January 2, 2017

Pizza Growth Good for Dairy Producers

 |  By: Mike Opperman

In a year when U.S. restaurant chains have seen sluggish traffic, one food segment that has continued to thrive is pizza.

As an example, shares of Domino’s Pizza Inc. are up 45 percent this year. That’s compared to a 3.4 percent gain for the Standard & Poor’s 500 Restaurants Index.

The reasons are pizza is cheap, fast and increasingly easy to get -- thanks to user-friendly mobile-ordering apps and technology that lets diners order from Facebook, Twitter and even Apple TV. That’s helped insulate pizza chains from a shift away from eating out.

The U.S. restaurant industry has largely been mired in a slump. Some have blamed negativity around the election, and now uncertainty about the president-elect’s planned policies on issues such as immigration and minimum wage. Cheaper wares at supermarkets, driven by food deflation, also are enticing Americans to save a buck by cooking at home. Yet, diners’ pizza habits haven’t been hurt.

Domino’s same-stores sales gained 13 percent in the U.S. in the third quarter of 2016, marking 22 consecutive quarters of growth. Much of that has come through investments in technology, including one-click ordering and its online loyalty program.

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Domino’s said earlier this week that customers can now order through Google Home. It’s the fifth ordering method to be added this year. Diners also can request Domino’s food through Twitter and Facebook. The chain’s rewards program, introduced last year, lets customers get a free medium pizza for every six orders. With its newest program rewards members can win shares of Domino’s stock through next November.

An increase in pizza sales is good news for dairy producers. Generally speaking it takes about 10 pounds of milk to make a pound of cheese, and about 25 percent of all cheese produced in the United States ends up on pizza.  The dairy checkoff program began a partnership with Domino’s in 2008. Domino’s now uses 43 percent more cheese that it did then, and in 2015, Domino’s moved more than 230 million additional pounds of milk versus 2014. Certainly continued growth by Domino’s should point to more milk movement in 2016.

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