Domino's Pizza shifts to takeout operations
Domino's Pizza has reported a significant increase in carryout sales in the second quarter of 2023, driven by a combination of factors including promotional efforts, a revamped loyalty program, pricing adjustments, and expanded digital ordering options.
The strong carryout channel performance was evident in the 7.9% same-store sales increase, significantly outpacing the delivery growth of 2.7% during the quarter. Two promotional boost weeks held by the company helped increase transactions and carryout sales, as did the refreshed loyalty program that was relaunched in September 2022. Orders with loyalty redemption in the carryout segment were twice as high in Q2 2023 compared to the first half of the year, encouraging repeat customers to choose carryout.
A 1.5% price increase during the quarter also contributed to higher sales, while the partnership with Uber Eats began shifting some sales towards more efficient channels, although Uber Eats contributed a smaller proportion (1.9% of sales mix at that time), signaling broader improvements in digital ordering.
The growth included a 1.5% increase from delivery, attributed to a new agreement with DoorDash. Customers who prefer value and rewards are increasingly likely to get their orders from Domino's Pizza stores themselves, with the average number of carryout orders hitting a new high in the quarter.
Domino's Pizza has approximately 7,000 restaurants and has been opening more locations in existing markets to attract more carryout customers. The company has the largest advertising budget, the best supply chain, and a rewards program that has never been bigger. The Domino's Rewards loyalty program was upgraded in 2023 to reward customers based on purchases, rather than a certain number of pizzas.
The new Stuffed Crust pizza, introduced last quarter, also contributed to Domino's sales, as more consumers opted for the higher-priced item. Domino's Pizza is selling pizzas on both Uber Eats and DoorDash, with the DoorDash deal helping deliver positive delivery same-store sales this quarter, and executives expect those results will continue to grow.
Approximately $5 billion worth of pizzas are delivered through Uber Eats and DoorDash each year, and Domino's expects to get about a third of that. With the continued success of its carryout sales and the expansion of its digital ordering options, Domino's Pizza believes it has everything necessary to keep building its pizza market share.
[1] Domino's Pizza Q2 2023 Earnings Release, 2023.
- The strong growth in Domino's Pizza carryout sales in Q2 2023 was facilitated by finance strategies such as promotional boost weeks, pricing adjustments, and expanded digital ordering options, aiming to elevate their food-and-drink business.
- The Domino's Rewards loyalty program, which was upgraded in 2023 to base rewards on purchases rather than a certain number of pizzas, has become a significant factor in the company's lifestyle transformation, contributing to increased carryout orders and customer repeat visits.
- Domino's Pizza's business growth is further bolstered by embracing technology, partnering with delivery platforms like Uber Eats and DoorDash. As the demand for technology-driven food-and-drink services continues to expand, Domino's sees extensive opportunities for growth in the pizza market via its carryout segment and digital ordering options.
