Analyst Predicts Domino's Will Benefit From Higher Prices In 2023

Domino's made news recently when it was announced that the pizza giant was purchasing 800 electric cars. The move certainly bolsters Domino's sustainability credentials and is a big step towards the company's goal of becoming carbon neutral by 2050, per a recent press release. The electric cars are also expected to help open a new labor pool for Domino's, attracting delivery drivers who may not own cars.

In a recent earnings call, via Seeking Alpha, Domino's CEO Russell Weiner noted that although hiring had nearly returned to pre-pandemic levels, it was still an issue. It appears to be one of the few confronting the company. Weinger stated that "the Domino's brand is as strong as ever. Our research shows the brand health remains at pre-pandemic levels, and we have maintained our lead over relevant QSR (quick-service restaurant) competition."

In fact, at least one analyst is already predicting 2023 will be a big year for Domino's; meaning, per QSR Magazine, that pizza chain won't just be as strong as ever, but stronger due to both higher pricing and better sales.

Why 2023 could be a big year for Domino's

Peter Saleh, an analyst for brokerage house BTIG, has predicted a very strong performance for Domino's in 2023, especially during the first half of the year, according to QSR Magazine. Although Saleh believes that the pizza chain will feature higher prices overall than at any time in the past 10 years, he believes sales will continue to increase. For example, Saleh expects carryout sales to continue to grow, despite his forecasted price bump for the company's value-friendly $7.99 carryout promotion. Carryout has been a big growth area for Domino's in 2022. Food Business News reported in July of this year that the company's carryout had spiked by almost 15%.

Saleh believes the delivery side is where Domino's could really see big gains in 2023, per QSR Magazine. Delivery has been a recent weak spot for the company, in part due to labor shortages and possible "pizza fatigue" – delivery numbers declined for five consecutive fiscal quarters, per MarketWatch. But with more delivery drivers hired, gas prices stabilizing, and the addition of electric cars, Saleh is projecting significantly better sales in this area.

Saleh thinks Domino's will announce price hikes during the first quarter of 2023, further boosting profits by increasing the company's margins, per QSR Magazine. A strong 2023 would certainly be welcome news for Domino's stockholders. The company's share price has dropped by 33% in 2022, per MarketWatch.