Domino’s CEO Russell Weiner believes his company is in the midst of a pizza war right now—one the chain is clearly winning.
However, the executive was kind enough to offer advice on how competitors can go toe-to-toe with the pizza giant.
“What the competition is going to have to do to keep up with us is to continue to lean into value,” Weiner said during Domino’s Q3 earnings call. “So I’m not sure what they’re doing. Obviously, we don’t have their plans, but I know what we’re doing, and if they want to match us, they’re going to have to continue to do that.”
Keeping pace with Domino’s is easier said than done. The brand keeps gaining market share, which Weiner said is the best measure of a company’s current and future success. Through the first three quarters of 2024, retail sales are up 6.6 percent while the QSR pizza segment is growing at less than 2 percent. From 2015 to 2023, Domino’s opened roughly 1,750 stores. The top QSR pizza competitors, in aggregate, closed nearly as many stores during the same period, according to Weiner.
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The company currently handles slightly fewer than one in four pizzas delivered in the U.S. Weiner said that in other categories, the dominant No. 1 player is usually twice that size, and he thinks Domino’s has room to become that. Half of its competition are independents and regional brands that don’t have the same marketing budget or supply chain efficiencies.
“If you think about having to lean into value, what do you want to make sure you’ve got? You’ve got a system with capacity in advertising to get the word out there, right?” Weiner said. “Because if there’s a little bit of a squeeze in-store margin, well, the way to make that up is through volume. The way to drive volume is through great advertising. You’re going to want to have a great supply chain … Look, I’ll be frank. If you look at the competitors’ marketing, it’s very similar to our marketing, which, I guess, it’s the sincerest form of flattery is what they say. But I know our budget is bigger than them from a marketing perspective. I know our supply chain has got fantastic efficiencies on food costs.”
U.S. same-store sales rose 3 percent, marking the brand’s fourth straight quarter of positive comps. Carryout same-store sales rose 5.4 percent and delivery rose 1.3 percent. Domino’s isn’t pricing high either. This year, prices have risen 1.6 percent, inclusive of California where fast-food minimum wage is now $20 per hour.
Comps were driven by positive order count for the fourth consecutive time. Weiner attributed the performance to Domino’s revamped rewards program, which just passed its first anniversary. The program—offering a system that makes it easier and faster for consumers to earn free menu items—is driving more light users and carryout customers as intended. It’s also grown overall active members significantly, allowing Domino’s to engage more guests and fuel frequency with targeted marketing efforts.
The chain began to see a pressured low-income consumer and more promotional activity in August, so the brand will ramp up its own value efforts in the fourth quarter. Next week, its Emergency Pizza promotion (guests ordering online can receive a free meal at a later date) will go back on air. The offer was first introduced in October 2023.
“Emergency Pizza 2.0 has some big shoes to fill,” Weiner said. “But what I’d say is, I’ve seen the program, and if we have big shoes to fill, the program has big feet, maybe with a little bit of nail polish on it as well. And so you’re going to be more exposed to that, but we’re excited about how we’re going to lap, I think, one of the better programs in our history.”
Additionally, the company is drawing valuable traffic from Uber Eats. In Q3, Uber sales mixed 2.7 percent, which is close to Domino’s goal of 3 percent by the end of the year. Domino’s sees third-party delivery as a $1 billion business in the U.S. if the brand goes on all aggregator platforms. Currently, the chain is only partnered with Uber, but it can decide at the end of Q1 to add more partners.
“DoorDash is bigger than Uber, so that would certainly be an incremental and most likely more significant impact on our business than Uber, but we’ll take one step at a time,” Weiner said. “I’m just excited that we’ve essentially achieved our goal of the 3 percent. That’s our fair share, and our goal remains to exit the year at 3 percent.”
The other part of the value equation is product innovation. In September, Domino’s launched a new Mac and Cheese, available in Five Cheese and Spicy Buffalo. It’s the first time the brand has brought product news to its pasta platform since it began in 2009. The chain has previously rolled out Pepperoni Stuffed Cheesy Bread and New York Style Pizza.
Could stuffed-crust pizza be next? Weiner didn’t rule it out.
“We’re the number one pizza company in the world, and we don’t have one of the larger crust types,” Weiner said. ” … We’ve got stuffed crust in Domino’s markets all around the world. So it’s not that we’re averse to doing it. It’s just, the U.S. got really significant volumes going through the store and operational excellence and quality is a big pillar for us. And so we’ve chosen so far not to do stuff crust, but that doesn’t mean it’s off the table. We just need to make sure that the circumstances would be right in the store.”
Because of these levers, Domino’s is confident in its long-term annual projections of 3 percent same-store sales growth and 175 U.S. store openings. Franchisee profitability is expanding too. This year, the chain is targeting more than $170,000 in average EBITDA per unit, which would be well above the roughly $160,000 in 2023.
Domino’s finished Q3 with 6,930 U.S. locations after opening 24 and closing none in the quarter. In the trailing four quarters, the brand has opened a net of 168 domestic units.
International same-store sales rose 0.8 percent in the quarter. There were 14,072 units outside the U.S. at the end of Q3.
