Domino’s pizza soars as food, drink makers parry inflation

Bloomberg

Domino’s Pizza Inc’s better-than-expected quarterly sales are a further indication that even in the face of inflation, consumers are still indulging in their favourite meals and snacks.
Domino’s stock surged as much as 11% in New York trading, the most since July 2021, after US comparable-store sales beat analyst estimates. Overall it was a mixed quarter, with revenue in line with expectations and adjusted earnings per share missing the average analyst estimate.
“We delivered around one out of every three pizzas in the United States before the pandemic, and we deliver around one out of every three pizzas today,” Domino’s Chief Executive Officer Russell Weiner said.
Still, delivery continues to be pressured, the company said. Weiner elaborated on the carryout business on the earnings conference call, which showed strength in the US, driving comparable sales above analysts’ estimates.
“We believe that inflation will impact delivery more than carryout due to the added expenses of fees and tips,” Weiner said. He said that this could cause more consumers to cook at home rather than pay to have restaurant food delivered —
especially approaching the
holiday spending season.
Citi analyst Jon Tower called the Domino’s report “better than feared.” He said in a note that the company’s net global store growth of 6.2% was “not much to cheer,” though it fell within the range Domino’s had offered in guidance. Domino’s has also faced labour struggles, causing it to emphasise its carryout business as it tries to fill open delivery positions.
The pizza giant isn’t the only one finding consumer resilience. PepsiCo Inc reported earnings that beat estimates despite higher prices and rising costs for ingredients such as sugar and potatoes.
Chief Financial Officer Hugh Johnston said the company’s products, which include Lay’s potato chips and Mountain Dew soda, are treats that consumers enjoy whether times are good or bad.
Government data shows the core consumer price index was up 6.6% year-over-year in September, reaching the highest level since 1982.
“The latest inflation numbers provide little comfort for hard-pressed consumers as higher prices remain an embedded feature of economic life,” wrote Neil Saunders, managing director at GlobalData. “This is especially true in essential categories like food, gasoline and energy where the increases are particularly sharp and continue to drain household income.”