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Domino's sales momentum slowed from 17.5% to 11.2% over the last quarter.

Domino’s COVID-era same-store sales momentum slows to 11.2% for the fourth quarter

Domino’s reports strong delivery momentum but pressured carryout business for Q4 2020

The runaway sales momentum Domino’s Pizza had throughout the first year of the pandemic — punctuated by their strongest performance in decades in the third quarter — seems to have slowed at the end of 2020, according to the company’s earnings report released Wednesday. For the fourth quarter of 2020, ended Jan. 3, Domino’s saw 11.2% same-store sales growth for its U.S. stores and 7.3% same-store sales growth internationally, a more normalized pace than 17.5% same-store sales growth last quarter.

During an earnings call Thursday, Domino’s CEO Ritch Allison noted that during the entire year, they saw strong growth in both order counts and ticket totals, as customers were ordering more pizza and more frequently than before. But whereas they saw tailwinds in delivery growth, Domino’s carryout business faced pressures:

“There were fewer customers comfortable going out and walking into restaurants,” Allison said during Thursday’s call. “We did see some pressure on order counts in carryout business. Prior to the pandemic that had been a terrific source of customer acquisition and order growth. Moving forward, we want to restart growth in the carryout side of the business.”

As noted in previous earnings calls in 2020, Domino’s also saw some negative impact from COVID-related costs, totaling $7 million last quarter and including labor costs, franchisee aid, frontline bonuses, and extra cleaning supplies.

But despite some slowdown, Domino’s expressed satisfaction with the results, with Allison noting, “I hope I have a lot of quarters where I can talk about 11% comps.”

Moving forward, Domino’s strategy remains largely unchanged: focus on fortressing and push growth to create smaller delivery zones and more opportunities for the company to reach larger groups of customers.

“We’re committed to maintaining the unquestioned position of value leadership,” Allison said. “We’re ramping up our focus on service: Getting pizzas out the door hotter, fresher and more reliably ever before, and doubling down on technology, training and communication.”

Allison also hinted that a sustainability commitment will be coming soon from Domino’s, noting, without further details, that they will be announcing a “science-based, time-bound commitment to reduce the company’s total contribution to climate change” sometime in the near future.

Domino’s reported a 17.9% increase in company-wide revenues last quarter, driven by higher U.S. and international retail sales resulting from same store sales growth and an increase in store counts. The company’s net income grew 17.5%, in the fourth quarter to $151.9 million or $3.85 earnings per share, up from $129.3 million or $3.12 earnings per share in the same quarter the previous year, driven by higher income from operations.

Domino’s Pizza added 388 net new units in the fourth quarter ended Jan. 3, bringing their portfolio to a total of 17,644 company-owned and franchised stores.

Contact Joanna at [email protected]

Find her on Twitter: @JoannaFantozzi

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