Domino’s (DMP) shares fell yesterday after more bad news in weekend media with allegations of widespread wage fraud within the pizza chain’s network.
The stock dropped more than 5% to the day’s low of $59.63; the former highflyer’s shares are down more than 23% since hitting an all-time high last August.
They later rose a little after the market had considered a statement from the company defending its business.
The shares closed down 4.7% at $61 ahead of the release of its interim financial results tomorrow and briefing which is expected to see the claims probed by analysts for the possible impact on operations, profits and costs.
Fairfax Media on Saturday revealed widespread underpayment and the illegal sale of visa sponsorship for migrants inside Domino’s and its franchisees.
Fairfax said its six-month investigation included the compiling of a database listing hundreds of workers who claim to have been underpaid, as well as external audits commissioned by the company over the past 18 months that allege “a strong likelihood of unlawful and fraudulent behaviour”.
In a statement released to the ASX on Monday, Domino’s claimed the reporting "did not reflect the strong financial performance of its franchise network, the high ethical standards required of all employees and franchisees, or the healthy levels of collaboration between the company and franchisees."
Only 21 franchisees lost money last financial year, while 87% of new store owners last year were either existing franchisees or store managers, which was “an endorsement of the franchise system”, the company said.
“There is no reason, no excuse, and no tolerance for any Domino’s franchise that chooses not to pay its employees correctly or fails to meet expectations around ethics and governance," the statement said. The company said four franchisees have been let go in the past three years for deliberately underpaying their employees.
Domino’s also said it is investigating an allegation of visa fraud raised in a Fairfax Media report yesterday but said it had not previously received any complaints of that nature.
Fairfax Media’s report said it has a phone recording of a Domino’s franchisee from a store in far north Queensland asking for up to $150,000 in exchange for sponsoring a foreign worker.
The Fair Work Ombudsman (FWO) is investigating a number of Domino’s stores for allegedly underpaying staff.
"In recent months FWO has conducted a number of site visits at Domino’s outlets across the country, these visits are continuing and as such it would be inappropriate to make further comment at this stage," a spokesman for the industrial regulator said.
