October 8, 2019 / 11:35 AM / 16 days ago

Domino's same-store sales miss estimates as competition bites

Oct 8 (Reuters) - Domino’s Pizza Inc on Tuesday reported same-store sales below Wall Street estimates for the fourth straight quarter, hurt by growing competition from third-party delivery services and small pizzerias.

The pizza chain, known to have popularized fast delivery of hot pies, faces competition from aggregators such as Uber Eats, Postmates and GrubHub who offer promotions and delivery from a list of restaurants serving a variety of cuisine at low prices.

Domino’s is also one of the largest chains to stay off third-party delivery apps altogether, as more restaurant chains become heavily dependent on meal-delivery companies to boost sales at the cost of lower profit margins.

Rivals Yum Brands-owned Pizza Hut and Papa John’s International Inc and small players like MOD Pizza and Blaze Pizza have all tied up with third-party apps to deliver food.

Ann Arbor, Michigan-based Domino’s has also been aggressively opening new restaurants in a move it calls “fortressing” to facilitate faster delivery to locations beyond homes and offices, ranging from beaches to bus stops.

Same-store sales at restaurants open for more than an year in the United States rose 2.4%, its slowest growth in at least 15 quarters. Analysts had estimated a 2.84% rise, according to IBES data from Refinitiv.

The slowdown in the market came despite the company offering half-off on online orders for a week in August and launching a 20% off for late-night orders in September.

Its international business climbed only 1.7% higher, missing estimates of a 2.86% rise.

The company’s net income rose to $86.4 million, or $2.05 per share, in the third quarter ended Sept. 8, from $84.1 million, or $1.95 per share, a year earlier.

Total revenue rose 4.4% to $820.8 million, missing analysts’ estimate of $823.9 million. (Reporting by Praveen Paramasivam in Bengaluru; Editing by Maju Samuel)

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