Domino’s Pizza Group has reported strong like-for-like (lfl) sales growth of 10.7% for Q1 2023, excluding the change in the VAT rate, with momentum continuing in the second quarter.

The pizza delivery business saw lfl system sales increase by 4.4% including the VAT change, compared to a lfl decline of 2.4% in Q1 2022, while the increase excluding the impact of the new VAT rate was up from 3.9% in the comparable quarter last year.

Overall system sales were up 5.6% in the 13 weeks to 26 March 2023, from £365.9m to £386.6m, with order volumes up 2.8% to 18 million.

As a result of its strong sales momentum and continuation of its strategy the business has announced a new £20m share buyback programme, effective immediately.

Collection orders increased by 23% with delivery orders continuing to improve on the previous three quarters, but still down 4.9%.

The first four weeks of Q2 have seen lfl system sales (excluding the VAT impact) up 10.9%, and order volumes up 5.9%.

The group said its performance had been driven by its key areas of focus for FY23, as well as its focus on a value for money offering, franchise partners’ focus on service, its digital acceleration; “the continued incremental benefit of being on the Just Eat platform”; and new store openings.

Domino’s has opened 15 new sites to date, compared to nine in the same period in FY22, with its new store pipeline now 75% larger than the comparable pipeline last year, with more than 30 different franchisees with stores in development.

The business said that it had achieved excellent progress on its digital transformation, with 6.8m active app customers – a 27% increase on Q1 2022.

It also reported gains in UK takeaway market share – which has increased from 6.4% in Q1 2022 to 7.8% in Q1 2023.

“We have delivered record first quarter sales and orders thanks to the immense hard work of our franchise partners and colleagues in executing our strategy and our relentless focus on giving customers the best possible quality, value and service,” Elias Diaz Sese, interim chief executive officer, said.

“Whilst this year has started well for Domino’s, there continues to be uncertainty in the economic environment with household budgets likely to remain under increasing pressure. However, we continue to be excited about the many opportunities we see for Domino’s in 2023 and beyond as we continue to work towards our purpose of delivering a better future through food people love.”

Diaz Sese said the business was focused on improved its franchise partners’ profitability made good progress in investing in the business and driving operational efficiencies.

“Our digital strategy continues at pace, and we continue to offer our customers strong national value campaigns, which are particularly important as they continue to feel pressures on their household budgets. We are continuing to grow our collection business and are aligned with our franchise partners who are making great progress with their focus on service.

“Combined with the benefit of new store openings, the Just Eat platform roll-out and further product innovation, we remain confident that our resilient, asset-light business model will deliver market share gains, further financial and strategic progress, and increased returns for our shareholders.”