On a Thursday (July 18) call with analysts discussing the quick-service restaurant (QSR) giant's second-quarter 2024 financial results, CEO Russell Weiner reported a significant increase in loyalty reward redemptions for pickup orders since the brand revamped its program last fall.
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GLOAs overall consumer spending declines, Domino’s has successfully encouraged its loyalty members to purchase more through more effective rewards.
On a Thursday (July 18) call with analysts discussing the quick-service restaurant (QSR) giant’s second-quarter 2024 financial results, CEO Russell Weiner reported a significant increase in loyalty reward redemptions for pickup orders since the brand revamped its program last fall.
“With the new loyalty program, we aimed to increase engagement among light users and boost frequency — mission accomplished. We wanted to keep driving our delivery customers while also engaging our carryout customers — another success. So, the program is fulfilling all our expectations,” Weiner stated. “Loyalty redemptions in the first half of this year have doubled compared to the old program’s first half of last year.”
The program’s relaunch involved lowering the threshold for earning points and reducing the number of orders required for redemption. By targeting light users and promoting repeat purchases, the Domino’s loyalty program has strengthened its customer base. High redemption rates indicate consumers’ preference for value-driven incentives, making the loyalty program a key element of Domino’s growth strategy. Additionally, promotions like “Boost weeks” have successfully increased transactions and customer acquisition, contributing to positive order counts.
Indeed, QSR customers value loyalty rewards. PYMNTS Intelligence research shows that 51% of consumers use a restaurant loyalty program, with 49% participating in these programs at QSRs.
The Cautious Consumer
Due to inflation and economic uncertainty straining household budgets, many consumers have become more selective with their discretionary spending, affecting dining choices and frequency.
As dining out becomes a non-essential expense for many, most consumers cut back during economic hardships. PYMNTS Intelligence data from last year indicated that 78% of consumers have been eating at home more often to save money amid inflation.
Yet, Domino’s experienced sales growth both domestically and internationally, though perhaps not to investors’ satisfaction — the stock was down nearly 14% at the time of this writing since the market opened Thursday morning.
“Consumer spending is slow, but let’s consider the context. We’ve grown orders in our delivery business, our carryout business, across all income cohorts,” Weiner said. “We’ve increased order count internationally. This is happening in an economy where people are being more careful with their spending.”
The Aggregator Boost
The brand’s partnership with Uber Eats, which began last year after Domino’s resisted aggregators for as long as possible, is also expanding. CFO Sandeep Reddy noted that sales from Uber grew to 1.9% of total sales in Q2, with a target of 3% by year-end.
The Uber Eats partnership highlights Domino’s relatively new dual-channel approach, combining its own digital platforms with third-party aggregators. This strategy not only extends the company’s reach but also ensures a significant share of the growing food delivery market.
The company is leveraging discounting to drive growth on the platform.
“Whether it’s how customers shop or part of the algorithm or a combination, starting with a slightly higher price that can be discounted is a way to attract more attention. We’ve continued to test and adjust this strategy, and the results are evident,” Weiner said.
Source: PYMNTS Read original article.
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