Food & Beverage

Domino's trounces estimates with Q2 results

During the difficult second quarter of 2020, pizza powerhouse Domino's turned in an outstanding performance in the U.S. particularly, despite a downturn in actual foot traffic at the brand's locations.

Photo: File provided

July 16, 2020

Domino's Pizza Inc. trounced analysts' estimates for its second quarter this year, that ended on June 14.

Though international same-store sales for the chain were relatively stagnant at 1.3% growth, U.S. same-store sales clocked in at 16.1% versus the consensus estimate of 11.9% growth. Diluted EPS grew 36.5% to $2.99 for the Ann Arbor, Michigan-based brand, which was 71 cents higher than estimates, according to the quarterly report released Thursday morning.

Revenues were up 13.4% year-over-year, to $929.02 million, which was $6.4 million ahead of estimates. The brand said U.S. same-store sales were positively impacted by COVID-19-era customer ordering behavior, according to a press release on the financial report.

Domino's added a net growth of 84 stores systemwide in the second quarter, including 39 net new U.S. stores and 45 net new international stores. The number of temporary store closures in certain of the company's international markets declined from its peak of approximately 2,400 temporary closures. Based on information reported to the company by its master franchisees, the company estimates that, as of July 8, 600 fewer stores internationally are now closed temporarily.

Additional Q2 results include:

• Net income grew to $118.7 million versus $92.4 million during Q2 2019.
• Net income for the first two quarters of 2020 was $240.3 million versus $185 million during Q1 and Q2 2019.
• Diluted EPS for the first two quarters of this year was $6.05 on 39,688,663 diluted shares versus $4.38 on 42,219,649 shares last year's first two quarters.
• 78-cents per share quarterly dividend declared for shareholders of record on Sept. 15 this year, paid on Sept. 30 this year.

"Our focus as a global brand and the commitment of our local operators remains steadfast on serving our customers and our communities with a convenient, affordable and safe food and service experience," CEO Ritch Allison, said in the release. "I have never been more proud of our system of franchisees, operators and corporate team members for their continued passion and innovative spirit, which was evident during the second quarter."

During the second quarter of 2020, a Domino's subsidiary also acquired a non-controlling interest in Dash Brands Ltd., for $40 million. Dash Brands Ltd. is a privately-held company that — through its subsidiaries — serves as Domino's master franchisee in China for Domino's Pizza stores in that market. The company is contractually required to invest an additional $40 million in Dash Brands Ltd. in the first quarter of next year if certain conditions are satisfied.

Globally, Domino's has more than 17,100 stores in over 90 markets.

Foot traffic decline

Interestingly, even with all its sales success, data from Gravy Analytics shows that foot traffic to stores is actually down 11%, compared to pre-pandemic norms. In fact, the company said foot traffic was down 24% at Pizza Hut and 8% at Papa John's over the same period.

Gravy Analytics founder and CEO Jeff White said the number shows just some of the effects the pandemic has levied on actual store traffic.

"Consumers are looking to reduce their risk of exposure by taking advantage of more convenient contactless options such as curbside pick-up and contactless delivery — the decline in Domino's foot traffic reflects just that," he told QSRweb in an email.