Article

Commodities: A tale of 2 papas

A short trading week still revealed plenty about the current restaurant pizza market in the popularity, or lack thereof, of two brands with different approaches to their customers' needs.

November 27, 2017 by S.A. Whitehead — Food Editor, Net World Media Group

In a three-day trading week, commodities showed a mix of trends last week, including the surprising rate of falling gas prices. But as those necessities go through their regular ups and downs, the real story might be in the contrasting fates of the two "papa" brands monitored by this site: The rapidly devolving Papa John’s, and the steadily growing Papa Murphy’s. Taken together, their stories are instructive on the pitfalls of a vocal, often controversial CEO and the value of being on the right trend at the right time.

Cheese 
Cheese is down 10 cents over the last two weeks' trading, settling at $1.61 before markets closed at the end of the most recent shorter trading week. That’s down 1 cent from the previous Friday’s close and up 1 cent from the beginning of the week when it stood at $1.60. 

Wheat
Wheat trading was mixed over the three days of activity last week, trading from 18 1/2 cents lower to 8 cents higher. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 4–6 cents higher at $4.68–$5.96 per bushel. Kansas City U.S. No. 2 Soft Red winter rail bid was not quoted.  

St. Louis truck U.S. No. 2 Soft Red Winter terminal bid was 2–8 cents higher, at $4.37–$4.38 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14 to 14.5 percent protein rail, was 18 1/2 cents lower to 1 1/2 cents higher, at $7.46 3/4–$7.96 3/4 per bushel.  

Portland U.S. Soft White wheat rail was steady to 1 3/4 cents lower at $5.17 3/4–$5.35 per bushel.

Gasoline and diesel fuel

Natural gas

Natural gas spot prices fell at most locations in the week before Thanksgiving. The Henry Hub spot price falling from $3.15 per million British thermal units in early November  to $3.11/MMBtu by the middle of the month. 

At the New York Mercantile Exchange, the December 2017 contract price fell 9 cents, from $3.175/MMBtu last Wednesday to $3.080/MMBtu yesterday.

Net withdrawals from working gas totaled 18 billion cubic feet for the week ending Nov. 10. Working natural gas stocks are 3,772 Bcf, which is 7 percent lower than the year-ago level and 3 percent lower than the five-year (2012–2016) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose 3 cents, averaging $8.26/MMBtu for the week ending Nov. 15. The price of ethane fell 3 percent. The prices of propane, butane, and isobutane rose 1, 3 and 3 percent respectively. The price of natural gasoline remained flat week over week.

Pizza company stocks

Domino’s healthy gains of last week (up $5.32) faltered, but the fall wasn’t too steep, and the brand closed Wednesday at $177.34, down $1.31 from the previous Friday’s close of $178.65. Meanwhile, Pizza Hut parent Yum Brands gained 58 cents over the short trading week, rising to $79.18 from $78.60 at the previous Friday’s close. 

But the real news revolves around Papa John’s and its steep and speedy race downward in trading price, closing Wednesday at $56.27, down another $1.22 from the previous Friday’s price of $57.49. The brand has been declining since February when its price hit a high-water mark of slightly more than $86. The most dramatic fall came at the end of October with CEO John Schnatter’s remarks about the alleged effects of the NFL kneeling controversy on the brand’s performance. 

As Papa John's has lost value, the smaller take-and-bake concept, Papa Murphy’s has steadily risen in value all year, closing Wednesday at $6.29. That’s up from its January 2017 price of $4.36, and from the previous week's price of $5.98. Whether the growing value is indicative of consumers' growing love for all things eaten at home remains to be seen, but surely it was a happier Thanksgiving at Papa Murphy’s offices than at those of Papa John’s. 

Photo: iStock

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.