Domino's shifts its focus to menu innovation

The pizza chain is seeing some strong results with its Pepperoni Stuffed Cheesy Bread, its second new product introduction this year. Expect more from the chain.
Domino's menu innovation
Domino's Pepperoni Stuffed Cheesy Bread is outselling regular Stuffed Cheesy Bread. | Photo courtesy of Domino's

In late August, the pizza delivery giant Domino’s introduced a new product, Pepperoni Stuffed Cheesy Bread.

Such new products are common in the restaurant industry, particularly a fast-food business where limited time offers and new menu items drive interest and sales. For Domino’s, the introduction was rare. It was the second new product this year, following an earlier introduction of Loaded Tots.

It had been a while since the company had done that. “The last time we had two major launches was 2011,” Domino’s CEO Russell Weiner told analysts on Thursday.

The results aren’t exactly discouraging the company from additional menu innovation. Both the Loaded Tots in February and the Stuffed Cheesy Bread appear to have resonated with consumers. And Weiner made it clear this week that he wants more of that kind of innovation.

“We’re going to continue to lean into all types of innovation, including product,” Weiner said.

Domino’s regularly introduced new products coming out of the Great Recession. It launched sandwiches in 2008 and pasta in 2009. It also upgraded its pizza and launched a pair of items in 2011, including Cheesy Bread.

In the decade afterward, however, the chain focused much of its marketing elsewhere, typically its technology. “We didn’t do a lot of product innovation,” Weiner said. “We did a lot of technology innovation. We built delivery vehicles, all those kinds of things.”

They did it because it worked. Until 2021, the chain had not had a decline in U.S. same-store sales dating back to 2011.

These days, however, product innovation is becoming important. Rivals have thrived in part by introducing new product platforms, notably Papa Johns’ Papadias and Pizza Hut’s “Melts.”

Outside the pizza business, brands have generated some consumer enthusiasm with new products like chicken sandwiches, chicken nuggets or new sauces. This summer, brands introduced a record number of limited-time offers.

Simply leaning into technology isn’t as effective as it had been a few years ago, when digital sales were less common throughout the industry. In the past-pandemic environment, Domino’s is getting less traction that way.

Domino’s same-store sales declined 0.6% in the U.S. It was the fourth time in the past nine quarters that the chain recorded a same-store sales decline. Only one of those other quarters did the chain generate more than 1% same-store sales growth. At a time of high menu-price inflation, the results have been disappointing.

Yet there is evidence that its product news is working. The company generated 3.6% same-store sales growth in the first quarter, when it introduced the Loaded Tots. And executives said that its Pepperoni Stuffed Cheesy Bread is already outselling regular Stuffed Cheesy Bread.

“I’ve been doing innovation most of my professional career, and I’ve never seen a line extension outperform its base,” Weiner said.

Domino’s does not plan to go away from its focus on technology innovation and, indeed, it just announced a deal with Microsoft on artificial intelligence. The company is simply broadening its horizons.

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