Like the rest of the foodservice industry, Domino’s Pizza is facing a challenging consumer environment as the company reported a modest 3% U.S. same-store sales growth (and under 1% international sales growth) for the third quarter ended Sept. 8, 2024. Although Domino’s CEO Russell Weiner described a “pressured global marketplace,” he emphasized that the company had experienced four straight quarters of positive same-store sales and positive order count growth since launching the company’s “Hungry for More” strategy.
Although analysts seem to think that customers have been scared off by Domino’s price increases, particularly while spending is down across segments, creative promotions continue to be a major part of the Ann Arbor, Mich.-based company’s strategy. Domino’s continues to rein in lapsed or sometimes-customers back in with boost weeks, and just announced the return of the highly successful Emergency Pizza BOGO promotion.
Another crucial part of Domino’s strategy is to focus on the revamped rewards program, which just passed its one-year anniversary and continues to drive incremental sales:
“Today's order count growth drives tomorrow's order count growth as well, because the strength of Domino's Rewards brings members back for repeat purchases in the future,” Weiner said during Thursday’s earnings call. “Domino's Rewards continues to perform well and was a key driver of our US comps performance in Q3…. I expect it to continue to play a critical role driving the business for the next several years because Domino's Rewards is achieving our goals of driving more light users and carryout customers.”
Another crucial growth channel for Domino’s is third-party delivery. As a latecomer to the third-party delivery game, Domino’s has started to lean more heavily on Uber Eats to reach a new, less price-conscious customer base that they would not normally have before.
“While providing value through our own channels is one part of our renowned value barbell strategy, tapping into the aggregator marketplace is the other,” Wiener said. “In Q3, we saw a nice acceleration as we grew our percentage of US sales coming through Uber to 2.7%. Importantly, incrementality in this channel has continued as expected since these customers have been less sensitive to economic pressures.”
While Domino’s continues to have a positive outlook stateside, despite macroeconomic circumstances outside of its control, Wiener admitted that the company has a lot of work to do to bolster sales in international markets. The company is working closely with master franchisees in global markets to double down on aggressive promotional pricing, maximize aggregator sales, and drive demand in other channels beyond delivery, which includes both carryout and dine-in options, in some places.
For the third quarter of 2024 ended Sept. 8, Domino’s revenue increased $52.8 million, or 5.1% in the third quarter of 2024, primarily driven by higher supply chain, U.S. franchise advertising and U.S. franchise royalties and fees revenues. Net income decreased $0.8 million, or $4.19 earnings per share in the third quarter of 2024 as compared $4.18 earnings per share in the third quarter of 2023. Domino’s opened net 72 new stores in the third quarter for a total store count of 21,002 restaurants globally.
Contact Joanna Fantozzi at [email protected]
