More dough
This week, Domino’s Pizza announced a surprising new partnership with Uber Eats and Uber-owned Postmates, a move that sent the company's shares soaring more than 13% in the last 5 days. The news marks a significant shift for the pizza giant. Historically, Domino's has been a staunch opponent of third-party delivery apps, keeping tight control over its product chain, supplying franchisees with everything from dough and ingredients to equipment and services through its enormous supply chain.
Whether you slice the numbers by sales or stores, Domino’s is the world’s largest pizza company, shipping more than 1.5 million pies every single day, through its network of franchised stores. That scale has enabled the company, until now, to resist the urge to partner with the food delivery apps.
But habits are changing. The company’s CEO, Russell Weiner, says that pizza delivery orders directly from chains aren’t growing — Domino’s reported a 2% decline in US delivery same-store sales for the first quarter this year — while app-based orders are on the rise. Pie rivals Papa Johns and Pizza Hut jumped on third-party delivery apps as early as 2019, and third-party delivery apps now account for 14% of pizza sales in the US, up from 4% before the pandemic, per analytics firm Circana.
The new partnership is expected to boost annual sales by up to $1 billion. That’s good news for the individual franchise operators and the parent company itself, which makes the majority of its profit from franchise royalties and fees. Indeed, just 8% of the company’s sales — and less of its profits — in the first quarter of 2023 were from company-owned stores.
