Domino's Pizza loyalty program revamp, Uber Eats tie-up boost sales

FILE PHOTO: Domino’s pizza boxes are pictured inside a restaurant in Noida, India, July 4, 2023. REUTERS/Adnan Abidi/File Photo

(Reuters) -Domino’s Pizza beat Wall Street targets for quarterly results on Monday as a revamp of its loyalty program and a delivery partnership with Uber Eats boosted appetite for its pizzas and chicken wings, sending its shares up 8% premarket.

After struggling with a sales slowdown in early 2023, the company has rolled out multiple initiatives in recent months including promotions and offering more redeemable points to its loyalty program users, helping it turn the tide and attract more consumers.

The global pizza giant recorded higher customer transactions at its U.S. stores in the fourth quarter.

Domino’s entry into third-party delivery through the national rollout of its partnership with Uber Eats has also helped it capture new customers and swiftly grow its market share.

It already held a 19% market share among pizza chains on the Uber Eats platform in December, according to research firm M Science.

“The Uber Eats and Domino’s loyalty program revamp are paying immediate dividends. (The Uber Eats partnership) has delivered on its promise,” said Zak Stambor, senior analyst at Insider Intelligence, adding that the two initiatives would continue to power sales throughout the first half of 2024.

U.S. same-store sales at Domino’s rose 2.8% in the quarter, beating a 2.2% increase estimated by analysts, according to LSEG data.

The company also lifted its quarterly dividend by 25% to $1.51 per share and announced an additional $1 billion share buyback plan.

Still, like other fast-food majors including McDonald’s and KFC-parent Yum Brands, which have taken a hit to overseas business amid the conflict in the Middle East, Domino’s international same-store sales growth of 0.1% lagged estimates of about 3%.

Higher wage rates and expenses tied to the loyalty revamp ate into Domino’s U.S. company-owned store-level margins, but lower food costs drove quarterly earnings per share to $4.48, above estimates of $4.38.

(Reporting by Deborah Sophia and Annett Mary Manoj in Bengaluru; Editing by Devika Syamnath)