The shares of Domino’s Pizza tumbled 12% on Thursday after the pizza restaurant chain reported worse-than-expected sales in the second quarter and adjusted its plans for new store openings.
The food service industry has been experiencing a weakening demand as consumers are getting more cautious with their spending and cutting back on their eating out and ordering habits. Domino’s managed to record a growth of 4.8% in same-store sales but fell short of analysts’ expectations of 4.91% growth.
The investors also took note of Domino’s expansion plans. The pizza chain continues to have a goal of opening 175 net stores – new stores minus the closed locations – in the United States in 2024. However, it now expects that its goal of 925+ net stores in the international market will come short by 175 to 275 stores “as a result of challenges in both openings and closures” being faced by one of its master franchisees.
Still, Domino’s Pizza had a lot to be optimistic about in the second quarter. Its earnings came at $4.03 per share, an increase of 30.8% compared to the same period in 2023 and well above the $3.68 expected by analysts. It also had a total of $1.10 billion in revenue, which came in line with estimates.
“We had positive order counts in our delivery and carry-out businesses and across all income cohorts. Our strategy is resonating with customers,” said Domino’s CEO Russell Weiner in a statement.