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.
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