Pizza companies vie for bigger slice of COVID-19 dine-at-home business
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On Thursday, Domino’s Pizza reports earnings in this brutal first quarter of the COVID-19 economy. The entire restaurant industry will be watching.
But there is relative optimism about Domino’s and pizza delivery even in this dismal moment.
Even though earnings for fast-food and sandwich companies are falling by double-digit percentages, pizza delivery earnings are expected to be flat or up a bit.
Especially Domino’s, which is running an ad about how the only hands that touch its $6 pizza are yours, along with contactless delivery.
“Typically we see consumers flock to value propositions in times of uncertainty,” said R.J. Hottovy, an analyst at Morningstar. “With Domino’s $6 anchor price point, that’s hard to match.”
The pizza chain’s other big strength is technology. You can order from the Domino’s app, Twitter, Alexa or Slack. And that’s trending now, said Peter Saleh, an analyst at BTIG.
“People tend to want to order digitally online,” Saleh said. So Domino’s is “essentially set up extremely well to take advantage of this environment.”
Meantime, he said, competitor Papa John’s is still recovering from racial slurs uttered by its founder two years ago. He stepped down as chairman and CEO.
And Pizza Hut faces a challenge, as it depends on people dining in.
What about third-party food delivery app companies, like DoorDash and Uber Eats? Can they compete well against Domino’s delivery? Restaurant analyst John Gordon at Pacific Management Consulting isn’t sure.
“There is some worry and discomfort regarding the third-party delivery agents,” Gordon said.
Still, there is a potential cloud for Domino’s. Andrew Custage, at the research firm Sense360, sees signs that customers may choose to just eat at home.
“As more and more people in this economy are becoming more insecure about their incomes and are focusing on value, we think this is something that all restaurants have to keep in mind,” Custage said.
But Domino’s seems to be confident. It’s in the middle of hiring 10,000 drivers.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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