ANN ARBOR, MICH. – Domino’s Pizza, Inc. is operating counter-cyclically to the rest of the foodservice industry. While other operators are struggling to get back to where their business was pre-pandemic, Domino’s business is accelerating.
“The third quarter marked our 38th consecutive quarter of positive same-store sales growth, and 17.5% is the strongest same-store sales number we’ve posted in our US business over the course of that almost decade-long run,” said Richard E. Allison, president and chief executive officer, during an Oct. 8 conference call to discuss third-quarter results. “We achieved this remarkable level of growth without running any aggressive promotions during the quarter. During Q3 of last year, we ran 2 5% off boost week promotions.”
The same-store sales acceleration in the United States helped boost quarterly earnings 10% and global sales 14%. Net income for the quarter ended Sept. 6 totaled $99.1 million, equal to $2.49 per share on the common stock, up over the previous year when the company earned $86.3 million, or $2.05 per share.
Sales for the quarter totaled $968 million.
“During the third quarter, the pandemic continued to drive a favorable tailwind for food delivery, coupled with a challenging operating environment,” Mr. Allison said when discussion Domino’s US business. Store sales in the United States rose 21%, according to the company.
“Our focus as a brand across our corporate and franchise stores remained squarely on serving our customers and our communities with a convenient, affordable and safe food and service experience,” Mr. Allison said. “Now we still have work to do on service levels, but I am very pleased with our execution in absorbing the unprecedented volume in both our stores and our supply chain centers.”
Between corporate and franchise stores in the United States, the company had 47 openings and 3 closings.
“This is a terrific result when you consider what is happening across the category and more broadly across the US restaurant industry,” Mr. Allison said.
International store sales rose 8% during the quarter.
“As the pandemic continues to evolve around the world, we continue to see wide variations in performance across the international business and forward visibility continues to be quite challenged compared to normal,” Mr. Allison said. “We had a number of markets that continue to generate strong retail and same-store sales growth, including China, Japan and Germany, among others. In these markets, our ability to remain open and operating throughout the pandemic has allowed us to benefit from the delivery tailwind in these markets.
“In several other markets, we are still fighting our way back from significant temporary unit closures and service restrictions to regain our sales momentum. India and Spain are two large markets where our master franchisees and operators have worked diligently to reopen stores and continue to build order counts during the quarter.”
A headwind for the company during the quarter was the cost of commodities, said Stuart A. Levy, chief financial officer. Domino’s “food basket” of commodities was down 1.2% during the second quarter but was up 3.8% during the third quarter.
“If you break that down a little bit, cheese, which is obviously a huge input for us, was at an all-time low in Q2 and it’s been at all-time highs in Q3,” he said. “And we’ve seen similar volatility across a lot of other commodities. So that obviously puts a headwind on the business, both in terms of store operations and our supply chain business.”