The Domino’s Effect

Published on
August 30th, 2019
Duration
11 minutes

The Domino’s Effect

Trade Ideas ·
Featuring Howard Penney

Published on: August 30th, 2019 • Duration: 11 minutes

Howard Penney, sector head of restaurants at Hedgeye, breaks down the transformations in the food-delivery space and highlights one particular company that’s feeling the heat: Domino’s Pizza. In this interview with Jake Merl, Penney explains how companies like GrubHub are eating Domino’s lunch, discusses the issues with Domino’s “fortressing” strategy, and presents a pairs trade to play the situation. Filmed on August 28, 2019.

Comments

Transcript

  • RC
    Robert C.
    30 October 2019 @ 14:16
    This trade couldn't have been more incorrect. KM's team at hedgeye with another poor trade.
  • Nv
    Nick v.
    3 September 2019 @ 13:09
    Great interview. Fundamentals and technicals align. Dominoes technical target is 166 and Grubhub probably a buy at 45
  • as
    andrew s.
    1 September 2019 @ 12:38
    Hedgeye are paper traders
    • JG
      Jose G.
      1 September 2019 @ 23:18
      Why you say that?
    • as
      andrew s.
      5 September 2019 @ 20:16
      Jose G, they been called out on that before , they don't deny it
  • JG
    Jose G.
    31 August 2019 @ 14:00
    Watch out, he had terrible calls this year. long Waitr, short Starbucks and other bad trades with DelFriscos. Not saying that hes not a good analyst, maybe just not a good year for him.
    • GG
      Goncalo G.
      31 August 2019 @ 14:48
      So true... Also he was bearish on Grub at 30 and went long above 100.
  • DS
    David S.
    31 August 2019 @ 07:21
    Well developed trade idea. In addition, many health conscious people will be looking to other restaurants for carryout. This gives delivery services that cater to all types of restaurants in the area an edge. Full disclosure, I only ordered Domino's Pizza once many years ago; eating only one slice. DLS
  • PP
    Peter P.
    30 August 2019 @ 17:49
    Appreciate all the Trade Ideas & Jake Merl is great. I have not ordered a Domino's in 25+ years, and of course Domino's delivered then. I understand why there may be a cloud over Domino's at the moment due to the new entrants of food delivery & greater choice from them, however using a 3rd party delivery service involves a cost, and makes the food more expensive than ordering direct. I would ask if you do not get the delivery in 30 minutes or less is Uber Eats or Doordash or GrubHub going to comp a second free pizza pie on the next order ? I don't think so. That is what keeps the GrubHub/Uber Eats (bleeding money)/Doordash (who cheat on the delivery person's tip as we now all know) from every crowding into Domino's turf or anyone else who has a loyalty program. (I have no position in DPZ or GRUB) & on unicorrn valuations, would highly recommend the Michael Green/Josh Wolfe on these budding zombies
    • WW
      Will W.
      4 September 2019 @ 10:55
      Overall solid idea, but in a risk off environment going long GRUB at these levels seems like a risky play as well as shorting DPZ going into football season which is a seasonal strong time of the year for them. If I am really negative on DPZ in this environment I would probably just short DPZ and wait for a better entry point on GRUB.