Domino’s Pizza Empire Was Built on Delivery. Now, That May Not Be Enough | WSJ The Economics Of

Summary

Domino's revolutionized pizza delivery, from creating the iconic corrugated pizza box to pioneering fast delivery methods. Initially focused on in-house delivery, Domino's grew through innovative strategies like 'fortressing' and its advanced supply chain. The company continued to embrace tech with features like the Pizza Tracker and experimented with unique delivery vehicles. However, as competitors like Uber Eats and DoorDash gained ground, Domino's faces new challenges with driver shortages and changing market dynamics. To adapt, it’s exploring electric delivery fleets and incentivizing customer pickups, all while continuing to focus on delivery efficiency and innovation.

Takeaways

• 😀 Domino's revolutionized pizza delivery by introducing the corrugated pizza box, which prevents cheese from sticking to the lid.
• 😀 The company began offering pizza delivery in 1960, setting a precedent for other restaurants.
• 😀 In the 1980s, Domino's gained recognition for its '30 minutes or less' delivery guarantee, helping boost its brand.
• 😀 Domino's dropped the '30 minutes or less' guarantee in 1993 due to safety concerns, but it had already solidified its position as a delivery leader.
• 😀 By 2022, Domino's captured the largest share of pizza chain sales, benefiting from its strong delivery model.
• 😀 The company's strategy of smaller store formats and a focus on low rent helped reduce operating costs.
• 😀 Domino's used a 'fortressing' strategy, opening multiple locations within close proximity to ensure quick delivery times.
• 😀 The company's supply chain, which includes 25 centers in the U.S., plays a crucial role in ensuring fast pizza production and delivery.
• 😀 In 2008, Domino's launched its advanced online ordering system and Pizza Tracker, enhancing customer experience and convenience.
• 😀 Domino's has continuously experimented with innovative delivery methods, including electric bikes, self-driving cars, and even helicopters.
• 😀 Facing competition from delivery apps like Uber Eats and DoorDash, Domino's is exploring new options, such as electric delivery vehicles and incentivizing customers to pick up their own pizzas.

Q & A

What was the original name of Domino's and when did it enter the delivery business?

Domino's was originally called DomiNick's and entered the delivery business in 1960 when it acquired its first restaurant in Ypsilanti, Michigan.

Why is Domino's well-known for its delivery services?

Domino's became well-known for its delivery services due to an early campaign in the 1980s promising delivery in less than 30 minutes, which helped cement the company's reputation for fast home delivery.

What led Domino's to end its '30 minutes or less' delivery guarantee?

Domino's ended its '30 minutes or less' delivery guarantee in 1993 after a delivery driver caused an accident resulting in a lawsuit.

How did Domino's manage to scale its delivery operations effectively?

Domino's scaled its delivery operations by using smaller store locations with little to no dining space, which helped reduce rent and operating costs. It also implemented a strategy called 'fortressing' to ensure enough pizza shops were within a specific area to handle deliveries quickly.

What is 'fortressing' in Domino's delivery strategy?

'Fortressing' is a strategy where Domino's ensures there are enough pizza shops within a certain radius to guarantee quick delivery. This helps ensure that no matter where the order is placed, it can be quickly handled by a nearby store.

How much of Domino's revenue comes from its supply chain?

In 2021, Domino's made 59% of its revenue from its supply chain, which includes selling pre-prepared dough and toppings to franchise stores.

What key innovation did Domino's introduce in 2008 for ordering pizza?

In 2008, Domino's introduced an advanced online ordering system, which included a customized pizza builder and the Pizza Tracker, allowing customers to track the progress of their order in real-time.

What unique delivery innovations has Domino's experimented with?

Domino's has experimented with several unique delivery methods, including helicopters, electric bikes, self-driving cars, and cars with heated pizza ovens to ensure pizzas stay warm during delivery.

What new challenge is Domino's facing in the delivery market?

Domino's is facing challenges from food delivery apps like Uber Eats, GrubHub, and DoorDash, which have attracted drivers away from pizza delivery, contributing to a nationwide delivery driver shortage.

What steps is Domino's taking to address the driver shortage and maintain its delivery services?

To address the driver shortage, Domino's is building a fleet of electric delivery vehicles and offering customers a $3 tip to pick up their own pizza, as well as expanding its carry-out services.