Domino's Pizza Faces Mixed Results Amidst New Strategies and Partnerships

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Apr 28, 2025
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Domino's Pizza (DPZ, Financial) reported a strong Q1 EPS, with revenue increasing by 2.5% year-over-year to $1.11 billion, aligning with expectations. However, the main concern is the decline in U.S. comparable sales. A positive note is that most of DPZ's food products are sourced domestically, minimizing tariff impacts on profits.

- U.S. comparable sales decreased by 0.5% in Q1, slightly below internal expectations and continuing a trend of declining comps from previous quarters. U.S. carryout comps increased by 1%, while delivery comps dropped by 1.5%, affected by macroeconomic pressures on low-income consumers.

- Despite the Q1 downside, DPZ reaffirmed its 2025 U.S. comp guidance of +3%, expecting lower comps in the first half compared to the second. However, persistent macro pressures could challenge this target. International comps are expected to grow by 1-2% amid global macro and geopolitical issues.

- DPZ launched its Parmesan Stuffed Crust Pizza in March, filling a menu gap compared to other pizza chains. Although it did not significantly impact Q1, the launch has been positively received, with a high mix of orders including the new item. DPZ is optimistic about its impact in 2025 and beyond.

- DPZ has made significant changes to its delivery system. Previously reliant solely on its drivers, it has partnered with UBER Eats and DoorDash. This allows DPZ to reach new customers, with a nationwide U.S. launch expected in May 2025 and Canadian expansion later in the year. The partnership is anticipated to have a meaningful impact in the latter half of the year.

Overall, Domino's faced a somewhat disappointing quarter, with anticipated weak U.S. comps in Q2 but potential improvement in Q3. The partnerships with major delivery services should bolster the struggling delivery segment, particularly in 2H25 as year-ago comps become more favorable. Similar consumer pressure stories may emerge from other QSR names reporting soon.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.