Food & Beverage

Papa is pleased: Good week for pizza trading is great week for Papa John's

Last week's positive Q1 earnings report for Louisville, Kentucky-based Papa John's made for very happy investors, as the brand posted a pick-up in value over the week's trading. Meantime, cheese trading also rebounded, with prices trending up thanks to increased food service demand.

Photo: iStock

May 11, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

Papa John's International Inc. was the story last week in pizza trading, when — after release of the brand's very positive Q1 earnings results — investors showed their love for the Louisville, Kentucky-based pizza power by catapulting its value up $9.63 in value over the trading week to close Friday at $81.20. 

But it was a good week for all of the publicly traded pizza stocks monitored here weekly, with all four posting gains on the week. For Domino's Pizza, Inc., the upward bounce in value last week added another $11.81 to the stock's value of $369.11 when markets closed Friday. 

For Pizza Hut parent, Yum Brands Inc., the earnings for the week were up $2.37 to $86.18. Pizza Inn and Pie Five parent, Rave Restaurant Group Inc., also toasted a 9-cent increase in value on the week when that stock closed Friday at 91 cents. 

Elsewhere in commodities trading last  week, the news for pizza restaurateurs was not as positive, with price increases in cheese, auto fuel and even natural gas, due to a pair of gas line ruptures nationally. 

Pipeline explosions trim U.S. natural gas supply

Natural gas spot price movements grew for the seven-day period that end on May 6 last week, with the Henry Hub spot price up from $1.70 per million British thermal units (MMBtu) to $1.88/MMBtu over that period, according to the U.S. Energy Information Administration. 

At the New York Mercantile Exchange, the price of the June 2020 contract increased 8 cents, from $1.87/MMBtu to $1.94/MMBtu yesterday. Prices at key trading hubs generally reached weekly highs last Tuesday after a Monday explosion on the Texas Eastern Transmission, or TETCO pipeline. Then — and also Monday — Enbridge, Inc. reported a pipeline rupture at the TETCO system near the Owingsville Compressor Station outside of Lexington, Kentucky that restricted movement of natural gas out of the Appalachia-producing region. 

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 25 cents/MMBtu, averaging $3.35/MMBtu for the seven days. The prices of butane and isobutane fell by 3% and 6%, respectively. The price of propane remained flat week over week. High reliance on ethane as petrochemical feedstock resulted in ethane prices rising 20%. Natural gasoline prices rose by 31%.

Cheese prices kick it up a notch

Last week in cheese trading, prices grew for both barrels and blocks, with the average for barrels coming in 10 cents higher than the previous week at $1.25, while blocks were 8 cents higher at $1.28. Barrels closed at $1.27 and 40-pound blocks at $1.31. 

Cheese market tones, demand and production have changed markedly from previous weeks. Cheese market prices have rebounded, after reaching COVID-19-related lows. Buyers in both the restaurant industry and retail are actively taking on more of the commodity, with food service customers who held back through April, now beginning to reengage with cheese markets. 

Plant managers have responded. According to the U.S. Department of Agriculture, the same lines that were all but down as recently as the previous week, are now up and running six days per week. 

Wheat prices wane

Wheat — fortunately for pizza operators — was mostly lower, last week, ranging from 9 1/4 cents lower to 3 cents higher, the U.S.D.A. said. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 9 ¼ cents lower, from $5.49 3/4-$5.59 3/4 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 5 cents lower, at $5.44 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, came in at $5.96 per bushel. Portland U.S. Soft White wheat rail was 5 cents lower to 3 cents higher, from $6-$6.08 per bushel.

Auto fuel prices pump it up

Over the week last week, the national average for a gallon of regular gasoline increased by 3 cents to $1.81, which is 4 cents higher than a week ago, in a reversal of recent downward trends for the commodity. Nonetheless, the American Automobile Association said that prices were generally 10 cents lower than a month ago, and $1.07 lower than last year at this time, indicating the overall price reductions in the U.S. since stay-at-home orders took effect in March. 

The U.S. Energy Information Administration released new data that showed demand for gasoline increased by 800,000 barrels a day to 6.7 million b/d last week, which is 3.2 million b/d less than last year at this time. The boost in demand continues to push pump prices up around the country, as more states re-open businesses. 

The four states with the biggest weekly gas price increases were Wisconsin (up 33 cents), Ohio (up 26 cents), Michigan (up 25 cents) and Indiana (up 22 cents), AAA said. The average price for a gallon of regular today was $1.85, up 7 cents from the price seven days ago. Similar increases were recorded for mid-grade ($2.21) and premium ($2.47), while the price of diesel at $2.42 was actually down a penny and E85, at $1.73, was up 8 cents from the previous week.

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.