Quick-service restaurant chain Domino’s Pizza Inc. (NASDAQ:DPZ) confirmed its newly announced partnership with DoorDash Inc. (NASDAQ:DASH) for a nationwide rollout beginning in May, followed by an expansion into Canada later in the year.
What Happened: On Monday, during the restaurant chain’s first quarter earnings call, the management discussed its recent partnership with DoorDash, which was announced at the beginning of this month.
After testing across a small number of stores, it now plans a nationwide rollout starting in May, which is set to be complete towards the end of the second quarter. The company expects this to have a sizable impact on top-line growth during the second half of this year.
See More: US Restaurants Face Growth Hurdles As Macro Headwinds Mount, Says Analyst
According to Domino’s CEO, Russell Leener, 50% of orders from DoorDash are expected to be incremental, which means half the orders coming from the platform will be new, and not cannibalizing current sales.
“If customers want to buy us on DoorDash, it’s because of their natural behavior on that platform, and we’re fine with that,” Leener says, adding that DoorDash will have 2x the contribution of Uber Eats, with which Domino’s has been working since 2023, contributing 3% to the company’s sales in 2024.
The company believes this move will help its rural and suburban stores, just as Uber Eats helped it penetrate deeper into underserved urban regions. Leener says, “Our strategy for aggregators has been to meet customers where they are, whichever app they’re on.”
The company, however, says that it will continue to retain its delivery drivers, and will not expand delivery zones, a decision aimed at preserving product quality. Additionally, its loyalty program will remain exclusive to purchases made directly through its existing platform.
Why It Matters: Despite being a holdout against third-party delivery apps for years, the company decided to give in after its same-store sales continued to lag during its recent fourth quarter earnings release.
The same lackluster same-store figures were reported during its first quarter results on Monday, but the company projects a 3% growth in same-store sales for the full year, partly due to these strategic initiatives.
Domino’s COO, Joe Jordan, recently said that third-party delivery platforms represent a $1 billion opportunity for the company. “Tapping into incremental customers, particularly in suburban and rural markets, is a meaningful opportunity for Domino’s,” he added.
Price Action: Shares of Domino’s Pizza were up 0.63% on Monday, and are down 0.13% in after-hours trading, following the company’s miss on top-line consensus estimates during its first quarter results after markets closed.
Domino’s Pizza sports a favorable price trend in the short, medium, and long terms, despite scoring low on growth and volatility. For more such insights, sign up for Benzinga Edge.
Photo Courtesy: Yalcin Sonat On Shutterstock.com
