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Why Domino's Is Pushing Its Carryout Offering

Domino's Pizza (NYSE: DPZ) recently announced solid operating results in its fiscal third quarter even though sales declined in the U.S. market for the first time in over 40 quarters.

In this video from "Beat & Raise" from Motley Fool Live, recorded on Oct. 14, Fool contributors Parkev Tatevosian and Demitri Kalogeropoulos put those results in perspective considering the pizza chain's push into carryout and drive-thru ordering.

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Parkev Tatevosian: This slide goes to show Domino's market share and split between the pizza delivery market share and the carrier market share. Surprisingly, Domino's has a larger market share in carryout versus its delivery. That's going to play a bigger role as economies reopen and folks are more mobile and looking to carry out more often than delivery.

Over the last few months, Domino's has taken on an advertising campaign to raise awareness of their car side delivery service that they're really trying to push out. This is where they guarantee you a two-minute delivery window. If you order online and driving to a Domino's hit the button on your phone that says I'm hear and someone from Domino's will bring out your order. It's been averaging about two minutes and in some locations it's even faster than that. That's going to be a big helper in driving some carryout orders.

Then in the third quarter, Domino's mentioned that even though economies are reopened and folks are feeling more comfortable going out and picking up orders. The delivery sales are still above 2019 levels, and then carryout orders are still below 2019 levels. Even though that balance is shifting, it's still significantly skewed toward delivering more so than it historically has been.

Demitri Kalogeropoulos: Yes. That's interesting. I'm sure you cover some other fast food restaurants, too. I hear everybody talking about obviously, mobile ordering and delivery is a place they're all targeting, but also the drive through McDonald's is known as the king of that being able to get you in and out of that parking lot as quickly as possible.

I wouldn't have thought that Domino's was the place that could compete in that space because you mentioned pizza at a minimum takes whatever, maybe at least 10 minutes to make versus assembling burger could be more like three minutes or something max. But the innovation they've done to do this for this car-side delivery it's the same thing as a drive-thru accepted almost in some ways more convenient because you're not waiting in line, you're just sitting waiting your two minutes.

Tatevosian: Yeah, I agree with you there. It is impressive that they are able to compete with the certain drive through locations and their use of technology. Certainly, Domino's is known as one of the companies that's really good at using technology to drive their business. This is another case where management has been able to use technology to drive business growth.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool recommends Domino's Pizza. The Motley Fool has a disclosure policy.


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