Domino's Pizza Inc. (DPZ) is pressing on with new products and a beefier advertising budget in 2010 as it awaits a consumer reluctant to spend, especially for dinner deliveries.

The pizza-delivery chain is locked in a market-share battle with competitors like Yum Brands Inc.'s (YUM) and Papa John's International Inc. (PZZA), as well as thousands of independent pizzerias across the U.S. Domino's has gone after new customers and the lunch business by adding pasta, desserts and sandwiches to its menu, which has softened the blow from a sharp consumer pullback in dinner spending.

Domino's will continue to roll-out new products next year and is developing some items with faster cook times to attract time-crunched customers. The chain hopes broadening the menu will help win share from competitors that focus just on pizza, and put it in a good position when consumer spending bounces back.

"If we can do well in this environment, we can do fantastic when that dinner day part comes back," Domino's Chairman and Chief Executive David Brandon said in an interview.

Sales have not come back just yet, as Domino's reported flat same-store sales in the U.S., although that out-paced Pizza Hut's 13% decline in its latest quarter, which has a large exposure to dinner.

"Right now, at least, we're not feeling in that dinner day part a material change in consumer behavior," Brandon said. "I think it's a pretty tough road to go."

Internationally, Domino's stores posted a 2.7% gain in same-store sales. The company said it doesn't expect any negative impact from foreign exchange rates in its upcoming quarter.

Shares fell 68 cents, or 7.4%, in recent trading to $8.68, with total revenues below expectations. A 40% year-over-year decline in cheese prices hurt revenue for Domino's supply chain business, but helped improve operating margins. The chain also cut other costs.

Earnings rose 76% as the company retired debt. Excluding gains from that, per-share earnings of 17 cents came in ahead of analysts' estimates of 15 cents, according to Thomson Reuters.

Domino's continued to chip away at its debt load, buying back $71.8 million in fixed-rate senior debt during the latest quarter. Investors remain concerned over the debt levels, although Domino's remains comfortable with the capital structure. Brandon said long-term franchise agreements provide reliable revenue streams and many have contracts to buy ingredients from Domino's supply businesses.

"Those agreements do not show up on our balance sheet and they're worth billions and billions of dollars," Brandon said.

Domino's said the financing market is showing some signs of improvement, though it remains challenging. It shuttered 30 domestic units in the latest quarter, but Brandon said that it would likely add stores next year.

Franchisees recently approved an increase to the national advertising budget for 2010 that will allow Domino's run ads for a record number of weeks.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;

paul.ziobro@dowjones.com