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Domino's same-store sales miss estimates as competition bites

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Domino's same-store sales miss estimates as competition bites
FILE PHOTO: A Domino's Pizza restaurant is seen in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson   -   Copyright  Lucy Nicholson(Reuters)
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(Reuters) – Domino’s Pizza Inc <DPZ.N> on Tuesday reported same-store sales below Wall Street estimates for the fourth straight quarter, hurt by growing competition from third-party delivery services and small pizzerias.

The pizza chain, known to have popularized fast delivery of hot pies, faces competition from aggregators such as Uber Eats, Postmates and GrubHub <GRUB.N> who offer promotions and delivery from a list of restaurants serving a variety of cuisine at low prices.

Domino’s is also one of the largest chains to stay off third-party delivery apps altogether, as more restaurant chains become heavily dependent on meal-delivery companies to boost sales at the cost of lower profit margins.

Rivals Yum Brands-owned <YUM.N> Pizza Hut and Papa John’s International Inc <PZZA.O> and small players like MOD Pizza and Blaze Pizza have all tied up with third-party apps to deliver food.

Ann Arbor, Michigan-based Domino’s has also been aggressively opening new restaurants in a move it calls “fortressing” to facilitate faster delivery to locations beyond homes and offices, ranging from beaches to bus stops.

Same-store sales at restaurants open for more than an year in the United States rose 2.4%, its slowest growth in at least 15 quarters. Analysts had estimated a 2.84% rise, according to IBES data from Refinitiv.

The slowdown in the market came despite the company offering half-off on online orders for a week in August and launching a 20% off for late-night orders in September.

Its international business climbed only 1.7% higher, missing estimates of a 2.86% rise.

The company’s net income rose to $86.4 million, or $2.05 per share, in the third quarter ended Sept. 8, from $84.1 million, or $1.95 per share, a year earlier.

Total revenue rose 4.4% to $820.8 million, missing analysts’ estimate of $823.9 million.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Maju Samuel)

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