In its Q3 2022 earnings call with analysts, Domino's Pizza Inc.shared that global retail sales, excluding the negative impact of foreign currency, grew 4.7% in Q3 2022. Without adjusting for the impact of foreign currency, global retail sales declined 1.6% in Q3 2022.
In the U.S., same store sales increased 2% versus Q3 of last year.
“…Same-store sales were up almost 18% versus Q3 of 2019,” said Russell Weiner, Domino's Chief Executive Officer, in the Oct. 13 call with analysts.
Carryout Reigns Supreme
“Carryout same-store sales were up almost 20% versus Q3 of 2021 with a three-year stack of 35+% versus Q3 2019. Most importantly, we continue to see tremendous runway ahead in our carryout business,” Weiner said.
The pizza brand is among the many restaurants that have raised prices due to inflation, going from $5.99 to $6.99 on its mix-and-match deal for delivery and carryout.
"As we begin the fourth quarter, I believe Domino's is poised to emerge from these volatile times stronger than ever," Weiner said. "We delivered around one out of every three pizzas in the United States before the pandemic, and we deliver around one out of every three pizzas today. Combined with our strong carryout business where we have continued to accelerate our momentum, I have never been more confident in the future of Domino's Pizza."
Weiner emphasized to the analysts: “One important thing we have today that we didn't have in 2008 is a strong carryout business.”
To state the obvious, hiring and workforce shortages continue to impact hospitality, including Domino's. About half of U.S. stores are now connected to call centers to help answer some of the calls.
“While we only have visibility into our corporate stores, the number of job applications and new hires have increased throughout the year," Weiner said. "At the end of the quarter, we were more or less back to 2019 levels as far as applications and new hires per week. Staffing remains a constraint, but my confidence in our ability to solve many of our delivery labor challenges ourselves has grown over the past few quarters."
Admitting there's still "work to do" to get back to pre-pandemic delivery standards, "estimated average delivery time has improved every quarter this year," Weiner added.
U.S. Off-Prem Performance
In Q3, carryout remained strong, with U.S. carryout same-store sales 19.6% positive compared to Q3 2021. On a three-year basis, carryout same-store sales were up 55% versus Q3 2019, explained CFO Sandeep Reddy.
Q3 delivery same-store sales declined by 7.5% relative to Q3 2021. Looking at the business on a three-year stack, Q3 delivery same-store sales were 8.4% above Q3 2019 level.
“When we look at the quintiles relative to the delivery business, we continue to see a more pronounced difference in performance. We saw an 8% point gap in delivery same store sales between stores in the top 20% and those in the bottom 20%,” Reddy explained.
Domino's is among the brands expecting sustained, strong demand for carryout in the near future.
Prognosticating on the possible impacts of inflation Weiner said, “We believe that inflation will impact delivery more than carryout, due to the added expenses of fees and tips in that channel. Our research shows that a relatively higher delivery cost might lead some customers to prepare meals at home."
Weiner stressed his glass-half-full outlook to the analysts.
"In a world where consumer confidence is shrinking and inflation is high, Domino's will succeed, because we have strong profitable franchisees, a team that makes disciplined decisions based on insight, and have the digital supply chain and delivery expertise to offer best-in-class value and customer experience."
Domino's Q3 2022 financial results are detailed here.