Domino's CEO says value is giving consumers reason to eat out

With consumer confidence edging lower in July, fast-food chains have resorted to cutting menu prices and adding value meals to draw in crowds. Domino's Pizza, Inc. (DPZ) reported its second quarter earnings, beating estimates over profits of $4.03 per share, surpassing estimates of $3.70, but revenue missing estimates with $1.09 billion against an estimated $1.1 billion

Yahoo Finance Reporter Brooke DiPalma talks with Domino's CEO Russell Weiner at the New York Stock exchange to talk about the performance of the company and give insight into the state of the consumer.

On customers potentially struggling with prices and buying pizza, Wiener says" What we're seeing in the broader restaurant segment is consumers are saying, 'hey, you know what, folks? You've taken a little bit too much price,' and so that's why you're seeing a lot of the deals that you're seeing. The beauty with us is we took prices when we needed to a couple of years ago, but then we stopped. And so we continue to be in value."

On pricing, after reports of consumer confidence trending lower, Weiner states: "We actually purposely didn't take price after that. And actually when we look at our value scores, one of the reasons we drove order counts, other folks are losing orders is because we stayed in value. People still want to eat out, you just got to give them a reason."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

Welcome back to Yahoo Finance.

I'm Berba Joining you live from the New York Stock Exchange alongside Domino's CEO Russell Wiener Russell.

I like to kick things off with the state of the US consumer.

Are Americans having trouble paying for pizza these days?

Not for Domino's Pizza, but I think what you what we're seeing in the broader restaurant segment is consumers are saying, Hey, you know what, folks?

You've taken a little bit too much price, Um, and so that's why you're seeing a lot of the deals that you're seeing.

The the beauty with us is we took prices when we needed to a couple of years ago, but then we stopped.

And so we continue to be in value.

And so now what's happening is customers want value.

They're getting a little part.

OK, hey, maybe you can get this item a little bit cheaper at Domino's.

Everything you can get for 699 you can get, you know, pizza, pasta, chicken desserts.

And so the fact that our value is not whip lashing people like it's always been here where it can be counted on and you can you can get what you want has been really important.

And that's why order counts for us.

We're positive and carry out delivery and against every income segment this past quarter.

And, you know, in this sort of environment, people tend to think that families go for pizza.

Are we seeing that right now?

Uh, well, families always go for families, go for pizza.

But specifically, in times like this, you know, there's no better way to to to feed a family than than than pizza.

But, you know, we we we found ourselves during good times and bad.

Now, as as as we continue to grow as a brand, we, you know, we're pretty steady state through through different economic times.

And you said you took prices when you did.

Consumer confidence is trending lower.

Do you think you'll have to cut prices?

No, I mean, we we we actually purposely didn't take price after that.

And actually, when we look at our value scores, one of the reasons we drove order counts other folks are losing orders is because we stayed in value.

People still want to eat out.

You just got to give a reason.

You know, Russell here in the US, the presidential election is on everyone's mind come November.

Should the White House switch from Democratic to Republican?

What does that mean for the growth trajectory for dominos and opportunities for franchisee owners?

Well, what I'd like to talk about is, um, we're not about the Democratic Party or the Republican Party.

We're about the pizza party, right?

So we'll stay out of politics.

But what I can say is, you know, no matter what, no matter who's in the White House, no matter who's in Congress, you know, we're as as long as the cards are dealt and everyone's dealt the same deck.

As long as our competition and us, we've got the same parameters.

I think we win.

We win.

We have scale from a purchasing standpoint, and we got a, you know, a half a billion dollar advertising budget.

And so, as long as as long as the sides as long as the deck is a fair deck, I think we win.

No matter who's in the White House.

Are you switching around a dollars?

Given the election?

No, no, we we have our plans for the year.

We're sticking to it.

Ad buys tend to be a little regional for the elections, and we do national advertising.

I want to hit on those higher wages in California.

You did have to raise prices from that.

What are you hearing from franchisees?

You know, we did hear from one McDonald's franchise owner that they had to close because of higher costs.

What are you hearing?

Well, you know, we did the same type of analysis we do.

And when we come up with our national pricing, which is to say, OK, here are the input.

Costs are about to come up, right?

Still, though, how can we maximise top line and bottom line?

Because, you know, we're still in the business of feeding customers, right?

And so we want to be able to do that, too.

So still early.

What I can tell you is things have gone as we've expected.

So we, for example, we haven't had closures.

We haven't had to lay off our drivers like some of our competition has.

But it's a long haul, and in the short term, you're definitely going to lose orders when you increase prices.

And, you know, our job is to feed customers.

So I got to get to that New York style pizza.

You were in the commercial.

Why did you feel that?

It was important for you to be the face of this introduction.

You are a New Yorker yourself.

Yeah, Yeah.

You know, I tell the team I have a face for radio.

I have no idea why they they put me in it.

But actually the the reason why we try to be, um, you know, from the heart of Domino's Pizza.

And and this is my favourite pizza.

Um, you know, it's it's much more foldable than our our tradition.

It's more like New York, more like the pizza I grew up with.

And so they said, You know what better person to do that than than you?

And so, yeah, it's it's doing well so far.

Despite the, uh, ugly actor, it's It's, it's it's it's doing really, really well.

It's an Inc.

It's bringing in incremental people because it's a different type of pizza.

You have Domino's CEO Russell weer.

Thank you so much for joining us