ANN ARBOR, MICH. — The market researcher Circana pegs US quick-service pizza restaurant aggregator sales — those from such third-party platforms as Uber Eats, DoorDash and Postmates — at approximately $5 billion for the 12 months ended May 31. With its recent agreement with Uber Eats, Domino’s Pizza, Inc. is set to capture its slice of the pie.
“The opportunity represents over $1 billion in incremental sales for our US business,” said Russell J. Weiner, chief executive officer, during a July 24 conference call to discuss second-quarter results. “And our research indicates that most of the transactions we gain from participating in this segment will be incremental customers and sales. This has also been supported by what we’ve learned from our Domino’s Pizza international master franchisees who have already developed a $1 billion business, taking orders from aggregators.”
Mr. Weiner added that Domino’s agreement with Uber Eats allows the company to maintain control of its customer data and that orders placed through the platform will be delivered by Domino’s personnel.
“Successfully executing an aggressive plan to get our fair share of the scaled pizza distribution channel isn't new to us,” he said. “We approached the carryout pizza segment in a similar manner back in 2011. Carryout pizza was a smaller percentage of our business before we took thoughtful, aggressive action. Today, our carryout business is almost $2.5 billion larger than it was in 2011, making Domino's the No. 1 carryout pizza brand in the US.”
The Uber Eats agreement comes at a time when Domino’s Pizza’s delivery business is challenged. Fiscal 2023 second-quarter same-store delivery sales declined 3.5% following an 11.7% decline during the second quarter of fiscal 2022, according to the company.
“We expect Q3 same-store sales trends in our delivery business to be challenged similar to Q2,” said Sandeep Reddy, chief financial officer. “ … we expect a slight improvement in trend in Q4 as our updated loyalty program begins to roll out, followed by a considerable improvement in 2024 as a result of transaction growth from our Uber Eats partnership…”
The company’s carryout business experienced growth during the quarter, with same-store sales rising 5.6% and up from a 14.6% gain during the second quarter of fiscal 2022.
“… We've gained $2.5 billion since we leaned in to carryout 2011,” Mr. Weiner said. “We've got another $2 billion just to get our fair share. Our feeling here at Domino’s Pizza is if there is a category that sells pizza that we compete in vigorously, we should get our fair share, which is our share of delivery, 1 out of every 3 (pizzas delivered), and so we've got a lot more to go on carryout as well.”
For the quarter ended June 18, Domino’s Pizza earned $109.4 million, equal to $3.08 per share on the common stock, and higher than the second quarter of fiscal 2022 when the company earned $102.5 million, equal to $2.82 per share.
Quarterly sales ticked down 3.8% to $1.03 billion from $1.07 billion the year before. The company attributed the lower sales total to a fall in supply chain revenues as well as lower order volumes.
For the first six months of fiscal 2023, Domino’s net income was $214.2 million, equal to $6.02 per share, up from $193.5 million, equal to $5.32 per share, the year prior.Sales for the period were $2.05 billion, down from $2.08 billion the year before.