Technology of the Year: Domino's Hotspots
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Domino's Hotspots was just the beginning of the latest stunts and augmented technology from U.S. leaders in an increasingly heated pizza war.
After its stock hit an all-time low in 2008, Domino's went back to the drawing board, re-envisioning itself as an "e-commerce company that happens to sell pizza." Its first innovation was the Pizza Tracker, an oft-imitated product that allows customers to track their order along every step of the process. The company has also experimented with self-driver delivery vehicles, artificial intelligence-powered voice recognition and Snapchat augmented reality (AR) — technologies usually associated with an e-commerce giant like Amazon rather than a pizza delivery chain.
The strategy worked: Domino's says it's the largest pizza company in the world based on global retail sales. But while the Pizza Tracker was groundbreaking at the time, it's showing its age these days, with every other delivery or on-demand service offering something similar. To stand out in the crowded pizza market — to say nothing of food delivery at-large — Domino's had to look to the next frontier of technology: mobile hot spots.
Delivering where people are in a mobile-first, on-demand world
While mobile technology often promises what consumers want, where and when they want it, Domino's recognized that it was not always serving customers exactly where they were. What about the pizza parties in a park, at a kid's soccer field or at the beach? These are locations where customers are, but without an easy way to make a purchase, even with the convenience of ordering via mobile devices.
With that in mind, Domino's launched its Hotspots program in April 2018. Hot spots are those thousands of away-from-home-and-office places where pizza delivery was difficult or impossible to do. The program is online-only, allowing customers to make prepaid orders on the company's website or in its mobile app and then receive text alerts about the status of their order.
After launching the program with 150,000 hot spots, Domino's in May ran a TV campaign (and its first ad in The New York Times) to call for suggestions for more locations that could use the Hotspot delivery program, helping it cross the 200,000 line several months later for the number of hot spots deployed. The company also ran a "Hotspots Pie and Fly Sweepstakes" to increase awareness about the technology and encourage adoption.
Mixed results, but too early to judge
Domino's stock has risen nearly 40% since the beginning of the year. In Q2, thanks to a higher check average and contributions from its loyalty program, domestic same-store sales grew 6.9%. Considering that the hot spots are selected and run by local franchisees, the program certainly could have helped bolster same-store sales.
"We are very pleased with the launch and customer reception and most importantly, the participation and execution of our U.S. franchisees, store team members and drivers in making this a successful start to a unique, collaborative and clever digital platform," said CEO Richard Allison on the company's Q2 earnings call.
"The overall message that we're really trying to bring forward is that we want to be, for our customers, we want to be their pizza provider any time, anywhere they want to access us," he said.
Domino's saw continued growth in Q3, with same-store sales at company-owned U.S. stores rising 4.9% — good for 30-straight quarters of same-store U.S. sales growth. And despite falling short of analyst expectations, the results increased its lead over rivals Papa John's and Pizza Hut.
"On the technology front, our Hotspots program was featured front and center this past quarter. Beyond any sales expectations at this early stage, the thing I am most pleased with has been the incredible engagement from this program, with our customers, our franchisees and the media. Hotspots received much attention because it is a program that is completely unique within our industry," Allison said on the company's Q3 call.
"I couldn't be more proud of the store level execution of our franchisees and operators around the country as they deliver delicious Domino's Pizza to parks and beaches and more than 200,000 hot spots across the U.S."