Domino’s Pizza experienced a significant drop in stock prices on Monday, with shares plummeting 10% during morning trading after the company reported disappointing U.S. same-store sales growth. According to recent data, the chain’s domestic same-store sales increased by just 0.9%, falling short of the anticipated 2.3% growth forecast by Wall Street analysts based on estimates from StreetAccount.
CEO Russell Weiner candidly expressed his dissatisfaction with the results during an interview with CNBC. In light of the disappointing figures, Domino’s adjusted its full-year U.S. same-store sales forecast to low-single-digit growth, a significant revision from its previous estimate that sales would increase by 3%.
Weiner attributed some of the struggles to challenges faced across the industry, particularly noting that many fast-food chains are likely to encounter similar obstacles in the coming months. He pointed out that consumer sentiment dipped sharply in March, largely due to rising fuel prices stemming from geopolitical tensions linked to the U.S.-Israeli war with Iran.
As the first restaurant chain to report earnings this season, Domino’s is setting the stage for its competitors, with Starbucks scheduled to release its results shortly after the market closes on Tuesday. Chipotle Mexican Grill and Yum Brands, which owns Pizza Hut, will follow on Wednesday, and rival Papa John’s is set to report next Thursday.
In addition to disappointing sales figures, Domino’s faced fierce competition during the quarter. Rivals such as Papa John’s and Pizza Hut launched promotions that matched Domino’s $9.99 “Best Deal Ever,” while Little Caesars introduced a $5.99 version of Domino’s $6.99 Mix & Match deal. Weiner commented on this competitive landscape, acknowledging that rivals are eager to regain market share.
Despite the challenges, Weiner expressed optimism about Domino’s future, highlighting the brand’s substantial advertising budget compared to its nearest competitors. With both Pizza Hut and Papa John’s exploring strategic options that may include sales or closures of hundreds of locations, Weiner believes that these shifts could reinforce Domino’s leading position in the pizza market.
Over the past year, Domino’s shares have depreciated by nearly a third, resulting in a market capitalization of approximately $11.2 billion. As the company grapples with immediate challenges, its long-term prospects remain a topic of interest in the fast-food industry.
