Papa John's PZZA CEO Rob Lynch has some words for Domino's DPZ delivery deal: bring it on.
Domino's CEO says it will keep its top spot in delivery as Domino's joins forces with Uber UBER in a 12 month collaboration to offer pizzas on its delivery apps.
In 2019, Papa John's entered the third-party delivery market when Lynch joined the pizza chain as CEO, including Uber Eats, Postmates, DoorDash DASH and Grubhub JTKWY Domino's, but Lynch said he has been competing with like 30,000 pizza shops since we got there. So we're still the leader, mom and Pops and everybody else is all over the aggregator, so we're still the leader. The more merrier, I said, is a big source of growth for us. Papa John's stock is down 1.4% since September, while Domino's Pizza shares are up more than 14%.
Domino's trading relationship with Uber has been a major catalyst for the stock's growth in recent months. The Papa John's rival plans to roll out an initial test in the US with four markets this fall before expanding across the country by the end of 2023.
Domino's CEO Russell Weiner said the firm aims to compete for its fair share of this third-party delivery market and believes there's an opportunity for roughly $1 billion of incremental sales in the US from the partnership.
Domino's would eventually move beyond using its own internal app for online orders and join others like Little Caesars and Pizza Hut on delivery apps.
For Cowen analyst Andrew Charles, Domino's struck the deal with Ubereats earlier than we expected. The analyst predicted that Domino's sales would be significantly affected by the partnership's results.
This will result in a low-single-digit percent lift to same-store sales, Charles wrote in a note to clients.
I know Domino's gets a lot of credit for being kind of a technology digital-first company, Lynch said. I'm not trying to diminish that, but we were the first to do that. We made the strategic decision that we wanted to be where the customer was going, and that's how we've always focused. The competition on delivery apps is increasing as consumers have pushed back against prices at Papa John's.
Last quarter, the company's North America same-store sales dropped 1%, dragged lower by a 2% decline in franchisee restaurants' same-store sales.
Franchisees raised prices too fast, Lynch said, which was kind of inconsistent with what the customer expectation is. The franchisee increased due to margins and hyperinflationary environment, he said.
For the full year, Papa John's expects same-store sales to remain flat to up to 2%, given the softness in the first half of the year.
Lynch, however, is optimistic that Papa John's value offerings will perform well in this environment.
We're bullish in the back half of the year, he said. Our value relative to traditional quick-service restaurants has never been stronger. She has Twitter at BrookeDiPalma@yahoofinance.com or email her at bdipalma@yahoofinance.com.