Domino’s Pizza beats sales estimates as discounts spur demand

(Reuters) -Domino’s Pizza Inc beat quarterly U.S. same-store sales estimates on Thursday, as it saw steady demand for its pizza and chicken wings helped by heavy discounts offered by the company amid rising inflation.

The Michigan-based company’s shares rose about 7% in premarket trade.

Domino’s, which posted a 2% rise in U.S. same-store sales in the third quarter, has been doubling down on discounts and promotions, offering cheaper meals “inflation relief” deals. This helped the company attract consumers, who were looking for more-pocket friendly offers.

In August, Domino’s offered a 50% discount on pizzas ordered online as part of its “boost week” promotion and in September had another 20% discount on its online orders.

However, the company has not been immune to the pressures of decades-high inflation that forced Domino’s and several other restaurants to raise prices of some menu items as labor and raw material costs for commodities such as wheat, dairy and fuel soared.

The price increases, however, failed to protect profit margins at Domino’s, while also taking a hit from a strengthening U.S. dollar.

The company earned a profit of $2.79 per share in the quarter ended Sept. 11, missing expectations of $2.97 per share, according to Refinitiv data.

Domino’s international segment’s same-store sales fell to 1.8%, compared with a 8.8% jump reported last year, which was however roughly in line with analysts’ expectation.

Overall, total revenue rose 7% to $1.07 billion, edging past estimates.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shailesh Kuber)