Domino’s Pizza Sees Strong Forecast for Food Costs This Year

One of the leading pizza chains in the nation is forecasting soaring food costs in 2022 and has reiterated its long-term sales outlook.

The company is expecting “unprecedented” food costs this year, projecting an 8% to 10% increase in its food basket costs. This is three to four times the inflation for a typical year said CEO Ritch Allison.

Domino’s is planning to modify some of its national promotions to address rising costs.

“We expect unprecedented increases in our food basket costs versus 2021,” CEO Ritch Allison told attendees of the virtual ICR Conference this week.

Allison said that prices for meats, cheeses and certain grains are going up, making its pizzas more expensive to produce.

The CEO also said that the company currently believes the restaurant industry will continue to see higher labor costs this year as well.

“That will certainly impact us at Domino’s as well,” Allison said.

During Q3, Domino’s U.S. transactions were faced with pressure from staffing issues. These restaurants had to miss out on sales as a result.

Executives are aiming to mitigate these challenges by improving their labor challenges. This includes rolling out a new applicant tracking system and updating franchisees on ways to most efficiently use their workers’ time.

This year Domino’s is also aiming to change some of its national promotions to maintain profit margins, despite rising costs.

The pizza chain reiterated its two-to-three year outlook, saying that it expects 6% to 8% of net unit growth and 8% to 10% of retail sales growth. Wall Street analysts surveyed by Refinitiv were waiting to see earnings growth of 12.9% in 2022 and revenue gains of 7.1% in 2022.

Shares of Domino’s have climbed 28% over the last 12 months.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.