Rising competition, pandemic costs take slice out of Domino's profit

·1 min read
FILE PHOTO: A staff member prepares pizzas at a Domino's Pizza restaurant in Moscow

(Reuters) - Domino's Pizza Inc on Thursday missed quarterly revenue estimates amid stiff competition from rival fast-food chains and reopened restaurants, while rising pandemic-related costs ate into the company's profit.

Shares of the pizza chain slid 7% in premarket trading as sales at its U.S. stores open for more than a year rose 11.2%, but missed analysts' estimates of 12.48%.

Easing coronavirus restrictions in the United States have led to a rebound in business for dine-in restaurants, which have also doubled down on their digital operations and inflicted more pressure on sales at pizza chains.

Fast-food giants have also been incurring high costs to sanitize their stores regularly, while investing more in digital business to keep up with the surge in online orders during the pandemic.

Domino's competitor Papa John's International Inc also missed market estimates for fourth-quarter profit earlier on Thursday as it incurred higher costs for ingredients and doled out bonuses, sending its shares down 7% in premarket trading.

For Domino's, total revenue rose about 18% to $1.36 billion in the fourth quarter ended Jan. 3, but fell short of the $1.39 billion estimate.

Analysts have also raised concerns over the ability of pizza chains, including Domino's, to keep up heightened sales levels seen during the health crisis in a post-pandemic world.

Net income rose to $151.9 million, or $3.85 per share, from $129.3 million, or $3.12 per share, a year earlier. Analysts were expecting a profit of $3.89 per share.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Ramakrishnan M.)