Pittwater Life March 2017 Issue

Business Life: Money
Business Life
An $80 slice of pizza
business now on special with Brian Hrnjak
“If a cop follows you for
small and medium businesses
500 miles, you’re going to
but at least these guys are not
get a ticket.” This is how
ripping off the staff wages.
Warren Buffet once famously
described the legal woes facing
But what about those who
have to compete in markets
Jamie Diamond, the CEO of JP
with perfect competition like
Morgan Chase.
exploitation, slavelike
conditions and black
fast food or groceries? What
It seems the same cop was on
happens when some bright
the tail of ASX market darling
market labour gangs found spark in a national fast food
Domino’s Pizza (DMP).
on farms and in factories company marketing meeting
Stand back and look
this latest supplying Australia’s biggest yells out “We should try $5
at a long-term chart of
news of wages supermarkets and fast food pizzas!” Usually the competition
Domino’s share price
rorting by local chains.” The companies
has their own bright spark that
and you’ll see evidence of
franchisees has seen the implicated in this instance were yells out “we have to match
impressive growth commencing
with a float price of $2.20 per
share in 2005 and peaking at
around $80 per share in August
last year – in round terms a very
handy 3,600% capital return for
investors!
But a number of Domino’s
franchisees have recently been
exposed underpaying workers,
according to reports by Adele
Ferguson in The Sydney
Morning Herald who was
also the reporter responsible
for outing the large-scale
underpayment of wages at
7-Eleven stores.
Domino’s shares have been
in a downward drift since their
peak in August which is more
than likely a reflection of global
pizza market fundamentals but
once $80 shares fall to around
$55 per share in late February.
I think it still surprises
many of us that companies
this big can be party to such
poor practice and sloppy
corporate governance. The
fact is however that this sort
of behaviour is being reported
more and more in the press
these days. 7-Eleven, probably
the worst example of recent
cases, even achieved the
dubious honour of having one
Sydney Morning Herald article
that was headlined: ‘A sweat
shop on every corner’.
You only need to go back to
2015 to another joint Fairfax
/ ABC investigation shown on
Four Corners that uncovered:
“evidence of extreme labour
supermarkets: Woolworths,
Coles, Aldi, IGA and Costco;
and fast food outlets: KFC,
Red Rooster and Subway. An
impressive list of brands if
ever there was one – in fact, a
list of the major food anchor
tenants in just about any mall
in Australia.
The problem with our big
business cousins behaving in
this way is that we in small
business have to compete with
them on something that is
not even close to being a level
playing field.
At our office we compete
with big business every day of
the week – in our case with the
banks for financial planning
and international accounting
practices for the accounts of
them!” and before you know it
you’re in the middle of a messy
pizza war. From the reporting
mentioned above we know
that at least some Domino’s
franchisees cooked the wages
books as much as they cooked
the pizzas and last year we
saw the toll such competition
can take with the third biggest
chain in the country, Eagle Boys,
being placed into voluntary
administration and sold to Pizza
Hut.
I’m not arguing against
free market competition;
the issue here is that some
organisations need to be
saved from themselves and
employees should not be the
ones that ultimately bear the
brunt of a relentless fight for
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MARCH 2017