Domino’s Pizza stock rises on earnings beat in a hopeful sign for chains. McDonald’s and Starbucks are up next
Domino’s Pizza stock rises on earnings beat in a hopeful sign for chains. McDonald’s and Starbucks are up next
The pizza giant beat analysts’ expectations despite a rocky financial terrain for many well-known restaurant brands.
Domino’s first-quarter earnings report is in, and the pizza chain’s U.S. sales outdid Wall Street analysts’ expectations for the second quarter in a row. Quarterly net income is up 20% to $126 million from a year ago.
Shares of Domino’s Pizza were up more than 2% in early trading on Monday. Over the past six months, the stock has risen an impressive 47%.
According to a statement from Domino’s chief executive Russell Weiner, the boost “came through positive order counts in both our carryout and delivery businesses,” with orders being placed across all income cohorts. In February, Weiner told investors on an earnings call that marketing endeavors including a new-and-improved loyalty program, a quicker overall service time, and splashier advertising were helping to bump up orders. This quarter, the results of those efforts are in: Same-store sales rose 5.6% compared to analysts’ predictions of a 3.9% gain, Bloomberg reported.
“Our first quarter results demonstrated that our Hungry for MORE strategy is off to a strong start: delivering MORE sales, MORE stores, and MORE profits,” Weiner said in Domino’s first-quarter report.
Challenging time for chain restaurants
The pizza giant’s boost in sales comes as many big name restaurants—including TGI Friday’s, Tijuana Flats, and Red Lobster—are facing down tough financial straits. According to a March report from Reuters, some of the strained climate for fast food and restaurants can be traced to low-income consumers cutting back on dining out.
However, the outlook isn’t all bad for fast-casual joints. Last week, Chipotle also managed to beat earnings expectations, reporting a 14% jump in first-quarter revenue compared to last year and hitting an all-time-high share price on Thursday. Like Domino’s, Chipotle attributed its success both to faster service and new marketing efforts, including the revival of limited-time menu offerings.
The earnings from Domino’s and Chipotle offer a positive outlook for restaurants this quarter—though reports from McDonald’s and Starbucks, which publish tomorrow, will help paint a clearer picture of what’s to come.
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