(box clattering)
- [Narrator] Your last pizza probably came
in a box like this.
It's cardboard, sturdy and most importantly,
keeps your cheese from getting stuck to the lid.
And that's thanks to Domino's.
This founder is widely credited
with creating the corrugated pizza box.
It's just one of the company's innovations,
not in pizza, but in delivery. (doorbell ringing)
In 2022, more than 40% of online delivery orders
for major pizza chains were from Domino's.
Here's how the company made its name
in the pizza delivery market
and why this foundational piece
of its business is facing new challenges.
This is the economics of Domino's.
♪ Domino's Pizza delivers ♪
- [Narrator] Domino's, originally called DomiNick's,
acquired its first restaurant
in 1960 in Ypsilanti, Michigan,
and jumped into the delivery business the same year.
Something very few restaurants were doing at the time.
- Now we think of delivery as being so ubiquitous.
I mean, so many types of restaurants have delivery
but Domino's was there very early at scale.
- [Narrator] One reason it's become so well known
for its delivery is a campaign the company started
in the '80s promising delivery in.
- [Announcer 1] Less than 30 minutes.
- [Announcer 2] Within 30 minutes.
- [Announcer 3] Only Domino's Pizza delivers
in 30 minutes or less.
- People really did have the sense
that once they ordered that pizza,
they were gonna get it to their homes quickly
and I think that really helped for marketing.
- [Narrator] Domino's ended that guarantee in 1993
after a delivery driver struck another vehicle resulting
in a lawsuit.
But by then, the company had cemented its place in delivery
and in the half century
since Domino's was founded, it's paid off.
It took the biggest slice of pizza chain sales in 2022.
Domino's success is due in part
to creativity in every step of its delivery process,
starting with stores.
Many are small and often with little or no dining space,
a model the company has said allowed
for lower rents and reduced store expenses.
Over the years.,
Domino's has also focused on establishing more
than 6,500 locations in the US
and has worked with franchisees to extend their reach.
- So one part of Domino's strategy
is what's called fortressing,
which is making sure there's enough pizza shops
in a certain mile radius, that wherever your order goes,
one of those pizza shops can handle it
and it can help get it to your house quickly.
- [Narrator] The company supply line is also structured
to make the pizza creation process
as quick and uniform as possible.
Domino's has 25 supply chain centers
in the US where dough is mixed
and toppings are prepared before being sold
to franchise stores where pizzas are assembled and baked.
The more pizzas that are sold,
the more money Domino's makes from its supply chain.
It made up 59% of Domino's revenue in 2021.
The next part of the process is ordering.
In 2008, the company rolled out
its advanced online ordering system,
which included a customized pizza builder
and the Pizza Tracker.
- So the Pizza Tracker is something that Domino's invented.
They will let you know where it is in the process.
It's whether it's being cooked,
whether it's out for delivery, where they're approaching.
- [Narrator] Domino's has continued
to introduce new ordering options.
- Pizza emoji scent, Domino's ordered, smiley face.
- [Narrator] Then there's the last step of the process,
getting the pizza from the kitchen to your home.
From working with special kinds
of insulated bags to creating 3D car top signs,
Domino's has been a big innovator in this step.
The company has experimented with several methods
of delivery vehicles,
(helicopter whirring) helicopters, electric bikes,
self-driving cars, even cars with a heated pizza oven.
- It's really putting the whole brand
behind delivery in a lot of ways.
- [Narrator] But after years at the top of delivery,
Domino's is facing new challenges.
Companies like Uber Eats, GrubHub
and DoorDash are eating at Domino's business in the US
as drivers leave pizza for apps with more flexible hours.
It's contributed
to an industry-wide delivery driver shortage.
Other chains like Papa John's
and Pizza Hut have both started working
with some of these apps, but Domino's has resisted.
- They argue that that makes it more profitable
because you're not having to pay an outside service
to deliver that pizza and to market that pizza on their app
and it keeps 'em closer to their customers.
- [Narrator] As the company has faced these issues,
its shares have slumped from a high at the end of 2021.
Now Domino's is exploring new options.
The company is building out a fleet
of electric delivery vehicles to recruit new drivers
and it's now offering customers what it calls a $3 tip
to pick up their own pie.
- [Announcer 4] We see you, carry out heroes.
- You know, it's much cheaper for them
if their customers pick up their own pizza
and so they are getting in the pickup game in a big way.
- [Narrator] As Domino's continues to grapple
with these issues, investors
and customers will be watching for future innovations.
(lively music)