Domino’s Leads the Pizza Industry: Insights from Fox Business
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Pizza may not hold the same allure as a go-to delivery meal, but one player is still dominating, according to industry analysts.
The pizza industry is grappling with heightened competition, not only from other cuisines but also from within its own ranks. Despite this, Domino’s has “regained its crown” over the past two years, as noted by Sara Senatore, a senior restaurant analyst at Bank of America Securities, in an interview with FOX Business.
Interestingly, this resurgence isn’t due to a newfound love for pizza among consumers. Instead, Senatore attributes Domino’s success to its strong emphasis on value, expansive marketing, advanced technology, and customer loyalty initiatives spearheaded by CEO Russell Weiner.
DOMINO’S REBRANDS FOR FIRST TIME IN OVER A DECADE
“If Domino’s is going to outpace the industry meaningfully, which it is… that share has to come from somewhere else,” Senatore explained. “And that is presumably coming from Papa John’s and Pizza Hut among other restaurants.”
This year, Domino’s launched a partnership with DoorDash, creating a new distribution channel. While this move has bolstered the pizza chain’s competitive stance, Senatore emphasizes that it is not the sole reason for its thriving business.
Domino’s signage showcasing its brand refresh. (Domino’s )
DOMINO’S PIZZA DEBUTS STUFFED CRUST IN EFFORT TO BOOST SALES
Domino’s has also focused on enhancing its value proposition, including an improved loyalty program and a strategic advertising approach. “They’re being very sharp on value and they’re very strategic about what they advertise, how they advertise,” Senatore remarked. “They’re leveraging their substantial advertising budget, which is four times or more the size of their nearest competitors.”
The company has made it easier for customers to join its loyalty program by lowering entry costs and adding more tiers for point redemption.
Pizzas are prepared for a delivery order at a Domino’s restaurant in Trenton, Michigan, US, on Wednesday, April 10, 2024. (Nic Antaya/Bloomberg via Getty Images)
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Senatore highlighted a “virtuous cycle” where Domino’s loyalty program attracts more users, making it easier to market directly to them. The more successful the loyalty program, the more customers it garners, enhancing its effectiveness.
This strategy has significantly contributed to Domino’s resurgence. In the third fiscal quarter, sales at U.S. locations grew by 5.2% year over year. In contrast, sales at Papa John’s North America stores fell by 3%, while Pizza Hut U.S. stores saw a decline of 6%. Little Caesars, another competitor, remains privately held and does not disclose earnings.
Domino’s growth is particularly noteworthy given the slow growth and increasing competition within the pizza category. “There’s certainly more competition for the pizza delivery dollar,” Senatore observed, emphasizing that while the pizza category may grow at a steady pace, competition within it has intensified.
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Mark Wasilefsky, head of restaurant and franchise finance at TD Bank, noted that pressures in the pizza industry have escalated in recent years, driven by both internal competition and broader shifts in the food sector.
“Given the small amount of space and relatively simple equipment requirements, pizza has some of the lowest barriers to entry of any cuisine, making small local shops easy to set up and creating more ongoing competition,” he explained.
Papa John’s International Inc. signage is displayed on top of a delivery vehicle outside the company’s restaurant in Nashville, Tennessee, U.S., on Thursday, Feb. 9, 2017. (Luke Sharrett/Bloomberg via Getty Images)
Wasilefsky also pointed to sweeping changes across the restaurant industry that have fundamentally altered the economics of the pizza business. “For decades, the pizza business model was built on a foundational monopoly on delivery,” he explained. “Pizza was the only scaled option delivered directly to consumers, aside from some Asian cuisine.”
This monopoly allowed operators to invest significantly in delivery fleets, which contributed to healthy profit margins. However, the pandemic drastically changed this landscape, accelerating the adoption of mobile ordering and the rise of third-party delivery apps.
“Pizza has forever lost this basic tenet of their business model, and they have yet to recover,” he concluded.
‘Barron’s Roundtable’ panelists break down the Magnificent Seven and other stocks gaining traction.
Pizza may not hold the same allure as a go-to delivery meal, but one player is still dominating, according to industry analysts.
The pizza industry is grappling with heightened competition, not only from other cuisines but also from within its own ranks. Despite this, Domino’s has “regained its crown” over the past two years, as noted by Sara Senatore, a senior restaurant analyst at Bank of America Securities, in an interview with FOX Business.
Interestingly, this resurgence isn’t due to a newfound love for pizza among consumers. Instead, Senatore attributes Domino’s success to its strong emphasis on value, expansive marketing, advanced technology, and customer loyalty initiatives spearheaded by CEO Russell Weiner.
DOMINO’S REBRANDS FOR FIRST TIME IN OVER A DECADE
“If Domino’s is going to outpace the industry meaningfully, which it is… that share has to come from somewhere else,” Senatore explained. “And that is presumably coming from Papa John’s and Pizza Hut among other restaurants.”
This year, Domino’s launched a partnership with DoorDash, creating a new distribution channel. While this move has bolstered the pizza chain’s competitive stance, Senatore emphasizes that it is not the sole reason for its thriving business.
Domino’s signage showcasing its brand refresh. (Domino’s )
DOMINO’S PIZZA DEBUTS STUFFED CRUST IN EFFORT TO BOOST SALES
Domino’s has also focused on enhancing its value proposition, including an improved loyalty program and a strategic advertising approach. “They’re being very sharp on value and they’re very strategic about what they advertise, how they advertise,” Senatore remarked. “They’re leveraging their substantial advertising budget, which is four times or more the size of their nearest competitors.”
The company has made it easier for customers to join its loyalty program by lowering entry costs and adding more tiers for point redemption.
Pizzas are prepared for a delivery order at a Domino’s restaurant in Trenton, Michigan, US, on Wednesday, April 10, 2024. (Nic Antaya/Bloomberg via Getty Images)
KFC BRINGS BACK A TASTE OF NOSTALGIA WITH FAN-FAVORITE ITEM
Senatore highlighted a “virtuous cycle” where Domino’s loyalty program attracts more users, making it easier to market directly to them. The more successful the loyalty program, the more customers it garners, enhancing its effectiveness.
This strategy has significantly contributed to Domino’s resurgence. In the third fiscal quarter, sales at U.S. locations grew by 5.2% year over year. In contrast, sales at Papa John’s North America stores fell by 3%, while Pizza Hut U.S. stores saw a decline of 6%. Little Caesars, another competitor, remains privately held and does not disclose earnings.
Domino’s growth is particularly noteworthy given the slow growth and increasing competition within the pizza category. “There’s certainly more competition for the pizza delivery dollar,” Senatore observed, emphasizing that while the pizza category may grow at a steady pace, competition within it has intensified.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Mark Wasilefsky, head of restaurant and franchise finance at TD Bank, noted that pressures in the pizza industry have escalated in recent years, driven by both internal competition and broader shifts in the food sector.
“Given the small amount of space and relatively simple equipment requirements, pizza has some of the lowest barriers to entry of any cuisine, making small local shops easy to set up and creating more ongoing competition,” he explained.
Papa John’s International Inc. signage is displayed on top of a delivery vehicle outside the company’s restaurant in Nashville, Tennessee, U.S., on Thursday, Feb. 9, 2017. (Luke Sharrett/Bloomberg via Getty Images)
Wasilefsky also pointed to sweeping changes across the restaurant industry that have fundamentally altered the economics of the pizza business. “For decades, the pizza business model was built on a foundational monopoly on delivery,” he explained. “Pizza was the only scaled option delivered directly to consumers, aside from some Asian cuisine.”
This monopoly allowed operators to invest significantly in delivery fleets, which contributed to healthy profit margins. However, the pandemic drastically changed this landscape, accelerating the adoption of mobile ordering and the rise of third-party delivery apps.
“Pizza has forever lost this basic tenet of their business model, and they have yet to recover,” he concluded.
