Domino's Pizza delivery business suffers slowdown as consumers opt to cook at home due to inflation

Domino's Pizza Inc warned that its delivery business is experiencing a slowdown as consumers have become cautious about spending on pricier food items and higher delivery fees and are now opting to cook at home.

The change in dining habits sent its shares 6 percent and took the shine off the better-than-expected first-quarter results.

To protect its margins, the world's largest pizza chain has raised prices on menu items and increased delivery charges.

But consumers’ disposable income has already been stretched by elevated levels of inflation.

In a bid to attract inflation-weary consumers, Domino's relaunched the $3 Carryout Tips promo, where customers who place a carryout order of $5 or more earn a $3 promo that can be used for another carryout order.

Domino's Finance Chief Sandeep Reddy said that the carry-out business was strong, with a new menu item, "Loaded Tots," seeing higher sales.

The delivery business was seeing a migration of demand to consumers returning to restaurants, Reddy added.

However, CFRA Research analyst Siye Desta said consumer spending patterns will normalize as pizza delivery orders begin to contribute to overall sales growth.

US same-store sales at Domino's rose 3.6 percent in the first quarter, compared with analysts' estimates of a 1.96 percent increase.

Total revenue rose 1.3 percent to $1.02 billion but missed estimates of $1.04 billion hurt by a strong dollar.