Domino’s Pizza (DPZ) , which has over 6,000 locations in the U.S., is sounding alarm bells on a startling change in customer behavior.
In the pizza chain’s fourth-quarter earnings report for 2024, it revealed that while its revenues spiked by almost 3% year over year during the quarter, its U.S. same store sales only increased by a measly 0.4%, missing analyst expectations of a 1.63% increase.
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Domino’s shares declined by roughly 6% shortly after it unveiled its latest earnings results.
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During an earnings call on Feb. 24, Domino’s Pizza CEO Russell Weiner revealed that the company has noticed more of its low-income customers in the U.S. are avoiding delivery.
Domino’s faced a 3.2% increase in carryout orders and a 1.4% decrease in deliveries during the quarter. Weiner claims that this change in customer behavior is due to recent “macro and competitive pressures.”
“Delivery is a tougher value right now in this value-conscious world,” said Weiner. “And so, the choice isn’t going to another restaurant. Most of the time, it’s eating at home.”
Domino’s CEO admits a harsh reality
The growing preference for carryout comes during a time when many consumers have grown frustrated with tipping culture in the fast-food industry amid inflated prices.
According to a recent survey from LendingTree, 78% of consumers view fast-food as a luxury since it’s gradually become more expensive. Also, 43% of Americans who were asked to tip on fast-food refused to do so, while 62% said that they’re eating less fast-food due to rising prices.
Domino’s workers prepping pizza orders.
In addition, 56% of Americans in the survey said that they choose to make food at home when they want an easy and cheap meal.
During the earnings call, Weiner acknowledged that delivery isn’t cheap, but claimed that Domino’s delivery fee is “very competitive.”
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“Delivery is certainly more expensive,” said Weiner. “You got the fees, hopefully tips for our drivers. But still, when you look at delivery, we’re very competitive down to the delivery fee and the price, not only to other pizza, but really other items you get delivered. If you think about getting a pizza delivered to your house, two pizzas delivered to your house for $6.99 each, that’s 16 slices, you’re feeding a lot of people.”
Domino’s previously made several bold moves to win back customers
Last summer, Weiner made it loud and clear in an interview with Bloomberg that he is not a fan of value meal deals in the fast-food industry.
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“It’s like ‘hey, the rest of our menu is expensive, but you can get this one thing you may or may not like cheaper,’” said Weiner, referring to competitors in the fast-food industry. “That’s not value. Just because something is cheaper, if it’s not what you want, it’s not valuable. If you want a big sandwich, and you end up getting a little sandwich cheaper, you’re not happy.”
Domino’s later launched several efforts to attract price-conscious customers into its stores late last year. Between Sept. 9-29, it ran its MOREflation deal which allowed customers to mix and match any two or more medium two-topping pizzas for $6.99 each, with the option to upgrade one of their pizzas to a large for free.
Domino’s also launched its Emergency Pizza program in October that offered its Rewards customers a free medium, two-topping pizza when they placed a qualifying online order. The program lasted until Jan. 19.
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