2023-07-12 11:20:48 ET
A global partnership announced on Wednesday between Domino's Pizza ( NYSE: DPZ ) and delivery specialists Uber Technologies ( UBER ) and Postmates ( POSTM ) has stirred things up in the pizza sector.
The agreement allows U.S. customers to order Domino's products through the Uber Eats and Postmates apps, with delivery via drivers from Domino's ( DPZ ) and its franchisees. The initial U.S. rollout of the agreement will begin in the fall in four pilot markets, with ordering on the Uber Eats and Postmates apps anticipated to be enabled across the country by the end of 2023.
BTIG analyst Peter Slahe said the partnership will likely boost Domino's ( DPZ ) struggling domestic delivery sales and improve franchisee economics. Northcoast Research analyst Jim Sanderson said adding Domino's to Uber's U.S. marketplace will expand the pizza brand's reach to new customers.
Meanwhile, Cowen analyst Andrew Charles thinks the global nature of the new partnership with the potential for adopting Uber Eats in up to 27 countries that cover 70% of Domino's ( DPZ ) store base positions the restaurant chain to negotiate a favorable commission rate as well as compelling data access.
"We believe these benefits are further underscored by terms of the agreement that include Uber Eats to be the exclusive third-party platform for Domino's U.S. until at least 2024. Internationally, Domino's will start assessing the transition to Uber Eats for markets that do not have an aggregator agreement in place. Orders placed on the Uber Eats platform will be delivered by uniformed Domino’s drivers."
Shares of Domino's Pizza ( DPZ ) were up 10.18% at 11:15 a.m., while those of Papa John's International ( NASDAQ: PZZA ) showed a decline of 1.85% .
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Pizza shakeup: Domino's higher after Uber deal, Papa John's falls