With three out of four Americans now under some kind of lockdown, that is around 245 million people who now need to cook for themselves every day. Whilst many may be embracing their kitchens and cooking up delicious meals for their families, millions of people don’t know a saucepan from a sieve, and therefore still need to order out to satisfy their hunger.
Where thousands of eat-in fast-food restaurants have been forced to close their doors and now face an uncertain future, pizza delivery restaurants on the other hand are benefitting from a surge in demand across the country.
Papa John’s, the fourth largest pizza delivery restaurant in the US, is predicting a 5.3% increase in North American sales for the first quarter of 2020. After this announcement on Tuesday, stock prices for Papa John’s increased by over 10%, starting the day at $48.01 and ending on a high of $53.37.
Source: Google Finance
Despite the increase, stock prices are still significantly lower than the $69.32 which Papa John’s was trading at in February this year, prior to Covid-19 spreading so relentlessly across the US.
In the last month, investor confidence has been at an almost all time low, but perhaps these positive sales figures will encourage investors that despite the economic havoc being caused by the coronavirus, there are still opportunities for growth. Some businesses are not only surviving the crisis, but to an extent thriving, and it is these businesses which will hopefully support the economy through the dark days ahead.
THINK LIKE AN ECONOMIST!
Q1. Why has the stock price for Papa John’s increased?
Q2. What was the exact percentage increase of Papa John’s stock price on Tuesday?
Q3. Explain why investor confidence is so low.
Q4. Discuss which types of businesses are ‘surviving’ and which could be ‘thriving’?
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