Domino’s Pizza (DPZ.O) reported a surprise dip in U.S. same-store sales for the first quarter of 2025, as inflation and economic uncertainty dampened consumer demand for restaurant food. The company’s U.S. delivery business, in particular, suffered as inflationary pressures and financial concerns led to reduced spending among lower-income consumers.
For the quarter ending March 25, Domino’s posted a 0.5% decline in same-store sales in its largest market, the U.S., falling short of analysts’ expectations, which had forecasted a 0.5% increase, according to data from LSEG. The decline follows a slowdown in restaurant traffic during February and March, attributed to weakened consumer sentiment, exacerbated by concerns over the U.S. economy and the uncertain impact of President Donald Trump’s trade policies, which have raised fears of a recession.
In response to the challenges, Domino’s reaffirmed its annual growth target of 3% for U.S. comparable sales. However, executives cautioned that prolonged economic uncertainty could hinder the company’s ability to meet this goal.
Despite the current headwinds, Jim Sanderson, an analyst at Northcoast Research, expressed optimism, noting that Domino’s is well-positioned to return to positive comparable sales in the second half of the year. He cited upcoming initiatives, including a partnership with DoorDash (DASH.O) to facilitate orders through the aggregator platform starting in May, and the launch of a new parmesan-stuffed crust pizza, as key drivers of potential growth.
In early trading, shares of Domino’s fell approximately 1%.
On the international front, the company’s same-store sales outside the U.S. rose by 3.7%, surpassing analysts’ expectations of 1.93% growth. However, executives warned that geopolitical instability could dampen demand in certain regions and potentially impact the company’s global annual growth target of 2% for comparable sales.
Domino’s also reported a solid earnings performance for the first quarter, posting earnings per share of $4.33, exceeding analysts’ estimates of $4.07.
However, the company faced rising costs, with U.S. company-owned store gross margins declining to 16% from 17.5% in the previous year, primarily due to higher food prices.
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