Pandemic helped grow Domino's US same-store sales 16.1%

Dive Brief:

Domino's U.S. same-store sales increased 16.1% during Q2 2020 compared to 3% during the year ago quarter, according to an earnings release. International same-store sales increased 1.3% during Q2 2020 following thousands of temporary store closures, which declined from a peak of 2,400 to 600 as of July 8. Comparatively, international same-stores sales increased 2.4% during the same period in 2019.
Same-store sales growth in the U.S. was driven by ticket and order growth, which were positively impacted by customer ordering behavior during the pandemic, Jeff Lawrence, Domino's CFO, said during a Thursday earnings call with investors. Delivery comps were impacted by higher order counts in addition to larger order sizes. The company saw accelerated levels of demand during the middle of Q2, which Lawrence said were elevated through the end of the quarter with no drop off.
"The second quarter marked a rather unprecedented acceleration for food delivery in the U.S. and we were certainly no exception," Ritch Allison, Domino's CEO, said during the call. "[We had] our 37th consecutive quarter and strongest in that nine-plus year run for same-store sales, with evidence of this tailwind in delivery."

Dive Insight:

Years of technology investments, which include GPS delivery trackers, better prepared Domino's to adapt to consumers' needs for online ordering and contactless delivery following stay-at-home orders due to the pandemic. In June, the chain added carside delivery to expand its carryout options for diners, which could help the company continue to boost its carryout business, which was already thriving pre-pandemic.

"[Carside] is a great way for us to compete … against the drive-thru that so many other QSRs have," Allison said during the call.

These innovations paid off during the pandemic. Almost 75% of the company's U.S. sales came from digital channels, Allison said. The company benefited from new customer acquisition on the delivery side with strong repeat business and had its best quarter for driving new active loyalty customers since Q1 2019, when it ran its Points for Pies promotion, Allison said. Loyalty members also had higher tickets during the quarter, he said.

"COVID-19 has accelerated some of the trends that we were already seeing in motion around delivery, carryout and digital adoption, and we expect that customer expectations around safety and contactless experiences will remain heightened for the foreseeable future," Allison said.

While Domino's results are strong, many investors expect the boosts seen in the pizza delivery segment to be short lived, according to Fortune. As more people return to reopened restaurants, competition will increase. Areas like Florida and Texas, where coronavirus cases are rising, could lead to additional pizza delivery sales, but analysts don’t expect the entire country to go back into quarantine.

Regardless, Domino’s will focus on its value, fortressing, expanding its supply chain capacity and innovating across all of its areas of business in digital, delivery, carryout and food, Allison said.

And as dining rooms reopened, the chain didn't see a discernible difference as of the second quarter, Allison said.

"Those that were reopening were reopening at 50%, and at most 75% capacity and as we’re all aware some of those things are actually being reversed as we see another spike, unfortunately in COVID-19 cases," Allison said. "It's still a very dynamic and evolving marketplace out there for us."