Why Domino’s Pizza Shares Are Surging Today

In a bold step forward for the fast-food industry, leading pizza chain Domino’s Pizza Inc. (DPZ) has announced a unique worldwide collaboration with Uber Technologies Inc. (UBER). The announcement sent Domino’s shares skyward with a robust 10.4% increase, whilst Uber experienced a modest rise of 0.41%. However, the financial intricacies of the partnership are yet to be divulged.

This innovative move enables U.S. consumers to indulge in Domino’s menu items through the convenience of Uber Eats and Postmates apps, with all deliveries carried out by Domino’s own uniformed personnel. Beginning with four test markets this fall, the program aims to expand to a nationwide level by the end of 2023.

The joint venture has harmonized Domino’s and Uber Eats operations across 27 international markets. Domino’s CEO, Russell Weiner, noted that this new venture into order aggregation will provide access to a new customer segment and anticipates a surge of additional delivery orders when available broadly. Weiner’s remarks further underscore the deal’s capacity to boost the delivery volume from Uber Eats to as many as 70% of Domino’s outlets globally, including U.S. locations.

Domino’s franchisees already collaborating with Uber under separate contracts are expected to transition to the new global agreement by the end of the year. This exclusivity ensures that until at least 2024, Uber Eats will serve as Domino’s sole third-party platform within the U.S.

Market responses have been dynamic following this announcement. Domino’s shares enjoyed a 10% leap to $384.88 post bell on Wednesday, with DPZ stock increasing around 22% from its late-May low. In contrast, Uber shares experienced a gentle dip post-bell but ultimately climbed 1.7% in premarket trade.

This deal positions Domino’s advantageously in the current competitive landscape, even as rival pizza chain Papa John’s International (PZZA) reported a 4% early trade retreat. Papa John’s had previously begun partnerships with third-party apps like DoorDash (DASH) in 2019.

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