Domino's Pizza is known as a tech savvy company that has been ahead of the mobile and data curves and now it plans to leverage integration with Uber Eats, revamp its loyalty program and reinvent its customer experience and boost productivity with generative AI.
The company has been transforming from a pizza maker with delivery service to a food delivery platform. CEO Russell Weiner said on Domino's Pizza's third quarter earnings call that its "initiatives are designed to create significant shareholder value in the months and years ahead."
According to Domino's, these new experiences will "lead to loyal customers who will provide considerable lifetime value for our brand and our company." Domino's has more than 6,700 US stores and about $4.5 billion in annual sales with two-third of revenue coming from digital channels.
Here's a look at what Domino's is cooking up:
Revamped loyalty program. For firms like Domino's loyalty programs are key to drive customer engagement. The company changed its Domino's Rewards levels to drive more consumption by lowering spend thresholds and the point system to redeem items. "This change will make us even more competitive in the carryout segment where ticket tends to be lower," said Weiner, who added that the data shows higher engagement.
Domino's also said that customers who use the company's e-commerce platform will automatically earn an Emergency Pizza.
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Uber Eats integration. In July, Domino's and Uber announced they would integrate platforms. The idea was to drive sales through delivery orders. For Domino's the move was a reversal given it had previously shunned delivery aggregators. In its regulatory filings, Domino's cited delivery aggregators as competitors along with traditional rivals.
Weiner said that "our integration into the Uber Eats platform is proceeding as planned." Uber Eats will be to deliver from Domino's US stores by the end of the year. He said:
"We expect this initiative will drive incremental delivery volume from new customers, increase our share of the pizza delivery market and create stronger economics for our company and franchisees. This will begin in a measurable way in the first quarter of 2024. We want to exceed the expectations that the incremental customers will get through Domino's Rewards and Uber Eats."
Right now, Weiner said it is piloting the integration to work out "the handshake between two really large platforms." "We already deliver more pizzas than anyone in the country, and so as we take on these incremental orders, we just need to make sure that technology works. That's what we're doing now and then certainly making sure the staffing is right, and we're working with Uber and our franchisees to do that," said Weiner.
Microsoft partnership on generative AI. In October, Domino's announced it is partnering with Microsoft on generative AI to "create the next generation of pizza ordering and operations technology."
Weiner said:
"Our teams are focused on two important goals: first, transforming customer experiences by enhancing the ordering process through personalization and simplification; and then second, streamlining operations and quality control with more predictive tools."
These projects are expected to drive sales starting in the fourth quarter and 2024 and drive a more efficient model for the company.
For Domino's, the Microsoft partnership is also about choosing to buy rather than build. Domino's historically had invested in technology at the expense of product innovation. Today, Domino's wants to be more product focused with proprietary technology driving competitive advantage. Weiner said:
"As you look back in the history of Domino's, we certainly have built more things internally when it comes to competitive points of difference. I think we've always said, you can't outsource a competitive point of difference. There's going to be a competitive point of difference with generative AI solutions, and we think we've got the resources and the pizza expertise internally.
What we've got with Microsoft is the best in the field externally. And so, you take those two things together, and it's not just cost, it's also an impact."
"This is kind of a hybrid here, best-in-class, both best-in-class pizza, best-in-class AI."
