Domino’s CFO Says Momentum Shifting to Pickup Over Delivery

Years into consumers’ ongoing financial challenges, restaurant customers are still trading down from delivery to pickup, Domino’s observed.

The pizza giant, which has more than 20,000 locations around the world, shared on a call with analysts Monday (Feb. 26) discussing its fourth-quarter and full-year 2023 financial results that it saw consumers’ channel preferences shift throughout the year.

“The weight of sales and transactions shifted slightly more to carry out in 2023,” Domino’s Chief Financial Officer Sandeep Reddy said, observing that delivery accounted for 48% of transactions and 58% of sales, while carryout represented 52% of transactions and 42% of sales in 2023.

The move comes as budget-conscious restaurant customers opt for pickup. The PYMNTS Intelligence report “Connected Dining: Rising Costs Push Consumers Toward Pickup” found that 48% of consumers reported they have been more likely to pick up their restaurant orders themselves rather than have them delivered due to inflation, and pickup orders outnumber delivery nearly four to one.

Indeed, restaurant brands ranging from IHOP to Sweetgreen have noticed consumers cutting back on delivery in favor of ordering more pickup to cut out the extra fees.

Plus, consumers’ economic concerns are continuing into the future. PYMNTS Intelligence’s recent study “New Reality Check: The Paycheck-to-Paycheck Report: The Pessimism About Pay Rises Offsets the Effect of Falling Inflation,” which drew from a census-balanced survey of more than 4,300 U.S. consumers, found that 83% are at least somewhat concerned about current and near-future economic conditions.

One of the Domino’s key strategies for driving sales with deal-seeking customers is its digital rewards program, relaunched in mid-September to make perks easier to earn, which brought in 2 million new members between the upgrade and the end of 2023 — twice the amount of new members gained in the previous nine-plus months of the year.

One of the ways the chain drove adoption of this program was through its “Emergency Pizza” promo, which ran for about four months and offered one free pizza to rewards members, a move that comes as part of the brand’s broader push to drive loyalty adoption to engage infrequent customers and those who prefer pickup.

“The big objective here was to engage carryout customers and to engage light users, and we are absolutely doing that with the program,” CEO Russell Weiner noted. “And we can see that even out of the gate so far.”

Plus, consumers are seeking out loyalty programs. The PYMNTS Intelligence report “Leveraging Item-Level Receipt Data: How Personalized Card-Linked Offers Drive Store Card Usage” found that 65% of cardholders shop with brands or merchants where they are members of loyalty or rewards programs.

Even as consumers shift to pickup, however, Domino’s continues to look to grow its reach in delivery with its partnership with Uber Eats, kicked off last summer. Yet it is as yet unclear what portion of those sales are additive and what portion could be eating into margins by cannibalizing occasions from the brand’s direct ordering channels.

“It will take us some time to determine just how much of that Uber mix is incremental,” Reddy said. “So more to come on that as we move through 2024 and into 2025.”