Domino’s Pizza at the Center of a Securities Fraud Class Action Lawsuit. Here’s What We Know

Domino’s is central to a class action lawsuit involving potential securities fraud. Shareholders have been alerted about the deadlines to file their potential claims with the Securities and Exchange Commission (SEC). Here’s what we know so far about this developing story.

Domino’s Sued in a Class Action Lawsuit Involving Securities Fraud

Bronstein, Gewirtz & Grossman, LLC issued a press release announcement on Sunday, Sept. 29, advising Domino’s (referred to as “Defendants”) investors of the class action lawsuit.

All individuals and companies that bought or otherwise acquired Domino’s stocks between Dec. 7, 2023, and July 17, 2024, are the plaintiffs in this complaint, which aims to recover damages against the pizza giant for alleged violations of the federal securities laws. The firm has set up a website for people to file their claims.

“Throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects,” the press release states. “Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) DPE, the Company’s largest master franchisee, was experiencing significant challenges with respect to both new store openings and closures of existing stores; (2) as a result, Domino’s was unlikely to meet its own previously issued long-term guidance for annual global net store growth; (3) accordingly, Domino’s business and/or financial prospects were overstated; and (4) as a result, the Company’s public statements were materially false and misleading at all relevant times.”

Faruqi & Faruqi, LLP is another law firm involved in the class action lawsuit, but it is representing investors who lost more than $100,000 with their investments. Affected investors have until Nov. 19, 2024, to file a claim and get their share of the settlement. There is no cost to participate in the class action lawsuit. Affected investors may also request to be listed as the lead plaintiff, though it isn’t necessary to be named as such to win a cash settlement.

Soaring Stocks

Back in April, Domino’s stocks soared on the strength of the company’s recent loyalty rewards promotions.

According to a Reuters story released at the time, the popularity of the new reward programs and other promotions contributed to the over 7% increase in the pizza chain’s shares during pre-market trading.

In addition, the outlet highlighted how the new loyalty plans and promotional offers helped draw in “inflation-weary consumers” and how new menu items like chicken wings, pasta bowls, and desserts helped Domino’s avoid the nationwide dining-out slump.

First-quarter in-store sales increased by 5.6%, above experts’ initial projection of 4.04% before the release of the official Q1 earnings report. The average order size increased across the nation, according to CEO Russell Weiner.

In the first quarter, Domino’s revenue was above market projections by 5.9%, totaling $1.08 billion. Additionally, the company’s shares grew to $3.58 from $3.39 per share, a modest improvement over the previous estimate.

The national pizza chain’s success was attributed to its new loyalty programs and food options, but analysts also pointed to other variables, such as the drop in food prices, which helped the gross profit margin improve by 0.6% in the first quarter.

Analysts also attributed Domino’s increased overall revenue to its September 2023 agreement with Uber Eats as its third-party delivery provider. As previously reported, the new deal permits Domino’s to keep control over delivery execution since orders submitted on the Uber Eats platform will still be delivered by Domino’s drivers. Additionally, Uber Eats and Domino’s will exchange data regarding incremental sales and delivery efficiency.

Due to these better overall results, Domino’s proposed raising menu prices “in the low-single-digit percentage range in the U.S.” The business claimed at the time that this price rise would start at some point this year, although it did not specify when customers should expect it.