Domino’s still hasn’t solved its delivery problem

“The delivery business continued to be under more pressure” in the second quarter due to staffing issues, Chief Financial Officer Sandeep Reddy said on a call with analysts Thursday. Delivery sales at stores open for at least a year fell 11.7% year-on-year in the second quarter, he said.

In the United States, sales at stores open for at least a year fell 2.9% in the second quarter.

Delivery issues are nothing new to Domino’s or the pizza industry as a whole.

In early March, Ritch Allison, then CEO of Domino, warned that a driver shortage would be a drag on business. Pizza Hut also attributed lower same-store sales in the first quarter to a lack of delivery drivers.
At the same time, delivery demand exploded. Domino’s reported Thursday that although its delivery sales fell in the second quarter from a year earlier, they were up more than 8% from the second quarter of 2019, before the pandemic.
Dominoes (DPZ) tries to solve its delivery problem in several ways. The pizza chain uses call centers to free up employees for other tasks such as delivery. By the end of the second quarter, about 40% of Domino’s U.S. stores were using the service in some capacity, the company said.

To attract more drivers, Domino’s is also considering offering more flexible schedules.

“One of the biggest issues for delivery drivers is flexibility,” Domino CEO Russell Wiener said on Thursday’s call. Letting drivers work shorter shifts, fewer hours per week and signing up for last-minute assignments are “areas where we continue to evaluate and evolve our practices,” he said. he declares.

The brand is also trying to simplify store operations to increase efficiency and free up more time for employees.

One option that Domino’s tries to avoid is the use of third-party delivery providers such as DoorDash (DASH)Uber Eats or Grubhub (WORM)who charge commission fees.

“We continue to believe that many of the answers to the labor shortages we face are already in our system,” Weiner said. But, he noted, “the question remains, can we close the performance gap and get back to fully meeting demand using our current delivery model.”

Until Domino’s comes up with the answer, he said, “all options will remain on the table.”

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