Domino’s Shares Soar as Pizza Chain Defies Sales Expectations

Domino’s Pizza was banking on loyalty programs and proprietary promotions to usher in a new era, and that risk seems to have paid off.

A new report from Reuters revealed that the pizza chain’s shares were up by almost 7% in pre-market trading thanks in part to the success of the new loyalty programs and various promotional offerings.

The outlet also noted the role of the new promotional offerings and loyalty programs in the uptick in same-store sales by drawing in “inflation-weary consumers,” with experts citing new menu options such as chicken wings, pasta bowls, and desserts as helping Domino’s avoid the national dining out slump.

In-store sales have jumped 5.6% in the first quarter, better than the 4.04% that analysts predicted before the official Q1 earnings report was released. CEO Russell Weiner confirmed that stores across the country saw a growth in the average order size.

Total revenue has also soared by 5.9% in Q1, bringing revenue to $1.08 billion — a slight improvement over Domino’s previous market expectations — and shares have increased to $3.58 (compared to the previous predictions of $3.39 per share).

While the new loyalty programs and food offerings certainly play a role in the national pizza chain’s newfound success, analysts also cite other contributing factors, including the decrease in the cost of food, which contributed to the gross profit margin increase of 0.6% in the first quarter.

Analysts also credit Domino’s September 2023 partnership with Uber Eats as its third-party delivery provider with improving its overall sales. As previously reported, under the new agreement, orders placed on the Uber Eats platform will still be delivered by Domino’s drivers, allowing the chain to maintain control of delivery execution. Uber Eats will also share data with Domino’s on delivery efficiency and incremental sales.

These improved overall numbers have prompted Domino’s to propose an increase in menu prices “in the low-single-digits percentage range in the U.S.,” which the company says will commence sometime this year, though it didn’t say exactly when consumers could expect the price hike.

But the increased prices will likely be offset by new promotions, including a $3 coupon provided to customers who give their delivery drivers a tip of $3 or more.