Domino’s Pizza executives said the chain’s reformulated pizza and international growth fueled third-quarter sales gains throughout the system.
J. Patrick Doyle, chief executive of the 9,541-unit chain, said during a conference call with investors that Domino’s 3-percent domestic same-store sales increase, compared with an 11.7-percent result a year earlier, showed that its recent sales success was more than a temporary spike from introducing a new, reformulated pizza.
“This was a sustained improvement from greater customer frequency and retention,” Doyle said.
Doyle also underscored huge potential for the chain’s international business, which recorded its 71st consecutive quarter of same-store sales increases, with an 8.1-percent gain this quarter compared with a 7-percent increase a year earlier.
Domestic growth, however, will be cautious, the company said, as the overall economy remains tepid and commodity prices hamper efforts to make long-term plans. Domino’s commodities basket price rose 8 percent in the third quarter, chief financial officer Michael Lawton said, including a spike in cheese prices to a high of $2.08 per pound before settling at $1.79, compared with an average of $1.53 in last year’s third quarter.
U.S.: Cautiously confident
Doyle said domestic same-store sales and margins were helped by labor-saving moves like a carryout focus, an in-sourced call center and digital ordering, but he added that the chain was still weighing the effects of other economic factors.
“When cheese spikes above $2 a pound, that has some real short-term impact,” he said. “Our confidence is good, but still a little bit qualified, until we see it flow through more on the bottom line. Financing is there for the larger players, but it hasn’t opened up materially for a new franchisee or somebody with maybe one store looking to open a second.”
