There's a pizza price war going on, and Domino's is feeling the pain

By Bill Peters Domino's will lean into 'pizza innovation' as one way to engage customers who are getting more selective with their spending Domino's rivals Papa John's and Pizza Hut earlier this year said they would close hundreds of locations. Domino's Pizza's growth prospects are buckling as the chain deals with a deep discount war in the pizza industry and more cautious customers - trends it said could lead to more store closures, at least for its rivals. The company's softer-than-expected earnings results and forecast for the year arrived Monday as big restaurant chains try to cut prices or otherwise run promotional deals in order to regain consumers who have pulled back their spending after years of increases to menu prices and the cost of living. They also arrived after rivals Papa John's (PZZA) and Yum Brands' (YUM) Pizza Hut said earlier this year that they would close hundreds of locations amid the weaker spending backdrop. Shares of Domino's (DPZ) were down 9.3% on Monday afternoon, pacing the S&P 500's SPX decliners even after recovering a bit off their session lows. The stock is down 32.6% over the past 12 months. "Consumer sentiment hit COVID-level lows, and ongoing inflation continued to impact purchase decisions," Domino's CEO Russell Weiner said during Domino's earnings call on Monday. He said competition increased through the first quarter, as Domino's big national rivals offered deals that were "comparable if not identical." However, he argued that Domino's had the profits and the advertising budget to outlast competitors that are leaning harder on discounting and, in turn, putting more pressure on their chains' franchisees. "Over time, we expect this pressure to contribute to more store closures on top of the roughly 450 closures our two public pizza competitors have already announced for 2026," he added. Investors will get more detail on how consumers are feeling when Starbucks (SBUX) and Chipotle Mexican Grill (CMG) report results this week. Chipotle's outlook in February suggested caution on the year ahead. However, when Starbucks last reported results in January, executives said there were signs its turnaround efforts were taking hold. Domino's on Monday said it now expects global retail sales growth to be up "mid-single-digits" for the year, compared with a forecast in February for a gain of around 6%. Management also appeared to soften its forecast in the U.S. The company said it expects U.S. same-store sales to be up "low-single-digits" for the year, following prior expectations for a 3% gain. Weiner on Monday said a 3% gain in U.S. same-store sales was still the company's "objective." Still, for its first quarter, Domino's said it increased its order count as well as its market share in the U.S. Revenue came in at $1.15 billion, up a bit from $1.11 billion in the prior-year quarter but below FactSet estimates for $1.16 billion. U.S. same-store sales were up 0.9%, below estimates for a 2.3% increase. Domino's reported adjusted earnings per share of $4.13, below $4.33 in the prior-year quarter as well as below Wall Street's estimates for $4.27. Following those results, Weiner said during Monday's call that Domino's would try to bring more new items to its menu to revive consumer enthusiasm. "It's not just value," he said. "I think we can do a little bit more on pizza innovation as well. And so, starting as soon as May, you're going to see things on the calendar or in media from Domino's that weren't on our calendar to start the year." -Bill Peters This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 04-27-26 1441ET