|
Domino’s Pizza executives aren’t happy with the start of the year.
Higher fuel prices, inflation and tanking consumer sentiment ate into the chain’s first-quarter sales, particularly in March. Intense competition didn’t help as others in the pizza space offered deals comparable to Domino’s.
U.S. same-store sales were up 0.9% for the three months ended March 22, a deceleration from growth of at least 3.4% in the three previous quarters. Domino’s said it now expects U.S. comparable sales to rise in the low single digits this year compared with a prior outlook for 3% growth.
“I’m not thrilled about the way we started the year,” Chief Financial Officer Sandeep Reddy told me. “We're going to do everything in our power to turn the tide.”
Promotions and ads
To entice consumers, Domino’s is increasing its promotional efforts, according to Reddy. And as the chain considers new deals, the aim is to operate on margins thin enough to prevent competitors from sustainably undercutting its offerings without sacrificing profitability.
“We make sure it’s profitable at a threshold where a competitor can’t actually get the same profitability,” Reddy said
The chain is also pivoting its marketing. Future ads will continue to emphasize value while also nodding to consumer sentiment since the start of the war with Iran, according to Reddy. “The advertising messaging and the communication that we want to do needs to evolve to the environment in which we are,” he said.
Menu shake-up
The company is also adjusting its menu lineup. This means fast-tracking certain items while shelving others to better align with what cash-strapped consumers crave today, the CFO said.
When asked for a menu sneak peak, Reddy said: “We’re not going to get into too much on that because of the competitive impacts. What I will say is there’s pizza coming.”
|
