Papa John’s takes the lead in the pizza wars, outperforming Domino’s
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Papa John’s is gaining ground in the competitive pizza market, outperforming Domino’s as the latter struggles with a tough macroeconomic environment.
“We navigated a dynamic, operating and competitive environment while setting in motion near-term strategic priorities,” Papa John’s CEO Todd Penegor said during the company’s earnings call on Feb. 27.
Papa John’s delivered a stronger-than-expected fourth-quarter profit of 63 cents per share, surpassing Wall Street’s estimate of 50 cents, according to FactSet (FDS+0.86%). The Kentucky-based chain’s revenue declined 7% to $531 million during the period, but it still beat analysts’ forecast of $516.6 million. Sales were down across the vendor’s North American and international markets.
Despite these mixed results, Penegor said the company is focused on taking market share from rivals and driving sales in the near term to increase profitability. He added that this involves allocating an additional $25 million in marketing investments.
Domino’s is facing its own challenges, some of which its wildly popular “Emergency Pizza” hasn’t been able to remedy. The company’s CFO, Sandeep Reddy, acknowledged the “tough macroeconomic environment” during the firm’s Feb. 24 earnings call, signaling growing volatility in the market.
Domino’s CEO Russell Weiner added that competitors are offering similar deals, making it harder to stand out. “There are a lot of folks doing similar promotions that we do,” he said.
“We have a strong slate of initiatives primed and ready to go,” Weiner said. “You can expect a similar cadence of promotions as we believe it’s going to be another challenging year ahead in the industry.”
But even so, Weiner noted that Domino’s remains bullish about its delivery partnership with Uber (UBER+1.48%), calling it a “$1 billion opportunity.”
Meanwhile, Domino’s is also preparing for the potential impact of President Donald Trump’s proposed tariffs. CEO Weiner stated that the company’s U.S. supply chain is largely insulated from the tariffs, as most food products are sourced domestically. However, he noted that the food basket is still expected to rise, with prices likely to increase in the first half of the year, particularly due to higher cheese prices. “Any metrics we are providing exclude any impacts from the proposed tariffs,” he added.
