As competition with third-party delivery services heats up, Domino's CEO Ritch Allison is rejecting the idea that the pizza chain should outsource its delivery.
"We've got a loyalty program with 20 million-plus active members," Allison told analysts on the quarterly conference call Wednesday. "So it's just not clear to me why I would want to give up our franchisees' margin or give up the data in our business to some third party who will ultimately use it against us."
Restaurant chains like McDonald's, Starbucks, Chipotle Mexican Grill and Yum Brands' Pizza Hut have partnered with third-party delivery services to attract consumers looking for more convenient choices. While the restaurants benefit by seeing a pop in sales, the delivery services do not share most consumer data but charge high commission fees, usually between 15% and 30%.
Allison has long held that Domino's will continue to deliver its own pizza in the U.S. without the help of Uber Eats or DoorDash because it wants to control the quality of its food, but he has typically shied away from speaking so strongly about the competition. Domino's has partnered with third-party services in some international markets, which has led to mixed results.
"It is absolutely critical in my mind that we control the quality and the safety around our product versus handing to some random third party and then having no visibility into what happens to that food before it gets to the customer," Allison said Wednesday.
CFO Jeff Lawrence said that "aggressive marketing" from third-party services put pressure on U.S. same-store sales this quarter. Uber Eats and DoorDash launched their first national ad campaigns, and some restaurants partnering with third-party delivery companies have turned to offering free or reduced fee delivery to promote the new service. Domino's reported domestic same-store sales growth of 3.9%, falling short of Wall Street estimates of 4.2%.
Domino's stock rose 9% after the company reported earnings that topped expectations. The pizza chain earned $2.20 per share during its first quarter, beating Wall Street's estimates of $2.09 per share. And while U.S. same-store sales growth was weaker than expected, many investors were expecting the numbers to be worse.