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
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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