Domino's Pizza on Thursday announced third-quarter sales that were lower than expected as the restaurant operator doubled down on value offers and stepped up its pursuit of price-conscious customers.
The world's largest pizza chain has revamped its rewards program and boosted its discount offerings, but it still faces challenges from fast-food rivals that can offer more affordable meals.
McDonald's, for example, brought back its fan-favorite $5 meal sale this summer and extended the promotion through the end of the year due to a surge in demand from consumers struggling with inflation.
Domino's Pizza's U.S. same-store sales rose 3% in the quarter that ended Sept. 8, below expectations for a 3.6% increase, according to LSEG analysts' estimates.
Domino's Pizza stock was down less than 1% Thursday afternoon.
From July to September, Domino's Pizza traffic increased an average of 8.3% year-over-year, according to data from Placer.ai.
That growth was slower than Domino's, which saw a 10.7% increase in customer traffic from April to June, according to Placer.ai.
“Domino's continues to lead its peers with strong traffic reports,” said North Coast Research analyst Jim Sanderson. “Average checks may be affected by discounts. However, we believe our current strategy will drive market share growth.”
This week, Domino's Pizza resumed its emergency pizza service and extended it until January 19th.
The deal helped drive enrollment in the company's loyalty program last year, allowing customers to redeem a free pizza within 30 days on select online orders.
“In the near term, the pillars of our Renowned Value, Hungry for MORE, will continue to grow as we look to continue to generate unique tailwinds around the world,” Russell Weiner, CEO of Domino's Pizza, said in a statement. “This will be the main focus of the business.” “Famous value is a competitive advantage for Domino's Pizza and is an advantage that allows us to be an industry leader.”
Overseas same-store sales rose 0.8%, well below the forecast of 2.9% growth.
The company lowered its annual growth target for global retail sales to 6% from the previously expected 7%.
Domino's Pizza also lowered its global online store growth target for the second consecutive quarter.
The pizza chain now expects global online store growth to be between 800 and 850 this year. In July, it was forecasting an increase of 825 to 925.
Overseas markets were hurt by macroeconomic conditions, poor store performance and geopolitical tensions in the Middle East.
However, increased franchise royalties and fees and higher profit margins contributed to the company's profits.
Domino's Pizza reported earnings of $4.19 per share, beating expectations of $3.65.
with post wire
