- Analysts flag falling order volumes, weaker guidance track record and growing reliance on franchisee support
Domino's Pizza Group PLC (LSE:DOM) has been hit with a downgrade from Barclays, which flagged growing signs that the UK market may have matured, while cost inflation continues to squeeze the fast-food chain’s business model.
The bank cut its rating on the stock to Underweight from 'equal weight' and lowered its price target to 250p.
The main concern is that like-for-like order volumes have fallen since 2019, raising questions about whether the brand’s rapid UK expansion is running out of road.
Barclays noted that Domino’s has invested an estimated £7–9 million in recent months to help franchisees through its “profitability and growth framework,” but said it remains unclear whether this kind of support can be sustained without top-line growth.
Adding to the pressure, the company has struggled to hit financial guidance. Barclays pointed to repeated downgrades to earnings expectations during 2024, despite the boost from its acquisition of franchisee Shorecal.
Plans to introduce a second brand were also seen as a possible red flag.
While potentially helpful in boosting growth or re-energising franchisees, analysts warned that launching a new brand could raise execution risks and add further complexity to a business already contending with rising input costs and softening consumer demand.
The stock was flat as a thin-crust Margherita pizza at 274.6p.