Banking on its increasing store density in the city, Domino’s will now deliver pizzas in all areas across Bengaluru within 20 minutes, Sameer Khetarpal, MD and CEO of Jubilant FoodWorks, told FE.
All customers, irrespective of where they place orders from, would see the food reach their society gates or the main entrance within the stipulated time or would be compensated with 200 Domino’s wallet points or the bill value (whichever is lesser) in case of a miss.
The company currently runs the service in 13 cities across India, but Bengaluru is the first city where the pizza maker will deliver to all areas from its 170 stores. The other cities have lower delivery timelines only in certain pockets for now.
Domino’s has been piloting this offering for at least two months and has already seen an accuracy rate of 90%, Khetarpal said, adding that the company is confident of servicing 100% of the orders in 20 minutes.
“We have seen customer retention and the number of repeat orders both increase as the delivery times reduce. Over the past three years, we have analysed ride times, order patterns, how roads are being constructed, have increased store densification, and deployed data and tech — all of which gives us the confidence to be able to deliver in 20 minutes,” Khetarpal said.
Each year, Domino’s cuts down about 5-6 seconds in its store processes, which eventually results in faster deliveries. On an average, it takes about 10 minutes to make a pizza and about 7-8 minutes to deliver it, he explained. This is largely possible because Domino’s has about two stores within a one-and-a-half kilometre radius in Bengaluru. Its stores are more spread out in cities like Gujarat’s Ahmedabad. Bengaluru is among the most densely populated cities in terms of store counts for Domino’s, and will be further penetrated.
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“In cities like New York, there are almost five Starbucks in 500 metre and there is no reason why Domino’s cannot be that way. Nothing stops us,” Khetarpal said.
The new offering comes at a time when the food delivery business, as a whole, has slowed in the country as customers spend lesser in an inflationary environment.
Analysts at Jefferies also flagged concerns. Noting that the demand for QSR (quick service restaurant) firms was robust in October (festive season), they said November saw an abnormal slowdown. December did, however, see some pickup.
“(The QSR) segment remains weak…tough macro, inflationary pressures and muted consumer sentiment were the key reasons…QSR gained at the expense of the informal sector during Covid, companies had strong store adds, and delivery benefited at the expense of dine-in,” Jefferies said.
“We are seeing customer spends going down, they’re opting for pizzas that are priced lesser as inflation rises. While the `49 pizzas have helped us attract and retain customers, we are hopeful if the industry was earlier growing at about 20%, we will get to those levels in about two-three quarters. All pizzas, irrespective of the price point, have the same profit margins,” Khetarpal said.
Domino’s has also faced challenges from the domestic pizzerias in India and the company is taking cognisance of that, Khetarpal said. “The 20-minute deliveries will unlock our next growth chapter. Our `49 pizzas compete with samosas, our 20-minute delivery promise competes with food aggregators, our gourmet pizzas compete with the niche pizza players and chicken, along with other sides, compete with the others,” he added.
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Domino’s monthly active users (MAU) were up 23% in the December quarter to about 11.3 million and “there is no reason why we cannot have about 200 million users, just like the e-commerce space”, Khetarpal said. For that, while the company would not take price hikes for the next six months even in an environment when inflation was likely to trend high, it is focused on increasing its store counts, customising menus according to regions, and enhance delivery channels to grow its business.
Jubilant FoodWorks’ share price closed 1.46% up at `447.8 apiece on the NSE on Monday.