Domino’s Pizza on Thursday missed market expectations for its quarterly revenue, as higher menu prices and delivery charges discouraged inflation-weary consumers from ordering at the restaurant.
Already pinched by higher prices for necessities, including rentals and borrowing costs, consumers are forced to spend their limited household budgets on cheaper home-cooked meals instead of ordering from restaurants, denting demand at Domino’s.
Domino’s, which became synonymous with quick home delivery around the world, has said that benefits from higher product prices would ebb as the year progresses. The company in July forecast an average price increase in the current quarter to be 2%, compared with a nearly 4% jump in the third quarter.
Higher pizza delivery charges have also been a pain point for customers.
The company said it also faced a setback from lower supply chain revenue from its franchised stores. Pricing to these stores decreased 1.7% in the reported quarter, compared with the year-ago period.
Still, the Ann Arbor, Michigan-based company saw its net income jump nearly 47% to $147.7 million in the quarter, underpinned by a one-time pretax gain and cooling in costs of some commodities like cheese.
Earnings per share of $4.18 handily beat analysts’ average estimate of $3.30, as per IBES data from LSEG.
Total revenue fell 3.9% to $1.03 billion in the quarter ended Sept. 10, compared with analysts’ estimate of $1.05 billion, according to LSEG IBES data.
The company’s same-store sales in the United States fell 0.6% in the quarter, compared with analysts’ average estimate of a 0.14% rise.
Domino’s said its 2023 global retail sales growth, excluding the impact of currency fluctuations, would come in below the mid-point of its 4% to 8% two- to three-year outlook.
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