Domino’s Pizza: cashing in on carry-out

If you want a pizza in America, you would do well to get it yourself.

Domino’s Pizza, a pioneer of the delivery pie — a US staple for decades — was a pandemic winner as in-restaurant dining collapsed. But now it has become a victim of all the maladies of the recovery: sharply rising input costs, more choice for customers and labour shortages. As a result, it has been encouraging pizza buyers to come and pick up boxes rather than rely on conventional delivery.

In the second quarter, like-for-like US sales dropped 2.9 per cent, a smaller-than-expected decline. The company partly attributed the surprise to its emphasis on carry-out. DIY is one way to help ease the economy’s constraints.

Still, it remains very expensive to run a restaurant. Domino’s has turned to centralised call centres to take orders so store staff are not distracted from pizza-making. Delivery drivers, it said, want more flexibility. The company has been seeking to accommodate workers’ demands to retain them.

The company has raised its prices by 6 per cent. But the “food basket” — or raw material — cost rises for its stores, which earlier this year had been estimated to be as little as 8 per cent, will now be as high as 15 per cent.

Domino’s has been one of the extraordinary stock successes of the past decade. At the end of 2010, its shares traded at $15. By its peak in 2021, they had reached $550.

Since then, Domino’s shares have fallen about a third, showing far more resilience than other pandemic darlings Netflix and Peloton. The company is quick to compare its latest sales figures not just against the anomalous 2021 and 2020 periods but also the more normalised 2019.

Domino’s revenues, as well as its market capitalisation, are higher than three years ago. Analysts point out that, as the economy softens, diners who previously chose to eat in restaurants will probably trade down. They will opt for fast food and pizza but will hop into their own cars to get it.