Here is the latest sign that changes are afoot in the US$500 billion US restaurant market: Even the pioneers of food delivery — big pizza chains — are now turning to third parties for help.
Papa John’s International Inc, trying to recover from its deep sales slump, is using DoorDash Inc in more than 1,300 of its locations.
It will be expanding that partnership in the coming months, chief executive officer Steve Ritchie said after the pizza chain reported revenue that missed analysts’ estimates.
Photo: Reuters
With Yum Brands Inc’s Taco Bell, McDonald’s Corp, Chipotle Mexican Grill Inc and others doubling down on delivery, pizza chains are starting to feel the heat.
It is by no means Papa John’s only problem: The chain reported declining revenue and an 8.1 percent drop in North America comparable sales for the latest quarter amid bad public relations stemming from founder John Schnatter’s use of a racial slur last year and his lingering dispute with management.
The results show that rivals might be eating into sales.
Delivery specialists such as UberEats “have been growing their overall share of the restaurant industry over the last 12 months. We don’t want to lose our customers,” Ritchie said in an interview. “Our goal is to certainly convert those customers over to a Papa John’s platform.”
The company has been working with DoorDash since July last year and also works with Postmates Inc.
It has been exploring working with other delivery specialists as well, a spokeswoman said in an e-mail.
“The competitors of the pizza chains were previously other pizza chains,” KPMG managing director Andrew Nolan said.
For the convenience of having food delivered straight to the door, “pizza was the only main option,” Nolan said.
However, that has changed, with other restaurants delving into delivery at full speed and “broadening the options available to the customer,” he said.
Pizza Hut has turned to Grubhub Inc for help improving and expanding delivery.
The pizza chain’s parent, Yum Brands, invested in the delivery company last year and Pizza Hut pies can now be ordered through the Grubhub mobile app.
On Wednesday, Pizza Hut said it is working with FedEx Corp to test a new robot — dubbed Bot — that is able to navigate unpaved surfaces, and even stairs, to deliver pizzas. Certain US markets might see Bot as soon as this summer.
Delivery is not the only part of the business that is changing: Consumer tastes are evolving as well.
Papa John’s also wants to cater to more sophisticated pizza preferences by offering toppings like arugula, spinach and roasted red peppers.
“There’s opportunity to lean in on the premium side of ingredients,” Ritchie said.
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