Business

Pandemic Pizza Sales Growth Cools as Domino’s Reports Orders Decline

Pizza’s big gain during the pandemic is starting to lose momentum.

Same-store sales at

Domino’s Pizza Inc.’s


DPZ 2.30%

U.S. stores dropped 1.9% in the three months through early September compared with the same period last year, the company said Thursday. It is the company’s first U.S. same-store sales decline in more than a decade, according to FactSet data, and a reversal from as recently as the prior quarter when sales were still growing.

Domino’s and rival chains Pizza Hut and

Papa John’s International Inc.

benefited last year from a flood of delivery and takeout orders as restaurants closed dining rooms during the pandemic. Now, most restaurants have reopened their dining rooms, slowing the growth in delivery sales. Nearly 30% of U.S. diners said they expected to order delivery less from restaurants in the future, according to a survey last month of 963 Americans by industry research firm Revenue Management Solutions.

Domino’s attributed some of the decline in U.S. orders to a reduction in federal stimulus payments to consumers during the period. Springtime government payments that helped the chain and other restaurants didn’t occur again over the summer, reducing sales, the company said. Delivery sales particularly were hurt by fewer payments going to U.S. consumers, Chief Executive

Ritch Allison

told investors.

Ongoing staffing problems also resulted in Domino’s stores shortening hours and service, depressing sales, the Ann Arbor, Mich.-based company said. Staffing problems, and the added burden for workers that companies do have, is an increasingly common challenge across industries from manufacturing and healthcare to air travel.

The company said it is trying to steer more customers to its carryout business, due to a shortage of delivery drivers. “There is no doubt that we will continue to experience challenges with Covid with staffing and other factors,” Mr. Allison said.

Domino’s shares rose 2% in morning trading to $488, recovering after they fell premarket.

Restaurants have had a bumpy year as the Delta variant of the virus in recent weeks depressed renewed dine-in sales growth. Rising supply and labor costs are eating into profits, and industry executives expect rising inflation to further crimp their margins next year. Restaurants are passing along the costs to consumers, with fast-food prices up 6.7% over the year ending in September compared with a year earlier, according to Labor Department data.

Mr. Allison said he expected labor to continue to be a problem as people have left the workforce and immigration to the U.S. has fallen. The chain said it is raising wages to try to recruit workers, and trying to make its restaurants more efficient to reduce labor hours.

Domino’s posted sales of $998 million for the three months ended Sept. 12, less than the $1.03 billion anticipated by analysts polled by FactSet. Domino’s reported profit of $3.24 a share, adjusted for one-time items. Analysts had expected a profit of $3.11 a share.

Worldwide, 323 new Domino’s stores opened in the quarter, including 45 in the U.S. Mr. Allison said that supply chain hurdles and permitting delays resulted in fewer U.S. stores opening than he had hoped.

Domino’s said Thursday that it expects its U.S. price inflation for next year to hit the high side of its projected guidance given labor and commodity pressures.

Domino’s and Dining Trends

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Write to Heather Haddon at [email protected]

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