Self-driving to digital dominance for Domino's

AI, voice and self-driving cars - three technologies on trend in 2017 that are top of mind across businesses across multiple sectors - including the pizza industry!

We’ve looked before at digital transformation at Domino’s Pizza, noting that the so-called Internet of Pizza is remarkably forward-looking. Ongoing innovation is a key strategic priority for CEO Patrick Doyle:

We will continue to invest to grow our digital lead. We are just as committed to keeping our lead as we were to achieving it, and this philosophy will very much continue to drive our approach to all things technology.

A notable case in point is the firm’s alliance with Ford Motor to explore the potential impact of self-driving cars, what Doyle pitches as:

the first ever meaningful test of self-driving vehicle delivery. We’re very excited to be the first to explore, and likely first to report our findings as this very exciting partnership and very intriguing study takes shape in the near future.

Doyle has a very clear idea of the role that the fast food provider will play in this and it’s essentially one that involves sitting in the passenger seat for the moment:

The good news is that all we have to understand here at Domino's is how the customer is going to interact with [self-driving vehicles] and make sure that we are ready for it when it comes. Ford and other people working on this and the government - as regulations develop, they’re going to be the ones who are going to be really determining when it rolls out at scale.

How long that will take remains to be seen, but Doyle has some cautious predictions:

Ford has talked about 2021 model year that they’re going to be delivering a significant number of these vehicles. I think you’re going to see adoption starting to really impact things somewhere between three years and ten years. It's going to take time, and there are a lot of parties that are involved in that that are going to have a lot more control than this Ann Arbor-based pizza company. Our job is to make sure that we understand how we're going to be able to adapt it to the customer, and how it's going to play into our business, and how we can make sure that we’re going to be ahead of curve on this.

Vocal

A comparison might be made with the advances in voice technology he adds. On this front, Domino’s has a partnership with Amazon around Alexa. This has been extremely well-received, says Doyle, allowing customers to order from scratch without the need of a preset profile or saved easy order. This has resulted in Alexa becoming Domino’s most popular ‘anywhere ordering’ platform:

This is a tremendous development, demonstrating next phase flexibility within these platforms, and giving customers more customization and choice during the ordering process on these pioneering, not to mention very cool, ordering platforms, all still unmatched within our category.

But Domino’s got in early on investing in voice tech, just as it now intends to do with Ford and the self-driving vehicle movement:

When we rolled out natural voice ordering on our apps, now probably four years ago, something in that range, we talked about the fact that we thought this was important and that it was going to be an increasingly large part of our business going forward and how people were going to interact with technology. And we were out doing that ahead of everybody else and [were] the first people taking commercial orders with natural voice. You see now how that's played out. Our very developed abilities in that area have given us competitive advantage as natural voice is becoming more and more a part of how people interact with technology.

So what I would say is three or four years ago as I was talking about natural voice. It was not clear exactly when that was going to start being widespread, but we were pretty confident that it would. We are equally confident that self-driving vehicles are going to have a material impact on transportation. And we've got to understand how we’re going to play in that space. It's why we’re investing some resources against that and starting to understand how it’s going to affect our customers, how their behavior would need to change, etc

So the exact timing is going to be harder to predict and definitely not something that’s controlled [by Domino’s] or probably anything that any government agencies will be asking me about. But we are pretty confident it’s going to come and we've got to understand it and understand how we’re going to leverage it for competitive advantage when it does roll out.

How such tech gambles are reached at is based on close analysis of customer desires and actions. The intention is to be where the customer is, often before that customer knows that that is where he or she wants to be. Doyle says:

Ultimately, the decisions on how we run our business are going to be made off of the data that we’re collecting on our own customers, research that we’re doing. That's really going to drive our actions. We certainly are watching everything else as changes are made, but decisions are being made based on our own customers and what we think is going to give them a better experience. We have pretty extraordinary data based on our model and used that actively to kind of model out our business and we understand pretty clearly what is driving our business and how each of the components of the things that we’re doing are kind of feeding into that.

One source of this customer data comes from Domino’s Piece of the Pie loyalty program which has itself now been expanded across all touchpoints, digital, phone and in-store, explains Doyle:

The biggest thing that we’ve done in terms of the loyalty program is change it so that you can earn anywhere, so that people can earn points if they’re ordering over the phone or if they’re ordering if they walk into the store. Though, that's relatively uncommon. They will still have to redeem digitally at the end of the process, but they’re going to be able to earn points by any order that take.

The loyalty program has continued to provide a meaningful impact on sales, and we will continue as with this most recent expansion to assess and evolve the program to keep it top of mind. To help this later in the quarter, we will launch a new national TV campaign around Piece of the Pie, as we continue to grow awareness around the simple and focused program. As we’ve noted, it continues to benefit topline business performance, and most importantly, our loyal and frequent customers.

My take

Amid all this digital vision is a couple of interesting points. Firstly digital orders are more profitable than non-digital orders. Secondly, 40% of sales still don’t come from digital platforms, with the local ‘Mom and Pop’ operations providing the main competition to Domino’s on the ground. Reducing that 40% figure is why continued investment in tech and digital is a priority. Domino’s remains a digital transformation exemplar to track.