Domino's US Sale Growth Hits Five-Quarter Low As Budget Diners Pull Back

Domino's Pizza posted its softest US comparable-sales growth in five quarters as inflation and the national average price for regular gasoline above $4 a gallon pressured working-poor consumers.

Second-quarter same-store sales rose a measly .1%, in line with estimates but trailing the growth expected across much of the quick-service restaurant industry (QSR).

Snapshot of 2Q earnings results (courtesy of Bloomberg):

Total domestic stores comp sales growth +0.1%, estimate +0.11% (Bloomberg Consensus)

• Domestic franchise comparable sales growth 0%, estimate +0.07%
• Domestic co-owned comparable sales growth +2.1%, estimate +0.55%

Revenue $1.19 billion, +4.3% y/y, estimate $1.18 billion

International comparable sales -0.1%, estimate +0.62%

EPS $4.07 vs. $3.81 y/y, estimate $4.18

Net addition of stores 209, +16% q/q, estimate 199

Income from operations $232 million, +3.1% y/y, estimate $225.5 million

Domino's shares were unchanged premarket trading. Although US same-store sales were roughly flat, the figures "were better than we and investors feared," TD Cowen analyst Andrew Charles wrote in a note.

Will the stock be able to stage another 2023-style bounce of the $300 level?

Citi analyst Sam Teeger noted:

DPZ noted that category growth in pizza is being driven by the dine-in channel as some pizza consumers are returning to pre-Covid habits of wanting a dine-in experience. Independent QSR pizza restaurants have been the biggest beneficiary of this shift. We are careful not to read too much into this as these comments were more focused on the US market.

Here is the Rothschild & Co analyst Edward Lewis' take on 2Q earnings:

Domino's Pizza reported second-quarter results that were in line on comparable sales but a miss on earnings. Revenue of $1,194m was marginally ahead of the $1,181m consensus had expected, while EPS of $4.07 fell short of consensus expectations of $4.16. Domestic same-store sales rose 0.1%, in line with flat consensus forecasts, but international same-store sales fell 0.1% consensus at +0.7%. Net store additions were mixed: domestic openings of 26 came in consensus at 35, while international additions of 183 beat consensus forecasts 158.

The top-line beat was entirely down to Supply Chain – the products Domino's sells to its franchisees – which was ahead by $17m against a total revenue beat of $14m. The Supply Chain outperformance reflects a combination of pricing and higher order growth, evidence that the value deals are working but at a cost, which is the source of the earnings miss.

The key challenge for Domino's is that it has delivered broadly flat comparable sales in the US in the first half – domestic same-store sales of 0.4% in 1Q26 (versus - 0.5% in 1Q25) and 0.1% in 2Q26 (versus 3.4% in 2Q25) – but now faces much tougher comparatives of 5.2% and 3.7% in the third and fourth quarters as it laps last year's menu innovation (stuffed crust) and the DoorDash launch.

In its prepared remarks, management emphasised order growth, which it sees as the lifeblood of the business: consumers coming into stores or through the aggregator channel can be signed up to the loyalty programme, giving franchisees the volume to leverage into profit. However, the long-term guidance still calls for 3% same-store sales growth, and we find it tough to see a path to that in the near term. There were no major announcements in the release on menu innovation or an updated outlook, and no revision to the long-term growth plans.

The shares look cheap on a P/E basis, but with no change to the long-term algorithm we see little fundamental support for a re-rating and retain our Sell rating.

Lewis summarizes the earnings call with management:

The quarter: management was at pains to flag that order count was in line with expectations; the miss was on ticket growth, as the Premium Series with Slice Sauce did not resonate as management had expected. Management returned repeatedly to the strength of order growth in a flat QSR industry as evidence of the health of Domino's core business.

Updated outlook: low-single-digit same-store sales guidance for both Domestic and International was reiterated, though International now includes any World Cup benefit (the tournament began after 2Q ended). FY26 domestic unit growth has been capped at 175, versus a prior 175-plus, as macro pressures and the weak 2Q ticket weighed on franchisee profitability. This may have ramifications for FY27 unit growth in our view. On comps, management is confident in the order-growth trajectory and expects to do a better job on ticket in the second half than in 2Q, implying sequential improvement on the 0.5% delivered in 1H26.

Strategic update: the outgoing CEO remained as positive as ever on the pizza category. He flagged a new product coming in 3Q – as yet undisclosed – that he expects to be incremental to the category, playing into an occasion where pizza does not typically do well (it sounds like an afternoon opportunity). He expects industry competition to stay elevated and has leant further into value, adding premium stuffed crust to the Best Deal Ever this quarter

Domino's maintained its forecast for low-single-digit US same-store sales growth in 2026 but trimmed planned domestic store openings to 175. As one of the first QSR chains to report quarterly results, Domino's provides an early proxy for consumer sentiment and a read-through on how restaurant operators are holding up amid elevated gasoline and diesel prices.