Domino’s wants more customers to pick up their own pizzas rather than wait for delivery

Forget delivery in 30 minutes or less. Domino’s Pizza Inc. wants customers to pick up their own pizzas.

The chain has a strategy to encourage customer order picking, giving customers a $ 3 “tip” when they go to a Domino DPZ.
+ 2.63%
location and get your food.

“Online delivery orders generate a higher ticket and require a lower cost than over-the-counter delivery orders, as well as boosting digital engagement and the opportunity to add members to our loyalty program,” he said. outgoing CEO Ritch Allison told Thursday’s Earnings Call, according to a FactSet transcript.

Offering customers a $ 3 bonus also encourages repeat business, Allison said.

The takeaway business was strong for Domino’s, with sales in the same store in the United States up 11.3%. It was one of the highlights of a quarter in which the company lost profits and revenue.

A major problem is staffing.

I’ll see: U.S. labor costs accelerate in the first quarter, adding to inflation concerns

“Staffing challenges continued during the first quarter, leading to a reduction in operating hours and other service-related challenges in many U.S. business stores,” Allison said.

“To give you an idea of ​​the magnitude, when we add up all the hours of operation lost during the first quarter, U.S. stores cumulatively closed the equivalent of nearly six days in all U.S. business.”

He added that stores with full staff or almost surpassed those with the most serious work challenges by 12 percentage points. The company has turned to call centers to help with phones while workers focus on orders and delivery. Incoming CEO Russell Weiner said the company is looking at the workforce of drivers to look at where improvements can be made.

“We believe that Domino’s job offer for aspiring distributors has deteriorated compared to many of the benefits that third-party services now offer,” Stifel analysts wrote in a note.

“In addition to providing fully autonomous programming, many third-party companies
they also offer aggressive financial incentives to attract delivery drivers, especially at peak times, and not assign additional responsibilities beyond delivering the order. We believe that Domino’s staffing problems will persist until it improves its attractiveness to drivers, which could require significant investment and time. “

Stifel values ​​Domino shares at a target price of $ 345, below $ 425.

“Management is working to bring best practices from the top quartile to the lower ranking stores, but if that doesn’t work, management said ‘all options are on the table’ to improve the results of delivery, which we understand as a possible provision to consider. “Third party delivery,” Benchmark analysts wrote in a note.

Domino’s reference rates hold stocks.

Domino’s has also made changes to manage inflation, raising the price of its Mix & Match offer to $ 6.99 from $ 5.99 and adding options to the offer, such as 32-piece parmesan bread bites and six-piece chicken wings.

Too: P&G Defends Premium Products as Consumer Budgets Fight Inflation and Rising Prices

“While the bones point to the smoothness of the recent top line as evidence of long-term headwinds (i.e., increased competition) that materialize in a normalization / post-COVID environment, the strength of the “Execution seems to suggest that brand demand remains healthy and that delivery staff challenges are really the main driver of the current weakness,” wrote RBC Capital Markets, which values ​​Domino’s shares exceeding and reducing its target price from $ 480 to $ 440.

MKM Partners kept its stock rating neutral, but lowered its target price to $ 405 from $ 440.

“Fundamentals and operations are in a state of change, in part due to capacity constraints due to a lack of drivers nationwide, which currently outweigh the long-term benefits of the Domino model (solid cash flows, economics / unit development) “. analysts said.

“Competitive positioning and key performance have begun to face pressure and their results, more recently, have haunted Domino ‘s teammates.
giving rise to the will of management to explore deviations from its previous approaches. “

Domino shares fell 4.5% in trading on Friday and have fallen 38.8% to date.

Source link

Leave a Reply