Take-Out Orders Take A Slice Out Of Pizza Sales In 2021
After a hot 2020, pizza sales have been on a downtrend after people realized there's more to takeout than crispy, cheesy goodness. Fools!
For starters, the fact that pizza sales were up so much in 2020 just proves that pizza is the greatest meal of all time. In 2020, Papa John's same store sales jumped 17.6% in America. For simplicity sake, we'll use them as the index. Dominos sales were up 11.5%, way ahead of the 3.2% growth they saw in 2019. This year, however, analysts are expecting a 1% growth this year as people have gotten sick of pizza (which is madness).
Domino's (DPZ) and Papa Johns (PZZA) pizza chains both reported that their same-store sales cooled off in the fourth quarter compared to the huge increases they saw earlier in 2020. Same-store sales are expected to continue going down well into this year. Both stocks gapped down and have sold off into market weakness.
People, including myself, love ordering pizza in. However, restaurants are getting smarter and more are offering delivery. With people having more choices of what to eat, pizza chains started to suffer. In a survey of 3,500 U.S. restaurant operators last fall, the National Restaurant Association found that 27% had added delivery from a third party like DoorDash, while 17% had added in-house delivery.
The reason brewed for this drop off in pizza sales has been lack of stimulus (hey, what gives? I thought this is why we voted for our president?) as well as different types of virus strains. This COVID thing turned into Pokémon where you gotta catch them all. We also have fierce competition in restaurants needing to keep a roof over their families heads and a certain clown in New York having prevented restaurants from indoor dining. So mesh that up together and you have restaurant owners clawing back profits and taking from pizza delivery sales.
Dominos, which uses their own delivery drivers, hopes to beat out third parties like DoorDash and GrubHub by charging less for delivery and opening more spots so customers can get their food quicker. With the markets choppy and a shaken up economy, people are looking for comfort food. I know I am. Rest in peace my portfolio.
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