London, Nov 24 - Domino's Pizza UK & Ireland Plc is looking at new ways to spend 10 percent of its advertising budget after being forced to ditch its long-running sponsorship of U.S. television series The Simpsons.
UK media regulator Ofcom ruled this week that the advertising of food high in fat, salt and sugar during programmes intended for children under 16 should be banned.
This forced Britain's largest home-delivery pizza chain to drop an association with The Simpsons that has run for nearly nine years.
"It is disappointing," Chief Operating Officer Chris Moore told Reuters in a telephone interview. "The sponsorship gave potential customers a constant reminder of the brand at meal times 365 days a year.
"We don't advertise at children. We've never done Nickelodeon for example," he said. "It's a bit of a ricochet."
Since the Simpsons sponsorship started in 1998, its share of the company's marketing budget has shrunk to 10 percent from 35 percent, while boosting brand awareness of Domino's to 98 percent of the British market from 65 percent.
But Moore said there were positives to be gained from the loss.
"There are a number of different things that would make good use of that 10 percent," he said. "We have a lot of data on customers, so we can do more direct mailing, while advertising over the Web has grown phenomenally."
MARKETING BUDGET
Moore explained that the company takes for its marketing budget 4 to 5 percent of revenues from each of the 428 stores and that it has opened 40 to 50 new outlets a year.
The chain reported overall revenue of 200.7 million pounds ($384.5 million) in 2005.
"Our target is 800 to 1,000 stores. Our pace of growth is how we like it. We could do 70 a year, but we'd probably end up closing 20 of those in the short term," he said.
Moore is a 16-year veteran of Domino's, which is now fully independent from its founding company in the United States, although it pays Domino's Pizza Inc. a cut of its revenues every year.
Analysts at Numis Securities advised shareholders in a note that the Simpsons loss should not affect their overall view of Domino's. "These advertising restrictions do not fundamentally alter the attractive dynamics of the Domino's Pizza business model."
Domino's said on Thursday it would return 10 million pounds to shareholders by way of a tender offer.
Its shares were down 1.8 percent at 543.5 pence by 1251 GMT on Friday, valuing the group at 298 million pounds.
Moore said he first started in the industry as a 19-year-old, when he tried to open a restaurant in Rio de Janeiro but was prevented from doing so by Brazilian gangsters.