Domino’s Pizza Lowers Profit Forecast as Staffing Costs Rise
Domino’s Pizza is one of the biggest names in fast food. It runs over 20,000 stores in more than 90 countries. We’ve all seen their ads promising hot pizza in under 30 minutes. But now, Domino’s is facing a tough challenge.
The company just lowered its profit forecast, and the reason is clear: staffing costs are going up. Hiring workers is harder. Paying them costs more. This isn’t just Domino’s problem it’s something many fast-food chains are going through right now.
Let’s look at why Domino’s is earning less than expected, how rising wages are changing the game, and what the company is doing to fight back. We’ll also check out how investors are reacting and what the future may look like for one of the world’s favorite pizza chains.
Overview of the Updated Forecast
Domino’s Pizza Group in the UK has cut its annual core profit guidance for 2025. They now expect profits between £130 million and £140 million, down from £140.8 million-£149.7 million. The change reflects weaker customer demand and rising staffing costs.
Store openings also fell short. Franchisees held back. They were worried about hiring and wage pressures. The CEO noted that May and June brought a slower outlook than the first four months.
Rising Staffing Costs
Rising labor costs are the main pain point. Domino’s cited millions in extra expenses due to payroll tax hikes and national insurance increases in the UK. Franchisees are cautious. Many delayed new openings or expansions.
We see this is part of a larger trend. Fast-food chains everywhere face steep wage inflation. Delivery drivers and store staff now cost more. Domino’s is not alone in this squeeze.
Broader Operational Challenges
Customer spending is down. Many Britons are staying home to save as living costs rise. Domino’s says price increases made some users cut back on ordering pizza.
The UK arm saw gross profit drop 7.4% in H1. Underlying EBITDA fell to £63.9 million. That shows the impact of weak demand plus rising cost pressure.
Domino’s units in the UK opened fewer new stores than originally planned. That slowed growth. And operational margins shrank under the strain.
Strategic Moves to Combat Rising Costs
Domino’s global group took action in other regions too. In markets like Japan, they closed over 200 stores that were losing money. They paused non‑essential tech projects and refocused on digital ordering. That way they could save costs and support online sales growth.
They also improved menu alignment to local tastes. And they cut back on deals and vouchers in some places to restore margin control.
DoorDash rollout in the US and partnerships with other delivery platforms also aim to widen reach without too much staffing burden.
Market & Investor Reaction
Domino’s UK stock plunged up to 20% in a single day after the full-year forecast was cut. That was the biggest one‑day drop on record for the UK Pizza Group.
In the global market, Domino’s shares have done better. U.S. stock is up around 11-16% so far in 2025. Berkshire Hathaway’s Warren Buffett is a significant investor. He continued buying shares through early 2025.
Financial analysts see the UK issues as local and cautionary. But they note Domino’s overall remains resilient. Its history of delivering steady growth and strong free cash flow still draws investor interest.
Domino’s Long‑Term Outlook
Despite UK difficulties, Domino’s global system added about 600 net new stores in Q2 2025, with most growth abroad.
Global retail sales rose 5.6% in Q2. U.S. same-store sales climbed 3.4%. Operating income rose nearly 15%, excluding currency effects.
The company remains focused on tech, rewards, and product innovation like its Parmesan stuffed crust pizza that has driven fresh customer interest.
Domino’s continues to project ~8% operating income growth (ex‑currency) and plans over 175 net new stores globally for 2025.
Still, risks remain. Rising inflation, currency moves, and customer sensitivity could continue to limit growth. A tighter wage and cost structure may strain margins further. Franchisee costs and consumer sentiment will matter a lot in the months ahead.
Wrap Up
Domino’s UK has cut profit guidance because it simply costs too much to staff stores right now. Customers are also spending less, so sales are soft. The result: shrinking margins and cautious expansion.
But the larger Domino’s business remains solid. Strong operations, digital platforms, and global
store growth help cushion headwinds. We watch to see if cost pressures ease or deepen in late 2025. Investors and franchisees will want to track store openings, wage trends, and consumer habits closely.
Frequently Asked Questions (FAQs)
Domino’s pizza costs more now because of higher prices for ingredients, delivery, and wages. Rent and electricity bills also add to the final price of each order.
The fortressing strategy helps with faster delivery and better service. But it can also lower profits since stores compete with each other in the same area.
Domino’s faces threats like rising food costs, staff shortages, strong competition, and changing customer habits. Economic issues can also hurt sales and franchise growth plans.
Domino’s uses value pricing with combo deals, coupons, and special offers. This attracts budget shoppers but sometimes lowers how much they earn on each pizza.
Disclaimer:
This is for information only, not financial advice. Always do your research.