Domino's Pizza cites worker shortage after posting rare sales decline

The labor crunch resulted in reduced operating hours and longer delivery times

Domino’s Pizza cited an ongoing nationwide labor shortage as a key obstacle after the company posted its first quarterly sales decline in more than a decade Thursday.

Company executives said the labor crunch resulted in reduced operating hours and longer delivery times at some of its store locations. The worker shortage affected Domino’s operations at a time of increased competition as other restaurants return to normal operations during the COVID-19 pandemic.

"Our U.S. order counts during Q3 were pressured by a very challenging staffing environment, which had certain operational impacts such as shortened store hours or customer service challenges in many of our stores," Domino’s Treasurer Jessica Parrish said during an earnings call.

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A Domino's Pizza restaurant is seen in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson/File Photo (Reuters Photos)

Same-store sales at U.S. locations declined 1.9% during the third quarter, ending a long streak of sales growth. The decline was partially due to a difficult year-over-year sales comparison. Domino’s posted 17.5% sales growth during the same quarter one year earlier, when homebound Americans relied more heavily on food delivery in the midst of the pandemic.

Domino’s quarterly results highlighted a key challenge faced by restaurants and stores attempting to rebuild their staffs to handle a surge in customers.

Domino’s CEO Ritch Allison noted same-store sales were rose 15.6% on a two-year basis. Domino’s reported net income of $120.4 million or $3.24 per share, topping Wall Street’s expectations.

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Ticker Security Last Change Change %
DPZ DOMINO'S PIZZA, INC. 521.77 -3.23 -0.62%

Allison outlined several steps to address the worker shortage. The company has improved its application process for job candidates, shared "operational best practices" with store locations to cut down on time-consuming tasks and is exploring ways to streamline deliveries. 

"While I'm optimistic about the efforts that we and our franchisees have underway, we believe that staffing may remain a significant challenge in the near term as the labor market continues to evolve," Allison said.

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The CEO said the company expects "inflationary headwinds to continue impacting Domino's and the broader restaurant industry over the coming quarters." He also noted a boost to sales in recent quarters following rounds of federal stimulus checks had ended.