Pizza Chains Made a Comeback During Covid-19

The F&B industry was shaken to its knees when the Covid-19 pandemic wreaked havoc around different sectors in the industry; however, one of the sectors is thriving apart from others in these trying times – Pizza chains.

With majority of consumers being homebound and with social distancing guidelines in place, most business were unprepared for the downfall while brands such as Dominoes were thriving in these unusual conditions.

Among many of the pandemic’s unsung heroes, the one’s making sure that we get our regular dose of pizzas are the pizza delivery guys as the rise in pizza consumption are not due to people flocking to pizza chains everywhere, but rather just calling in their orders and enjoying the pizzas from the comfort of their own home. Deemed the ultimate quarantine food, pizza travels well, can usually feed a whole family and holds up perfectly as leftover for the next day.

Domino’s Pizza profit surged 29 percent in the three months through June as consumers chowed down on pizza while riding out the COVID-19 pandemic from home.

As sales for pizza chains increase, it has also led to higher costs for various other essentials such as cleaning supplies, worker pay and also ingredients. Cheese prices went from an all-time low at one point to an all-time high in the last quarter, this means the increased sales have muted profits.

“The total impact from safety and cleaning equipment, enhanced sick pay and other compensation for our team members and support for our franchisees and our communities was $11 million,” CFO Stuart Levy said during an analyst call discussing results. The company expects those costs to remain for the duration of the pandemic.

The Ann Arbor, Michigan-based pizza chain earned $118.7 million, or $2.99 a share, as revenue jumped 13 percent year-over-year to $920 million. Wall Street analysts surveyed by Refinitiv were expecting earnings of $2.24 a share on revenue of $911.5 million.

This success is due to the vital moves that Domino have made over the years, which includes more pizza chains than ever, features like “hotspots” in the U.S. which allows people order pizza to the beach and other outdoor locations, and has also tried their hands at self-driving delivery cars.

The shift from in-person order to digital orders led to the rise as well, as executives said about 70% of sales came through the company’s app and website.

Even though there are downs in terms of international sales, one thing they won’t do is to cut pay for employees.

“This is not the time to lower the rate we pay our valuable team members,” CFO Jeff Lawrence said. 

“Look, I’m a finance guy. I think about efficiency. Right now, it’s not about that. It’s about hiring more people, paying them more and giving them jobs. We’ll leave it for another day on getting efficient on the labor rate.”

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