Turning to menu innovation, a methodical category for Domino’s typically, the chain launched chicken wings with improved sauces July 7 and also unveiled two specialty pizzas August 24—the cheeseburger and chicken taco options.
Allison said Domino’s hasn’t promoted wings thus far “because we’re selling all the wings that we can get our hands on today.” The specialty pizzas, he added, are already at the top end in terms of mix for Domino’s specialty pizza range.
Both extensions haven’t added operational complexity. In fact, wings reduced complexity “given how we package it,” Allison said. The specialty pizzas require one incremental ingredient apiece added to the make line.
Wings joined one of Domino’s famed carryout deals at the $7.99 price point for pickup. It’s also available, along with all crust types and a three-toping option, in the $5.99 tier.
“When I think about what's happening with the consumer right now, and looking forward with this recession that we are sitting in today and the fact that there has been no incremental stimulus brought to the consumer, I look forward and believe that our value platforms in sticking to those platforms will only be more important as we look out into the months and quarters ahead,” Allison said.
Overall, Domino’s hit 17.5 percent performance without aggressive promotions. In Q3 2019, it ran two 50 percent off boost week lures. Those will likely return as part of Domino’s customer acquisition strategy, Allison said, but the “underlying demand and our strong everyday value messages”—so critical to a COVID customer—allow the brand to focus on store-level profitability and better service.
Domino’s carside delivery is now available at more than 95 percent of U.S. locations. The launch didn’t add any significant labor cost, Allison noted. GPS technology is live in roughly 90 percent of venues, giving customers an experience they asked for as well as allowing operators to optimize routing and dispatching of deliveries.
With GPS, store managers know where drivers are at any given time. Doing so allows Domino’s to get more efficient in how it plots routing, pre-bag, and brings orders to ready once a driver returns.
In some units, drivers aren’t coming back into restaurants to pickup. Rather, operators run pizzas out to cars and hand them over. It saves a minute, maybe two at the turn, Allison said, a seemingly small tick but one that “results in better service and better labor that you run in the stores.”
Domino’s enhanced make line tools are rolling nationwide, too, and are now present in nearly 80 percent of domestic units.
Allison said Domino’s “slipped a bit” with average delivery times early when volumes jumped at COVID’s onset. The chain’s since returned to “as good or better than” service pre-pandemic, “which is pretty significant when you think about the overall increase in the business that we've seen, and the fact that we deliver our own food,” he said. “So we are making sure that we've got trained and uniform delivery experts bringing that product to the customer.
Systemwide, Domino’s boasts fewer than 300 temporary closures, down from a peak of 2,400 in late March. The company's net income increased about 15 percent to $99.1 million in Q3. Total revenue rose 17.9 percent to $967.7 million
Allison also spoke to the changing landscape and where Domino’s slots in. “I feel for the challenges that a lot of these independent restaurants are going through and their proprietors that have put their livelihoods into those businesses,” he said. “But the reality is, if you were operating an independent pizza restaurant with a significant amount of your business dine-in and if you were relying on beverage mix and alcohol to bring a good bit of margin to your business, if that business has now been shifted to where you have to do most of it [off-premises], and if most of that has to come by paying very high fees to third-party aggregators, it's just a really difficult operating environment.”
In terms of ultimate closures, Allison said, nobody quite knows where it will land.
“But I do believe that the shake-out in the turmoil is going to create opportunity for us to further take share and continue to grow,” he said. “Our teams both—our corporate store team and our franchisees—are out there every day looking for real estate opportunities that are opening up as a result of the pandemic, and also in some cases opportunities where we've shifted in some cities and towns from a more sort of landlord-friendly rental environment for to more of a renter friendly rental environment, an opportunity for us to get potentially some more favorable terms on leases going forward as well for some of the stores that we continue to operate.”