In 2019, Domino’s CEO Ritch Allison said he’d “have a tough time sleeping at night” if the company had to use a third-party delivery service.
It’s a good thing he retired earlier this year.
A driver shortage is forcing Domino’s and other pizza chains to embrace delivery alternatives and make other structural changes to their operations, per QSR magazine.
The shortage…
… is due to a combination of factors, including:
- Delivery drivers seeking more flexible hours and schedules
- Food delivery drivers getting paid less than ride-share drivers
- High gas prices preventing workers from taking food delivery jobs
The absence of drivers is impacting the bottom line of some of pizza’s biggest players. In Q1, Domino’s same-store sales were down 3.5% YoY, with delivery sales down 10.7%.
So, what’s the solution?
While pizza’s “Big Three” — Domino’s, Papa John’s, and Pizza Hut — will all likely embrace third-party delivery partners to some extent, that’s just one part of the equation.
Peter Saleh, an analyst at BTIG, believes the solution will also require:
- Tech improvements like AI and automation to help streamline operations
- Better benefits for drivers, including higher pay and flexible hours
Unfortunately, higher wages for delivery drivers will likely mean higher prices for consumers — meaning we may be looking at pricier pies going forward.
