The iron fist that is COVID-19 hitting America’s weakest restaurants paves the way for a future of tasty profits for fast-food pizza giants like Domino’s Pizza (DPZ) and Papa John’s (PZZA) who They have extensive delivery networks, robust balances, family food, and seamless ordering technology.
And potentially, tasty returns for investors.
“I think you have been seeing Domino’s and the fast service guys taking market share in this environment. If you have more access to delivery or are better at delivery, your sales have been extraordinary. You saw it from Papa John’s. You’re watching it from others, including Wingstop. Sales are double digits [percentage] kind. They are participating in smaller operators that do not have a delivery platform and / or access to a drive-thru, ”explained BTIG restaurant analyst Peter Saleh in The First Trade of Yahoo Finance.
Domino’s is the first major restaurant chain to report second-quarter earnings on Thursday, and finances certainly underscore Saleh’s thesis.
Sales at the same company store in the United States exploded 16.1%. In the first quarter, sales at the same U.S. store only increased 1.6%. Earnings per share increased to $ 2.99 from $ 2.19 a year ago.
Domino’s shares fell 1% on the news, likely reflecting news of its CFO withdrawal for a long time rather than investors being disappointed by the quarter.
A small Domino’s pizza made at a Domino’s Pizza store in downtown Pittsburgh. (AP Photo / Gene J. Puskar, File)
Meanwhile, Papa John’s delivered mind-blowing sales growth at the same store in a preliminary second-quarter update on June 30. The company said sales at the same North American store increased 28% in the quarter.
With dozens of restaurants still closed amidst the pandemic, many forever, established pizza players are clearly winning for convenience and affordability.
“Digital growth is where it’s happening these days,” Saleh said. “They are [Domino’s] essentially gaining in price. They are using their cost advantage to reinvest in value and they are taking quarterly to quarterly actions. ”
Stock capture could also be starting as well.
There have been eight bankruptcies of restaurant chains or franchise operators since early April, reports Yahoo Finance. With each passing month, the presentations have become prominent as restaurants grapple with lukewarm traffic, mountains of debt, and gargantuan rent after states allowed them to reopen. The last two high-profile names to file for bankruptcy include the Chuck E. Cheese children’s fun house and the Wendy’s and Pizza Hut NPC International franchisee.
Only the strong Survive.
