Domino’s and Pizza Hut are in an everlasting battle for the top spot among U.S. pizza consumers as fast-casual pizza upstarts nip at their heals.
The first quarter was an interesting one, as Domino’s had been surging ahead of Pizza Hut in 2015, but in the recent earnings report the company slowed down some. While the 6.4 percent same-store sales growth is nothing to sneer at, it breaks a five-quarter streak of double-digit comparable gains.
Pizza Hut, on the other hand, accelerated with a 3 percent same-store sales growth as parent Yum Brands has put more resources behind a turnaround for the concept. That’s a significant bump from the 2 percent dip in same-store sales for 2015. The surge comes as “value price points gain traction in the competitive pizza space,” wrote Andy Barish, a restaurant analyst at investment firm Jefferies. With the spinoff of Chinese operations expected this year, Pizza Hut U.S. will have more bandwidth to work in the very different U.S. market in 2017 and beyond.
Still, Domino’s has a significant leg up in technology. The heavy investment in ordering and loyalty technology has clearly paid off. The rollout of the Piece of the Pie in 2015 has provided a significant tailwind for the company. And as more customers shift from phone to online and mobile ordering, Domino’s is positioned to perform incrementally better.
Both concepts are, however, looking to increase their share of the carryout market. Surprisingly the carryout pizza segment market is larger in the U.S. than the delivered pizza market, according to a report from Mark Kalinowski, an analyst at Nomura, a financial services company. Currently the segment is dominated by independent restaurants, but expect the titans to look closely at the carryout game.