Domino’s Pizza’s grew revenue by 7.1% in the second quarter even as other restaurant chains struggled. The pizza chain also posted earnings early Thursday that beat Wall Street forecasts because of one-time gains.
For the three months ended in June, the company grew earnings by 30.8% from a year ago to $4.03 per share. Analysts polled by FactSet had expected $3.68. Total revenue came at $1.1 billion, slightly below analyst expectations.
The earnings gain was primarily due to a change in pretax unrealized gains and losses associated with the company’s investment in DPC Dash, its exclusive franchisee in the China region, according to Domino’s.
“For the second straight quarter we drove U.S. comp performance in the healthiest way possible, through profitable order count growth,” said CEO Russell Weiner in a statement, noting that the firm has seen positive order counts in both its delivery and carryout businesses across all income cohorts.
Domino’s owns more than 20,000 restaurants around the globe, mostly run by franchisees who pay the company royalties and fees. Across the network, sales totaled $4.43 billion in the second quarter, up 7.2% from a year ago, excluding the impact of foreign-currency rates. That has lifted Domino’s revenue as a result.
Same-restaurant sales increased 4.8% at U.S. stores and 2.1% at international locations. The company also continues to expand its footprint. Last year, management announced a five-year growth plan, dubbed Hungry for MORE, that includes 1,100 new store openings through 2028 and an annual boost to sales by 7%.
In the second quarter, Domino’s opened 228 new stores, mostly in international markets, and shut down 53 locations. “Our year-to-date performance demonstrates that our Hungry for MORE strategy is off to a great start, having an immediate impact on sales and profits,” said Weiner in the statement.
Still, there are headwinds ahead. The company had planned to open over 925 net stores — the number of openings minus closures — in international markets this year. Management now expects the number to fall short by 175 to 275 due to challenges faced by one of its major franchisees.
Domino stock has fallen 11% over the past month as investors become concerned about softer demand for restaurants. Many national chains, including McDonald’s and Starbucks, have seen weaker sales this year as consumers are squeezed by inflation-fueled high prices.
Fast-food giants like McDonald’s, Burger King, and Wendy’s have entered a value war this summer, rolling out deals with aggressive price cuts to lure consumers back to stores — a move that will weigh on profit margins.
Domino’s began listing its food on UberEats last year to boost its delivery sales. In September, the company also relaunched its loyalty program, which used various promotion deals and point-redemption schemes to engage with customers that order from the chain less often.
“Our strategy is resonating with customers and our system, which gives me great confidence that we can drive significant long-term value creation for our shareholders,” said the CEO.
In the first two quarters of 2024, Domino’s repurchased $25 million worth of stock. It also announced a $1.51 per share quarterly dividend to be paid on Sept. 30.