Domino’s Pizza, the world’s largest pizza chain, has inked a deal with Uber to showcase its menus on Uber’s Eats and Postmates food delivery apps across 28 markets, including Canada. U.S., and the U.K.
CEO Russell Weiner said in an interview that the company, along with its operators who will continue to handle pizza deliveries, anticipates generating $1 billion in new sales by listing its menus on Uber’s apps.
Although Weiner did not disclose the commissions Uber will charge or other specifics of the agreement, he did mention that franchisees will benefit from the increased sales.
Following the announcement, Domino’s shares experienced a 10.4% surge, reaching $386.22 during morning trading today, the highest level since November.
According to market research firm Circana, apps like Uber and DoorDash accounted for 14% of pizza sales in the 12 months leading up to May 28, up from 4% before the pandemic, with sales reaching $4.7 billion for that period.
Domino’s executives finally recognized the significant shift in consumer behavior during the pandemic, with a growing preference for ordering food through apps.”It’s a multibillion-dollar marketplace that sells food and pizza. We need to play in a big category like this,” Weiner stated.
While Domino’s had previously expressed no interest in working with apps, the company began discussions last year with various food delivery apps to evaluate the potential benefits of listing its pizzas on their platforms.
According to Weiner, loyalty programs offered by food delivery companies were diverting consumers away from ordering directly from Domino’s, thus impacting the chain’s reach.
The inclusion of Domino’s menu on Uber’s apps will initially begin in Las Vegas and three other U.S. markets in the fall, with a nationwide rollout expected by the end of this year. Uber will promote Domino’s menu across approximately 70% of the pizza chain’s locations, which accounts for around 14,000 restaurants.
The agreement between Domino’s and Uber is set to continue until next year, with the possibility of extension to other apps.
