Domino’s Pizza shares dropped over 13 percent on Thursday after the company revealed one of its largest franchisees was struggling and will shutter as many as 80 stores in the second half of 2024.
As reported by Heather Haddon of the Wall Street Journal, Australian-based Domino’s Pizza Enterprises (DPE) is the franchisee in question. “DPE, which operates restaurants in Asia and Europe, said Wednesday it was closing dozens of stores in Japan and France, as it reviews the performance of its entire business,” Haddon wrote.
Domino’s said it still plans to open about 175 stores per year through 2028, and projected sales will grow at an annual rate of 7% in that same time frame.
Related: How Domino’s ‘Hungry For MORE’ Strategy is Already Paying Off
Prior to Thursday, Domino’s shares had grown over 20% in the past year, as reported Haddon. That growth was particularly strong when compared to the S&P 500 restaurant subindex’s 8% decline during the same time period.
It wasn’t all bad news for Domino’s. however. The world’s largest pizza company also announced sales growth in line with projections for the year’s second quarter. Same-store sales grew 4.8% in the quarter that ended in June, which was in line with a 4.9% projected growth.
Domino’s CEO Russell Weiner touted the results as affirmation for the brand’s “Hungry for MORE” campaign, which was a growth roadmap announced at the end of 2023.
“For the second straight quarter we drove U.S. comp performance in the healthiest way possible, through profitable order count growth,” Weiner said. “We had positive order counts in our delivery and carryout businesses, and across all income cohorts. 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.”
Domino’s Pizza’s stock dipped further on Friday before rebounding a bit in the afternoon.
