Domino’s Pizza CEO Ritch Allison announced his retirement Tuesday, the same day the company announced weaker-than-expected fourth-quarter earnings.
Allison, 55, who has served as CEO since 2018, said he will step down at the end of April but remain in an advisory capacity through mid-July. He will be replaced by Russell Weiner, 53, who is currently Domino’s president and chief operating officer.
The Ann Arbor, Michigan-based company also announced that Sandeep Reddy will become its new chief financial officer on April 1. Reddy is a turnaround expert who has also served as CFO of Six Flags and Guess.
Domino's said its global revenue fell 1% to $1.34 billion in the October-December period. That was short of Wall Street’s forecast of $1.38 billion, according to analysts polled by FactSet.
The company said its net income rose 2.5% to $155.7 million, or $4.25 per share, in the fourth quarter. That also fell short of the $4.28 that analysts forecast.
Domino's said sales at international stores rose 2% in the October-December period, but sales at U.S. stores fell 3%.
On a conference call with investors Tuesday, Allison said the company faced acute staffing shortages __ particularly among delivery drivers __ in December and January due to the omicron variant. He said those shortages eased somewhat in February but remain a significant headwind, forcing some stores to limit their hours.
Allison said Domino's has raised wages and added benefits to attract workers to its 367 U.S. company-owned stores. This year, Domino's plans to invest another $8 million in increased wages at those stores, Allison said.
But Allison said Domino's is also trying to improve drivers' experience and earnings potential. At the company's best-run stores, he said, drivers only do deliveries __ and collect tips __ and don't spend time doing menial tasks in stores.
Allison said Domino's also faces “unprecedented” cost pressures that will persist in the first half of this year. U.S. food costs at Domino's are expected to rise 8% to 10% this year, he said.
The company is raising prices to compensate. For the first time in 12 years, the company will increase the price of its $5.99 mix-and-match deal __ which lets customers get two or more items for $5.99 each __ to $6.99 for delivery orders. Domino's said it will also add to the list of eligible items.
“We believe that $6.99 is still a great relative value for our delivery customers," Allison said. Carryout customers will continue to pay $5.99.
Domino’s Chairman David Brandon thanked Allison for his service, noting that Domino’s opened more than 4,000 stores and expanded to 90 countries during Allison’s four years as CEO.
Domino’s shares fell 3% in morning trading before recovering. They were up 0.5% in afternoon trading.