A weak first quarter has intensified investor concerns that Domino’s slow sales growth may not be offset by simply opening more stores.
Domino’s reported net revenue of $1.15 billion for the March quarter. This was up 3.5% from last year but still fell short of analyst expectations. Earnings per share dropped to $4.13, mainly due to a $30 million loss from Domino’s investment in DPC Dash, a food-delivery business using independent contractors.
Most of Domino’s global sales growth came from opening new stores rather than from increased customer demand, raising questions about the sustainability of this growth strategy despite rapid expansion plans in China and India.
Risks tied to Domino’s international expansion, such as energy costs and economic uncertainty, threaten long-term profits and highlight the main challenges of relying on rapid store growth for future success.
Management pointed out that order numbers and market share are growing in the U.S. They said pizza’s lower price helped Domino’s avoid the bigger drops in customer traffic seen by other fast-food chains. The company tried new ways to boost demand, such as adding menu items, running promotions, improving loyalty programs, and working more with third-party delivery services. This shift is major for a brand that usually relies on its own delivery network.
Domino’s shares have declined about 25% over the past year, reflecting persistent doubts about whether store openings alone can restore strong performance.
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