Domino’s Pizza (NYSE:DPZ) reported disappointing quarterly results on Monday, falling short of sales expectations as the fast-food sector faces increasing pressure from value meal promotions. The company noted that the consumer environment for fast food would remain challenging in 2025, with intense competition over discounted offerings. Following the announcement, Domino’s shares dropped 5%.
In recent years, fast-food chains have increasingly relied on discounting to attract customers. Domino’s introduced its own value meal promotions late in 2023, a move later mirrored by rivals such as McDonald’s (NYSE:MCD) and Burger King, as consumers began pushing back against rising menu prices.
CEO Russell Weiner stated during a post-earnings call that Domino’s would continue its promotional efforts, including its “emergency pizza” deals and “boost weeks,” which will offer 50% off online pizza orders throughout 2025.
Domino’s reported a modest 0.4% increase in same-store sales for its U.S. locations, falling short of analysts’ expectations for a 1.63% gain, based on data from LSEG.
Jim Sanderson, an analyst at NorthCoast Research, noted that Domino’s is likely to face ongoing challenges in the first half of 2025, with tough competition, weather disruptions, and shifting consumer behavior pushing demand for value-focused promotions.
However, Domino’s international business showed signs of recovery after macroeconomic pressures dampened demand in some European and Asian markets last year.
The company also extended its exclusive partnership with Uber Eats (NYSE:UBER) for online orders until May and revealed it had started discussions with additional delivery platforms, though specific details were not disclosed.
Analysts have been speculating about a potential partnership with DoorDash, which could help Domino’s expand its customer base, according to RBC analyst Reich Logan.
Despite the challenges in the U.S., Domino’s international business posted a stronger-than-expected 2.7% increase in same-store sales, surpassing the anticipated 1.46% growth. The company’s earnings per share for the fourth quarter, $4.89, were in line with analysts’ forecasts.
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