Domino's reported second-quarter revenue of $1.19 billion, slightly ahead of Wall Street estimates.
Growth in its supply-chain business helped offset weak same-store sales at US restaurants.
Higher costs weighed on earnings, while the company warned that consumer spending remains under pressure.
Domino's Tops Revenue Estimates as Supply-Chain Business Offsets Weak Demand
The pizza chain's supply-chain business helped offset sluggish restaurant demand as inflation and cautious consumer spending continued to weigh on discretionary dining
Summary
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Domino's Pizza reported second-quarter revenue that narrowly beat Wall Street expectations, as growth in its supply-chain business helped cushion slower demand at its restaurants amid continued pressure on consumer spending in the United States.
The pizza chain posted revenue of $1.19 billion for the quarter ended June 14, slightly above analysts' estimates of $1.18 billion, according to LSEG data. However, quarterly earnings came in below expectations as rising costs weighed on profitability.
Shares of the Ann Arbor, Michigan-based company rose around 7% in premarket trading after the results.
Supply-Chain Business Drives Revenue Growth
According to the company's quarterly results, supply-chain revenue increased 6.5% year-on-year (YoY) to $731.7 million, supported by higher order volumes from stores and a 2.2% increase in food-basket pricing, reflecting modest inflation in ingredients and supplies sold to franchisees.
The supply-chain business has become an important contributor to Domino's overall revenue, helping offset softer growth in its restaurant operations.
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"I believe order growth is the most important driver of long-term success in our business," retiring Chief Executive Officer Russell Weiner said in a statement.
Consumer Spending Remains Under Pressure
Domino's US same-store sales rose just 0.1% during the quarter, missing analysts' expectations of a 0.62% increase. The company had reported 3.4% growth in the corresponding period last year, highlighting the slowdown in customer demand.
The company said the broader US quick-service restaurant industry continues to face a challenging operating environment as consumers remain cautious about discretionary spending. Higher living costs and concerns over the labour market have led many households to cut back on dining out.
Weiner said consumer sentiment remains under pressure, echoing his earlier comments that inflation continues to influence spending decisions across the restaurant industry.
At the same time, Domino's cost of sales increased 4.7% YoY to $716.2 million, putting pressure on margins. As a result, quarterly earnings came in at $4.07 per share, below analysts' estimates of $4.17 per share, even as the company's revenue exceeded market expectations.
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