After Pizza Chains Deliver Soft Sales, Domino's And Papa John's Shares Fall‍

The shares of Domino's Pizza and Papa John's both dropped in pre-market trading after the companies reported mixed earnings on Thursday morning.

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It has been reported that Domino's missed analyst expectations on U.S. same-store sales and total revenue for the fourth quarter of 2016. There was also a downward revision to Domino's outlook. Sales in North America for Papa John's were softer than expected, according to the company.

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In an effort to offset the rising costs of food, transportation, and labor, both pizza companies have recently increased their prices. Due to a nationwide driver shortage, Domino's reported a decline in demand. According to Domino's executives, they are planning to raise their prices by about 7% in the fourth quarter, including raising the price of their Mix & Match deal from $5.99 to $6.99.

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In terms of Refinitiv's estimates, Domino's performed as follows:

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• Revenue: $1.39 billion compared to $1.44 billion expected

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• Adjusted earnings per share: $3.97 compared to $3.94 expected

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There was a 0.9% increase in same-store sales in the U.S. for the company headquartered in Michigan, which is significantly lower than analyst estimates of 3.4%, according to estimates compiled by StreetAccount. As a result, the fiscal year 2022 saw a decline of 0.8%.

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There were $117 million in revenues reported by U.S. company-owned stores in December, which fell short of the $129.3 million expected by StreetAccount.

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Macroeconomic headwinds weighing down on its domestic delivery business have reduced the company's two-to-three-year sales outlook to 4% to 8% growth.

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As a result of increases in market basket pricing to stores, revenue in the fourth quarter of 2022 increased by 3.6% from the year-ago period.

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The launch of loaded potato tots by Domino's this month, with three options to choose from, is expected to increase sales by some analysts.

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“During 2022, we experienced significant pressure on our U.S. delivery business and we focused our efforts on finding solutions to the challenges we faced,” said Russell Weiner, the CEO of Russell Weiner. “Moreover, the company achieved strong growth in its international store business as well as the U.S. carryout business."

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Wall Street was pleasantly surprised by Papa John's fourth-quarter results, which exceeded expectations. Revenues for the company's fourth quarter were down less than 1% compared to last year's record fourth quarter. It is estimated that revenue would have increased by 3% if it had not been for the strategic franchising of dozens of restaurants.

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In comparison with analysts' estimates, Papa John's performed as follows:

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• Revenue: $526.2 million compared to $523.8 million expected

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• Adjusted earnings per share: $0.71 compared to $0.66 expected

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It appears that the Louisville-based company missed estimates when it comes to North American company-owned restaurant sales, reporting revenues of $172.2 million, versus an expected $172.7 million, according to estimates compiled by StreetAccount. Compared to last year, comparable sales in North America were up 1% from the previous year.

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The company predicts growth in comparable sales in North America of between 2% and 4%, according to the company's executives. A spokesperson for the company stated that it expects growth to come in at the lower end of that range in 2023.

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This quarter, Domino's and Papa John's both beat quarterly earnings and revenue estimates, following McDonald's and Yum! Brands' strong results.