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Domino's Pizza (DPZ -4%) is trading lower after wrapping up 2024 on a bit of down note. We cautioned in our earnings preview on Friday that we were nervous heading into this report following a rare miss from Wingstop (WING) last week and it played out that way. The pizza chain giant missed slightly on EPS. Revenue grew just 2.9% yr/yr to $1.44 bln, which also was a bit light. Same store comps were also weak. The silver lining was that DPZ announced a 15% increase to its dividend.

• US comps came in at just +0.4%, which was below prior guidance and it continues its downward trend: +3.0% in Q3, +4.8% in Q2. US comps were driven by carryout at +3.2% but delivery comps were down -1.4%. The delivery comp was impacted by continued macro and competitive pressures that put pressure on its low income customers. DPZ was able to benefit from 2.3% of pricing and Uber contributed 2.7% of sales in Q4. Results were impacted by a higher carryout mix, which carries a lower ticket than delivery. Traffic was flat for the quarter, partially driven by a slight headwind from a mid-week NYE.
• International comps were a bit of a bright spot at +2.7% CC, which was slightly ahead of internal expectations. DPZ saw improvements in Asia that were driven by strong comps in India and broadly across Europe. DPZ also said it continues to see strong paybacks in its two largest growth markets, which are China and India.
• DPZ does not provide specific guidance, but it provided some general color. DPZ believes the combination of pressured consumer spending and a value driven QSR marketplace will continue in 2025. DPZ expects its 2025 US comp to be in line with its +3% long-term guide as a result of traffic-driving catalysts, aggregators and loyalty. However, DPZ expects US comps will be lower in 1H25 as compared to 2H25. DPZ expects international comps in 2025 to be about +1-2%.
• On the positive side, strong economics continue to drive store growth, which was a tailwind to market share growth in 2024 orders. Also, DPZ is benefitting from a revamped Domino's Rewards program and its entrance into the aggregator channel with UberEats. In addition, DPZ continued to see significant same store comp growth in its carryout business, up over +6% in 2024.

Overall, this was a disappointing quarter for Domino's Pizza. The EPS and revenue miss were a letdown, but the declining US comp trend stood out to us as the biggest problem. Unfortunately, it sounds like the weakness in US comps will continue in 1H25 as a result of pressured consumer spending and a QSR market that is much more value-focused. When we saw that rare miss from WING last week, we worried about other fast food / delivery chains and DPZ in particular. Unfortunately, those concerns were justified.