Domino’s Pizza mostly stumbled at the close of 2024. Same-store sales rose just 0.4%, a clear slowdown from the pace the brand had set throughout the year, the company reported on Monday.
Per-store cash flow was $162,000, well below the company’s own stated expectations, as the company pushed more value in a bid to convince reluctant customers to order more pizzas. In short, weak sales and more value orders hurt store profitability.
Yet the brand was nevertheless able to boast that it gained market share, which says as much as you need about the sector in which Domino’s operates.
“The macro environment, plus the competitive pressures really started weighing on sales, and then profits as well with the promotional intensity that was building,” CFO Sandeep Reddy told analysts. “However, the important thing, and this was really critical, we grew about a point of market share in the year.”
Domino’s also provided little in the way of hope that things will change this year, suggesting that the consumer pressures that dominated 2024 and hurt the chain’s sales and profits will persist into 2025.
“As we look ahead to 2025, we believe the combination of pressured consumer spending and a value-driven QSR marketplace will continue,” CEO Russell Weiner told analysts.
The pizza sector is either navigating a post-pandemic lull, brought on by a weak consumer, or it is facing longer-term challenges as wealthier consumers shift to third-party delivery and lower-income diners cut their spending.
Either way, the result has been some broad-level weakness from the sector’s biggest concepts.
QSR pizza chains have seen their average sales slow for the past year and a half. Domino’s was the only one of the three big publicly traded pizza chains, also including Pizza Hut and Papa Johns, to record any same-store sales growth last year. Both Papa Johns and Pizza Hut’s U.S. business replaced their top executives last year.
On the other hand, third-party delivery companies, notably DoorDash and Uber Eats, have enjoyed sales growth over that period. The expense of that service suggests that people with more money have been spreading their spending around when they want food delivered to their homes.
That’s left pizza chains with lower-income diners. Those diners have cut back on their restaurant visits. And they’ve gravitated toward value. They’ve also been a lot more likely to get their pizzas from the restaurant, rather than have them delivered.
Domino’s numbers demonstrate this shift. Same-store sales in the fourth quarter increased 3.2% for carryout orders, but delivery same-store sales declined 1.4%. Given that pricing increased 2.3%, that means customers ordered a lot fewer pizzas for delivery.
The company also kicked off its exclusive arrangement with Uber Eats. By the fourth quarter, the delivery company accounted for 2.7% of Domino’s sales—suggesting the chain would have reported negative same-store sales but for that Uber Eats deal.
Domino’s exclusive arrangement with Uber Eats ends on May 1, but the pizza chain is negotiating with other providers now and may start testing such deals soon. “The aggregator marketplace is the fastest-growing segment with QSR pizza, and we’re just getting started,” Weiner said.
The company believes expanding its use of aggregators, along with growth in loyalty and the company’s “traffic-driving catalysts” will result in full-year same-store sales “in line” with its 3% long-term target. That suggests an improvement from late-2024 results.
“We really have a bunch of initiatives in our marketing calendar,” Reddy said. “We weren’t shy about rolling out a whole bunch of them in 2024. We have similar plans in 2025.”
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