- Domino's warns weak demand may affect orders until 2026
- Franchisees raise prices to offset higher wages and taxes
- Maintains full-year EBITDA guidance, plans new store openings
Nov 4 (Reuters) - UK's Domino's Pizza Group reported growth in its third-quarter sales on Tuesday helped by higher prices and new menu items but warned that weak demand is likely to weigh on orders into 2026.
Fears of tax hikes in Finance Minister Rachel Reeves' autumn budget have dampened consumer spending, compounding challenges for the fast-food industry. Domino's Pizza Group cut its profit in August, already reeling from April's tax and wage increases.
The group, which operates under the umbrella of U.S.-based Domino's Pizza in the UK and Ireland, reported growth of 1% in like-for-like system sales - a measure of sales growth in mature stores - for the three-month period ended September 28. That compared with a decline of 0.7% in the prior quarter.
However, the pizza chain saw its total order count fall 1.5% in the quarter, with delivery orders dropping 3.4% as consumer sentiment remained weak.
Franchisees have been tactically raising prices alongside targeted value deals to partially mitigate higher wages and employee taxation, the company said, as the weaker quick-service restaurant market and lower consumer discretionary income pressured the business in the quarter.
Despite the broader weakness, it maintained its full-year core profit guidance of 130 million pounds to 140 million pounds ($174.47 million to $187.89 million) and expects to open mid-twenties new stores by year-end.
Shares of the London-listed company, which have lost nearly 40% of its value this year, were down 1.7% at 0843 GMT.
"Some initiatives are paying off, especially new products and better service," Peel Hunt analysts said, adding that an improvement in like-for-like sales and faster expansion should materialise in 2026 if the macro environment does not deteriorate.
($1 = 0.7451 pounds)
Reporting by Raechel Thankam Job in Bengaluru; Editing by Janane Venkatraman, Subhranshu Sahu and Conor Humphries
Source: Reuters