Article

Domino's climbs, Rave crashes in volatile pandemic-era pizza trading

Scale and an owned delivery system are both paying off for pizza brand, Domino's, as skittish investors show their support for the world's biggest pizza purveyor, even in panic-ridden pandemic-era times.

Pizza markets are in rough-and-tumble mode again this week, as the pandemic continues to toy with investors preferences. (Photo: iStock)

March 30, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

In the business of pizza restaurant company trading in this pandemic-poisoned era, scale and ease of delivery are paying off for the world's largest such brand, Domino's. Last week, the mega-brand's values were trading at levels just below some of the highest values recorded for the brand since its IPO in July 2004. 

At the close of trading Friday, Domino's reached $338.74, up $38.79 from the previous Friday's closing value and back up toward its all-time high on Feb. 26 of $377.25, just before the pandemic truly punched the U.S. restaurant industry in the gut.

Domino's major U.S. competitors at Papa John's and Pizza Hut did not fare as well, but still showed that right now the size of a chain and its ability to deliver easily to customers, is paying dividends. 

At Pizza Hut parent, Yum Brands — which said it would close 1,000 Express locations last week due to COVID-19 — investors still responded warmly by raising the brand $10.45 in value to $68.53 at the close of markets Friday. Though still well below the highs the brand achieved with investors in early February (in the $106-range), the uptick was assuredly good news amidst the overall pandemic-induced palor for pizza brands across the restaurant currently. 

Papa John's International, Inc., which announced it was hiring 20,000 delivery drivers last week, was down slightly last week to close Friday at $50.59, off 41 cents from the previous Friday. But by far the biggest proportionate loser last week was double-restaurant company, Rave Restaurant Group. Shares of Pizza Inn and Pie Five parent hit an all-time low Friday when they closed down 6 cents to 80 cents Friday, despite announcing its clever "buffet-to-go" initiative for Pizza Inn, designed to boost takeout and delivery business amidst the pandemic. 

Cheese prices push downward

Elsewhere among the pizza restaurant commodities markets last week, there were some operational savings to be had on the outlays operators pay for essentials like cheese and auto fuel, which both dropped in price reflective of both world gas markets and U.S. consumer demand in the shelter-in-place situations many are now living with. 

In cheese trading, average block prices fell 11 cents to $1.76, while barrel prices fell 4 cents to $1.41. Closing values for barrels on the Chicago Mercantile Exchange were put at $1.34, according to the U.S. Department of Agriculture, while 40-pound block ended at $1.59. 

Much of the movement on cheese markets comes as the result of shifting consumer demands for cheese, which now favor retail over what the U.S.D.A. views as "faltering" restaurant ordering." The department said that overall, cheese market tones -- like most dairy commodity markets -- are "not in a good place," with a large block to barrel price gap, combined with slipping prices. 

Wheat prices walk up

Wheat prices nationally have not helped pizza operators much on their expenditures for dough production, since cash bids for wheat were higher last week.  
Wheat was 1 1/2 cents to 35 cents higher. Kansas City U.S. no. 1 hard red winter, ordinary protein rail bid, was 31 ¾ cents higher, from $6.07 1/4-$6.17 1/4 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 34 cents higher at $6 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, from $6.61 1/4-$6.81 1/4 per bushel. Portland U.S. soft white wheat rail was 25 to 35 cents higher, from $6.05-$6.15 per bushel.

Auto fuel prices continue to plummet

According to the American Automobile Association, gas prices not only fell 6 cents nationally over fewer than five days, but the national average of $2.01 for a gallon of regular has returned to the levels we paid four years ago in March 2016. 

Pump prices continue to decline around the country as oil prices have decreased significantly in response to the increasing public health, financial and economic impact of COVID-19 and the crude price war between Russia and Saudi Arabia. 

New data from the Energy Information Administration reveals that with many Americans staying at home and practicing social distancing, gas demand dropped dramatically — from 9.7 million b/d to 8.8 million b/d — in mid-March. Gas demand is likely to continue decreasing and push gas prices cheaper, AAA said. 

The averages for a gallon of regular ($2.01) mid-grade ($2.40), premium ($2.66) and diesel $2.61, all fell 10 cents to 14 cents over the last full week, with regular showing the biggest drop. 

The price decrease was not as steep for diesel ($2.61) and E85 ($1.81) fell 6 cents and 8 cents respectively over a full week's time. And all fuel prices were down substantially from last month and particularly last year, when, for instance, the price of a gallon of regular was a full 68 cents higher than it is currently. 

Natural gas values rise

Finally, over the last week, natural gas spot prices rose at most U.S. locations. Henry Hub spot price rose from $1.65 per million British thermal units (MMBtu) to $1.71/MMBtu, over the seven das that ended March 25.

At the New York Mercantile Exchange, the price of the April 2020 contract increased 6 cents, from $1.60/MMBtu to $1.66/MMBtu over that same seven days. The price of the 12-month strip — averaging April 2020 through March 2021 futures contracts — climbed 10 cents/MMBtu to $2.18/MMBtu, according to the U.S. Energy Information Administration.

About S.A. Whitehead

---

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.