Same-store sales have declined for the second-quarter as Dominos faces threat from competitive third-party delivery.
Dominos will continue with its long-term plans and not go ahead with foolish things in the short term. Its current plan, called fortressing is to add stores to the existing ones so that they are closer to customers, to enable speedy delivery.
There are many delivery apps that customers now use, to order food. Customers can now choose from a number of restaurants using the delivery app to order food of their choice. Companies like Uber Eats, GrubHub and DoorDash have been competing to attract more users through these apps.
Domino’s Pizza is, however, going ahead with its long term plans to deliver its products to customers through speedier delivery and through closer services.
“We will not react through foolish short-term reactions”, says CEO Ritch Allison. While discussing second-quarter earnings with analysts on Tuesday, the CEO says that Domino’s faces significant pressure through these mobile-app services.
Domino’s is able to generate about $1 million cash flow per day, says Allison. He says that the company gives importance towards expanding its footprint and to speed up its delivery times.
For the second quarter, Domino’s has added 45 stores, while closing three stores, says Allison.
Same-store sales have fallen by 3 percent for the second quarter, which is lesser than the market expectation of 4.8 percent. The CEO says that this is due to stiff competition from its competitors like Papa John and Pizza Hut.
The company’s net income for the second quarter is at $92.4 million. This is up from last year’s $77.4 million. Earnings per share have gone up to $2.19 per share, while the market expectation was at $2.02 per share.
The earnings results were a bit disappointing to investors and shares have reacted sharply with a fall by 6 percent during trade on Tuesday.
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