Domino’s is in a bit of a pizza pickle here lately (say that 5 times). Fresh from it’s pandemic high, the biggest name in U.S. pizza—with 7,000 stores in the States and over 20,000 worldwide—is now watching its stock slide faster than cheese on a hot slice. Shares have dropped 13% in just six months due to a lawsuit and some seriously missed growth targets that are giving investors a bad case of the burps (metaphorically speaking of course).

So, what’s Domino’s doing to claw its way back? Yep, you guessed it—they’re pulling out what seems to be their only off-speed pitch: Emergency Pizza. You remember the deal—buy a pizza, get a coupon for a free one to redeem in the next 30 days. It worked like magic last year, giving the brand a much-needed sales shot in the arm. So, naturally, they’re hitting the same button and hoping for a repeat this October. But can giving away free pies actually fix their problems? 

Let’s rewind. Last October, Domino’s Emergency Pizza promotion hit, and it was a monster success. In fact, it helped drive U.S. same-store sales up 2.8% in the fourth quarter of 2023. And here’s where it gets really interesting—two million people signed up for their loyalty program just to snag a free pizza. That’s two-thirds of all new loyalty members in 2023. 

But why bring it back? Because Domino’s is struggling to keep up with rising costs, and honestly, their sales numbers are in the gutter right now. Just in the last quarter, Domino’s guidance for 2024 dropped like the “The View’s” TV ratings. Domino’s is now saying they expect just 3% comparable sales growth in the U.S. for the rest of the year. Not exactly a number that gets investors excited.

And if slipping sales weren’t enough to deal with, Domino’s is also facing a legal issue in court. An investor has slapped the company with a class-action lawsuit, accusing them of misleading the market about their growth plans. Basically, the lawsuit claims that Domino’s was way too optimistic about their global store growth, and, surprise, they’re falling short. Domino’s, of course, denies the whole thing, saying the lawsuit is “without merit.” 

And another thing: International store openings are expected to be between 175 and 275 units shy of their goal of 925 new stores in 2024. That’s a big miss, especially when you’re trying to convince investors you’ve got international expansion locked down.

Here’s the thing—Domino’s isn’t about to collapse. They’ve still got over 20,000 stores globally, so there’s room to grow. For context, McDonald’s has about double that worldwide, so Domino’s could easily ramp up if it sorts out its growth issues in places like Japan and Europe, where some franchisees have been shutting down stores. But the missed growth targets scared Wall Street, and the stock has taken a massive hit.

As of now, Domino’s stock is trading at a price-to-earnings (P/E) ratio of 27. Not exactly bargain-bin, but for a company that’s still showing consistent growth, it’s a reasonable price if you’re willing to wait for the bounce back. Traffic is up, both in the U.S. and internationally, and the Emergency Pizza promotion could help push sales even higher in the short term.

If you’re the kind of person who can’t resist a free pizza deal, you might be tempted to grab some shares while they’re down. Sure, Domino’s has its issues—missed growth targets, a lawsuit, and slow U.S. sales growth—but they’re still putting up numbers that make them competitive in the fast food space. But until they sort out the international situation and shake off that lawsuit, Domino’s might need more than a free pizza to keep investors happy. 

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Stocks.News has positions in Domino’s and McDonald’s.