Domino's Pizza: Delivering Growth Through Partnerships Amid Global Challenges

Domino's Pizza (NYSE: DPZ) stands at a pivotal juncture as it navigates the dual engines of its DoorDash partnership and the debut of its Parmesan Stuffed Crust pizza, both designed to sustain same-store sales growth in the face of macroeconomic headwinds and international expansion risks. With the company's Q2 2025 earnings set to be discussed on July 21, investors will scrutinize whether these strategies are overcoming hurdles like delivery sales softness and geopolitical pressures. Here's how the pieces fit together—and what they mean for long-term value.

The DoorDash Play: Expanding Reach or Cannibalizing Sales?

Domino's U.S. same-store sales rose 4.8% in Q2 2025, fueled by strong carryout demand (up 7.9%) and the gradual rollout of its DoorDash partnership. The collaboration, launched nationwide in May 15, allows customers to order via DoorDash's app, leveraging its broader suburban/rural reach. Domino's expects this partnership to generate ~$1 billion in incremental revenue annually, with 50% of orders deemed new business.

However, execution risks linger. While the Uber Eats pilot achieved 65% incremental sales, it fell short of a 3% order contribution target. The DoorDash rollout must prove it can avoid cannibalizing existing digital sales (which already account for 85% of U.S. revenue) and navigate margin pressures. DoorDash's commission fees could compress margins if sales growth doesn't offset costs.

Investors will watch closely for signs that DoorDash's 2.7% contribution to U.S. orders (from Uber Eats) is scaling efficiently. A miss here could undermine confidence in the aggregator strategy.

The Stuffed Crust: Capturing a $1 Billion Opportunity

The Parmesan Stuffed Crust, launched in early 2025, addresses a critical competitive gap: 13 million U.S. customers annually bought stuffed crust from rivals like Pizza Hut. Initial Q1 results were “modest,” but the product's full rollout in Q2 aligned with the DoorDash expansion, creating a dual catalyst.

Surveys show 48% of consumers (including 66% of Gen Z) are enthusiastic about the offering, suggesting it could lock in loyalists and poach rivals' customers. However, U.S. delivery sales dipped 1.5% in Q1 due to price-sensitive consumers—a trend that could linger if the stuffed crust's premium pricing (vs. standard crust) deters budget-conscious buyers.

The stock's valuation hinges on whether the stuffed crust's appeal translates to sustained demand. Positive Q2 results could lift the EPS forecast beyond the consensus $3.94, potentially re-rating the stock after a 20.9% jump in Q1 2025 EPS to $4.33.

International Challenges: A Tale of Two Markets

While U.S. momentum is promising, international markets face turbulence. Domino's Pizza Enterprises (DPE) projects a shortfall of 175–275 net store openings globally, with Japan's closures and geopolitical risks weighing on growth. The company's 1–2% 2025 guidance for international sales reflects these headwinds, contrasting sharply with the U.S. 3% target.

The solution? Focus on everyday value and loyalty programs under the “Hungry for MORE” strategy. Domino's Rewards members now account for 40% of U.S. sales, a metric it aims to replicate abroad. Yet, macro factors like inflation and supply chain costs could limit margin expansion in regions like Asia-Pacific.

Investment Thesis: Hold for Now, But Watch Q2 Catalysts

Domino's stock trades at 29.6x forward P/E, slightly above its five-year average of 25x. The valuation assumes the DoorDash partnership and stuffed crust deliver as promised. Key considerations:

1. Upside Case: Q2 U.S. same-store sales beat 4.8%, with DoorDash contributing >3% of orders and stuffed crust driving traffic. This could push EPS toward $4.00+, justifying a “Buy” rating.
2. Downside Risk: Delivery sales remain sluggish, or international store closures accelerate. Either would pressure margins and growth forecasts.

The company's $764M buyback authorization and $1.74 quarterly dividend underscore management's confidence in cash flow. However, execution remains critical.

Recommendation: Hold the stock ahead of the July 21 earnings report. A beat on U.S. same-store sales or positive DoorDash metrics could shift sentiment to “Buy,” while a miss warrants caution until operational clarity emerges.

Domino's Pizza is betting big on digital partnerships and product innovation to outpace rivals. The next few weeks will reveal whether these moves can deliver the growth needed to justify its valuation—or if investors should seek greener pastures.