- Domino's is facing new competition from fast-food chains partnering with third-party delivery partners like DoorDash, GrubHub, and UberEats.
- In addition to competing for customers, Domino's is trying to win over delivery drivers in a tight labor market.
- CEO Ritch Allison said that some drivers are returning to Domino's after realizing the "grass isn't always greener" in the "gig economy."
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As Domino's competes with delivery companies like GrubHub and UberEats to win over customers ordering food, the companies are also fighting for drivers.
On Tuesday, Domino's pulled back on its outlook, predicting sales growth of 7% to 10% in the next two to three years, down from 8% to 12% in the next three to five years. The new, shorter-term outlook also included a slashed US same-store sales growth prediction, to 2% to 5% from 3% to 6%.
Domino's CEO Ritch Allison attributed the change to an "evolving, competitive environment" linked in large part to third-party delivery aggregators such as DoorDash, GrubHub, and UberEats partnering with chains like Chipotle and McDonald's.
"Some of these new entrants into the quick service delivery segment are going to benefit from the financial support of aggregators who are seeking to buy market share," Allison said on Tuesday's earnings call. "These players are currently pricing below the cost to serve, offering free delivery or other deep discounts that are currently enabled by investor subsidy."
Domino's is not solely competing for delivery customers in an increasingly competitive environment. The pizza chain also needs to hire and retain delivery drivers, as GrubHub, DoorDash, and UberEats build up their own fleet — a challenging proposition in a tight labor market.
"It is a tight battle for talent out there," Allison said, citing Bureau of Labor Statistics' report that unemployment levels reached a 50-year low in August.
While Allison said that franchisees that are focused on their teams are fully staffed, he admitted the chain has "got to be better" as some locations struggle to recruit and retain drivers. At the same time, he said, some drivers are returning to Domino's after taking jobs as contractors at delivery companies.
"I am hearing a lot of stories of drivers who are coming back to us from some of the gig economy opportunities that they may have left us to join and realized that maybe the grass isn't always greener there," Allison said.
Allison added: "There is an opportunity at Domino's Pizza that doesn't exist in a lot of these other areas."
These opportunities include an opportunity to advance at Domino's, with Allison saying that 90% of franchisees started out as drivers.
"We see folks that started as drivers or insiders and worked their way up through," Allison said. "So the battle is ongoing, but our franchisees, I think, are up to the challenge."