Restaurant chains looking for a brand to emulate have been falling all over themselves to mimic the success of brands like Raising Cane’s (chicken fingers), 7 Brew (beverages) or Chili’s (raging casual-dining success). But if I’m looking to mimic a brand today, it honestly might be Domino’s.
The pizza chain’s sales and performance numbers may not have been quite as spectacular as those other brands. But its recent success has been driven by a shift in strategy, away from easy-at-all-costs marketing to pushing a better overall value.
It’s a key shift, and one that has not garnered near enough attention. Because Domino’s shift is indicative of a consumer that just isn’t motivated by convenience the way it used to be.
Or, to quote Technomic’s Robert Byrne, who is my guest on this week’s episode of my podcast, “consumers have enough convenience in their lives.”
Domino’s for years used convenience as a driving force in its marketing. Specifically, the pizza chain made it as easy as possible to order one of its pizzas.
The company made headlines by pointing its technology toward this goal. Consumers could order a pizza from their car or their television or their watch. The app is remarkably easy to use.
It was a massive success. The company’s same-store sales rose consistently for a decade. Its stock price performance was on par with major tech companies.
Those sales slowed just before the pandemic put them on overdrive. But by 2021, they began declining, largely because a labor shortage made it difficult to find drivers, which slowed service.
Under CEO Russell Weiner, Domino’s has shifted to marketing the quality of its pizzas. It also started innovating more often, with items like stuffed-crust pizzas and loaded tots. It has also given consumers some of the most innovative value offers we’ve seen, including its Emergency Pizza offer, a buy-one, get-one deal that requires customers to come in a second time. It has since used a $9.99 any pizza offer more recently that helped fuel last quarter’s 5.2% same-store sales increase. The company is now refreshing its brand to highlight that shift. Oh, and it started marketing its pizzas on the aggregators’ mobile apps.
Domino’s is not perfect. Its last quarterly result came with a warning that its sales could slow due to the economy. And the sales improvement has been more choppy than the pre-pandemic run. But this is also a much tougher market.
Fast-food chains for years were able to win at least in part because their offerings were just available.
McDonald’s success, for instance, is rooted in part on the prevalence of its restaurants and the speed of its drive-thrus. Chick-fil-A gave customers a sense of quality and service with its convenient concept. Starbucks is everywhere and has one of the best mobile apps in the business. These were all major winners.
These days, those chains must work a lot harder to get customers in the door. Customers are pushing back on prices. Or perhaps they don’t think the experience is good enough. Or they’re opting for other competitors. The convenience of those brands just isn’t worth the price customers are paying.
As such, fast-food brands over the past two years have surprisingly underperformed the overall market. Their fast-casual counterparts have more recently joined them in this underperformance. But full-service brands with effective value messages—not just cheap food—have been getting customers in droves.
The restaurant business today is as convenient as it’s ever been, thanks to the growth in drive-thrus, mobile apps, loyalty programs and third-party aggregators. And those aggregators ensure that customers can get anything via mobile app, even if they pick it up themselves.
And given that about half of those aggregator orders feature some sort of deal, that means the consumer still thinks they’re getting a good value. Convenience, in other words, is a baseline expectation. But customers want a lot more to go along with that easy service.
To win in this environment, in other words, restaurant chains have to convince customers that they’re worth it. That’s why cheap food doesn’t generate traffic, but value offers with some higher-end items will. And it’s why brands can get customers in the door right after offering a new promotion, but not a few weeks later.