Yum's Beer Delivery Sinks Domino's And Papa John's Stock

Shares of both Papa John's (NASDAQ:PZZA) and Domino's Pizza (NYSE:DPZ) sunk on Wednesday after rival Yum Brands (NYSE:YUM) announced that Pizza Hut will now deliver beer to its customers.

On Tuesday, the Yum subsidiary began to test beer delivery in the Phoenix area, with the hopes to add wine to its booze delivery offerings as soon as January.

Pizza Hut currently sells wine and beer at many in-store locations. Therefore, the next logical step was to offer adult beverage delivery, according to statements from Pizza Hut’s Director of Brand Marketing, Stacy Lynn Bourgeois.

Phoenix-area Pizza Hut customers will be able to order six-packs of Shocktop, Bud Light, Budweiser and a local Arizona-based craft brew, Kilt Lifter, which will all cost a flat rate of $10.99. Drivers will check customers’ IDs to verify that they are over 21 and deliver the cold beer kept in a cooler.

Yum plans to roll out Pizza Hut’s beer and wine delivery concept to more markets after its Phoenix trial.

This beer delivery move comes after Yum poured $130 million into Pizza Hut in April in order to better compete with rivals Domino’s and Papa Johns. Since then, the company also made plans to hire 14,000 more delivery drivers by the end of the year.

Shares of Yum, which also owns KFC and Taco Bell, were little changed after the announcement. However, rivals Domino’s and Papa John’s, saw their stock prices sink after the beer delivery announcement.

Papa John’s stock tanked 5.43% on Wednesday, helping the now controversial pizza giant inch closer to its 52-week low. Papa John’s is currently a Zacks Rank #4 (Sell) and scored an “F” for momentum in our Style Scores system. Shares of Domino’s dipped nearly 2.40%.

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