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

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[February 26, 2024]   (Reuters) -Domino's Pizza surpassed Wall Street expectations for quarterly same-store sales on Monday, as a revamp of its loyalty program and its delivery partnership with Uber Eats boosted appetite for its pizzas and chicken wings.

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

Shares of the company were up nearly 6% in premarket trade, as it also raised its quarterly dividend by 25% to $1.51 per share and announced an additional $1 billion share buyback plan.

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.

Improved staffing levels at its stores and more availability of delivery drivers have also helped it meet demand better.

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 helped the company capture new customers and quickly 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.

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.

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. Analysts on average estimated a per-share profit of $4.38.

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

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