Domino’s Maintains Nearly 80% Digital Sales Through Pandemic

Need to Know

• Domino’s is planning to expand its store footprint after online orders surged during the COVID-19 lockdown.
• The U.S. pizza chain reported a net income of $118.7-million, up from $92.4-million during the same period in 2019.
• More than half of all of Domino’s sales are now being handled remotely; the company has developed ordering platforms on Google Home, Facebook Messenger, and Amazon Echo.
• In some cases, 80% of Domino’s orders are originating through digital means.

Analysis

Despite store closures from many brands in the wake of the coronavirus pandemic, Domino’s posted massive Q2 gains on Friday, and announced plans to open new stores in North America and internationally as the company’s revenue surged to $920-million, owing largely to the company’s boost in online sales.

Domino’s net income was $118.7-million vs. $92.4-million over the same period in 2019. The spike in share price represents a 40% surge for the company, against the restaurant industry’s overall decline of 13.4%.

The gains largely came from online orders, as customers were confined to their homes during COVID-19 lockdowns. Domino’s rose to the challenge posed by store closures, launching ordering platforms on Google Home, Facebook Messenger, Amazon Echo, and Twitter, in addition to its own Domino’s Hotspots. According to a release announcing its Q2 results, 65% of U.S. sales over the period came through digital channels by the end of 2019, and more than half of global sales are now handled remotely.

“Through the second quarter, this, combined with loyalty adoption give us a good proven chance at driving additional customer frequency,” CEO Rich Allison said on an earnings call, adding that 75% of US Domino’s sales are now handled digitally. “And I am glad more than ever that we have this direct digital and loyalty relationship with our customers and that we’re not dependent upon a third party to bring us orders.” 

According to Allison, some weeks saw 80% of Domino’s sales originate from digital means, a huge percentage that the pizza chain first reported in the early weeks of the pandemic.

Allison’s earnings call remarks also referenced the Domino’s Piece of the Pie loyalty program, which saw the largest-ever spike in sign-ups in more than a year during this recent quarter. Allison also noted that the COVID-19 pandemic accelerated consumer trends—namely, a surge in online, remote ordering—that the company was already seeing. To that end, Domino’s also announced a partnership with Vonage, which will leverage the telecommunications provider’s Voice API program to provide increasingly personalized ordering experiences for customers.

Domino’s has been reporting digital gains since Q1, at which time the company saw a sales increase of 2.2%. The company has been investing heavily in its digital and remote capacities, including the aforementioned integration on Google and Amazon platforms, plus an improved delivery service including real-time GPS tracking technology on its in-house apps, contactless delivery, and driverless delivery vehicles.