Domino’s Pizza (DPZ) is battling a significant problem. The pizza chain concluded 2024 on a shaky note as it struggled with an unexpected decrease in consumer demand.
In Domino’s fourth-quarter earnings report for 2024, the pizza chain revealed that its U.S. same-store sales only increased by 0.4% year-over-year, missing analyst expectations of a 1.63% increase.
During an earnings call on Feb. 24, Domino’s revealed that while it faced a 3.2% increase in carryout orders during the quarter, it saw a 1.4% decrease in deliveries.
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Domino’s Pizza CEO Russell Weiner said during the call that low-income customers in the U.S. are increasingly avoiding delivery and acknowledged that delivery is a “more expensive” option than carryout.
“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.”
Even Papa Johns, Domino’s main competitor, also saw its deliveries shrink during the quarter, contributing to a roughly 4% year-over-year decrease in U.S. comparable sales.
“The environment is very much value-focused at the moment, and customers are much more deliberate on managing their overall ticket,” said Papa Johns CEO Todd Penegor during an earnings call last month.
Domino’s makes a major move to win back customers
As this consumer trend threatens Domino’s sales, the pizza chain has unveiled a new offer in an effort to win back customers and keep them away from its competitors. The offer comes amid the start of March Madness, a time when consumers across the country will be watching NCAA college basketball games.
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Between March 17 and 23, Domino’s is offering customers who order menu-priced pizzas online 50% off their order, according to a new press release.
“Domino’s is offering customers a deal they can’t resist,” said Domino’s Chief Restaurant Officer Frank Garrido in the press release. “They can choose from any of our Specialty Pizzas or create a pizza from scratch, with any size crust and toppings. Whether customers want their favorite, go-to pizza or have the urge to try something new, like our Parmesan Stuffed Crust, they’re all half off when ordered online.”
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The move from Domino’s comes after it added Parmesan Stuffed Crust pizza to its menu earlier this month. This bold move directly competes with Pizza Hut, Papa Johns, Little Caesars, and Cicis Pizza, which all also sell stuffed crust pizzas.
Consumers are sick of high prices for fast food
It is no surprise that Domino’s is stepping up its game as consumers across the country have recently been avoiding fast food in an effort to save money as they battle inflation and higher costs of living. Over the past decade, fast-food prices across the nation have increased by almost 47%,
According to a recent survey from LendingTree, 78% of consumers view fast food as a luxury since it’s gradually become more expensive. Also, 62% said they’re eating less fast food due to rising prices, and 56% said they choose to make food at home when they want an easy and cheap meal.
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To combat this trend, many fast-food chains, such as McDonald’s, Pizza Hut, and Taco Bell, have been launching value menu deals to entice consumers back into their restaurants.
However, Domino’s customers should not expect to see the pizza chain launch a value menu anytime soon as its CEO is not a fan of this tactic.
In an interview with Bloomberg last summer, Weiner said that value menu deals in the fast-food industry aren’t really providing any value.
“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.”
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