After about a year of deflated growth and delivery-related challenges, including slow staffing, Domino’s is switching strategies to boost momentum through a growing carryout business. U.S. same-store sales continue to improve at 3.6% growth for the first quarter ended March 26, 2023, bolstered by carryout, which now contributes about half of the orders systemwide and 40% of sales.
In fact, many of the innovations Domino’s launched recently were created with carryout business in mind, like the Apple CarPlay partnership recently announced, which allows CarPlay customers to order Domino’s while driving. The carryout business also continues to grow at 13.4% this quarter, while the delivery business is down 2.1% compared to the same quarter of last year, challenged by consumer trends and inflation, which makes customers more averse to delivery fees and tips.
“We often talk about how there’s not much overlap between our delivery and carryout business,” Domino’s CEO Russell Weiner said during Thursday’s earnings call. “Carryout is a very incremental piece of growth for our business, and that can help you understand how we think about diversifying and differentiating and growing ourselves, not only as a pizza delivery company, but as a total restaurant.”
Carryout is becoming such an important part of the growth strategy that the pizza chain is going to be reinventing its loyalty program and ecommerce platform over the next few quarters with the boost in carryout business in mind.
“When we launched [our loyalty program] back in 2015, we were more of a delivery company with our carry out business still gaining momentum,” Weiner said. “So naturally, our loyalty program was designed more around the delivery customer. One of the key objectives of the refreshed Piece of the Pie loyalty program will be to explicitly cater to the carryout customer in addition to the delivery customer. We're excited to add more value and rewards for everybody.”
Weiner went on to say that the company will also be redesigning its entire ecommerce platform to make sure that Domino’s stays competitive in the tech stack space. For a long time, Domino’s was known as the technology leader, not just in the pizza sector, but also across the quick-service restaurant industry. Although the company is still rolling out tech innovations (like Apple CarPlay and adding electric vehicles to their delivery fleet), Weiner emphasized that they are broadening the definition of innovation to apply to both menu and marketing strategies, not just pure technology.
“Carryout tips is a good example of innovation — The majority of companies call that a bounce back coupon, and our marketing people said ‘we’re a delivery company so let’s call it a tip,’” Weiner said. “That’s a product innovation. I also don’t think anyone talks about value innovation the way we do. You’ll see all these types of innovations on a quarterly basis.”
Domino’s also announced it is launching a “Summer of Service” training program, inviting all franchisees to headquarters in Ann Arbor, Mich. to participate in what they are calling “their largest systems training ever”to improve operations and increase profitability across the board with new strategies and innovations.
Domino’s revenues for the first quarter of 2023 increased $13.8 million, or 1.3%, as compared to the first quarter of 2022, attributable to higher supply chain revenues. Net income increased $13.8 million, or $2.93 diluted earnings per share in the first quarter of 2023 as compared to $2.50 in the first quarter of 2022. Domino’s opened net 128 stores in the first quarter for a total store count of 20,088 restaurants systemwide.
Contact Joanna at [email protected]
