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Domino's loyalty program revamp boosts results; to lift prices modestly

FILE PHOTO: Domino's pizza boxes are pictured inside a restaurant in Noida

By Deborah Mary Sophia and Annett Mary Manoj

(Reuters) -Domino's Pizza beat Wall Street targets for quarterly results as a relaunch of its loyalty program and promotional offers prompted more Americans to order its pizzas and chicken wings, sending its shares up 8.5% on Monday.

The company also plans to raise prices in the low-single-digits percentage range in the U.S. this year, CFO Sandeep Reddy said, in a bid to shield margins from the impact of the wage raises set to take effect in California in April.

After struggling with a sales slowdown in early 2023, Domino's rolled out multiple initiatives in recent months to help turn the ride. Its delivery partnership with Uber Eats helped attract new customers as well and is expected to boost sales throughout 2024, ramping up after the first quarter.

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"Uber Eats and Domino's loyalty program revamp are paying immediate dividends," said Zak Stambor, senior analyst at Insider Intelligence.

The rewards program added 3 million members in 2023, with more than 2 million of them joining since the revamp. It was also driving additional profit at franchisees, CEO Russell Weiner said on a post-earnings call.

Domino's Emergency Pizza deal, which offered a redeemable coupon on the rewards app for a free pizza, also boosted order counts.

"Clearly, customers want value, and we are driving it profitably," Weiner said.

U.S. same-store sales at Domino's rose 2.8% in the fourth quarter, beating analysts' estimates for a 2.2% increase, according to LSEG.

Domino's, which lifted its quarterly dividend by 25% and announced an additional $1 billion share buyback plan, posted a quarterly per-share profit of $4.48, above estimates of $4.38.

Still, like other fast-food majors including McDonald's and KFC-parent Yum Brands, Domino's said it was seeing an impact from the conflict in the Middle East. Coupled with pressures in Europe, that drove its international same-store sales growth of 0.1% below estimates of about 3%.

(Reporting by Deborah Sophia and Annett Mary Manoj in Bengaluru; Editing by Devika Syamnath)