Domino's finds its voice
Oct. 15, 2014
by Monica Watrous
|Domino's new iPad ordering app helped lift sales during the quarter.
ANN ARBOR, Mich. — A key strategy behind continued success at Domino’s Pizza, Inc. is digital innovation. On-line and mobile ordering, which represents 40 percent of sales, has helped the pizza chain deliver 14 consecutive quarters of positive same-store sales growth in the United States.
“What I would say and what you are seeing from us is we are absolutely determined that we are going to maintain and grow our leadership in digital ordering,” said Patrick Doyle, president and CEO, during an Oct. 14 conference call with financial analysts. “We are absolutely not standing still. And voice ordering is the newest step in that.”
Domino’s recently began promoting its new voice-ordering platform for iPhone or Android devices. Users interact with a virtual assistant named Dom, similar to Apple’s Siri, to place an order for carryout or delivery.
“This is yet another example of how we use national promotions to focus on technology rather than exclusively focusing on new products for all of our national windows,” Doyle said. “This is our first big promotion of our voice platform, available on iPhone and Android apps. And without any promotion, we have already achieved over 200,000 voice orders since it was introduced in June.”
Domino’s also unveiled a new pizza ordering app for iPad during the quarter with positive initial results.
“In the US, I am pleased to report that our new iPad app has the highest conversion and highest ticket of all of our digital ordering channels,” Doyle said. “It has exceeded all of our performance expectations and sets new benchmarks almost immediately upon launch. We continue to work to get even more iPad users to download the new app, as it provides a very robust ordering experience that plays into many of the iPad device strengths.”
|Domino's Specialty Chicken
Digital orders drive higher tickets than traditional phone orders for Domino’s, but the company said its biggest benefit is increased frequency of usage.
“It’s ultimately about a better retention of customers, better frequency of orders from customers,” Doyle said. “And as they have a better experience with Domino’s, we get more orders from them. And that’s really what drives it more than anything else.”
Enabling easy service for the time-starved and tech-savvy millennial consumer has become a bigger priority for the $37 billion US pizza market. Domino’s sees its digital position as a key differentiator not only from smaller players in the pizza category, but also from its top competitors of Pizza Hut and Papa John’s.
“I think the real opportunity is that as the three largest players continue to show that this is a better way for customers to do business with us, we are going to have an opportunity to grow the category, hopefully, but also continue to take some share from the people that can’t put up a platform of the quality that we are able to do,” Doyle said.
Net income in the third quarter ended Sept. 7 increased 16 percent to $35.6 million, equal to 63 cents per share on the common stock, which compared with $30.6 million, or 53 cents per share, in the prior-year period. Revenues climbed 11 percent to $446.6 million from $404.1 million.
Domestic same-store sales grew 7.7 percent during the quarter, and international same-store sales increased 7.1 percent. During the quarter, Domino’s opened 160 net new units, including 14 domestic stores and 146 in international markets.
The company also announced several leadership changes as part of an enhanced internal organization structure. Richard Allison, who has led Domino’s international division since 2001, has been named president, Domino’s International.
Russell Weiner, who joined the company in 2008 as CMO, has been promoted to president, Domino’s USA, and will oversee domestic franchise and corporate store operations and US marketing.
Michael Lawton, CFO, will assume additional responsibilities of the supply chain division.