Domino’s Pizza Delivery Hikes Result in More Pickup Orders. Here’s Why That Matters

Domino’s Pizza experienced a soar in shares in pre-market trading following its use of proprietary promotions and loyalty programs, which defied sales expectations. However, following this recent boom, the nationwide pizza chain is starting to falter after an increase in delivery prices. Here’s what that means for the company in the long run.

Domino’s Pizza Customers Increase Pickups

Business Insider is reporting that Domino’s carryout business has increased significantly. “Our carryout business is on fire,” CEO Russell Weiner told the outlet. “This is something we didn’t even contemplate years ago.”

The difference, Weiner said, has to do with the type of customers who want delivery versus pickup. According to him, clients who order food for delivery are prepared to pay the additional costs and tip their driver because they value convenience. In addition to running its own delivery business, Domino’s Pizza provides delivery via Uber. Roughly 3% of the pizza chain’s sales come from the third-party provider.

However, Weiner added that many U.S. consumers view delivery as an “expensive convenience” and that other more cost-conscious customers understand that they can get “more than another pizza” for the money they spend on delivery costs and tips.

For another reason — control — a growing number of consumers are choosing to drive to their neighborhood Domino’s Pizza and pick up their orders. Because they are concerned about what to do in the event that something goes wrong with their delivery order or whether it will arrive on time for a party, many carryout clients prefer this choice over delivery.

Additionally, by expanding its restaurant locations and reducing the distance that customers must drive, the chain has drawn a large number of new carryout consumers by making order pickup less difficult.d

However, this increase in pickup sales has resulted in another, unexpected effect, and this time, it has to do with the price of the company’s stocks.

Stocks Are Faltering

According to MarketWatch, shares of Domino’s Pizza fell 1.82% to $417.45 on Friday, July 26. Despite the decline, the stock market saw a mostly positive trading session, with the Dow Jones Industrial Average DJIA climbing 1.64% to 40,589.34 and the S&P 500 Index SPX rising 1.11% to 5,459.10.

The stock’s decline ended a winning run of four days.

Per DefenseWorld, with a $14.60 billion market capitalization, the company has a 27.25 price-to-earnings ratio, a 2.19 price-to-earnings-growth ratio, and a beta of 0.87. With a 52-week low of $330.05 and a 52-week high of $542.75, Domino’s Pizza is currently trading at $496.84 for its 50-day moving average and $474.12 for its 200-day moving average.

Part of the dip also has to do with a huge selloff by American International Group Inc., which offloaded 8.6% of its shares during the first quarter. After selling 904 shares during the quarter, the institutional investor now holds 9,553 shares of the restaurant operator’s stock. As of American International Group Inc.’s most recent statement with the Securities and Exchange Commission (SEC), the company’s shares in Domino’s Pizza are valued at $4,747,000.

The most recent earnings report for Domino’s Pizza was released on Thursday, July 18. The restaurant operator is above the consensus estimate of $3.68 by $0.35 to record $4.03 EPS for the quarter. Domino’s met expert projections of $1.10 billion in revenue for the quarter, up 7.1% year-over-year. Additionally, the company had a 12.42% net margin and a 14.22% negative return on equity.