Domino's and Papa John's Shares Sink After Pizza Chains Deliver Soft Sales, Outlook

• Shares of pizza chains Domino's and Papa John's both fell after both reported soft sales figures.
• Domino's missed analyst estimates on U.S. same-stores sales and total quarterly revenue. Papa John's came up short on sales in North America.
• Both companies have raised prices to offset rising food and labor costs.

Domino's Pizza and Papa John's both fell in pre-market trading after reporting mixed earnings on Thursday morning.

Domino's missed analyst estimates on U.S. same-store sales and total revenue for the quarter. Domino's also lowered its outlook. Papa John's posted softer-than-expected North America sales.

Domino's stock closed down more than 11%, while Papa John's fell 6%.

Both pizza companies have raised prices recently to offset rising food, transportation and labor costs. Domino's reported wavering demand amid a national driver shortage. Last October, Domino's executives announced plants to raise prices around 7% in the fourth quarter, including spiking its Mix & Match deal from $5.99 to $6.99.

Here's how Domino's did, compared to analysts' estimates, according to Refinitiv:

• Revenue: $1.39 billion vs. $1.44 billion expected
• Adjusted earnings per share: $3.97 vs. $3.94 expected

The Michigan-based company said U.S. same-store sales increased 0.9%, coming in much lower than analyst estimates of 3.4%, according to estimates compiled by StreetAccount. This was a 0.8% decline for fiscal year 2022.

U.S. company-owned stores reported revenues of $117 million, falling short of StreetAcount estimates of $129.3 million.

The company cut its two-to-three-year sales outlook to a range of 4% to 8% growth from 6% to 10%, citing macroeconomic headwinds weighing down on its domestic delivery business.

Revenue grew 3.6% in the fourth quarter of 2022 compared to the year-earlier period, citing higher supply chain revenues as a result of increases in market basket pricing to stores.

This month, Domino's launched loaded potato tots with three flavors, which some analysts think could raise sales.

"We experienced significant pressure on our U.S. delivery business in 2022 and focused our efforts on creating solutions," said CEO Russell Weiner. "We also drove continued momentum in our U.S. carryout business and achieved strong international store growth."

Papa John's fourth quarter results topped Wall Street's expectations. Total revenue was down less than 1% from the company's record fourth quarter last year. Revenues would have been up 3% if not for strategic refranchising for dozens of restaurants.

Here's how Papa John's did, compared to analysts' estimates, according to Refinitiv:

• Revenue: $526.2 million vs. $523.8 million expected
• Adjusted earnings per share: $0.71 vs. $0.66 expected

The Louisville-based company missed estimates on North American company-owned restaurant sales, reporting revenues of $172.2 million versus an expected $172.7 million, according to estimates compiled by StreetAccount. North America comparable sales were up 1% from a year ago.

The company said it expects North America comparable sales to grow annually between 2% and 4%, according to executives. For 2023, it expects growth to come in on the lower end of that range, they added.

Both Domino's and Papa John's earnings come after stronger than expected earnings at McDonald's and Yum! Brands, both of which beat quarterly earnings and revenue estimates this quarter.