Domino’s Pizza (NYSE: DPZ) revealed that it anticipates higher food prices to carry on throughout 2022, causing pressure for the company to keep up with rising costs. Furthermore, Domino’s is set to cut back on promotional offers to compensate for the impending impact.
“We expect unprecedented increases in our food basket costs (for fiscal 2022) versus 2021 of 8% to 10%, which is 3 to 4x what we might normally see in a year,” Chief Executive Officer Richard Allison said at ICR Conference.
The American multinational pizza restaurant chain predicts an 8% to 10% increase in its food costs for 2022, which is ultimately three to four times the inflation of an average year. According to Allison, its pizzas will be more expensive to produce as meat, cheese, and grain prices skyrocket.
Global supply-chain issues have increased prices of ingredients, causing U.S. restaurants to increase prices, all the while raising salaries to combat labor shortages. The company expects wage inflation to also continue throughout the year.
Domino’s is prepared to alter some of its national promotions in order to maintain profit margins, in spite of rising costs. The company will only be offering its USD7.99 week-long carryout offer online. Typically, digital orders cause customers to spend more, additionally, it allows the company to store valuable consumer data.
Shares have risen approximately 28% during the last 12 months and it has a current market value of USD18.3 Billion.