Domino's discounting binge puts some pressure on franchisee profits

During Domino’s first quarter earnings call in April, then-CEO Russell Weiner, who retired earlier this month, told his competitors to “bring it on” in response to the intensifying promotional environment.

Weiner touted Domino’s robust ad fund and franchisee profitability relative to its competitors, allowing the company to better absorb the deep deals consumers were increasingly seeking.

However, such aggressive discounting activity has taken its toll on that profitability number. During Domino’s third quarter earnings call Tuesday, executives wouldn’t specifically quantify just how big of a toll but acknowledged “franchisee profitability pressure year-over-year.”

Franchisee profitability

“Our objective is to first stabilize it and then start it growing again,” CFO Sandeep Reddy said during the call.

With Joe Jordan taking the lead on his first earnings call as CEO, he was forced to answer how Domino’s can continue to balance a compelling value position that bolstered much of its 2025 performance while avoiding getting stuck in a deal cycle that not only compromises margins, but also trains consumers to wait for the next promotion that will more than likely come.

“It is a balance,” he said. “We’ve driven the order counts throughout the year. We need to balance that with improved ticket growth. Sequentially, we did that in Q3 over Q2. We need to do more of that in Q4, and that's by getting the right offers to the right consumers at the right time.”

The Best Deal Ever promotion, he added, was brought back in the third quarter and worked by adding the Stuffed Crust to the lineup for the first time, luring customers back to purchase the item again once the deal ended.

“It’s that balance of getting trial of those products, driving some incremental occasions, but then seeing customers come back again at higher tickets. That's our goal,” Jordan said, adding that the 2027 promotional calendar will “evolve” as the company strives to find out what’s resonating most with consumers.

Same-store sales growth

The company just reported another soft quarter of same-store sales, which increased just 0.3% in the third quarter. To be sure, that followed a tough 5.2% lap from the third quarter of 2025, but it also marks the chain’s third straight quarter under 1% for the metric. Reddy expects a low-single-digit range for the year as “consumers remain under pressure.”

During the third quarter, those pressured consumers bought less items per order, though the company continued to see order count growth, particularly among lower-income consumers.

“Customers were still coming to us, but managing their ticket by managing items per order,” Jordan said. Domino’s launched the Lava Cake dessert in the quarter to bolster item count.

Executives expect the slower macroenvironment to continue throughout the remainder of the year.

“We do believe part of (slow sales) is the macro and the pressure consumers are under, and that's why we've been out there with a lot of value. Our competitors have been out there with a lot of value,” Jordan said. “We're not sure how long that increased activity will continue. Regardless, if it goes on, we're in a position where we have the profit power, the four-wall profitability to continue to offer great value to the customers.”

Order counts may include a slightly lower ticket, he added, but they’re still profitable for stores.

“As those pressures subside, we can we can potentially lessen some of that value,” he said.

Development pipeline impact

Of note, executives confirmed the profitability hit has also impacted the chain’s development pipeline. The company lowered its store opening forecast from 175 to 200 stores to 125 to 150 stores for the year but maintains its long-term 8,500-unit goal. It finished the quarter with 7,257 domestic locations.

“Until we get franchisee profits to move in the right direction, there will be incremental pressure going forward,” Reddy said.

Domino’s plans to pull some levers to bolster same-store sales in 2027, including through its loyalty program and its ability to generate more frequency from customers, and the single-serve, Detroit-style Domino, launched in August. The Domino fits the growing trend of group occasions where consumers are individually choosing their food, executives said.

“Pizza is a mature category," Jordan said. "We need to think about how we can push pizza into places that it hasn't been before, and get occasions where pizza hasn't traditionally been considered, so the Domino is a first step in that direction, and you can expect to see more of that from us in both value and product innovation."

Domino’s also plans to get “closer to the consumer” through 360-degree marketing.

“We saw some of the challenges we were facing around ticket and with higher income consumers,” Jordan said. “We moved that forward quickly, working across our operations, marketing, and technology teams, keeping those teams tight and focused on fewer [but] most important things. Deciding what those things are by being closer to the consumer is what you should expect going forward.”

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