Walmart Expands Restaurant Delivery With Papa John’s Deal – What Investors Need To Know

• The Papa John’s deal follows Walmart’s recent restaurant-delivery launches with Subway and Dunkin’, broadening the types of restaurants available through its platform.
• Customers will be able to combine Papa John’s orders with Walmart groceries and household products, with deliveries targeted at 30 minutes or less.
• Papa John’s orders will be delivered by Spark drivers, independent contractors who deliver online orders on Walmart’s behalf.

Walmart Inc. (WMT) is expanding its restaurant-delivery offering through a new partnership with Papa John’s International Inc. (PZZA), with the latter’s orders set to become available through Walmart’s app and website, according to a report by Bloomberg on Thursday.

Papa John’s delivery will launch in select U.S. markets in the coming weeks, with the partnership expected to expand to thousands of its locations nationwide, the report added.

According to the report, Greg Cathey, Walmart’s Senior Vice President, stated that the expansion into off-site restaurants is the “natural evolution” of its restaurant-delivery offering.

Papa John’s Orders Coming To Walmart

Under the deal, customers will be able to order Papa John’s food through Walmart’s mobile app and website, with deliveries expected in 30 minutes or less, according to Bloomberg.

Customers will be able to order Papa John’s on its own or add restaurant food alongside other Walmart purchases, including groceries and household items. The Papa John’s partnership is Walmart’s third restaurant-delivery deal in recent months, following its agreements with Subway and Dunkin’, Bloomberg reported.

Walmart Expands Restaurant Delivery

Walmart entered restaurant delivery earlier this summer with Subway, allowing customers in select markets to order Subway meals through Walmart’s app or Walmart.com and have them delivered in as little as 30 minutes.

The retailer further expanded its offering on September 3 through a collaboration with Inspire Brands and Dunkin’. Walmart said Dunkin’ would initially be available through 150 in-store locations, with plans to expand to the majority of its roughly 10,000 locations outside Walmart stores nationwide.

Hongseok Jang, an assistant professor of management science at Tulane University who studies online delivery, told CNBC that Walmart's large existing customer base, store network, and logistics infrastructure could make it a formidable competitor to established food-delivery players. 

Jang said the Dunkin' rollout looks like a test of Walmart's own delivery system, and that if it works, it could set up serious competition between Walmart and DoorDash (DASH) and Uber Eats.

Walmart said the expansion beyond its in-store restaurant tenants is creating a broader delivery ecosystem, allowing restaurant meals and beverages to be delivered alongside Walmart orders. Bloomberg reported that about 65% of Walmart’s restaurant orders currently also include other items from the retailer.

Delivery To Be Handled By Spark Drivers

Papa John’s orders will be delivered by Spark drivers, independent contractors who deliver online orders on Walmart’s behalf.

Walmart has been building its delivery network around its large U.S. store footprint. The company says its stores are within 10 miles of approximately 90% of the U.S. population, allowing it to leverage its existing last-mile delivery network.

The restaurant-delivery service is part of Walmart’s Express Delivery offering, which provides delivery in an hour or less for a flat fee, according to the report.

WMT Retail Traders View 

 On Stocktwits, retail sentiment around the stock turned to ‘bearish.’

At the time of writing, WMT shares were up 0.27%, while PZZA  fell 0.28%. UBER  shares slipped 0.32%, while DASH  gained 1.09%.

WMT stock has fallen nearly 5% year-to-date.

Read more: Starbucks CEO Says ‘Thousands’ More Store Upgrades Coming, Bets On China Growth

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