Domino’s Pizza CEO Patrick Doyle has been talking about being a tech company that sells pizzas for years. Some initially balked at this declaration. After all, the purpose of a restaurant brand is to focus on the industry cornerstones: food and service.
Domino’s, however, remained relentless, forging ahead on innovations and leaving independents and smaller chains in its dust. In its dust they remain, simply unable to keep up with the technology infrastructure Domino’s has amassed.
The approach has led to 28 consecutive quarters of positive comparable sales, with the company’s most recent quarter blowing revenue estimates out of the water by $100 million. Not a bad swan song for Doyle, who will retire in June.
On Doyle’s watch, the company has served as an industry case study of sorts, particularly in the delivery and digital spaces. On the delivery side, the company has been pressed about how it will maintain its competitive edge as more brands – including traditional powerhouses like McDonald’s and KFC – jump into the space using third-party delivery aggregators. But as this competition heats up, Domino’s continues to grow its delivery business.
“Delivery aggregator economics remain challenging and unproven, and those making attempts to succeed in this space are likely realizing something we have known for almost six decades; delivery is hard,” Doyle said during the company's Q1 earnings call. “While we aren’t always perfect, I’m confident in our ability to continue to send off those who attempt to play in our space of expertise.”
In fact, while these brands dive into delivery for the first time, Domino’s is now delivering to customers using hot spots on the beach and other locations that don’t have a physical address. Doyle calls the company's hot spot initiative a “game changer” that will redefine delivery convenience.
Also, and underscoring the company’s prioritization of forward-thinking technologies, Domino’s is thinking years ahead, testing driverless cars in Miami with Ford.
“You’re clearly going to see transportation change in the U.S. and we think it’s three to five years out, so we’re investing heavily,” Doyle told CNBC’s Jim Cramer. “We’re looking at how that transportation change is going to affect our customers, how they interact with us. We’re learning about that and we think it’s great opportunity for us. It’s clearly something we’re going to continue investing in. It’s coming.”
In other words, Domino’s isn’t just maintaining its delivery edge, it’s driving circles around the competition.
On the digital side, the company’s implementation of automated phone orders via artificial intelligence assistant DOM should further grow its digital ordering business beyond the current 65%. More digital sales typically mean higher checks and better operational efficiency. According to research from analysts at BTIG, traditional phone/counter orders cost at least a dollar’s worth of an employee’s time, while each digital order costs about 25 cents.
“Fundamentally, we are on a path to take all orders digitally,” Doyle said. “Doing so will mean not only a better customer experience, which should generate continued sales and store-level profit growth, it allows our store-level teams to focus all their efforts on making great pizzas and giving great service to our customers. I’m not big on hyperbole, but this could be a game changer for us.”
Doyle referenced two game changers during his last earnings call as CEO. If we are to believe him – and with his record of accomplishments at Domino’s there is no reason not to – the company will continue its momentum long after he’s gone.
“The major reason for deciding it’s time for me to move on is our deep bench of leadership talent and an incoming CEO (Rich Allison) who couldn’t be more prepared and ready to move the brand and business forward,” Doyle said. … “Here is the beauty about this organization. No one will rest. Complacency just doesn’t exist within this culture.”
As the American consumer swiftly gravitates toward brands of convenience (see also Amazon), Domino’s has found itself in a very good spot, and its “tech company that sells pizzas” idea has paid off in droves. In this intensely competitive industry, brands that offer such “game changing” convenience will have quite an advantage.
