Domino's CEO Don Meij has admitted up to 2400 of the pizza chain's staff were underpaid while blasting whistleblowing former franchisees as blackmailing "criminals".
Mr Meij had previously refused to reveal the number of workers who missed out on wages despite numerous requests from Fairfax Media.
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'They blackmail us': Domino's boss
Domino's CEO Don Meij blasts franchisees who have underpaid 2,400 workers by $4.5 million as "criminals".
Speaking after the company's share price fell on the back of lower than expected profit and wage fraud concerns, he attempted to downplay the underpayments.
"On average over the three years, it was just over 800 workers per year," he told ABC Radio Brisbane on Thursday morning.
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"Which you know, once again when you put it into perspective, whilst we employ 14,000 people, we actually over the year, with casual workers, would have employed north of somewhere - and we don't have the exact figures - 20-25,000 team members."
It follows a horror day for the pizza giant with share prices falling as much as 15 percent despite announcing stellar half-year results with network sales up 26.8 per cent, revenue up 21 per cent and net profit after tax up by 30.8 per cent to $59.7 million. Trading recovered slightly today with share price up around 6 per cent.
Macquarie Research said yesterday's strong results for Australia and New Zealand were driven by new digital initiatives and aggressive expansion but said there remains uncertainty about the final impact of the wage-fraud allegations.
"Potential issues may arise if allegations raised in the media impact social perception and consumer attitudes towards DMP," the research note said.
Deutsche Bank's described the half-year result was weaker than expected highlighting the company's "poor cash generation" and projected increases in labour costs.
"In our view, the requirement to pay penalty rates remains a risk to the Australia and New Zealand store rollout target, particularly given franchisee profitability has not kept pace with inflation over the past twelve years, even in the absence of material wage cost increases."
Ord Minnett cuts it target price to $59 from $73 despite the "strong" result warning about hte potential for future earnings downgrades while highlighting concerns about the franchising model which may weigh on the share price,.
"Concern regarding the franchise model is likely to remain a negative despite the increased disclosure, with the possibility that employment law compliance obligations from actions of the franchisee could transfer to the franchisor."
On Monday the company released an what it described as an "unprecedented" amount of disclosure around the steps it had taken to combat wage fraud, revealing that it had completed 102 audits.
About $4.5 million had been "recovered" from franchisees, which would mean employees were shortchanged, on average, about $1900.
On radio this morning Meij again promised to pay back all employees but admitted that process was not yet complete.
Fairfax Media spoke to one franchisee whose workers were yet to be repaid despite Domino's recouping $200,000 from him.
The company said four franchisees had been terminated for wage fraud over the three-year period and another 22 had left the system over underpayment issues.
Mr Meij again defended the company's $5 pizza deal and franchise profitability in the wake of a Fairfax Media investigation that uncovered widespread underpayment of wages, a delivery scam deliberately underpaying penalties and the illegal sale of migrant sponsorships.
The Domino's boss said he was "embarrassed" by a "small minority" of store owners doing the wrong thing but rejected claims the company's business model put pressure on franchisees to do the wrong thing.
"That is just the allegations of the guilty," he said.
"So here we have people who have done the wrong thing and they're not taking responsibility for their actions and decisions.
"They blackmail us upfront and say well we're not paying this back or we're going to the media.
"They then go to the media and they're made out as if they're whistleblowers or heroes.
"These are the criminals who did the wrong thing, so that's just absolutely absurd."
Speaking at Wednesday's half-year results, Mr Meij said there had been 456 spot checks at its stores over the past three years and 102 store audits, 42 of which were ongoing.
The company claimed to have investigated 88 complaints, with 25 still under review.
Mr Meij refused to guarantee there would not be more underpayments in the future but promised those responsible would be "exited".
He said the company would "open our doors" to anybody who wanted to do an external audit of the business.
"We have nothing to fear. We have nothing to hide," he said.