Domino’s fuels rare drop in US sales as slowing demand bites the labor crisis

Oct 14 (Reuters) – Domino’s Pizza Inc (DPZ.N) on Thursday posted its first same-store sales decline in the US in more than a decade as the world’s largest pizza chain struggled with a slowdown in delivery demand and a tight labor market that caused a shortage of drivers.

As COVID-19 subsides, Americans have begun eating out at restaurants after ordering food from home for more than a year, slowing sales at Domino’s, which gets most of its revenue from deliveries and takeout orders.

In addition to the woes, Domino’s also said a severe labor shortage in the United States dealt a blow to its company, forcing it to shorten store hours and compromise on delivery times.

To address the labor shortage, Domino’s Chief Executive Officer Richard Allison said the company would maximize the number of deliveries a driver could make per shift.

“I don’t see why drivers should ever get out of their cars. Why can’t we let them return to the store to the customer and maximize deliveries per driver per hour,” Allison said during an interview with analysts.

The Michigan-based company said the benefits of the stimulus checks in the third quarter also led to a 1.9% drop in same-store sales at its U.S. restaurants.

That was less than analysts’ estimates of an increase of 1.89%, according to IBES data from Refinitiv, and a reported increase of 17.5% a year ago.

However, compared to 2019, the pizza chain’s same store sales in the US were still up 15.6%.

Shares of the company were up 2% in afternoon trading as it also reported an 8.8% increase in its international same-store sales.

Domino’s net income rose 21.5% to $120.4 million or $3.24 per share, beating estimates of $3.11 per share and addressing some concerns that rising payroll costs could affect the company’s profit margins. putting pressure.

Reporting by Deborah Sophia in Bengaluru; edit by Uttaresh.V

Our Standards: The Thomson Reuters Trust Principles.

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