Domino’s Share Price Down On Class Action Announcement

The Domino’s [ASX: DMP] share price has fallen by over 6% today, and is sitting at $36.44 at time of writing.

This share price drop is undoubtedly related to news today that Phi Finney McDonald is issuing a class action lawsuit against Domino’s.

The pizza chain operator is an interesting contender in the food industry, given emerging trends away from fast foods and towards ‘cleaner’ eating and ‘healthy’ food joints like Grill’d or SumoSalad.

So how is Domino’s going to deal with this latest blow?

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What’s the class action all about?

The class action against the fast food giant is for widespread underpayment of delivery drivers and staff working in the franchise stores, according to the class action website.

The allegation is that Domino’s wrongly told its Aussie franchisees to pay delivery drivers and in-store workers under inapplicable employment agreements.

If this is true, this could be a difficult fall from grace for the takeout darling.

Further allegations argue that delivery drivers and in-store workers are now owed the difference between the wages paid under the employment agreements and the amount they should have been paid under the legal Award.

Domino’s in the dark

After news of the controversy spread like wildfire, Domino’s response may have appeared confusing initially. An announcement released today said that, the company ‘has not been served with any claim or received any prior contact about this matter.

But it also admitted its knowledge about one press article, which ‘reported that the matter relates to whether the pay and conditions of drivers and in-store workers employed by franchisees should have been determined by reference to a series of industrial agreements rather than the Fast Food Industry Award 2010.

The announcement went on to state their belief that ‘those industrial agreements applied to its franchisees at all relevant times.

These developments were followed by a subsequent acknowledgement that they had indeed been served with an unsealed class action proceeding.

It will be interesting to see how this plays out for the Domino’s share price over the coming days and weeks.

Regards,

Ryan Clarkson-Ledward

For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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