Domino's Pizza sinks on the latest sign the food-delivery wars are hurting sales

dominosSunday Alamba

  • Shares of Domino's Pizza fell by as much as 7% after the pizza chain reported worse-than-expected US same-store sales.
  • Sales from company-owned in the US stores grew by 2.1% while franchise locations saw revenue increase by 3.1%.
  • Second-quarter sales missed expectations, but earnings per share and net income beat.
  • Watch Domino's Pizza trade live.

Domino's Pizza is feeling the pressure from food-delivery startups eating away at its business.

The pizza giant reported second-quarter financial results on Tuesday, and US same-store sales fell short of analyst estimates, sending shares tumbling by as much as 7% before the opening bell.

Sales from US stores operated by the company grew by 2.1%, well-below the 3.2% increase expected by analysts, according to Reuters. Franchise locations saw sales rise by 3.1%, also missing estimates of 4.69%.

"As a work-in-progress brand, we are constantly striving to improve in needed areas, execute out long-term strategy and build toward Dominant #1 - a goal I continue to feel we are built to achieve," Ritch Allison, the chief executive officer of Domino's said in a press release.

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Services like UberEats, GrubHub, and DoorDash have cut into Domino's food-delivery business in recent years thanks to aggressive promotions and discounts. Domino's has attempted to fight back by speeding up its delivery time and quickly expanding its number of locations.

The increase in stores has led to a short-term slowdown in same-store sales. As Domino's opens a greater number of stores in close proximity to one-another, new stores can cannibalize the sales of existing locations.

Domino's added 200 stores across the world during the quarter. Revenue grew by 4.1% to $811.6 million, narrowly missing estimates of $836.6 million. Earnings per share of $2.19 beat Wall Street targets of $2.02, and rose from $1.78 during the same quarter last year.

Domino's is now up roughly 5% year-to-date.

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Domino's shares

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