Domino’s Pizza announced Thursday it fell short of sales estimates in the third quarter as restaurant operators intensified their pursuit for price-conscious customers by doubling down on value offers.
The world’s largest pizza chain has revamped its reward program and enhanced its discount offerings, but it still faces challenges from fast-food rivals that can offer more affordable value meals.
McDonald’s, for example, brought back its fan-favorite $5 Meal Deal this summer and extended it the promo through the end of the year because of steep demand from inflation-battered consumers.
Domino’s US same-store sales grew 3% in the quarter ended Sept. 8, missing expectations of a 3.6% increase, according to LSEG analysts’ estimates.
Domino’s shares were down less than 1% Thursday afternoon.
Foot traffic at Domino’s for the period between July and September increased 8.3% on average compared to a year before, according to data from Placer.ai.
That growth was slower than Domino’s 10.7% increase in foot traffic in the period between April and June, according to Placer.ai.
“Domino’s continues to lead peers given the positive traffic report,” Jim Sanderson, analyst at Northcoast Research, said. “Average check may suffer from discounting. But we believe the current strategy will drive market share growth.”
This week, Domino’s brought back its emergency pizza offer, extending until Jan 19.
The deal, which helped drive sign-ups for the company’s loyalty program last year, allows customers to redeem a free pizza on some online orders within 30 days.
“The Hungry for MORE pillar of Renowned Value will be the primary focus for our business in near-term as we look to continue to create our own tailwinds around the world,” Domino’s CEO Russell Weiner said in a statement. “Renowned Value is a competitive advantage for Domino’s and one where we are industry leaders.”
International same-store sales rose 0.8%, far below expectations of 2.9%.
The company cut its annual global retail sales growth target to 6% from an earlier 7% forecast.
Domino’s also slashed its global net store growth target for the second quarter in a row.
The pizza chain now expects global net store growth this year of 800 to 850. In July, it predicted growth of 825 to 925.
Overseas markets suffered a hit from macroeconomic conditions, underperformance at stores and geopolitical tensions in the Middle East.
But higher franchise royalties and fees and margin growth helped the company’s profits.
Domino’s reported profit per share of $4.19, exceeding expectations of $3.65.
With Post wires
