Domino's Pizza Inc has beaten Wall Street estimates for first-quarter US same-store sales and profit, boosted by higher prices as well as new promotional offers and menu items that helped draw more customers to its outlets.
Details
The pizza chain's better-than-expected sales follows similar reports from McDonald's Corp and Chipotle Mexican Grill Inc, which have been bumping up menu prices to protect their margins from a jump in costs of raw materials and labor.
In a bid to attract inflation-weary consumers, the pizza chain relaunched the $3 Carryout Tips promo, where customers who place a carry-out order of $5 or more earn a $3 promo that can be used for another carry-out order.
Analysts have said the company's new menu item "Loaded Tots" that serves oven-baked potato tots with cheese and toppings in three varieties has helped boost sales during the January-March period.
Consumer spending patterns will normalize with pizza delivery orders beginning to contribute to overall sales growth, according to Siye Desta, analyst at CFRA Research.
The world's largest pizza chain's US same-store sales rose 3.6% in the first quarter, compared with analysts' estimate of a 1.96% increase, according to Refinitiv data.
However, total revenue rose 1.3% to $1.02 billion but missed analysts' estimate of $1.04 billion hurt by a strong dollar.
Major companies such as McDonald's and Coca-Cola, which have sprawling global operations and convert foreign currencies into dollars, have flagged foreign currency headwinds.
Additional Information
Excluding items, the Michigan-based fast-food chain earned $2.93 per share, beating estimates of $2.73 per share.
The above news was followed by the following update:
UPDATE 4-Domino's Pizza Warns Of Challenging Delivery Business, Shares Fall
Domino's Pizza Inc on warned of a slowdown in its delivery business as consumers opt to cook at home instead of ordering in, sending shares of the company down 6% and taking the shine off the better-than-expected first-quarter results.
Consumers whose disposable income has already been stretched by elevated levels of inflation have become increasingly cautious about spending their dollars on pricier food items and higher delivery fees.
Restaurant chains from McDonald's Corp to Chipotle Mexican Grill Inc have seen prices of cheese and meat as well as fuel and labor increase. Domino's in an attempt to protect its margins has raised prices on menu items and increased delivery charges.
In a bid to attract inflation-weary consumers, the pizza chain relaunched the $3 Carryout Tips promo, where customers who place a carry-out order of $5 or more earn a $3 promo that can be used for another carry-out order.
Domino's Finance Chief Sandeep Reddy said on an earnings call that carry-out business was strong, with new menu item "Loaded Tots" seeing higher sales.
The delivery business was seeing a migration of demand to consumers returning to restaurants, Reddy added.
However, CFRA Research analyst Siye Desta said consumer spending patterns will normalize with pizza delivery orders beginning to contribute to overall sales growth.
US same-store sales at Domino's, the world's largest pizza chain, rose 3.6% in the first quarter, compared with analysts' estimates of a 1.96% increase, according to Refinitiv data.
On an adjusted basis, the company earned $2.93 per share, beating estimates of $2.73.
Total revenue rose 1.3% to $1.02 billion, but missed estimates of $1.04 billion hurt by a strong dollar.
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