Domino’s Pizza Group (LON: DOM) saw its shares climb on Tuesday after Benchmark Capital reiterated a Buy rating, following a second-quarter earnings beat that surprised analysts. The stock rose 1.8% to 342p in early London trading, outperforming the FTSE 250, which was flat at 20,450 points. The broader FTSE 100 edged up 0.1% to 8,220.
Benchmark’s note highlighted stronger-than-expected like-for-like sales growth, driven by resilient delivery demand even as consumers tighten discretionary spending. The analyst also pointed to improved cost controls and supply chain efficiencies, which helped margins hold steady despite food cost inflation. Domino’s reported a 4.2% rise in system sales for the quarter, with UK & Ireland stores benefiting from new menu launches and targeted promotions.
The positive rating comes at a time when the UK restaurant sector faces headwinds from elevated interest rates and cautious household budgets. Rivals such as Greggs and McDonald’s have also flagged softer footfall, though delivery-focused chains have fared relatively better. Domino’s digital ordering platform and loyalty programme have provided a buffer against the downturn, analysts noted.
For UK investors and pension holders, Domino’s performance offers a bright spot in an otherwise subdued mid-cap space. The company is a constituent of several pension and income-focused funds, and its dividend yield of around 3.5% remains attractive in a low-growth environment. However, some analysts caution that valuation multiples are already elevated, limiting further upside without sustained earnings momentum.
Looking ahead, Domino’s is expected to provide a full-year trading update in the autumn. The company has guided for moderate like-for-like growth and stable margins, though rising labour costs and potential regulatory changes around delivery workers remain risks. Benchmark’s Buy rating suggests confidence in the company’s ability to navigate these challenges, but investors should weigh the stock’s premium valuation against sector uncertainties.