Domino’s to ease up on product development pace

by Jeff Gelski
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ANN ARBOR, MICH. – Domino’s Pizza, Inc. plans to slow its rate of product introductions while promoting the ease and speed of digital on-line ordering, as opposed to phone call-in ordering. Domino’s Pizza will seek to launch products that will become permanent additions to its menu, as opposed to numerous limited time offerings, said Patrick Doyle, president and chief executive officer, in an Oct. 15 earnings conference call.

“We are not in the product of the month club anymore,” he said. “You are not going to see us launching things every six or eight weeks like we have in the past. We think that what we are doing is building overall brand momentum by focusing on fewer, bigger things that are truly improving the experience for our customers.”

Slowing the pace of product launches should have a positive effect, he said.

“It helps with execution in the stores, and it helps us make sure that the things that we are launching we’ve got right,” Mr. Doyle said.

A digital on-line platform may help Domino’s build on its menu because people have the menu in front of them.

“In terms of digital orders, basically all of the customer metrics are better with digital orders, and most importantly the retention of those customers is higher because their customer satisfaction is higher and the frequency of those customers is higher,” Mr. Doyle said.

Digital sales for Domino’s have reached about 40% of total sales, he said. Phone call-in orders are accounting for about 50% of sales, and walk-in orders are accounting for about 10%. Television advertisements for Domino’s are promoting the speed and ease of ordering digitally.

“Our customers can now create personalized profiles so they can save information, like credit card or address, as well as their favorite orders, letting them order in as little as five clicks or about 30 seconds,” Mr. Doyle said “This is great news, particularly for our mobile users who want speed and convenience while using a small keyboard. We expect this to be a very popular feature, and one we believe will give us a competitive advantage over a pizza company without this handy feature.”

On Oct. 15 Domino’s reported net income of $30.6 million, or diluted earnings per share of 51c, in the third quarter ended Sept. 8, which compared to net income of $26 million, or diluted earnings per share of 43c, in the third quarter of the previous year. Same-store sales growth, store count growth and a lower effective tax rate offset higher general and administrative expenses and a negative impact of foreign currency exchange rates. Third-quarter revenues rose 7% to $404.1 million from $378.1 million.

During the earnings conference call, Mr. Doyle recognized the success of the Handmade Pan Pizza introduced last year.

“Pan has certainly performed very, very well for us over the course of the past 12 months since its launch last year at the beginning of October, but digital also has been driving growth, and improved store operations have been driving growth, and I think there are a lot of things that have been contributing to it . . .,” he said.
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