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Russell Weiner, the CEO of Domino’s, went on a defense of the fast-food pizza market, arguing that the market is not as much of a problem as it would seem based on the performance of some of the chain’s competitors.
Almost like clockwork, Papa Johns said that its same-store sales declined 5%. It is now closing locations, cutting staff and culling operationally complex items from its menu. That follows news that Pizza Hut is closing 300 locations. Both chains have had challenges for two years.
We examined the market and found that it has stagnated those past two years, which is what happens when two of the four biggest chains are bleeding sales like that. To Weiner, Domino’s is taking share from those two rivals, which is most certainly true. But the pizza business is largely a commodity at this point, and it appears one that is shedding occasions.
Pizza is likely suffering from two afflictions right now. First, a lot of its customers are cutting back on occasions because of inflation. Second, third-party delivery has siphoned off customers.
Domino’s did an incredible job of courting carryout customers, far more than did either Papa Johns or Pizza Hut. That decision alone is probably helping the chain weather the third-party storm more than the others.
This week’s financial news
Sweetgreen. My goodness.
Burger King is upgrading the Whopper as the first part of a menu elevation effort. Its franchisee profitability took a hit last year because of beef prices.
McDonald’s has been arguing that it needs a bigger burger. We’ll see if that’s true.
Expect another “choppy” restaurant environment this year.
Chipotle and Sweetgreen may be having challenges but Cava seems to be doing just fine.
Casual-dining operators sure seem bullish right now. Applebee’s did well. Red Robin says its turnaround plan is working. And BJ’s customers just love those Pizookies. Oh, and Outback did something positive.
Schlotzsky’s is changing its name again and hopes this will be the last time.
Krispy Kreme’s stock had its best day maybe ever on Thursday thanks to some profitability progress.
Number of the week
The red line on that graphic shows sales growth in the fast-food pizza market in the U.S. Notice the trendline.
Quote of the week
“If you touch the Whopper too much, you’re going to piss a lot of people off.” -Burger King Head Chef Amy Alarcon on why the company made only subtle improvements to its signature sandwich.
On the blog
I wrote about the pizza market, the choppy restaurant environment and Burger King profitability. Check out all my blog posts on The Bottom Line.
On the podcasts
On A Deeper Dive I talked with Five Guys CMO Molly Catalano on changes the company is making. On The Week in Restaurants we talked about casual-dining earnings, the pizza market and Burger King.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.