Domino's Pizza Reports Third-Quarter Earnings

(Reuters) – Domino's Pizza posted a smaller-than-expected rise in third-quarter U.S. same-store sales on Thursday as consumers curtailed spending on dining out.

Shares of the pizza maker fell nearly 3% to $401.49 in premarket trading.

Despite inflation easing in the U.S., menu prices that rose over the last two years have kept consumers cautious about spending money in restaurants. They have instead responded to steep discounts and special offers.

As a result, competition has intensified in the fast-food industry, with burger chains like McDonald's (NYSE:MCD) and Burger King offering meals at around $5.

The "burger wars" may be pressuring demand for Domino's usually value-driven pizzas, analysts noted.

Same-store sales in the U.S. grew 3% in the quarter ended Sept. 8, compared to expectations of a 3.6% rise, according to estimates compiled by LSEG.

Domino's now anticipates annual global retail sales for 2024 to grow about 6%, down from an earlier forecast of 7% growth. The company expects 2025 global retail sales growth to align with the current year.

The world's largest pizza chain also had only one promotional week in the third quarter, offering 50% off online orders, compared to two weeks in the second quarter.

For July through September, foot traffic at Domino's grew by 8.3% on average, compared with a year ago, slower than the average 10.7% growth from April to June, according to data from Placer.ai.

Fast food chains are also facing weak demand in some international markets. Domino's reported international same-store sales growth of 0.8% in the third quarter, compared to expectations of a 2.9% rise.

Domino's now expects global net store growth of between 800 to 850 this year, compared to an earlier target of about 825 to 925 new stores.

Third-quarter diluted earnings per share came in at $4.19, exceeding estimates of $3.65.