Domino's: New store design upgrades carryout, not dine-in

When Domino’s Pizza announced this month a new store design, it was part of the brand’s ongoing effort to reinvent itself, officials said — but not as a dine-in concept.

In the 12 Domino’s locations where guests currently can watch orders being made in the “pizza theater” section, sit and watch a big-screen TV, or add on from a grab-and-go case, the point is to improve the experience for carryout customers rather than chase new foot traffic, spokesman Chris Brandon said.

“We’re not changing what we do,” Brandon said. “There’s more seating, and if somebody really wants to sit there and have a slice or two of their pizza, there’s going to be a more comfortable setting to do that, but we’re not moving in that direction. This is just about the consumer experience being more comfortable, and the increase in pick-up orders helps that.”

But Brandon and other industry watchers note that upgrades to the in-store environment are still very beneficial to the pizza segment’s traditional delivery-carryout brands, even if the renovations do not add significant dine-in sales to the average unit volume. In Domino’s case, carryout specials have increased the mix of pick-up orders to about 30 percent of traffic, Brandon said, giving more customers reason to visit their local Domino’s.

Whitewater, Wis.-based Toppers Pizza has achieved a similar 30-percent share of carryout business, in part because of its systemwide lobby upgrades that began in 2007. By 2014, all existing restaurants that don’t carry the décor package will be remodeled, said vice president of marketing Scott Iversen.

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The 42-unit chain’s lobbies feature large leather chairs, coffee tables and flat-screen TVs, meant to satisfy carryout customers waiting for their orders or foot traffic streaming in from nearby college campuses.

“During the high-traffic periods, whether at lunch or late night, we’re still primarily carryout and delivery,” Iversen said. “But as we’ve gone to higher-profile real estate locations, we want to make the store more inviting and more comfortable to wait in. It’s made a difference in how we’re perceived, in comparison to the bigger chains.”

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Though Brandon said Domino’s is not anticipating a large number of people to walk in spontaneously to order a pizza or a side item like Parmesan Bread Bites to enjoy on-site, Iversen said that it has happened a little bit for Toppers. The bigger benefit has been encouraging add-on sales, which Toppers has done with new menu boards and in-store signage for sides like wings, Topperstix and Cinnamonstix.

“The in-store environment is where we can capture incremental sales with these lobbies,” Iversen said. “It’s had a positive effect on the average check for carryout.”

Dennis Lombardi, executive vice president of Columbus, Ohio-based WD Partners, said Domino’s move to slightly blur the lines between carryout and dine-in with a little bit of exhibition cooking and a little more grab-and-go is not surprising. Decades ago, the pizza segment’s roles were rigidly set with Pizza Hut as the dine-in leader, Domino’s the delivery specialist and Little Caesars the value player, Lombardi noted, but now every brand is looking everywhere to build frequency and reach.

“In the long term, does this surprise me? No,” he said. “Will it be hard to retrofit? Probably. But that doesn’t mean a brand shouldn’t try to evolve in a way to strengthen its consumer proposition.”

Domino’s and other national pizza chains have to compete with more upstart players selling pizza in a fast-casual setting. But Brandon said the convenience and entertainment of the “pizza theater” stores are not a response to this burgeoning segment.

“The cool thing about this is we’re continuing a tradition from our stores and most pizzerias,” Brandon explained. “People wondered if we’re jumping on the bandwagon of being more interactive and digital, because a lot of QSRs have gone that way, but we’re not mimicking anybody. It’s more about re-energizing the tradition of the pizzeria, where you see the prep process and watch cooks tossing the dough.”

Lombardi agreed that the Domino’s store design is a smart evolution rather than a defensive play.

“If there weren’t a fast-casual pizza guy coming in, this would’ve happened anyway,” Lombardi said. “It stands alone. Domino’s is right to focus on what’s best for their brand.”

Ann Arbor, Mich.-based Domino’s operates 387 restaurants and franchises another 4,514 units in the United States, and it franchises 5,023 locations in more than 70 international markets.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN