Pizza News

Domino’s Saw Drop in Delivery Demand in the Last Quarter

According to Nation's Restaurant News, Domino's CEO Russell Weiner said many customers are returning to dine-in or making meals at home.

Same-store sales for Domino’s grew by less than 1% in the latest quarter, Nation’s Restaurant News (NRN) reports, a sign of declining demand for pizza delivery, while dine-in seems to be on the way up again.

For the fourth quarter ending on January 2, 2023, the world’s No. 1 chain saw a 0.9% increase in same-store sales, “boosted mainly by pricing increases during the quarter and offset by a decline in orders,” NRN said. Carryout sales accounted for about half of all Domino’s orders in that quarter, while same-store sales dropped 6.6%, according to Reuters.

Reuters reported that the discouraging quarterly sales report sent Domino’s shares down 11%. “For Domino’s, the fourth-quarter (U.S. same-store sales) weakness was disappointing, and it’s raising a bit of a red flag,” Northcoast Research analyst Jim Sanderson told Reuters.

In a Thursday, February 23 earnings call, Domino’s CEO Russell Weiner said, “As consumers returned to many of their pre-COVID eating habits, some of the sit-down business that was a source of volume for restaurant delivery orders returned to that channel.” Due to inflation, he added, some customers are also preparing more meals at home instead of ordering delivery.

Related: Papa Johns logged 26% same-store sales growth in past three years

“We believe this dynamic will continue to pressure the delivery category in the short term,” Weiner said, according to NRN.

As delivery demand slows, Domino’s has also rolled back its unit growth prediction for 2023, from 6-8% to 5-7% for the remainder of the year.

How will Domino’s respond to the changing food delivery climate? Expect some new menu items, an increased focus on keeping loyal customers happy and higher prices on value deals, NRN says. The chain signaled that it will continue to stick with in-house delivery rather than partnering with third-party platforms and will rely more heavily on robotic delivery to cope with staffing challenges.