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Domino’s Pizza Sees Potential Growth with Uber Eats Collaboration

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Domino’s Pizza Inc. shares soared to an 11-month high on Monday as the popular pizza chain expressed optimism about its recent partnership with Uber Eats. The company believes that joining the aggregator marketplace could potentially generate an additional $1 billion in sales.

Despite falling slightly short of revenue expectations in the second quarter, Domino’s exceeded profit forecasts. However, they did experience a decline in delivery sales for the eighth consecutive quarter. It is worth noting that U.S. delivery same-store sales plunged 3.5% compared to the previous year, after experiencing an 11.7% drop in the second quarter of 2022. According to FactSet data, the last time Domino’s reported growth in delivery same-store sales was in the second quarter of 2021.

During the post-earnings conference call with analysts, Domino’s CEO Sandeep Reddy acknowledged the continued challenges faced by the U.S. delivery business. He also mentioned that the company anticipates similar difficulties in third-quarter same-store sales, mirroring the trends observed in the second quarter.

However, Reddy did express some hope for a “slight improvement” in the fourth quarter. This is attributed to the company’s upcoming loyalty program update and increased transaction growth expected through the partnership with Uber Eats.

It is clear that Domino’s Pizza is actively seeking opportunities to enhance their delivery business and expand their presence in the market. With a positive outlook on their partnership with Uber Eats, Domino’s aims to overcome the challenges they currently face in this ever-evolving industry.

Domino’s Stock Soars Following Uber Eats Agreement

Domino’s stock experienced a rollercoaster ride as investors reacted to the release of the company’s latest results. Initially, the stock dropped by 5.3% during premarket trading but made an impressive recovery, rallying to a 2.2% increase by midday. This surge put the stock on track to close at its highest price since August 25, 2022.

The cause of this fluctuation can be traced back to the highly-anticipated announcement of Domino’s partnership with Uber Eats on July 12. This strategic move marked a significant shift from Domino’s previous stance against collaborating with food-delivery aggregators. The market responded with enthusiasm, propelling the stock up by an impressive 11.1%.

During a recent call, Chief Executive Officer Russell Weiner provided additional insight into this business decision. Citing research data from Circana, Weiner revealed that delivery sales through aggregators had reached nearly $5 billion for quick-service pizza restaurants in the year ending May. Encouraged by these numbers, Weiner confidently stated that Domino’s planned to capture its fair share of this lucrative market over time.

Weiner went on to explain that the $1 billion estimate represented Domino’s expectation of acquiring their fair share of the entire $5 billion aggregator pizza delivery business in the United States. Currently, Domino’s holds a one-third share of the delivery market, but Weiner expressed their intention to expand their presence further by competing with broader competitors on the platform.

The success of Domino’s stock is not limited to this recent development alone. Over the past three months, it has seen an impressive increase of 19.2%, outperforming the overall market as represented by the S&P 500, which experienced a 10.2% advance during the same period.

In conclusion, Domino’s stock has experienced a thrilling journey fueled by investor reactions to the company’s partnership with Uber Eats. With ambitious plans to secure their fair share of the thriving food delivery market, Domino’s is poised for future growth and success.

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