Dive Brief:
- Domino’s reported U.S. same-store sales growth of 0.9%, lower than originally expected, CEO Russell Weiner said Monday during an earnings call. Comparatively, same-store sales were up 3.7% during the fourth quarter.
- While the year started strong, economic pressures increased, particularly in March as consumer uncertainty intensified, Weiner said. Consumer sentiment was at “COVID-level lows” and ongoing inflation impacted purchases. He added that bad weather and increased competition also impacted the company’s quarterly performance.
- Domino’s has been among the stronger-performing QSR brands in the past few quarters, so its slow sales growth could be indicative of a tough quarter, particularly for brands like Chipotle, Wendy’s and Sweetgreen, which have seen declines in same-store sales over the past few quarters.
Dive Insight:
Despite the rocky start to the year, Weiner said Domino’s remains committed to reaching its original same-store sales growth projection of 3% for 2026. The chain is already tweaking its business, particularly its marketing calendar, to try and reach that goal.
“Our team is hard at work making the adjustments we believe are necessary to drive an even bigger impact in the current macro environment,” Weiner said. “I'm especially energized by the product innovation we're bringing in the second half of the year, particularly around pizza, which goes beyond what we originally planned. It's bold, exciting, and has real potential to elevate our brand.”
Domino’s has a multi-year product innovation strategy that allows it to move up products in the pipeline or come up with new items that can help drive sales, he said. Its menu is fairly diverse , with a wide variety of chicken products, and about 40% of what it sells is not pizza, he said. The company is already testing a Chick N Dip lineup in the U.K. and seeing strong performance, for example. The products include hot and crispy tenders, wings and boneless bites alongside nine sauces, according to a press release.
Weiner also emphasized the rollout of a new app, which included improvements to Domino’s pizza tracker. The updates give consumers more precise ready times using artificial intelligence. If a delivery driver isn’t going to be back in time to pick up a pizza out of the oven, the system will alert the store to hold-off on making the pizza until the driver will be back in time. This will result in “a more consistent, higher quality product for our customers,” Weiner said.
While competitive pressures impacted quarterly results, both CFO Sandeep Reddy and Weiner emphasized that this was a short-term impact. National pizza competitors offered deals that were comparable to Domino’s “renowned value” strategy.
However, Domino’s value offerings continue to drive franchise profitability, while its publicly-traded competitors face about 450 unit closures this year. Weiner added that as competitors try to replicate Domino’s value, it could put additional pressure on franchisee economics that could result in additional closures. These closures, in turn, help drive Domino’s market share growth, Reddy said.
Domino’s also has an advertising budget equal to both of its publicly-traded competitors combined, which helps drive order counts, Weiner said.
“I know the kind of volumes that need to be done in order to make deals like the ones we have out there profitable,” Weiner said. “And I do not believe that our competition can drive those kinds of volumes.”
