On Monday, Domino’s Pizza Inc DPZ delivered a profit beat with its financials being fueled by its innovative “emergency pizza” offer. Its stock jumped as it hiked its quarterly dividend by 25% while also announcing a $1 billion buyback. research firm M Science reported that in December, Domino’s held a 19% market share among pizza chains on the Uber Technologies Inc UBER Uber Eats platform.
However, like its fast-food chain peers, McDonald's Corporation MCD and KFC-parent Yum Brands Inc YUM, Domino’s also reported it suffered an impact from the raging conflict in the Middle East. Like McDonald’s and Yum Brands, Domino’s has found itself amid U.S. brands being shunned by consumers in light of the U.S. supporting Israel’s invasion of Gaza. At the end of January, Domino's franchisee that operates its restaurants in Australia, Europe, and Asia reported that same-store sales in Asia alone contracted about 8.9% during the second half of 2023. McDonald’s didn’t disclose the exact impact of boycotts on its sales, but did acknowledge the conflict created societal pressure in the countries it operates. Therefore, Domino’s not alone in facing the backlash, with McDonalds, Yum Brands and Starbucks Corporation SBUX also being among U.S. brands that some customers in the Middle East and Asia turned their back on.
Fourth Quarter Highlights
Revenue rose 0.8% to $1.40 billion. U.S. same-store-sales grew 2.8% with international same-store-sales rose merely 0.1%, excluding currency impacts. Domino’s Pizza reported a strong performance on both sales fronts:delivery and carryout. Its rewards program increased by 10% and ended 2023 with 3 million active members. What’s more impressive is that more than 2 million joined after the revamping of the rewards program that also boosted profit at franchises. Domino’s Pizza logged a net income of $157.3 million, or $4.48 a share. Despite higher wages and costs related to its revamping initiative that dented margins of its U.S. company-owned stores, lowered food costs drove quarterly earnings per share to $4.48, topping estimates of $4.38.
Uber Eats partnership is paying immediate dividends.
Joining hands with Uber was a wise call, one that delivered on its promise.
Revamping its loyalty program did the trick and sales were revived after struggling with a slowdown in the beginning of 2023. The delivery partnership with Uber helped Domino’s lure in new customers and is expected to continue doing so throughout 2024 as well.
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