Shares for Domino’s Pizza surged 10% Wednesday morning, after the company announced a deal with Uber to sell its menu items through Uber Eats and Postmates starting this fall, reversing the pizza chain’s stance against working with other food delivery companies.
Shares for Domino's rose after announcing a partnership with Uber.
Domino’s shares closed at $346.70 Tuesday and rose to $385.07 as of 10:22 a.m. Wednesday, hitting their highest level so far this year.
The company announced an agreement with Uber—whose shares rose just under 1%—earlier Wednesday, allowing customers to order menu items through Uber Eats and Postmates for 70% of Domino’s locations in the U.S.
The partnership will start this fall in four “pilot” markets before expanding to the rest of the U.S. by the end of the year.
Russell Weiner, Domino’s chief executive, told the Wall Street Journal he expects the partnership to generate $1 billion in new revenue for the company.
Domino’s reported a 6.6% decline in same-store delivery sales in February, causing the company’s shares to fall by as much as 11% one day.
Weiner noted the partnership was necessary because “it’s a multibillion-dollar marketplace that sells food and pizza,” adding his company will “need to play in a big category like this.”
$104.8 million. That was Domino’s net income in the first quarter of this year, up from $91 million last year, according to its earnings report.
Domino’s executives have signaled a reluctance to work with other food delivery companies for years. Then-CEO Ritch Allison told CNBC in 2019 that the company had “a very strong and profitable delivery business,” indicating Domino’s didn’t “have to decide to get in or not” as some food delivery companies—including Uber or GrubHub—continued to grow before the pandemic. Combined revenues for Domino’s and Papa John’s increased by nearly 12% through the first nine months of 2020, according to the New York Times, as more people ordered food from home. Allison told the Times that pizza “was the perfect food for the pandemic.” As pandemic restrictions eased, Domino’s growth slowed down and same-store sales declined for the first time in over a decade. Weiner told the Journal the company began discussions with other food delivery companies last year, after some began developing loyalty programs that prevented customers from ordering directly from Domino’s.
Domino’s Pizza Strikes Deal With Uber In Search For New Sales (Wall Street Journal)