Domino’s ‘Hungry for More’ Strategy Boosts Global Sales, but Stock Dives

A Domino's Pizza restaurant in the Lower East Side of Manhattan on July 11, 2017. Samira Baouaou/The Epoch Times

News Analysis

Domino’s “Hungry for More” strategy helped the world’s largest pizza franchise deliver higher sales and earnings for the fourth quarter of 2024 despite a challenging environment for the quick service restaurant (QSR) industry.

That’s according to a statement by CEO Russell Weiner on Monday, following the release of the company’s fourth quarter and full fiscal year 2024 financial results.

“Domino’s 2024 results demonstrated that our ‘Hungry for More’ strategy can drive strong order count growth, even in the face of a challenging global macroeconomic environment,” he said.

“In our international business, we delivered a remarkable 31st consecutive year of same-store sales growth, with our sales improving in the fourth quarter. In the U.S., leaning into our pillar of Renowned Value helped us once again generate meaningful market share growth in QSR Pizza.”

In addition, Weiner expressed confidence that Domino’s will continue to win and grow its market share in 2025. “This will increase our advantage as the No. 1 pizza company in the world, driving best-in-class results and long-term value creation for franchisees and shareholders,” he added.

Wall Street saw it differently. Both sales and earnings came below estimates, while U.S. sales lagged international sales. Shares of the Ann Arbor, Michigan, franchise chain dived more than 6 percent at the opening of the trading session.

Domino’s shares have been up 25.50 percent for the last five years, lagging the broader market.

Like the rest of the restaurant industry, quick service restaurants face several challenges that squeeze profit margins. One is the rising cost of food ingredients due to inflation.

Other challenges are the minimum wage hikes and labor regulations in the United States, as state and local governments have implemented standards that are far more strict than federal requirements. For instance, starting this year, employees in San Francisco, including part-time and temporary workers, must be paid at least the city’s minimum wage of $18.67 per hour, while in New York, the minimum wage is $16.50 per hour.

A third challenge is the growing competition from new entrants, as the barriers to entry, such as capital and know-how requirements, aren’t as high as in other sectors.

Global franchise chains face another challenge: a stronger dollar, which reduces the value of overseas earnings after conversion. For instance, in the fourth quarter of 2024, a stronger dollar cut Domino’s royalty income by $200,000.

Then there are geopolitical events, such as the Russian-Ukraine war, which have forced U.S. franchises, including Domino’s Pizza, to cease operations in Russia.

Quick service restaurant franchise chains have tried to address these challenges in different ways.

For instance, Chipotle has been trying to pass the higher food and labor costs on to customers with price hikes for its burritos, a strategy with limits as consumers can look for better value elsewhere. McDonald’s has been pursuing a value menu strategy that caters to price-sensitive customers.

Domino’s has tried to cope with industry challenges with its Hungry for More strategy, which includes several initiatives that increase productivity by opening new stores worldwide and improving efficiency in existing stores. It also streamlines delivery operations with better technology, driver incentives, and partnerships. and encourages customers to pick up orders.

For instance, customer incentives helped boost the U.S. company-owned store gross margin by 0.8 percentage point in the fourth quarter of 2024 from a year earlier, while streamlining store operations and the supply chain led to further productivity gains.

“Domino’s latest update highlights the challenging environment facing the QSR sector and the restaurant industry as a whole,” R.J. Hottovy, Head of Analytical Research at Placer.ai, told The Epoch Times via email.

“While the company successfully balanced value and innovation this quarter, U.S. transaction growth remained flat year-over-year. New product launches, value promotions, and expanded partnerships with delivery aggregators should help drive visitation growth throughout the year. However, the chain must also navigate increasing competition from restaurants and food retailers emphasizing value-driven messaging.”