Domino’s hopes Uber Eats delivery deal will boost sales by 2024

Delivery sales remain a drag on Domino’s U.S. same-store sales, which were up 0.1% during Q2 2023, compared to a decrease of 2.9% in the year-ago quarter, according to an earnings release

U.S. delivery sales actually fell 3.5% year-over-year, compared to a 5.6% increase in carryout same-store-sales, Domino’s CFO Sandeep Reddy said Monday during an earnings call. The company expects delivery to be “challenged” during the third quarter, but improve in the fourth quarter with its updated loyalty program rollout, Reddy said.

The pizza giant has devised several strategies to boost its anemic delivery sales growth. In June, it added Pinpoint Delivery, which allows pizza to be delivered to a pin dropped on a map. Domino’s is also expanding its electric vehicle fleet to 1,100 cars by the end of the year. These cars, which will be available at select franchise and corporate units, allow stores to expand their search for delivery drivers to include drivers who may not have a vehicle of their own to complete orders. The company is seeing more delivery drivers apply for work than it did in 2019, which CEO Russell Weiner said is translating into improved service.

Earlier this month, the company struck an exclusive deal with Uber Eats and Postmates to begin offering delivery orders through their marketplaces in four U.S. markets in the fall. Domino’s will still complete those orders with its own drivers and will use Uber Eats to generate orders. By next year, the company expects its delivery sales to improve considerably due to transaction growth expected from its Uber Eats partnership, Reddy said. 

Domino’s, which had long been a holdout on joining aggregator platforms, reversed course due to “scale, scope and incrementality,” Weiner said. The QSR pizza category is now a $5 billion business on aggregator platforms, he said, and Domino’s, as the largest pizza delivery company, wasn’t making any sales through those channels. The scope of the deal was favorable for international and domestic franchisees. The company needed to be able to deliver its own orders before it took on incremental sales, and with improved service times — which shortened by almost two minutes compared to last year — it’s ready to do so now.

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“Our new global deal has the potential to bring Uber Eats customers to 70% of Domino’s stores around the world with improved economics for our international franchisees,” Weiner said, adding that there is the potential for Domino’s to reach a net $1 billion in incremental business within the U.S. aggregator pizza delivery business. 

BTIG expects the benefits of the Uber Eats deal to materialize in the fourth quarter when the partnership rolls out nationally, according to a report emailed to Restaurant Dive. The analyst firm also noted that third-party delivery isn’t entirely new for the chain, as it already makes $1 billion in revenue overseas with aggregators. Among the biggest questions remaining are which menu items will be available on the marketplace and how Domino’s will adapt its boost weeks — where discounts can be as steep as 50% off menu items — on the new platform. 

“In our view, we would be surprised if the $6.99 Mix and Match menu, which we estimate is about 40% of sales, was available on the UberEats platform,” BTIG said.

Weiner said Uber Eats will be a premium-priced channel and will target higher-income customers, while Domino’s direct order channels will provide value. Its loyalty program and Pinpoint Delivery will only be available to customers through Domino’s app or website. 

“Our delivery fee and franchisee-level delivery fees are contemplated in our pricing structure. I don’t think that’s going to be affecting our profitability at all,” Weiner said, adding that whatever Uber Eats does to drive customers to order from Domino’s is at the platform’s expense.

Domino’s partnership with Uber Eats is exclusive for 12 months, and the company could expand with other aggregators after that time, Weiner said. 

“When we show our customers that we’re obsessed with the delivery process or even the ordering process — there are 20 different ways to order Domino’s Pizza — they realize and recognize that means we’re obsessed with every piece, and what that does is it drives long-term brand love,” Weiner said. “That’s why we are and have to be delivering these aggregators orders. We are obsessed with delivery.”


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