A Domino’s employee prepares to deliver pizza.
Pizza companies are struggling with slumping sales due to lower demand, inflation, and labor shortages.
Both Domino’s and Papa John’s reported disappointing performances on calls with investors this week.
Attempts to attract both customers and talent appear to be falling short.
It was a rough week for pizza companies, as some of America’s biggest pie chains struggle to overcome waning demand for delivery.
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Both Domino’s and Papa John’s reported slumping sales, citing customers returning to pre-pandemic habits, inflation, and ongoing labor shortages.
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Their underwhelming performance comes despite vast efforts to lure customers back to delivery, ranging from robots to cash-back offerings.
Chris Urie
On Thursday, Domino’s reported that same-store delivery sales declined by 6.6%, prompting shares to tumble by 12% — the company’s highest drop since 2010.
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Source: Yahoo! News
In a call with investors, Domino’s CEO Russell Weiner attributed the decline to consumers resuming “pre-COVID eating habits,” inflation’s impact on higher delivery and tip fees, and staffing issues.
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“We believe this dynamic will continue to pressure the delivery category in the short term, as long as consumers’ disposable income remains pressured by macroeconomic factors,” Weiner said in the call.Bayron Solorzano, a Salvadorian immigrant, works as pizza delivery man for Dominos in Washington Heights, New York.
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And while Papa John’s reported that international sales were up and the company managed to narrowly beat Wall Street expectations, its middling results — in tandem with Domino’s performance — led shares to drop 6% on Thursday.A courier worker is seen delivering an order as he leaves the American pizza restaurant franchise Papa John’s Pizza in Spain.
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Source: Forbes
As Weiner stated on the call, pizza companies are not alone in their struggle: According to NPD data for 2022, food delivery was down in high single digits across the board.A man cooks dinner at home.
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Some pizza companies also were hesitant to team with third-party services like DoorDash and Uber Eats, which tend to offer faster and cheaper delivery, ramping up competition.Starbucks launches nationwide delivery with DoorDash.
Starbucks
Source: Yahoo! News, The Wall Street Journal
After experiencing a pandemic boom, pizza companies have had to abruptly shift strategies in an effort to bring consumers back after they cooled on placing delivery orders and returned to pre-COVID dining patterns.A man with safety gloves and face mask delivers pizza to the designated location.
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The shift has led to a variety of efforts designed to promote delivery and bolster orders, many of which haven’t proved to move the needle much.Papa John’s pizza delivery bikes seen parked outside its branch in London.
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Domino’s began offering coupons, or what they referred to as “tips,” for customers who picked up their own pizzas using curbside delivery. The promotion, which debuted in February 2022, came after the company announced its first same-store sale decline in a decade.Domino’s is offering carside delivery.
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Source: Insider, Insider
In November 2022, Domino’s also rolled out a fleet of 800 Chevy Bolt electric vehicles to deliver pizzas, intended to attract employees who didn’t already have cars of their own.
Domino’s
Source: Insider
The previous year, Domino’s teamed with the robotics company Nuro to experiment with autonomous pizza delivery that delivered orders from a small self-driving robot car.
Domino’s/Nuro.
Source: Insider
Ultimately, such efforts to boost sales and attract talent have fallen short.
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