The recipe for success in the hotly-competitive pizza industry isn’t just about the best sauce, crust, and toppings. For Domino’s Pizza, it’s also about new digital channels that let its customers order its food as soon as the thought occurs to them, regardless of where they are.
Betting big on digital has been very good for Domino’s Pizza, the nation’s second largest pizza chain by sales and locations, after Pizza Hut. In its latest quarterly earnings report, the Ann Arbor, Michigan company said same-store sales grew by 10.7 percent at its domestic franchise locations. (By contrast, Pizza Hut’s same-store sales numbers have been stagnating.) And for the full fiscal year in 2015, Domino’s said orders placed over digital channels hit $4.7 billion. Domino’s chief executive J. Patrick Doyle attributed those solid numbers in part to the company’s steady investment in technology.
Overseeing much of that investment is Dennis Maloney, Domino’s chief digital officer. “We are now at the point where more than half of our orders and our sales are coming through our digital channels — which makes us a very big e-commerce company,” Maloney says. “And that’s really about the way we think of ourselves. About five years ago we were a pizza company that sold online. We are now an e-commerce company that sells pizza.”
Maloney discussed the transition from neighborhood pizza shop to e-commerce innovator in a recent interview with InnoLead. Later this month, he will be speaking at the AGENDA16 conference in Florida. The title of his talk: “The Making of a Tech Company Out of Pepperoni and Emoji.”
Emoji? Yes, in mid-2015, Domino’s made it possible to send a text message with a pizza emoji, and have your previously-stored usual order show up at your door. Customers can also place orders on the web or even by speaking a request to an Amazon Echo device.
But rewind the clock a few years, and most orders were placed with an old-fashioned phone call. “Customers have always been pretty satisfied with the pizza ordering experience on the phone. But…you may have a situation where the person in the store is the only person in the store, so they’re dealing with three or four things and they’re really rushed,” he says. “When you place an order online, you have ultimate control. You get to see the entire menu, you get to browse, you get to add products to your cart… So it’s just a much more controlled experience if you’re shopping online than if you place a phone call to the store.”
The company had an ideal opportunity to grow its online presence in late 2007 and 2008. At the time, it was undergoing a consolidation of several regional ordering systems into a single national online ordering platform, Maloney says. In addition to desktop and mobile websites, customers can place orders through specialized apps for iPhone, Android, Windows, Kindle and iPad devices, Maloney says.
The apps allow customers to not only custom-build a pizza, but track its progress through every step of the process, from assembly and baking to quality assurance and delivery. The company calls these new apps “AnyWare” platforms.
Over the past year, the company’s own programming teams have built AnyWare apps for Ford cars and trucks equipped with the SYNC in-vehicle communications and entertainment system; Samsung smart TVs; smart watches from Apple, Pebble and Android Wear; Twitter and text messages using pizza emojis; and the Echo, an Internet-linked device that is controlled by voice commands.
Each of the product launches has been a driver of steady digital growth for Domino’s, and a source of repeat customer business. “A lot of our customers are using platforms and technologies that, while they still have screens in them and still have very interactive capabilities, have not been what has been considered a traditional ordering platform,” Maloney says. “We want to make it as easy as possible for people to order pizza using whatever platforms or technologies they’re comfortable using.”
About 70 people work on Domino’s enterprise e-commerce team developing the various AnyWare apps; the company doesn’t rely much on outside vendors. Maloney says that access to customer data and feedback allows and his team to continually improve and fine tune the company’s digital sales platforms until they perform at their very best.
“Our digital orders have higher customer satisfaction, and actually result in higher profit because our customers have [access to] a better mix of products,” he says. “They actually end up getting the products they want. So customers are happier, our franchisees are happier, Dominos as a corporation is happier. It really winds up being a win-win-win all around.”
While Domino’s 12,119 locations are largely operated by franchisees, Maloney says, “We’re very fortunate. By definition we own a very good part of the experience in the entire value chain… [This] gives us a very good set of data around what’s important to our customers, the best way to talk to them and market to them, give them special offers, introduce them to new products, basically create really good ordering experiences.”
Maloney says that while it was gratifying to see more than 50 percent of all sales taking place over digital channels in 2015, he doesn’t think the company is anywhere close to the finish line when it comes to innovation. “I was a little worried when I started [working at Domino’s six years ago] that we would eventually run out of really interesting cool things to be doing either for our [customers] or the business,” Maloney says.
“I can tell you we’ve got a long list of very distinct things coming,” he says. “Digital just continues to play more and more of a role, and [become] a bigger and bigger percentage of the sales. …It really does come down to whoever wins the digital space in pizza is going to win pizza.”