McDonald's (MCD) - Get McDonald's Corporation (MCD) Report , Yum! Brands' (YUM) - Get Yum! Brands, Inc. (YUM) Report Pizza Hut, Papa John's (PZZA) - Get Papa John's International, Inc. Report and Popeyes Louisiana Kitchen (PLKI) all delivered weak, if not disastrous, fourth quarter results recently because of a lack of significant digital growth - if any at all.
Food gimmicks just don't appear to drive savory growth in the fast-food space anymore. McDonald's coming out with plans to start selling $1 soft drinks and $2 McCafe specialty drinks, or Papa John's doing a major relaunch of pan pizza, may not be what Millennial and Gen X customers are looking for (as TheStreet's Brian suggests in the below video).
To be fair, Papa John's is trying. Following in Domino's footsteps, the company added options in 2016 for customers to buy pizza online with its Papa John's Rewards, gift cards and PayPal (PYPL) - Get PayPal Holdings Inc Report , versus just credit cards. As a result, Papa John's fourth quarter same-store sales rose 3.8%, but still missed analysts' estimations for a 5.9% growth.
McDonald's, on the other hand, has zero online presence - not a smart move. During its fourth quarter, same-store sales fell 1.3%.
"I urge you to focus on our unyielding commitments to offering the best digital experience possible," Domino's CEO Patrick Doyle said on an earnings call Tuesday morning.
Doyle said Domino's partnered with tech leaders Apple (AAPL) - Get Apple Inc. (AAPL) Report , Amazon (AMZN) - Get Amazon.com, Inc. Report , Alphabet's Google (GOOGL) - Get Alphabet Inc. Class A Report and Facebook (FB) - Get Facebook, Inc. Class A Report to help create its app that is easy to join and "even easier" to understand. Some of the company's digital features include ordering pizza via Twitter (TWTR) - Get Twitter, Inc. Report .
"Given their sales momentum and proven technology advantages, we believe that over the long term, Domino's can control 25% to 30% of the domestic pizza segment," BTIG analysts said in a recent research note.
On Tuesday, the company reported 2016 fourth-quarter earnings of $1.48 a share on $819 million in revenue, crushing Wall Street's estimates for earnings of $1.44 a share on $782 million in revenue.
Domino's also posted a 12.2% domestic same-store sales increase for the fourth quarter with a 10.5% growth for the year. Shares rose 2.4% to $189.91 on the session.
The company's online ordering is offered in 25 international markets and Domino's said it is planning for heavy investments in technology in 2017 to take the "competitive advantage" it created in the U.S. and grow it "across the globe."
At the end of 2016, 60% of its total U.S. sales were generated from mobile devices. In total, Domino's is planning to increase its capital growth spending to $75 million in 2017, with a primary focus on technology capabilities, according to Doyle.
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