Domino’s New CEO Drives ‘Fortressing’ Strategy To Great Results

Domino’s has been riding a bit of a rollercoaster for the last three years but has ended up at the same place: at the apex of the quick-serve pizza industry.

Russell Weiner took over as Domino’s CEO in May after eight years serving as its chief operating officer, which followed six years as CMO, so he aided in the long run of success and industry growth enjoyed by the Ann Arbor, Michigan-based chain under his predecessors, Patrick Doyle and Ritch Allison. But only Weiner has been around to guide the company after a wild ride which saw its delivery business soar during the pandemic and then wane afterward as Domino’s faced a shortage of drivers.

Nowadays, Weiner presides over an industry juggernaut that retains nearly half of all quick-serve pizza sales in the United States and the No. 1 position in both home delivery, its traditional arena of strength, and the No. 1 position in carryout business, where Domino’s more lately has come to superiority. Domino’s, mostly through multi-franchisees, now operates nearly 20,000 stores in more than 90 markets globally.

“We’re now on the tail end” of the impact of the pandemic and its aftermath, Weiner told Chief Executive. “Our staffing and service times are getting back to where they need to be. Sequentially, this year our quarter-three, three-year stack [of financial results] was better than our Q2 stack, which was better than our Q1 stack. And the situation with delivery services has gotten better every quarter.”

As a result, Domino’s under Weiner was able to report third-quarter sales of $1.1 billion, up 7% from 2021 and presaging a likely continuation of Domino’s annual growth in Domino’s same-store sales, which it has enjoyed at least since 2000. The company averaged 5.5% same-store sales growth from 2010 through 2021, and 8% last year.

Domino’s continues to benefit from its strategy after the Great Recession which dictated great improvements in the quality of its products, huge investments in R&D for online ordering and delivery technology, and a determined rise to become the No. 1 pizza brand in the United States. Along the way, it has been an outlier in the quick-serve industry in its determination not to farm out delivery to third parties and a trailblazer in experimentation with delivery technology such as autonomous vehicles, drones and even robots.

Under Weiner, the company has emphasized a strategy to maximize its carryout business, which long was an afterthought relative to the delivery strategy that made Domino’s a household name in America. The company calls it “fortressing,” and it basically means that Domino’s shortens its delivery radiuses and continues to put new stores in the same markets, as close to customers as possible. This enables drivers to make more deliveries and tips, and it follows the company’s conviction that customers won’t go more than a half-hour to pick up a carryout pizza.

“Fortressing did two things that helped us starting during Covid,” Weiner said. “The more we fortress, and the more stores we have, the closer you are to customers, which means when you’re strapped for delivery people, at least you have more stores, so people aren’t traveling as far. That enabled us to maintain our delivery services better than others. And since things opened up again, carryout has been booming for us. It’s up by 35% in a three-year stack, driven by an incredible value perception.”

Which brings Weiner to the challenges du jour: inflation and economic slowdown. “There’s only about 15% overlap in our pickup and delivery customers,” he explained. “As the economy gets tighter, the interesting thing is that our carryout customers look at pizza as a really good value, so we’re sourcing carryout customers not just from pizza [competitors] but from other QSRs. If you look at pizza from a price-value perspective, you can’t do better.”