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Domino’s Claims Confidence as Rivals Stumble

Domino’s does not have time for everyone else’s problems.

As leadership fielded questions on delivery, labor, and traffic growth on the company’s third-quarter earnings call, CEO Richard Allison, who started in the position roughly three months ago, maintained that Domino’s strong franchisee relations and forward-looking attitude towards technology innovation are key to the company’s overall success.

The pizza chain reported revenue growth of 22 percent in the third quarter this year compared to the same period last year, and U.S. same-store sales growth was up by 6.3 percent (as compared to 8.4 percent in the same period last year). While the numbers were good, they weren’t good enough to meet Wall Street estimates, sending shares sliding in early morning trading.

On the call, Allison touted the success of recent experiments, including Domino’s Hotspots, which allow drivers to drop off pizzas in places without a traditional address, although no early sales results from the initiative were mentioned.

Domino’s has also closed only seven stores in the U.S. so far this year, while opening 140 locations. Comparatively, Chipotle has closed over 50 locations, Starbucks is closing 150 stores, and Subway is in the process of closing 500 U.S. locations.

“I credit the many efforts related to sales and efficiencies made by our team and our franchisee base toward industry-leading unit economics that are keeping stores open and profitable,” Allison said.

Labor Concerns

The national rate of unemployment in the U.S. is at 3.7 percent as of September, according to the Bureau of Labor Statistics. In a climate where it’s increasingly difficult to hire and retain staff, Domino’s hasn’t seen “any decline in customer satisfaction” due to the shrinking labor pool.

“Our franchisees out there are making it happen,” Allison said. “They are hiring drivers, and the fact that our drivers are so busy helps us. When we take a look at what the driver can make at Domino’s Pizza relative to delivering or driving for some other business, it’s very, very attractive.” He also noted that the strength of the Domino’s brand makes it easier to bring potential hires in the door. (It makes sense: as a pizza delivery driver, would you rather be working for Domino’s or Papa John’s right now?)

As Domino’s continues to build its footprint in more areas, Allison sees that as an even more attractive proposition for the company’s delivery drivers. “When we get our stores closer to the customer, our drivers can execute more runs per hour because the distances are shorter and more runs per hour means happier customers and it also means more tips, which helps us to attract and retain delivery drivers into our business over time.”

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