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June starts on high note: Domino's, Pizza Hut, Papa John's values up, gas prices down

How do you make a pizza brand leader croon a little at the start of summer? Push up their brand's stock values and keep things like the price of gas low.

June 10, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

With commodity prices remaining manageable and Domino's, Papa John's and Pizza Hut parent, Yum Brands, seeing increases in stock prices, the first full week of June 2019 finds major brands' pizza leaders with ever-widening smiles on their faces as the pizza industry officially heads into summer. 

Cheese

On the cheese markets, the weekly average paid for barrels dropped 3 cents to $1.51, while blocks again trended up about 4 cents last week to average $1.73 on the week. Closing prices for barrels were $1.54 for barrels and $1.75 for 40-pound blocks, according to the U.S.D.A. Agricultural Marketing Service. 

Though the U.S. overall demand for cheese is steady to improving in most parts of the nation, according to the U.S.D.A., food service orders have fallen as summer breaks have begun, or will soon begin, in school districts across the country, signaling the start of a drop in demand for that sector. 

Wheat

Compared to last week, cash bids for wheat were mixed, with prices ranging from 13 3/4 cents lower to 36 1/2 cents higher. Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 13 3/4 cents lower, from $5.80 1/4-$5.90 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 9 cents lower, from $5.38-$5.43 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 16 1/2 to 36 1/2 cents higher, from $6.65-$6.85 per bushel. Portland U.S. Soft White wheat rail was steady to 2 cents higher, from $5.75-$6.07 per bushel.

Vehicle fuel

The American Automobile Association's 2019 Gas Price survey found that over just the last three years, Americans have become far less sensitive or alarmed by higher pump prices. In fact, this year AAA found that half of consumers today think paying $3 per gallon is too high. That high-water mark this year is actually a substantial 30-cents more per gallon than last year when half of consumers said $2.70 would be what they consider a "too high" price at the pump. 

The good news with that trend for pizza restaurateurs is that though Americans still cut back when they find pump prices "too high," they are far less likely to cut back on eating out than they were last year when that happens, according to AAA.  For example, 49 percent said they'd eat out less if gas prices were above that $3 mark, down from 61 percent of those surveyed who said they would eat out less if prices were too high just last year, when consumers defined that as just $2.70 a gallon. 

Fortunately at the moment, the average price for a gallon of regular is staying well below the $3 mark, coming in at an average of $2.75 on average this morning. That's a substantial 17 cents a gallon lower than what we paid last June 10. Mid-grade ($3.08), premium gas ($3.34) and even diesel ($3.05) followed the same trend. E85 prices however have been less dramatically affected over the last year, with the average price of a gallon of that fuel coming in around $2.37 today, just about 9 cents lower than last year's average price for the alternative fuel. 

Natural gas

Natural gas spot prices fell at most locations for the report week that ended on Wednesday, June 5, according to the U.S. Energy Information Administration. Henry Hub spot prices fell from $2.63 per million British thermal units (MMBtu) to $2.39/MMBtu over that period. 
At the New York Mercantile Exchange, the June 2019 contract expired June 5 at $2.63/MMBtu. The July 2019 contract decreased to $2.378/MMBtu, down 25 cents/MMBtu over the same seven-day period. The price of the 12-month strip — averaging July 2019 through June 2020 — futures contracts declined 16 cents/MMBtu to $2.55/MMBtu.

Net injections to working gas totaled 119 billion cubic feet (Bcf) for the week ending May 31. Working natural gas stocks are 1,986 Bcf, which is 10% more than the year-ago level and 11% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 54 cents/MMBtu, averaging $4.81/MMBtu for the seven days ending June 5. The price of butane, natural gasoline, isobutane, propane, and ethane all fell, by 14, 12, 11, 9 and 8%, respectively.

According to Baker Hughes, for the seven days ending May 28, the natural gas rig count dropped by two, to 184. The number of oil-directed rigs rose by three to 800. The total rig count increased by one, and it now stands at 984.

Pizza company stocks

The first full week of June was pretty good to publicly traded pizza brands, with Domino's, Pizza Hut and Papa John's all reporting healthy gains in value last week. On the New York Stock Exchange, Domino's traded up $7.50 when it closed Friday at $287, up from $279.50 the previous Friday. 

For Pizza Hut parent, Yum Brands, traders were equally affectionate last week, wrapping up Friday at $109.07, $6.72 higher than the previous Friday's close of $102.35 on the NYSE. Finally, over on the Nasdaq, Louisville, Kentucky-based Papa John's International Inc. closed up $2.11, settling in Friday at the close at $50.58.  

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.