert businesses to the systemic issues identified.

What next for Domino’s?

The issue of workplace compliance for Domino’s isn’t new…this has been a long battle.

But the pizza chain reached a share value of $57.70 on Wednesday, 29 August — its highest price in just over 12 months. Although disappointing, Domino’s has a way of surprising the market to the upside. There will in all likelihood be repercussions from Fairwork’s investigation on the company, but investors will hope that they’ll be able to turn this situation around.

Regards,

Matt Hibbard,
For Money Morning

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Money Morning Australia