Is Contactless Delivery Here to Stay?
Pizza brands have long offered delivery and to-go, but the impact of COVID-19 has required Domino’s to modify standard operating procedures that have been in effect for 60 years.
“We've had to rewrite a good many of them in just the last six weeks around contactless delivery and carryout, no sitting down and dining in our stores, our drive up carryout feature, which we've now been rolling out aggressively across the country,” said Domino’s CEO Ritch Allison in Q1 earnings call with analysts.
For the quarter, Domino's global retail sales increased 4.4%. U.S. same store sales grew 1.6% during the quarter versus the year-ago period, continuing the positive sales momentum in the company's U.S. stores business. The first quarter marked the 105th consecutive quarter of international same store sales growth and the 36th consecutive quarter of U.S. same store sales growth.
COVID-19 Response
The brand’s focus on self-delivery and carryout has contributed to its strong performance during the early days of the COVID-19 pandemic. “And I think it will continue to help us because I don't think consumers are going to snap right back to the old patterns and behaviors,” said Allison. The capability the brand is building in contactless delivery and contactless carryout will “continue to be important for many months to come,” he added. Some locations are offering Domino's Carside Delivery, which allows customers to pick up their orders without having to leave their cars.
“So as we think about the capabilities that we're putting in place today, it's not just to be competitive in the next couple of months. It really is to set ourselves up in what may end up being the new normal in our industry.”
Currently contactless delivery is the only type of delivery Domino’s offers in the U.S., and it is here to stay.
“If we … no longer mandate it, we are still going to offer it to the customer, because I think for some extended period of time, there is going to be some portion of the customer base that is going to want that contactless experience in delivery and/or in the carryout side of the business,” Allison said.
Put It On the Pedestal
Domino’s contactless delivery experience includes the Pizza Pedestal, a cardboard pedestal for placing the pizza upon. Domino’s tech teams added the contactless delivery option to online ordering and the mobile app.
The customer order interface was also tweaked to make tipping easier and a more visible part of the ordering experience, ”because the last thing that we want to see come out of this is any of our delivery experts to see a decline in income as customers move away from cash transactions and more toward digital and either credit or debit card transactions,” explained Allison.
The brand has seen an influx of new customers and new digital customers as well. For Q4, “we touched 70% digital, and in recent weeks, we're running at 75%. And we've had at least one week where we were over 80% digital,” said Jeff Lawrence, CFO. “… Customers are coming to that digital channel as we go into this contactless space that we're in.” And the brand is working to migrate them to the Piece of the Pie Rewards loyalty platform.
Domino's is among the brands that has shunned third-party delivery and has maintained ownership of the customer relationship and their customers’ data in the process.
Allison said he has “great optimism” the global brand is still on target for 25,000 global locations by 2025.
“The brand came into this crisis in a very healthy place with strong growth momentum,” he said. “We're going to work our way through this, but I still have a ton of optimism about the long-term health and growth of Domino's Pizza.”