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The world’s largest pizza chain has had to spend more on ingredients from grains to oil since the Russian invasion of Ukraine, adding to the headaches of a company already grappling with rising freight and labor expenses.
While Domino’s has tried to offset the cost spike with increases in delivery fees and menu prices, its gross margin fell to 36.3% in the second quarter from 39.5% a year earlier.
Net income dropped 12.1% to $102.5 million. On a per-share basis, the company earned $2.82, missing the $2.91 figure expected by analysts, according to Refinitiv data.
The profit miss also reflected the pressure from a shortage of delivery drivers that has hampered the company’s efforts to capitalize on strong demand for its pizzas and chicken wings.
To navigate that issue, Domino’s has tried to encourage more takeaway orders by offering discounts. It has also enlisted the services of third-party call center providers to boost capacity during peak hours.
The company’s U.S. same-store sales fell 2.9% in the three months ended June 19, less than the 4.8% fall estimated by analysts.
Total revenue jumped 3.2% to $1.07 billion, beating expectations of $1.05 billion.
