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Domino's reported same-store sales improvements from Q1 to Q2 during the COVID-19 crisis.

Domino’s same-store sales up 7.1% in first few weeks of Q2, despite coronavirus uncertainty

Carryout business strong, but delivery negative as Domino’s reports improvements between Q1 and Q2 of 2020

Domino’s Pizza Inc. reported same-store sales up 7.1% during the first few weeks of the second quarter of 2020 in a preliminary look at the financial effects of COVID-19 during the Ann Arbor, Mich.-based pizza company’s earnings call on Thursday. This is a measurable improvement since the previously reported Q1 U.S. same-store sales growth of 1.6% with international same-store sales growth of 1.5% primarily driven by ticket growth and “robust carryout” business, though with delivery trending slightly negative.

Despite this relatively positive outcome out of an unpredictable March and April due to the COVID-19 pandemic, Domino’s has withdrawn its long-term financial guidance.  

“The world is changing rapidly, and we are much more focused on the present and how we’re going to navigate the crisis moving forward,” Domino’s CEO Ritch Allison said during Thursday’s call.

But as much of the rest of the restaurant industry is in a freefall, Domino’s has reported a fairly stable and robust quarter and a third, with fewer than 20 stores closed in the U.S. systemwide, and international store closures dwindling from 2,400 to 1,750 over the past several weeks. Allison attributes their growth in a time of crisis to ticket growth, global store count, and their ability to pivot to a 100% contactless delivery model over the past six weeks.

“We attribute our current situation to the underlying strength of our business model,” CFO Jeffrey Lawrence said. “We’re making significant investments in our team members, community giving, and partnership in our franchisees.” 

Lawrence went on to state that their sales have trended up over the past four weeks, with delivery and carryout mix steady, and a tilt toward weekday lunch and dinner sales over weekend or late-night sales. Digital sales have also soared to 75-80% of total revenues, while  international sales are struggling more during the second quarter so far, with same-store sales down 3.2% in Q2. The improvement, he says, reflects the company’s readiness to deal with a sudden pivot toward an entirely off-premise-focused industry.

“There was a lot of pantry loading that consumers did as the pandemic first started to come to the U.S. but as we have seen in Asian markets in particular as time goes forward, people get tired of cooking,” Allison said.

Revenues for the quarter increased 4.4% to $873 million, from $835 million in the same period a year ago, driven by global store counts. Net income increased 31.2% to $121.6 million, or $3.07 per share, from $92.7 million, or $2.20 per share in the same quarter a year earlier. 

Domino’s opened 69 net new stores systemwide and 3 new U.S. stores during the first quarter of 2020.

As of March 22, Domino’s has 17,089 stores globally.

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Contact Joanna Fantozzi at [email protected]

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