As fast-food chains struggle to lure budget-conscious consumers back to their stores, Domino’s Pizza is positioning itself to capture market share through strategic pricing and value-driven promotions.
The pizza giant reported US same-store sales growth of 3.4% in its latest quarter, outpacing analysts’ expectations and suggesting that its value-centric approach is resonating with customers across income levels.
Sales growth driven by promotions and new menu offerings
Domino’s CEO Russell Weiner said Monday that the company’s performance during a challenging economic backdrop signals an opportunity to gain share from rivals. “I think the industry headwinds are actually tailwind for us,” Weiner told CNBC. “We’re going to gain [market] share during this time frame.”
Sales growth was supported by the introduction of Domino’s first-ever stuffed-crust pizza in March, as well as the company’s focus on promotional pricing.
One of the most successful promotions, according to executives, was the $9.99 “Best Deal Ever” offer.
Weiner said Domino’s ability to offer value on items that consumers actually want is helping it differentiate from competitors. “The reason it’s the best deal ever is because everybody else right now is giving you a deal on something you don’t want, something that may be your second choice,” he noted.
Despite economic pressures, Domino’s reported sales gains across all income segments, including among lower-income customers, an encouraging sign in an industry where inflation has caused many diners to cut back on dining out entirely.
Value positioning echoes broader industry trends
Domino’s strategy reflects a broader trend in the restaurant sector, where chains are increasingly focusing on affordability and value perception.
Competitors such as McDonald’s and Yum Brands’ KFC have leaned on value menus and combo meals for over a year in an attempt to stem declining foot traffic.
In some cases, casual dining chains have found success by marketing their offerings as affordable alternatives to fast food.
Chili’s, for example, has posted double-digit same-store sales growth over four consecutive quarters by emphasizing the value of its dine-in experience compared to fast food, a model Domino’s may be emulating through its own value positioning.
Weiner acknowledged that the economic environment has created systemic challenges for restaurant operators.
“Until people’s wages get back to the point where they’re outgrowing pricing, this is going to stay,” he said, noting similarities in consumer behavior across the industry.
Earnings miss and international headwinds
While Domino’s outperformed expectations on US same-store sales, its earnings missed Wall Street forecasts.
The company reported earnings per share of $3.81, short of the $3.95 consensus estimate compiled by LSEG.
A $27.4 million charge related to its investment in its China licensee weighed on the results. Revenue for the quarter came in at $1.15 billion, in line with analysts’ projections.
Shares of Domino’s fell more than 2% in afternoon trading following the earnings release, although it recovered some of the losses and is now trading 0.38% down.
Looking ahead, the competitive landscape will continue to evolve as other major players report their second-quarter results.
Yum Brands, owner of Pizza Hut, is scheduled to release earnings on August 5, followed by Papa John’s on August 7.
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