New Domino's Pizza CEO describes 'fortressing process' with hotspot initiative

  • Domino's Hotspots have a "fortressing" effect that curbs the need for innovations like oven-equipped delivery trucks, CEO Richard Allison tells CNBC's Jim Cramer.
  • Allison also remains mum about the Papa John's controversy, saying only that his company is "agnostic" as to where it takes market share.

Domino's Pizza's new initiative of delivering food to unconventional locations like beaches or parks curbs the need for industry innovations like Zume Inc.'s ovens on wheels, Domino's new CEO, Richard Allison, told CNBC on Thursday.

The initiative, called Domino's Hotspots, lets customers order food to places without traditional addresses. Domino's franchisees have now defined some 200,000 total hotspots in their communities since the push was announced earlier this year.

"Through this fortressing process, we’re bringing these delivery areas tighter and closer together," Allison told "Mad Money" host Jim Cramer in an exclusive interview. "What that’s doing is getting us closer to the customer, so as soon as that pizza comes out of the oven, we want it in a car, with a driver and on its way to the customer."

While Domino's, which reported a slight second-quarter earnings miss on Thursday, is planning a more concerted roll-out of the hotspots program in the third quarter, the response has already been overwhelming, the CEO said.

"Our franchisees have really embraced this, Jim. It’s been a lot of fun," Allison said. "And customers have really embraced this. We’ve gotten a lot of excitement around it."

Long known as a growth-focused pizza chain, Domino's domestic same-store sales, a key metric among restaurant operators, grew 6.9 percent in the second quarter.

While shares of Domino's ended Thursday's trading session down 2.44 percent, the stock has gained 50 percent since the start of 2018 as Domino's took market share from competitors Papa John's and Pizza Hut.

But Allison, also president of Domino's, was tight-lipped about the controversy swirling at Papa John's, a key Domino's rival.

"There’s some noise going on in the industry, but we’re really focused on our customers and our franchisees," he told Cramer on Thursday. "And I think if we can continue to deliver great value, great food, to our customers and can continue to support great cash-on-cash returns with our franchisees, I think we can continue to gain market share and we’re fairly agnostic as to where that comes from."

Thursday marked Allison's first earnings report as CEO of the international pizza powerhouse. He succeeds Patrick Doyle, who led a turnaround at Domino's and held the CEO position for seven years.

Watch Richard Allison's full interview here:

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