Domino’s Pizza just delivered its first-quarter earnings, and they are fresh-from-the-oven hot. The Ann Arbor–based pizza chain recorded a 5.6% year-over-year increase in same-store sales (which discount new stores) for the quarter, outperforming analysts’ sales estimates for the second quarter in a row.
The key to its strong performance, according to CEO Russell Weiner, was a boost from its revamped loyalty program and an emphasis on promotions over consistent low prices.
The company revamped its loyalty program last fall and quickly gained 2 million new members by the end of the year. Some of the changes included cutting in half the minimum amount customers need to spend to start earning rewards points to $5 from $10, giving away more menu items for lower point values, and offering more redemption options at the higher point values.
The adjustment to its loyalty program has already made a difference, said Weiner, as more customers have engaged with the program, including some it previously wasn’t reaching as much, such as carry-out customers and customers who don’t visit the chain as often.
“I don’t expect the tailwind from loyalties to go away anytime soon,” Weiner said during the company’s earnings call.
The pizza chain’s chief executive added that its recent promotions push, including a buy-one, get-one-free offer dubbed “Emergency Pizza,” has also helped drive increased orders and more sign-ups for its loyalty program.
“Emergency Pizza performed better than any buy-one, get-one-free I’ve done in my career,” Weiner said.
The company also saw a boost from its promotion efforts on Uber Eats, with which it has a deal to deliver orders made through the app. Weiner said customers on the app react better psychologically to special offers than they do regular prices.
“Customer responses to deals are stronger than to everyday low prices. As a result, we are continuing to work to fine-tune our marketing spend and our offers to ensure that we are effectively driving this channel,” he said.
The pizza chain’s rosy first-quarter earnings pushed its stock up as high as 8.2% from Friday’s close before slightly paring back gains. The stock is up about 27% since January and 55% over the past six months.