Domino’s Pizza continues its COVID-era sales momentum with second quarter U.S. same-store sales up 3.5% and international sales up by double digits, despite a “very difficult staffing environment,” which was first mentioned during the Q1 call, Domino’s CEO Ritch Allison said during Thursday’s earnings call.
“COVID’s strong sales, the accelerating economic growth and ongoing government stimulus continue to result in one of the most difficult staffing environments that we’ve seen in a long time,” Allison said Thursday.
The result? Despite continued sales growth both in the U.S. and overseas, Domino’s store openings growth — a key aspect of the Ann Arbor pizza chain’s strategy — slowed significantly with 35 net store openings over the last quarter in the U.S. The slowdown is in large part due to labor challenges, but also construction and permit hurdles. As a result, Allison said that they “expect to implement additional wage increases” this year to offset some of the increased demands from potential workers, and hope to continue store opening acceleration in the back half of the year.
Besides the staffing pinch, Domino’s is seeing an upward trend in off-premises sales — particularly takeout over delivery — even as most areas of the country have gone back to normal. In fact, Allison said, they have seen more growth in states and cities with fewer remaining COVID restrictions. The bulk of that growth comes from pre-existing customers, particularly their most loyal fans.
But one of the keys to sustaining COVID-era momentum from 2020 is to capture a new audience through carside delivery capabilities.
“We just launched a campaign highlighting our carside delivery, […] which will remain an important part of our strategy as we continue to evolve the carryout experience to reach the new, largely untapped drive-thru-oriented customer.”
As delivery sales become softer compared to when dining rooms were closed nationwide, Allison said that they bring customers back by staying focused on value and special deals for delivery customers, particularly by standing apart from third-party delivery competitors.
“We see the third-party delivery companies as our real competitors,” Allison said. “We use a single transparent delivery fee [that does not] change based on what city you’re in, or any hidden fees.”
Domino’s reported a 12.2% increase in company-wide revenues last quarter to $1.03 billion, driven by U.S. and international same store sales growth and increases in global store counts. during the previous four quarters. The company’s net income decreased 1.7% to $116.6 million or $3.06 earnings per share, down from $118.7 million or $2.99 earnings per share in the same quarter the previous year, driven by higher income taxes.
Domino’s Pizza added 238 net new units in the first quarter, bringing their portfolio to a total of 18,057 company-owned and franchised stores globally.
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