Domino’s Pizza will be cutting down the number of chicken wings in promotional offers as the restaurant chain deals with increases in food costs.
Companies across the country are trying to manage high inflation rates without disappointing customers.
The popular pizza franchise is planning on offering eight pieces instead of the usual 10 in its $7.99 carry out deal. “We expect unprecedented increases in our food basket costs (for fiscal 2022) versus 2021 of 8 percent to 10 percent, which is 3 to 4x what we might normally see in a year,” CEO Richard Allison said at ICR Conference, Reuters reported.
Customers can no longer call in and order wings as they will only be made available online. Domino’s expects to save on hiring people to attend phone calls. Moreover, people tend to spend more while ordering online.
The changes, which go into effect in a couple of weeks, might not be the last as the Michigan-based pizza chain struggles with rising prices of meats, cheese, and grains. Supply chain disruptions and labor shortages have compounded difficulties in obtaining the raw materials needed at the right time.
While many companies like supermarkets and restaurants have opted for passing on the increase in costs to the customer, places like Domino’s and McDonald’s have resorted to reducing food portions.
The Consumer Price Index, which indicates price increases from the perspective of consumers, has gone up 7.0 percent in the 12 months through December. The last time the country saw such increases was in 1982 when the index hit 7.2 percent. Inflation chips away at the spending capacity of Americans when earnings cannot keep up with the rise in prices.
Besides food price hikes, the restaurant industry is also dealing with an increase in labor costs. Last year, Domino’s had to shorten working hours as staffing issues were putting pressure on some locations. There are plans for introducing a new applicant tracking system and training franchises on how to employ staff more efficiently.
Many businesses have had to pay extra incentives and bonuses to workers to prevent them from leaving and maintaining business continuity, while employees have started negotiating better pay and benefits.
Domino’s shares have fallen more than 13 percent since Dec. 31, from $564 to trade at $486, but the company has performed well over the past 12 months with an increase of 27.5 percent, giving it a market capitalization of $17.7 billion.
Domino’s expects to see an earnings growth of 12.9 percent and 7.1 percent increase in revenues this year, according to Wall Street analysts surveyed by Refinitiv.