Food & Beverage

Domino's, Pizza Hut score on brand reputation, stock value

The Colonial Pipeline ransomware attack is sucking cash out of pizza operators' pockets in the form of higher gas prices, but generally lower prices for other commodities and some good news on the reputation front for two pizza brands is brightening the picture.

Photo: iStock.

May 24, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

For many in the pizza restaurant sector, one of the most precious "commodities" is their brand's reputation with consumers. That being so, at least two of the brands Pizza Marketplace tracks weekly here in the Commodities Report, have scored on at least one national consumer measurement of business brand reputation.

According to this year's Axios Harris Poll 100 reputation rankings released last week, both Domino's and Pizza Hut parent, Yum Brands, made it into the "good" reputation categories on this year's list, falling at No. 57 and No. 70, respectively. The annual list of 100 major U.S. business brands' reputations is based on Americans perceptions of the same along with 20 years of Harris Poll research. Neither Papa John's, Rave Restaurants Group's brands or any other pizza brands were included in the top 100 this year, in which brands ranked from 82 to 100 were rated as being fair to poor range.

Meanwhile, back on the traditional markets, including the ones where investors vote with their dollars — a.k.a. Wall Street — Domino's and Pizza Hut parent, Yum Brands, also managed to land in good stead with traders, who helped to push both brands' values up slightly over the trading week. Domino's managed to grow its value by 71 cents over the week, closing Friday at $427.65. Meanwhile, Yum Brands added 44 cents on the week to come in Friday at $119.71 at the closing bell.

On the losing side last week, was Louisville, Kentucky-based Papa John's which closed at $92.19 Friday, down from $96.65 the previous Friday's close. Finally, Pizza Inn and Pie Five parent, Rave Restaurant Group fell 3 cents on the week to close at $1.31.

Cheese

On the Chicago Mercantile Exchange, cheese prices trended lower, with barrels average $1.64, off 9 cents and blocks losing an average of 16 cents on average at $1.61, according to the U.S. Department of Agriculture. Barrels closed at $1.61 Friday, while 40-pound blocks ended up at $1.57.

Cheese producers report that they are running active schedules in all regions. The U.S. Centers for Disease Control and Prevention has updated its recommendations around COVID-19 restrictions as well, thanks to lower infection rates and an increase in the vaccinated population. That, in turn, has given some U.S.D.A. cheese contacts bullish near-term viewpoints regarding foodservice sales. However, demand notes this point are mixed, and in some cases, bearish, the department said, though pizza cheese producers report continually steady sales.

Wheat

Wheat prices closed down generally this week with Chicago Board of Trade soft red winter futures dropping 53 cents, ending at $6.74 per bushel. On the Minneapolis Grain Exchange, hard red spring wheat futures fell 45 cents to end up at $7 per bushel, while in Kansas City, hard red winter came in at $6.24, down 27 cents per bushel, the U.S.D.A. said.

Auto fuel

Gas prices are recovering a week after the cost hikes that followed a ransomware attack on the key Colonial Pipeline that ceased operations for several days, seriously affecting East Coast and Southeastern U.S. gas deliveries. In fact, the American Automobile Association reports that the national average for a gallon of regular gasoline held steady at $3.04 for six days following the May 6 attack.

According to new data from the U.S. Energy Information Administration, total domestic refinery utilization increased slightly to 86.3% last week, while total domestic supply fell by 2 million barrels to 234.2 million barrels, just as demand increased from 8.8 million barrels per day (b/d) to 9.2 million b/d.

AAA said that as the gasoline distribution system continues to recover from the attack, while also grappling with a shortage of gasoline tanker drivers, higher refinery utilization rates will ensure gas gets to where it's most needed, but AAA said we could see some fluctuation this week with the lead-up to Memorial Day weekend, during which the association forecasts 34 million Americans will take road trips.

Meantime, last week the biggest increases in gas price averages were in West Virginia (up 7 cents), North Carolina (up 5 cents) and Pennsylvania, Nevada, Colorado, Oregon, Wyoming Washington, D.C. and California, which were all up 4 cents.

The average paid for a gallon of regular this morning was reported at $3.04, down a penny from a week earlier, but still 15 higher than last month. At $3.38 and $3.65 respectively, mid-grade and premium gas prices followed a similar trajectory over the same time period. Diesel came in at $3.18 up a penny from last week, but a dime from last month at this time. At $2.54, E85 was even with last week's price, but still a dime higher than last month at this time.

Natural gas

Natural gas spot price movements were mixed for the seven days that ended May 19, with the Henry Hub spot price falling from $2.90 per million British thermal units (MMBtu) to $2.88/MMBtu over that period.

The price of the June 2021 NYMEX contract was unchanged at $2.96/MMBtu. The price of the 12-month strip averaging June 2021 through May 2022 futures contracts climbed 2 cents/MMBtu to $3.03/MMBtu.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 12 cents/MMBtu, averaging $7.61/MMBtu for the period. The price of ethane rose 3% week over week, as healthy domestic petrochemical activity and the increased pace of loadings at Gulf Coast export terminals grow total demand to the U.S. Energy Information Administration estimates will be the highest levels to date.

Prices of propane rose 1% week over week, reflecting a relatively flat market for this time of year. EPA's waiver of gasoline RVP limits related to the Colonial Pipeline shutdown remained in place through May 18, allowing for higher blending of butanes into motor gasoline and for average week-on-week prices of normal butane and isobutane to rise by 4%, and 3%, respectively. The price of natural gasoline fell by 1%.

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.