Super Bowl Sunday is for pizza delivery firms what Black Friday is for retailers — one of the busiest days of the year. And nobody delivers more pies on Super Sunday than arch rivals Domino's Pizza and Papa John’s.
Last February, for example, the Super Bowl boosted Papa John’s sales a full percentage point. And this Sunday, Domino's — nearly twice as big as its smaller rival — expects to serve up 1.2 million pies. But during the rest of year, it’s a zero-sum game between these rivals, notes Oppenheimer analyst Mike Smith.
“If one of those companies is successful for a period of time because of a promotion they are running, they are basically taking it out of the hides of one of the others,” Smith said.
With similar business models, these two pizza makers make up one of the few pure-play rivalries around, but which one will deliver for your portfolio?
Domino’s holds about 12 percent of the pizza delivery market, while Papa John’s has about 7 percent. Still, franchisees who have switched from Domino’s to Papa John’s see an opportunity. They say they are getting in on a company they believe has room to grow.
Take Papa John's franchise owner Kevin Sullivan, for example. He says many franchisees like him, that were doing very well with Domino’s, have made the switch to Papa John’s because they believe it has a better product and better service.
It’s certainly true that a reputation for using fresh ingredients has earned Papa John’s higher marks in consumer surveys, but it hasn’t translated into better earnings.
Papa John’s profit is expected to rise just 3 percent this year, with planned store closings and a management change in the works for the company. Meanwhile, profit at Domino’s is expected to rise 11 percent this year. And since the company went public in July, Domino’s has seen its share price outperform that of Papa John’s.
The key question now is whether “the market has accepted another public pizza company” notes Oppenheimer’s Mike Smith. Papa John’s and Domino’s have very similar systems, he adds, and Papa John’s is basically a Domino’s copy.
But whoever wins on Wall Street or on the gridiron this Sunday, one thing’s for certain: Franchisees like Kevin Sullivan will be hoping they hear from plenty of pizza-hungry football fans.