Domino’s Pizza, the Ann Arbor, Michigan-based quick-service restaurant (QSR) chain with more than 18,800 stores worldwide, may be seeing growth in its pickup business, but the delivery channel is taking a hit in the face of labor challenges.
On an earnings call with analysts Thursday (April 28), Russell Weiner, the brand’s chief operating officer and president, who will take over as CEO in July, discussed the stark differences in the challenges facing the restaurant’s different off-premise channels.
“We essentially have two businesses,” he said. “We’ve got a carryout pizza business and the delivery business. The carryout business has not really been constrained, … and that business over the last three years is up 24%.”
Nearly half of all consumers are looking for pickup options, according to data from PYMNTS’ April study “The Digital Divide: The Key Factors That Drive Restaurant Choice,” created in collaboration with Software-as-a-Service (SaaS) customer experience management (CXM) solutions provider Paytronix. The study, which drew from a survey of more than 2,600 U.S. adults, found that 47% of consumers cited convenient pickup options as an important factor influencing their choice of restaurant, and about one in five ranked these as the single most important factor.
Read more: From Outdoor Seating to Touchless Payments, Dining Habits Are Changing
On the other hand, the company is unable to fulfill the demand coming in for pizza delivery.
“Where we are now, the customer issue [is that] we actually have plenty of demand,” Weiner said. “We just have that capacity problem. Our customers understand — they’re not happy, but they understand — what our team members are up against.”
The company is doing what it can to mitigate the disappointment of delivery customers and incentivize adoption of pickup channels. As to the former, the brand is offering those whose pizzas arrive late a free pie the next time they order. For the latter, the company is continuing its initiative to “tip” consumers when they pick up their carryout purchases with a $3 credit for their next carryout order.
See more: Domino’s ‘Tips’ Customers for Pickup Amid Push to Shift Delivery Labor to Consumers
The tipping promotion has the added advantage of boosting consumers’ adoption of the brand’s digital channels, enabling Domino’s to, as Weiner put it, “do all our data magic” to further drive engagement.
“The only way you can get the carryout tip is to … go online,” he said. “We’ve seen a five-percentage-point increase in our online carryout business, and so that strategy is absolutely working.”
The capacity challenge is a common one across the industry. In a March interview with PYMNTS’ Karen Webster, Andrew Robbins, CEO of Paytronix, laid out the situation facing restaurants today.
“They’re still struggling,” he said. “So, revenue’s up, dining is up, and it really could be a boom market for them if they could get the labor. There are still people who are shutting down, not doing the full day that they would normally do, and closing some nights. … It’s still a real problem.”
Read more: Labor Challenges Stifling Would-Be Restaurant Boom, Paytronix CEO Says
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