Domino’s Pizza Delivery Takes a Hit as Americans Cook More at Home
Domino’s Pizza Inc.
DPZ -11.65%
said that its U.S. delivery business has taken a hit because consumers are cooking their own food at home to save money.
The global pizza chain Thursday reported fourth-quarter sales that missed analysts’ estimates and it cut its two-to-three-year sales outlook, pointing to challenges to its U.S. delivery business that it said it expected to last. Domino’s relies on delivery sales for its U.S. business.
Chief Executive
Russell Weiner
told investors on a call Thursday: “We believe this dynamic will continue to pressure the delivery category in the short-term as long as consumers’ disposable income remains pressured.”
U.S. same-store sales for Domino’s for the three months ended Jan. 1 rose 0.9%, below the 4% expected by analysts, according to FactSet.
The Ann Arbor, Mich., company’s shares fell 10.46% to $312 in morning trading.
Pizza chains gained sales after the Covid-19 pandemic hit in 2020 as diners sheltered at home. However, pizza sales have leveled off for top chains as restaurants have reopened and Americans have largely resumed prepandemic behaviors.
Domino’s said it anticipates consumers to continue eating at home to save money given softness in the broader economy.
Photo:
Toby Melville/REUTERS
Domino’s said it expects consumers to continue eating at home to save money given weakness in the broader economy, and is pushing its lower-cost pickup business. Domino’s said that carryout now makes uop for around half of its orders. The company has run promotions offering customers a $3 tip to pick up their pizza themselves.
Restaurant chains last year also wrestled with a shortage of pizza delivery drivers, costing companies revenue and frustrating customers with long wait times. Rising fuel and car-maintenance costs made the job less appealing over the past year, workers said, while pizza restaurants’ often rigid schedules made it harder to compete with food delivery apps such as
Uber Technologies Inc.’s
Uber Eats.
Some pizza chains work with food-delivery providers to have enough drivers on hand during peak hours.
Papa John’s International Inc.
Thursday told investors in a fourth-quarter earnings call that their restaurants’ staffing and service times have improved. Working with the apps is benefiting its business, Papa John’s said.
Papa John’s shares also fell Thursday, declining 6.83% to $86.04. The chain reported lower fourth-quarter sales and earnings. The company said higher costs for food, particularly cheese, and elevated labor costs weighed on operating margins. Both costs are expected to improve this year, the company said.
Domino’s hasn’t worked with the delivery apps in the U.S., and executives told investors Thursday that they continue to seek to improve their to-go operations internally. The company procured 800 electric vehicles to provide to U.S. outlets to help with recruiting drivers who don’t want to use their own cars.
The company said Thursday that some franchisees are now purchasing vehicles to attract drivers on their own, which is helping to attract a new pool of workers. “That actually is part of a larger strategic shift,” Mr. Weiner said.
Domino’s said that delivery service times have improved from last year, but still aren’t back to prepandemic levels.
For the fourth-quarter, the company posted earnings of $158.3 million, or $4.43 a share, compared with $155.7 million, or $4.25 a share, in the same period a year earlier. Analysts had expected earnings of $3.96 a share, according to FactSet.
Revenue rose 3.6% to $1.39 billion, below the $1.44 billion expected by Wall Street analysts, according to FactSet.
Domino’s lowered its multiyear retail-sales-growth outlook by 2 percentage points, to a range of 4% to 8% growth, when stripping out the effects of foreign-currency translations. It also lowered its guidance on new restaurant openings globally.
The company said it expects results for fiscal 2023 to come in toward the low-end of the ranges for both sales and unit growth.
—Will Feuer and Dean Seal contributed to this article.
Write to Heather Haddon at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Domino’s Pizza Inc.
DPZ -11.65%
said that its U.S. delivery business has taken a hit because consumers are cooking their own food at home to save money.
The global pizza chain Thursday reported fourth-quarter sales that missed analysts’ estimates and it cut its two-to-three-year sales outlook, pointing to challenges to its U.S. delivery business that it said it expected to last. Domino’s relies on delivery sales for its U.S. business.
Chief Executive
Russell Weiner
told investors on a call Thursday: “We believe this dynamic will continue to pressure the delivery category in the short-term as long as consumers’ disposable income remains pressured.”
U.S. same-store sales for Domino’s for the three months ended Jan. 1 rose 0.9%, below the 4% expected by analysts, according to FactSet.
The Ann Arbor, Mich., company’s shares fell 10.46% to $312 in morning trading.
Pizza chains gained sales after the Covid-19 pandemic hit in 2020 as diners sheltered at home. However, pizza sales have leveled off for top chains as restaurants have reopened and Americans have largely resumed prepandemic behaviors.
Domino’s said it anticipates consumers to continue eating at home to save money given softness in the broader economy.
Photo:
Toby Melville/REUTERS
Domino’s said it expects consumers to continue eating at home to save money given weakness in the broader economy, and is pushing its lower-cost pickup business. Domino’s said that carryout now makes uop for around half of its orders. The company has run promotions offering customers a $3 tip to pick up their pizza themselves.
Restaurant chains last year also wrestled with a shortage of pizza delivery drivers, costing companies revenue and frustrating customers with long wait times. Rising fuel and car-maintenance costs made the job less appealing over the past year, workers said, while pizza restaurants’ often rigid schedules made it harder to compete with food delivery apps such as
Uber Technologies Inc.’s
Uber Eats.
Some pizza chains work with food-delivery providers to have enough drivers on hand during peak hours.
Papa John’s International Inc.
Thursday told investors in a fourth-quarter earnings call that their restaurants’ staffing and service times have improved. Working with the apps is benefiting its business, Papa John’s said.
Papa John’s shares also fell Thursday, declining 6.83% to $86.04. The chain reported lower fourth-quarter sales and earnings. The company said higher costs for food, particularly cheese, and elevated labor costs weighed on operating margins. Both costs are expected to improve this year, the company said.
Domino’s hasn’t worked with the delivery apps in the U.S., and executives told investors Thursday that they continue to seek to improve their to-go operations internally. The company procured 800 electric vehicles to provide to U.S. outlets to help with recruiting drivers who don’t want to use their own cars.
The company said Thursday that some franchisees are now purchasing vehicles to attract drivers on their own, which is helping to attract a new pool of workers. “That actually is part of a larger strategic shift,” Mr. Weiner said.
Domino’s said that delivery service times have improved from last year, but still aren’t back to prepandemic levels.
For the fourth-quarter, the company posted earnings of $158.3 million, or $4.43 a share, compared with $155.7 million, or $4.25 a share, in the same period a year earlier. Analysts had expected earnings of $3.96 a share, according to FactSet.
Revenue rose 3.6% to $1.39 billion, below the $1.44 billion expected by Wall Street analysts, according to FactSet.
Domino’s lowered its multiyear retail-sales-growth outlook by 2 percentage points, to a range of 4% to 8% growth, when stripping out the effects of foreign-currency translations. It also lowered its guidance on new restaurant openings globally.
The company said it expects results for fiscal 2023 to come in toward the low-end of the ranges for both sales and unit growth.
—Will Feuer and Dean Seal contributed to this article.
Write to Heather Haddon at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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