Domino's CEO said that its carryout business is booming -- and its shows why many consumers aren't interested in having pizza delivered.
Domino's
Startups, retailers, and brands have spent over a decade figuring out how to make delivery to customers work.
But Domino's, the pizza chain known for delivery, is having success drawing customers to its restaurants to pick up their own orders.
"Our carryout business is on fire," CEO Russell Weiner told Business Insider in an interview. "This is something we didn't even contemplate years ago."
That business was a bright spot for Domino's during its second quarter. The company's carryout comparable sales grew 7.9%, while delivery comparable sales rose 2.7% during the same period.
People who order for delivery and those who stop by a restaurant to carry their orders out are mostly two separate groups with different priorities, Weiner said.
Delivery is about convenience, and customers who order their food for delivery are willing to pay the extra fees and tip their driver, he said. Besides operating its own delivery service, Domino's also offers delivery through Uber. The third-party service accounts for roughly 3% of Domino's sales, Weiner told BI.
"We see only about 15% overlap between our carryout and delivery customers," he said.
But other, more budget-conscious consumers realize that they can get "more than another pizza" with the money they spend on delivery fees and tips, he said, adding that delivery is an "expensive convenience" for many US consumers.
Delivery services gained popularity during the pandemic as consumers stayed at home and had everything from a restaurant meal to electronics delivered by the likes of DoorDash, Instacart, Uber Eats, Walmart Spark, and other services.
But as society reopened and prices soared for many consumer goods, especially food, many customers cut back on their delivery habits. Some also realized that they were paying a big premium to have stuff brought to their door.
One Instacart customer posted on TikTok after realizing that she had paid close to $100 in markups on her groceries — excluding delivery fees and a tip.
Many people are also opting to drive to their local Domino's and pick up orders themselves for another reason: Control. Many carryout customers prefer the option over delivery because they're worried about what they'll have to do if something is wrong with their delivery order or whether it will show up in time for a party.
"This person's like, 'I don't care if it's out of my way, I'm going to pick it up because it's going to be right,'" he said. "It is a completely different customer."
Domino's has also attracted many new carryout customers by opening more restaurants and cutting the distance that customers have to drive, thus making picking up an order less of a hassle.
"They don't want to drive past three or four pizza places," he said of Domino's customers. "They're going to the first one."
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