Domino’s Revamped Loyalty Pays Off
Domino’s Pizza Inc. credits its updated Domino’s Rewards program for its positive Q1 2024.
"Our new and improved Domino's Rewards loyalty program drove outsized comp performance, which flowed through to the bottom line with double-digit profit growth,” said CEO Russell Weiner. “Importantly, our growth in the U.S. came through positive order counts in both our carryout and delivery businesses for the second quarter in a row. Further, this order growth was across all income cohorts.”
During Q1 2024, U.S. same store sales increased 5.6%. Strong comps in the quarter for carryout of 9.5% and delivery of 2.9% were driven primarily by transaction growth, he said.
More Engagement
Domino's Rewards continues to perform “extremely well … Once customers become members, they're redeeming more than ever before and increases are being seen across all of our channels, delivery and carryout. Our new 20-point and 40-point redemption tiers are doing exactly what we hoped. They're engaging more customers,” Weiner explained.
On carryout: “The carryout customer engagement is much higher than it was before. Light users are much higher than they were before,” he said.
Delivering Options
Q1 also marked the pizza brand’s debut on Uber Eats. For the quarter, Uber Eats accounted for 1.4 % of sales, and Weiner said the pizza brand is still determining how much of that is incremental; Domino’s is aiming for 3% of sales coming through this channel by year’s end.
When asked about third-party delivery fees and pricing, Weiner said, “The important thing to remember it’s the best prices for consumers and our loyalty program are always going to be on our own channels.”
Weiner bragged about the operator's operational excellence. More orders were delivered in Q1 2024 vs a year prior. This year, Domino's is rolling out a new service program, MORE Delicious Operations, a series of three product trainings that focus on dough, how to build and make products, and how to cook them. During Q1 Domino's focused on its dough and implemented the training at its 6,800-plus stores in the U.S.
Labor is not an issue, Weiner and CFO Sandeep Reddy agreed. “Accessing labor has been not a problem,” Reddy said, but pointed to “wage pressure” such as minimum wage increases.
In California - where minimum wage jumped to $20 an hour at chain restaurants – “we had to increase our prices in California to address the wage increases that we saw over there,” Reddy added.
Getting Noticed
With its advertising the brand has enlisted a new food photographer and is leaning into the “delicious food and renowned value,” Weiner explained when asked about the new look and frequency of ads.
Weiner said they’re not increasing the number of promotions. “We’re really not. They’re just more impactful, and I think that’s why folks are talking about them more… The big difference now is they’re working better.” Weiner also pointed to the buzz around its You Tip We Tip promotion.
“Rather than just focus on price points, we’re focused on things that break cultural tensions… Everywhere you go today, whether they’re giving you extra service or not, folks are asking for tips … what we’re doing though, is we’re using that talk to get people to talk more about Domino’s because we’re breaking that tension, and that’s why it feels like we’re doing more.”
Domino’s full quarterly earnings report is available here.