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Daily news and analysis about the food tech revolution

Domino's

Domino’s: ‘In 60 Years, We’ve Never Made a Dollar Delivering Pizza’

Pizza chain Domino’s announced its fourth-quarter 2020 earnings this week and simultaneously reiterated its stance on using third-party delivery services like DoorDash, Uber Eats, and Grubhub.

Short answer: It won’t.

Speaking on an earnings call Thursday, Domino’s CEO Ritch Allison said his company has struggled to understand “the long-term economics in some of the aggregator business.”

“Every time we look at it here in the U.S., it just doesn’t make sense for us or our franchisees economically,” he said. “And if it doesn’t make sense economically, it certainly doesn’t make sense to take the risk of sharing all of our customer data with these third parties.”

Domino’s has never used nor planned to use third-party delivery apps to serve its customers, choosing instead to process digital orders through its in-house app and use its own employees to handle the last mile. Allison told the Wall Street Journal in 2019 that “the profit hit and reputational risk” of working with DoorDash et al. wasn’t worth the extra revenue that might come from such partnerships.

One pandemic and an industry-wide shift to delivery later, and Domino’s hasn’t changed its stance.

“In 60 years, we’ve never made a dollar delivering pizza,” he said. “We make money on the product, but we don’t make money on the delivery. So we’re just not sure how others do it.”

Allison went on to explain that third-party delivery services’ money has to come from either the restaurant or the customer. Both of those areas are problematic right now. The high commission fees these services charge restaurants is a well-documented and increasingly hated practice. At the same time, services have hiked prices for customers, and when restaurant dining rooms finally get to reopen, it’s uncertain how popular delivery will remain among consumers.

DoorDash as good as admitted this in its own earnings call this week, saying it expects “declines in customer engagement and average order values” as markets open back up. The company beat analyst expectations for revenue during the fourth quarter, but also more than doubled its losses. 

Those points underscore Allison’s hesitations around making money via delivery. Domino’s appears to be moving in the opposite direction. On this week’s call, Allison said the company was shrinking its delivery area “to get closer to our customer for better service.” This fortressing strategy, as Domino’s calls it, will continue to drive store growth in 2021.

Same-store sales for Dominos grew 11.2 percent during the fourth quarter. In addition to keeping its delivery business in-house, the chain will focus on its carryout service, including its recently launched “carside service,” and making investments in new technologies. 

Grubhub to Offer In-Car Ordering Through Fiat Vehicles

In-vehicle tech company Lear Corporation announced today that its Xevo software businesses has partnered with Grubhub to bring food ordering capabilities to Fiat Chrysler Automobiles (FCA). Drivers will be able to order food from the third-party delivery service via an app on FCA’s Uconnect Market platform. 

FCA vehicles will be the first to offer Grubhub’s service as an in-vehicle feature. Once signed into their Grubhub account via the in-car system, customers can order ahead and pay for their meal on the go before picking it up from the restaurant. Users will also be able to reorder past meals market as “favorites.”

An additional feature lets users discover “new favorites,” too. If a customer is driving by a restaurant from which theY have never ordered, they can tap a button that will forward the restaurant’s menu to their email. Needless to say, drivers can’t browse the menu of a new restaurant while actually driving the car. 

Given restaurant tech’s current focus on making the customer meal journey speedier and more efficient, adding order-ahead and pay features to the car seems like a no-brainer. Grubhub may be the first third-party delivery service to land in the car, but the Xevo deal is not the first go-around for in-vehicle restaurant service. In 2019, Domino’s teamed up with both Xevo and Chevrolet for in-vehicle ordering deals. Also in 2019, BMW partnered with Olo to make food ordering directly available from BMW vehicles. 

FCA’s Uconnect platform, meanwhile, is available on 2019 and 2020 models of Chrysler, Dodge, Jeep, and Ram vehicles, so it wouldn’t be surprising if Grubhub is available soon to those drivers as well.

Week in Restaurants: A Classic SoCal Diner Goes Off-Premises, Dom’s Still Checking Pizzas

Why are you reading this and not grilling up a delicious Beyond Burger this holiday weekend?

As long as you’re here, let’s take a quick look at the week in restaurants. And what a week it was. With states halting the reopening of dining rooms, it’s clear the effects of the pandemic are far from over in the restaurant industry. Yet business keeps on, and there were a number of noteworthy developments from this week around ghost kitchens, AI pizza checkers, and the greatest diner of all time.

New NORMS

NORMS, a much-loved diner chain in Southern California, this week debuted NORMS Junior, a new store prototype geared towards to-go orders. The company says NORMS Junior will be the model for future NORMS locations — no surprise, given the pandemic’s effect on dining rooms (see above). NRN has some great slides of what this new NORMS will look like.

Next Stop for Wingstop: Ghost Kitchens

Also riding the off-premises wave strong is fast-casual chain Wingstop, who this week opened its first ghost kitchen in its hometown of Dallas, TX. The new facility is less than 400 square feet and is for delivery-only orders. Wingstop says one of its goals is to digitize 100 percent of its transactions. A delivery-only ghost kitchen will aid in that.

Taco Bell Redoes Digital Rewards

Simply dubbed Taco Bell Rewards, the new app-based loyalty program comes five years after the band’s original rewards program. Apparently the idea of a new loyalty app was so popular it sent Taco Bell traffic through the roof and temporarily crashed the site. To access the new rewards program, customers can download the latest version of the Taco Bell app, which includes a beta version of Taco Bell Rewards.

AI Will Continue Checking Your Pizzas

Domino’s and Dragontail Systems said this week they will continue their partnership, which puts Dragontail’s AI tech in Domino’s restaurants to ensure quality. The smart scanner uses advanced machine learning, artificial intelligence, and sensor technology to check the quality of pies before the go out for delivery. (Dragontail’s tech can also be used to ensure proper sanitization in restaurants.) The continuation of the partnership means more of these pizza scanners across more Domino’s locations. So far, the partnership between the two companies has been limited to Domino’s locations Australia. They have not yet said if this extended partnership will bring the technology to stores elsewhere in the world.

Domino’s Takes a Cue From Grocery With Its New Carside Delivery Feature

Mega pizza chain Domino’s today launched yet-another way for mobile order customers to retrieve their pies. “Domino’s Carside Delivery” is now available across the U.S., according to a company press release. 

The carside delivery option functions just as you would expect. It works only for those ordering via the Domino’s mobile app, right now between the hours of 4 p.m. and 9 p.m. Customers order and pay for their pizza, and also give their vehicle color, make, and model, which Domino’s will use to identify them when they arrive at the store. Customers also note where they want the order placed: trunk, back seat, etc. Upon arriving, they can hit the “I’m here” button on the Domino’s Tracker app and a staff will bring their pizza out. 

“It’s carryout, delivered,” Dennis Maloney, Domino’s senior vice president and chief innovation officer, said in today’s press release. 

But could it be simpler? Over in the grocery sector, major retailers like Safeway and Walmart have seen demand for their versions of carside pickup spike during the pandemic. My colleague Chris Albrecht has tried a bunch of them and found that Walmart’s is the fastest and simplest because of the geofencing technology the company adds to the pickup process. There is no number to call, no “I’m here” button to hit. Walmart’s system simply knows when you’ve arrived and alerts the staff so they can bring out your groceries.

Panera has also implemented geofencing for its curbside pickup process, which suggests there’s a future for it in the restaurant industry, especially with dining rooms closing again and off-premises still being the major lifeline for business.

One of the perks of geofencing technology is that restaurants (or grocers) can move more customers through faster. For Domino’s, that would translate into selling more pies. It could also help the chain better predict demand because geofencing would give it access to data that says how far people are traveling to get to the store, how long it takes them, etc.

Domino’s made no mention of geofencing tech in today’s announcement, but it would not be surprising to see the chain adopt it in the future to remove an extra step — the “I’m here” button — from the curbside process.

Ok so having to hit an “I’m here” button is not an actual problem to have in the grand scheme of things, which is to say, I doubt it will hinder customers from ordering carside via Domino’s. But the quest for simplicity in the curbside/carside pickup process grows every more important for restaurants, and before any technology around it gets standardized, we’ll see many different features claiming to be the simplest solution out there.

Branch is Working With Domino’s Franchisees to Get Employees Faster Access to Their Pay

Challenger bank Branch today announced an integration with Domino’s to let employees of the pizza chain access their earnings after each shift. Over 400 Domino’s locations have already opted-in to the program, according to a press release sent from Branch.

The official partnership is between Branch and Servant Systems, the software developer behind Domino’s PULSE Franchise Office System, which manages reporting, accounting, payroll, and other financial tasks for over 3,000 Domino’s stores. 

The Branch platform, meanwhile, is a scheduling and pay-management app for hourly workers that lets them access wages instantly, rather than waiting for a paycheck, along with budgeting and management tools for their finances. Like other instant pay services out there, Branch is popular in the restaurant industry, which relies heavily on hourly workers. Taco Bell and Dunkin’ are also among the company’s clients.

Through the new partnership, Branch will integrate directly with Servant Systems, which will act as something of a middleman between Branch and Domino’s. In turn, Domino’s employees at participating stores will be able to set up an account on the Branch app and access the aforementioned instant pay features as well as financial wellness tools.

Quick access to earnings was already a major selling point for apps like Branch when they first emerged to challenge the traditional payday loan. Now, with a pandemic wrecking havoc on the restaurants and the entire industry projected to lose billions of dollars in sales, faster access to earnings and tips is crucial in order for many workers to make ends meet.

Many restaurant workers have historically had to live paycheck to paycheck, their wages and in some cases their tips locked into antiquated accounting systems that haven’t evolved with the times. But with restaurant dining rooms closed, hours cut, and jobs uncertain, the ugly underbelly of this model is clearly on display.

It’s also getting increasingly apparent which restaurant-focused technologies have real value right now and which don’t. Branch and other instant pay systems (DailyPay and Instant, to name a couple) fall into that “useful” category of tools people actually need to get by in a COVID-19-era restaurant business. 

Week in Restaurants: Domino’s Might Win Its Fight Against Third-party Delivery

Greetings from the far reaches of Newark Liberty International Airport. I’m off to Madrid to check out the the Hospitality 4.0 Congress for a few days. You should be finalizing your travel plans as well — to NYC, specifically, where you can join us next week for The Spoon’s daylong Customize event. We’ll be discussing food personalization and what that trend means for your diet, your kitchen, and your restaurant orders. Don’t sleep on this one. Grab one of the few remaining tickets here.

In the meantime, here are a few more restaurant-related stories from around the web this week.

Domino’s Stance Against Third-Party Delivery Is Paying Off

Who can possibly stand up to third-party delivery’s mission to dominate the restaurant industry? Domino’s apparently.

The pizza chain is at this point as famous for its in-house delivery policy as it is for its pies, and on its Q4 2019 earnings call this week, the Ann Arbor-based company announced same-store sales growth of $3.4 percent, while its stock jumped 25 percent. In other words, its anti-third-party-delivery stance isn’t killing its business, at least not yet. On the call, Domino’s CEO Ritch Allison did note that the company is still seeing a lot of pressure from third-party services. “As we look back on the quarter, it does appear to us that while we see continued headwinds in delivery that are difficult to forecast, aggregator pressure appeared to level off on our delivery orders in Q4, while carryout traffic was outstanding during the quarter, as our strategy to grow that business continues to pay off.“

Waitr to Lay Off 2,300 Drivers

Troubled food delivery service Waitr will lay off 2,300 delivery drivers in its home state of Louisiana, according to a notice filed with the state’s labor department. This announcement comes just a couple weeks after the service announced it would reclassify drivers as contract workers and pay them per delivery rather than per hour, as the old model dictated. The layoffs are effective April 6. A Waitr spokesperson said impacted drivers will be able to keep working as contracted drivers.

The Cheesecake Factory Is Finally Taking Yelp Reservations

Ever visit a Cheesecake Factory on a Friday at 7 p.m.? You’re lucky if you wait only an hour to get a table. Until now, that is. On a call with investors this week, the company announced it has partnered with Yelp to start offering limited seating reservations, meaning a certain number of tables will be set aside for reservations throughout the week.

This isn’t the most earth-shattering news out there today, but it does point to the work restaurants are currently doing to make the front-of-house experience more efficient and hopefully increase dine-in visits from customers. “One of the biggest hurdles for our guests can be our long wait times,” he said. “So we’re hoping this additional convenience will encourage guests who are more pressed for time to dine with us,” president David Gordon said on the call.

Domino’s Launches Pie Pass to Speed Up Pickup Orders

Domino’s is best known for delivery, but this week, the Ann Arbor, MI-based pizza chain has turned its attention to pickup orders. Yesterday, the company announced Pie Pass, a new feature that lets customers skip the line when they order a pizza for pickup online.

With Pie Pass, customers can place an order on the Domino’s mobile app, then check in via the Domino’s Tracker once they reach the store. Checking in alerts employees to ready the order. In the store, a digital board will display the customer’s name when the pie is ready for pickup, at which point an employee simply hands the order off to the customer.

Much of the discussion around off-premises orders these days centers on delivery. But pickup still represents the vast majority of those sales, and Domino’s is hardly the only restaurant-related company to introduce technology that makes the process faster for customers. The Pie Pass has some similarities with Little Caesars’ Pizza Portal, a heated, self-service pickup station where customers can grab orders placed online or via the Little Caesars mobile app.

Even straight-up delivery companies are paying attention to pickup. In January, Grubhub announced its own proprietary platform, Ultimate, dedicated to pickup orders. It, too, displays a customer’s name in the store, and provides updates on the status of their order. 

It’s not surprising that Domino’s would develop its own in-house tech for pickup, rather than teaming up with Grubhub. More than once, the chain has made it clear it will not use third-party services like Grubhub or DoorDash. Domino’s CEO Ritch Allison said last year that he didn’t “see a need” for Domino’s to be on third-party platforms. “It’s not clear why I would want to give up our franchisees’ margin, or data in our business, and give it to someone who would ultimately use it against our business,” he said. 

That line of thinking extends to pickup, as well, and it might just work. The Pie Pass system will ideally mean employees can more easily have a pizza ready as soon as a customer walks into the store. More customers would in turn be compelled to use the Domino’s mobile app to place their pickup orders, which would mean more brand loyalty for the chain, not to mention more customer data.

Domino’s Expands GPS Tracking Tech Across U.S. Stores

Domino’s announced this week it will expand its GPS tracking technology to roughly a quarter of its U.S. stores by the end of 2019. The chain has been piloting this technology, dubbed Domino’s Tracker, in select locations throughout this year. According to a press release, Domino’s expects “a significant portion of stores” to use it in 2020.

For customers, the Domino’s Tracker offers a more precise time estimate of when their pie will arrive. After placing an order via the Domino’s app, they will be able to access an interactive map of their order and receive an estimated delivery time. Users can opt in to receive text message updates letting them know when their order is on the way, when it is two minutes away, and when it has arrived. 

Store managers, meanwhile, can view where drivers (Domino’s refers to them as “delivery experts”) are on the road. The idea is that by having more exact visibility into drivers’ locations, managers can better manage operational elements of the delivery process, such as route optimization and driver safety. 

GPS tracking technology isn’t new to the delivery world, and in fact, part of Domino’s motivation behind enhancing its own is to compete with third-party food delivery services like DoorDash and Uber Eats, who already have such capabilities in place. The move is one of many strategies Domino’s has in place to fight back against third-party delivery dominance.

That’s no small order in a restaurant industry where 70 percent of all delivery orders are expected to come from third-party delivery services by 2022.  Hence initiatives like the Domino’s Innovation Garage, a testing ground for new tech that opened in August, an e-bike program to speed up delivery in dense urban areas where cars are inefficient, and partnerships with location-tech companies to pinpoint hard-to-find street addresses. 

Earlier this year, Domino’s CEO Richard E. Allison noted that his company faces “headwinds related to aggressive activity from third-party delivery aggregators” and that he did not expect to see this change any time soon. He added the company will continue to invest in technology for the foreseeable future.

Domino’s GPS tracking technology is currently operating at stores in Phoenix, Houston, Salt Lake City, Miami, Las Vegas, Baltimore and Norfolk, Virginia.

Domino’s Innovation Garage Doubles Down on GPS Tracking, Driverless Cars

Domino’s has wasted no time in ramping up its innovations since opening the doors on its Innovation Garage in August. And at an event held at the facility this week, the pizza chain-turned-tech company highlighted a couple of the top innovations it is currently working on.

Nation’s Restaurant News, who was at the event, reported on these developments, which are geared towards getting pizzas to customers’ doorsteps as fast and as seamlessly as possible.

GPS tracking technology topped the list of developments the company is working on. Earlier this year, Domino’s started testing its system that lets customers and stores track drivers in 27 company-owned locations around Phoenix, Arizona. The system allows customers to see their driver’s progress on a map and receive a notification when their pizza is just a couple minutes away. Store managers can also track drivers via a screen inside the store. Domino’s has said it will roll out this tracking technology to all U.S. stores by the end of 2019.

At the Innovation Garage this week, the company wouldn’t give data on how much GPS tracking improves the pizza delivery experience, but said Domino’s locations are seeing improvements and that more of them are adopting the technology.

Speaking of cars, the company also said at the event that it has finished its testing of autonomous delivery in Houston, TX, and is ready to officially roll the program out in that city. Domino’s piloted driverless delivery this past summer, teaming up with a company called Nuro, who makes a fully automated, low-speed vehicle about half the size of a regular car.

With Nuro, customers who select the “autonomous” option when ordering a pizza use a PIN to unlock the car when it arrives and retrieve their pizza.

For now, autonomous delivery via Nuro will be concentrated on the downtown Houston area. Domino’s didn’t say whether a larger rollout is planned for other parts of the city or the U.S. However, highlighting the struggles around rising labor costs and the struggle to find enough drivers, Domino’s Chief Digital Officer Dennis Maloney said at the event, “This is the future of our company.”

Domino’s Is Losing Its Legal Battle Over Website Accessibility. Good

The U.S. Supreme Court has declined to hear an appeal from Domino’s fighting a ruling that a blind customer could sue the chain for violation of the American Disabilities Act (ADA) after he couldn’t use the Domino’s website to order a pizza. The ruling comes at a time when the restaurant experience is more digital than ever thanks to the growing popularity of things like mobile ordering, delivery, and ghost kitchens. It will also likely trigger more action on the part of restaurant chains to make their digital properties accessible to those with disabilities.

For a quick backstory, in July, Domino’s petitioned the U.S. Supreme Court after the U.S. Court of Appeals for the Ninth Circuit ruled in favor of California resident Guillermo Robles, a blind customer who filed the lawsuit after two failed attempts to order a customized pizza from the Domino’s website and app. Robles argued that protections under the ADA apply to online properties as well as brick-and-mortar ones. Domino’s refuted the point, stating that the ADA regulations were written long before digital restaurant ordering existed and that the government hasn’t yet issued rules on how businesses should make their websites ADA compliant.

The puzzling element of this case has always been that Domino’s is a massive entity with ample resources to put towards improving the way its website and app functions for the disabled. That Domino’s prides itself on being more a tech company these days than a pizza chain makes the case even more of a head scratcher. You would think a company that wants to be known for its technology-forward approach to business would be falling over itself to set the standard for ADA-compliant digital properties.

But the opposite seems to be true. Domino’s has instead argued that the recent “tsunami of website accessibility litigation” by plaintiffs is “exploiting the absence of a standard for their own benefit” and that federal standards need to be put in place.

While it’s true that digital properties present more challenges when it comes to staying ADA compliant, Domino’s argument overall has been weak from the start. Rather than use the case as an opportunity to help create clearer regulations and become known as a champion of more ethical tech, the chain has instead chosen to spend millions of dollars fighting a ruling it will in all likelihood still have to comply with.

It’s estimated that blindness in the U.S. is expected to double to more than 8 million people by 2050. Meanwhile, around 26.9 million U.S. adults have some vision loss.

At the same time, though, more than 5 billion people own mobile devices, at least half of which are smartphones, the restaurant experience is only getting more reliant on digital properties. Add to that the rising popularity of delivery-only ghost kitchens, which wouldn’t exist without digital devices, and it’s easy to see why the issue of restaurants making their properties ADA compliant is so urgent now.

While a large number of restaurant websites are still not designed for ADA compliance, this week’s ruling should certainly motivate other chains to provide an acceptable level of service via digital properties to those with visual, auditory, and cognitive disabilities. If Domino’s is smart, it will start using some of its innovation muscle to be part of the solution, rather than continuing to paint itself as the villain of the story.

Domino’s to Launch E-Bike Program Across the U.S.

When it comes to getting food delivered, cars aren’t always the easiest, fastest way.

Domino’s underscored that point today by announcing a new program that will equip Domino’s locations across the U.S. with an e-bike option for delivery.

The custom e-bikes come courtesy of a partnership with Seattle-based e-bike maker Rad Power Bikes. According to a press release, Domino’s has been testing these two-wheeled vehicles in stores around Houston, Miami, and New York. The company will deploy the bikes throughout those cities as well as Salt Lake City and Baltimore later this year.

Bikes can run for 25 to 40 miles before needing a recharge. They include front and rear cargo areas, which are insulated so they can keep pizza hot and drinks cold en route to customers’ doorsteps. One e-bike can hold up to 12 pizzas.

With two out of three people likely to be living in cities by 2050, bike delivery via pedaled vehicles is becoming more of the norm in more places, and Domino’s isn’t the only company to be trying out the method for food delivery. Uber, who owns the Uber Eats platform, bought e-bike maker Jump in 2018, and Postmates has been testing e-bike initiatives since 2017.

E-bikes, meanwhile, are another area in which Domino’s is dabbling in ways to get pizzas to its customers faster. In June, the company announced a partnership with Chevrolet to make in-car ordering available to customers as well as a partnership with Nuro for autonomous delivery in Houston.

In the press release, Tom Curtis, Domino’s executive vice president of corporate operations, said the company saw improvement in delivery and service with the new e-bike program. He also noted that e-bike delivery allows stores to hire from a wider pool of candidates, including those who might not own a car or driver’s license.

Domino’s Responds to Third-Party Delivery Pressure, Hints at New Technologies

Domino’s posted its lowest-ever increase in same-store sales on its Q2 earnings call yesterday, a drop that’s in-part fueled by what CEO Rich Allison called “headwinds related to aggressive activity from third-party delivery aggregators.”

On the call, Allison noted that he didn’t expect to see third-party delivery activity slow any time soon, but that he questioned the sustainability of the third-party delivery model, noting that “there are going to be some survivors in this business and some of these aggregators will not be around in the future would be my hypothesis.”

A veteran of delivery, Domino’s has not and may never partner with a third-party service like Grubhub or DoorDash when it comes to getting pizza into the hands of customers as fast as possible. Rather, the company has over the last few years doubled down on its own in-house efforts, from its chatbots named DOM that can take your order to AI tools that assess pizza quality to a partnership with Nuro this year to test delivery via driverless cars.

On the call, Allison also hinted at what’s to come in terms of more and new technology initiatives from the company. Domino’s will launch GPS tracking technology at the end of 2019 that will, “bring even further transparency to the experience of tracking an order.” He also noted that the Nuro partnership will officially kick off this fall, and hinted at getting DOM into more stores across the U.S.

Despite their different context and mediums, all of these technology efforts roll up into the same goal: get the pizza delivered to the customer as fast as possible. And we’ll continue to see Domino’s attempt that through constant technology innovation, even as third-party delivery services continue expanding across the U.S.

Despite lower sales for the quarter, Allison said he was “pleased” with overall performance, and Domino’s is on track to meet the lower end of its five-year outlook.