Domino’s delivery drags on strong pricing and carryout

Dive Brief:

  • Domino’s U.S. same-store sales increased 3.6% during the first quarter, compared to a decrease of 3.6% in the year-ago quarter, CFO Sandeep Reddy said on Thursday during the company’s Q1 2023 earnings call.
  • The sales growth was partly driven by a 6.2% increase in pricing, which was offset by a decline in order counts. 
  • Delivery remains a drag on the business with same-store sales down 2.1% while carryout sales were up 13.4% compared to Q1 2022, Reddy said.

Dive Insight:

Carryout comprising 40% of sales has allowed the chain to mitigate some of the headwinds associated with the delivery category, Domino’s CEO Russell Weiner said. To improve the carryout experience, the company launched its Apple CarPlay innovation, which allows people to place and track their orders in their car and offers an alternative to the drive-thru, he said. 

With carryout becoming a larger part of the business, the company plans to update its Piece of Pie loyalty program, which originally launched in 2015. At the time, the program was designed with the delivery business in mind. The refreshed loyalty program will cater to carryout customers and add more value to both delivery and carryout channels and will help drive additional transactions, Weiner said. 

Reddy said delivery remains challenged due to demand from delivery moving to sit-down, as consumers return to pre-pandemic behavior. Lower income households experiencing greater budget constraints that impact how they think about fees and tipping when choosing between delivery and cooking from home.

“We are closely monitoring the evolution of growth in real personal consumption expenditures as a consistent inflection in that trend could result in relief on the second headwind to our delivery business,” Reddy said.  

Despite being in negative territory for delivery same-store sales, Q1’s sales were an improvement compared to Q4 2022, in which delivery same-store sales were down 6.6%, Reddy said during a  February earnings call

Weiner said delivery times improved by over a minute during the quarter compared to Q1 2022. The company is also increasing its investment in its electric vehicle fleet, which is now more than 1,000 cars. The fleet is helping the company grow its corps of drivers by providing electric cars to those who may not have their own, he said.

Domino’s has been looking to improve scheduling flexibility since last year to help attract and retain more delivery drivers. 

“While our goal is to get back to and improve on our delivery service levels from 2019,” Weiner said, “I’m really encouraged by the continued improvement we and our franchisees have made in this critical measure.”

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