…delivery platforms like UberEats, DoorDash and GrubHub have been putting pressure on the chain’s U.S. sales this year as they spend more on marketing. Rather than choosing to order delivery from Domino’s, consumers are now able to order delivery from thousands of restaurants that serve more than just pizza.
Deutsche Bank initiated coverage of the pizza chain Monday with a sell rating, citing these pressures for its opinion.
“The call here is really about the competitive intrusion of the third-party delivery aggregators, which we expect to increase in magnitude over the next two-to-three year period, before it potentially levels off or gets better,” Deutsche Bank analyst Brian Mullan wrote in a note.
Morgan Stanley estimates that third-party aggregators will bite off 1% to 2% of Domino’s U.S. same-store sales growth, a key metric in the restaurant industry.
Domino’s CEO Ritch Allison has expressed doubts about the viability of delivery services’ business model. As more aggregators pop up, each is pushing discounts to gain market share and spending heavily on national advertising campaigns. And restaurants are growing more vocal about the hefty commission fees — sometimes as high as 30% — charged for every order that comes from a delivery app.