Domino’s Pizza Inc. warned on Thursday of a slowdown in its delivery business as consumers elect to cook at home rather than order in, sending company shares down 6 percent and dulling the company’s better-than-expected first-quarter results.
Consumers whose disposable income has already been strained by high levels of inflation have become more hesitant to spend money on more expensive food items and delivery fees.
The prices of cheese, meat, fuel, and labor have increased for restaurants ranging from McDonald’s Corporation to Chipotle Mexican Grill, Inc. In an effort to safeguard its margins, Domino’s has increased prices on menu items and delivery fees.
In an effort to attract inflation-weary consumers, the pizza chain reintroduced the USD 3 Carryout Tips promotion, whereby customers who place a carry-out order of at least USD 5 receive a USD 3 promo that can be applied to a subsequent carry-out order.
Sandeep Reddy, the chief financial officer of Domino’s, stated on an earnings call that carry-out business was robust, with sales of the new menu item “Loaded Tots” increasing.
Reddy added that the delivery industry was experiencing a shift in demand as consumers returned to restaurants.
However, according to Siye Desta, an analyst at CFRA Research, consumer spending patterns will return to normal and pizza delivery orders will continue to contribute to overall sales growth.
Domino’s, the world’s largest pizza chain, experienced a 3.6% increase in same-store sales in the United States during the first quarter, according to data from Refinitiv.
On an adjusted basis, the company earned $2.93 per share, exceeding expectations of $2.73 per share. Total revenue increased by 1.3% to $1.02 billion, but fell short of expectations of $1.04 billion due to the strength of the dollar.
Network Hype Team