Consumers are ordering more Domino’s Pizza this year, no matter how they ordered or how much money they make, and that pushed the pizza chain’s sales higher in the first quarter, the company said on Monday.
Same-store sales increased 5.6% in the U.S. in the first quarter ended March 24, the company said.
“They were order-count driven,” CEO Russell Weiner said. “They were order-count driven overall. They were order count driven on our delivery business, on our carryout business across the different segments we’ve got.”
They were also order-count driven based on consumer income level, he said. But it was particularly strong among lower-income consumers that were focused on value in the period, Weiner said.
Two technology-related changes helped drive those sales: third-party delivery and the company’s loyalty program.
Loyalty was the big change. Domino’s last year changed its loyalty program to enable members to earn points with lower-priced orders and redeem them earlier.
Under the old program, customers couldn’t earn points until they spent $10, and couldn’t redeem them until they made a certain number of those orders.
Now, they collect points if they spend as little as $5, and they can redeem earlier. Thus, carryout customers focused on value and those that don’t come in as often are now earning points.
“We specifically designed it to tap into consumers that we hadn’t done before,” Weiner said. “Reducing the purchase from $10 to $5, well, all of a sudden, it’s a more compelling program for carryout customers and just customers who don’t want to spend a lot of money.”
That has helped the company generate stronger traffic from all income groups, Weiner said.
Domino’s also saw stronger residual sales from value. The company saw continued sales from the Emergency Pizza buy-one, get-one offer the chain ran last year. “Emergency Pizza performed better than any buy-one, get-one-free I’ve done in my career,” Weiner said.
And a “boost week” carryout special also performed better than the company expected. “Clearly, customers want value, and we’re driving it profitably for our franchisees,” he said.
Indeed, executives said that operator profitability improved, despite customers ordering more value-focused options.
That value also shows up in its third-party delivery orders. The chain has started selling pizzas through Uber Eats, and about 1.4% of sales came through that channel in the first quarter. Domino’s expects that will be 3% by the end of this year.
A higher percentage of those orders are from individuals, and customers are ordering more deals on that channel. “This allows us to tap into individual users who, frankly, are willing to spend a lot more money on a per-person basis than they would through us,” Weiner said.
The results at Domino’s came as the market for fast-food pizza had slowed, including at the chain’s rivals Papa Johns and Pizza Hut.
The chains had been losing customers who didn’t want to spend on delivery while third parties took customers who were willing to spend more. Domino’s surprising results from the first quarter run counter to that trend.
Weiner said that the pizza market has returned to where it was before the pandemic: a market share game. He said that the company has traditionally stolen share in this market, at least until last year. The company now hopes it’s back to where it was.
“We’ve returned to what our calling card was over time,” Weiner said. “This is a category that is tremendous, and it is growing in line with population. We’ve been what I call an equal opportunity share stealer. Frankly, we lost that last year, two years, and we’re back.”
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.