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Updated: Oct 10, 2018

So It Begins. The First Major Player Of The Delivery Chains Succumbs To The Gig Players In A Race To The Bottom.

It’s here! The race is on. The question (for those carefully eyeing the ‘delivery on demand’ space) has never been ‘will it happen?’ but rather, ‘when will it happen?’. We now have the answer. Whether or not it’s the on-going and ever fragile state of PAPA John’s Pizza that’s forced their hand, matters not. That they have capitulated and traded conventional wisdom of brand and competitive advantage for cost and…competitive advantage does.

Others Will Follow

While some, like Domino’s (formerly Domino’s Pizza – see what they did there?) denounce the forfeiture of their branding and service to these rogue delivery-on-demand companies and shun the gig business model, others like Yum Brands (see Pizza Hut) have decided to embrace in wholesale fashion the “new way” of doing business by investing hugely in their competition – cue the cowbell – GrubHub. After all, what’s a pizza delivery company to do?

Playing Domino’s

Domino’s has an interesting strategy. While they say they will not be intimidated to change the way they do business and they will never fold to the likes of UberEats, they seem to have entered the first stage of that denial in re-branding themselves as just Domino’s instead of Domino’s Pizza; expanding their menu to include chicken entrees, sandwiches, salads, pastas, desserts, etc., and investing heavily in the technology aspect of their business. My guess is that one might expect a further expansion of the menu – though it won’t help.

Domino’s is seeing a revival of sales and growth in number of stores thanks to a brilliant ad campaign like this Paving For Pizza ad buy.

A Rose By Any Other Name…

“But you can’t seriously suggest that the iconic pizza delivery man is going to be replaced by the GrUber person,” you may say. Yes Virginia, there is a new Santa that will be delivering your food…in a red pouch no less! You see, you can change names all you want – you can add menu items, seating, and cool technology. What you can’t do is pave over the fact that no matter how you slice it, to quote Frank Zappa, “You are what you is.”

Faux Variety

For decades pizza and Chinese food have owned the home delivery market. There are only so many ways to dress up a pie every Friday night. There has been a woeful lack of choices for food delivery. But that was so five minutes ago and now people are limited only to the type of apps they have in their phones as to the variety of food they can have on their table in a matter of minutes. And it is glorious!

You Can Tune A Piano But You Can’t Tuna Fish -REO Speedwagon

I’m not saying it’s all gloom and doom. But if I had a successful run in the stock market with any of these pizza titans I would be cashing out and moving on…perhaps to the next one of the delivery-on-demand companies that opt for the next IPO. Business is going to be affected. It already is, and the big boys (as stated earlier) are preparing. I spoke to the manager of a local PAPA John’s store recently about the recent DOORDASH deal and they told me the company’s position is that staffing stores with drivers is becoming problematic, leaving them little choice.

For decades, pizza and Chinese have had a competitive advantage…delivery…but that’s all they’ve had, no sit-down, no ambiance. I doubt that PAPA JOHNS is going to start selling General Tso’s Chicken, and even if they did it would be PAPA Tso’s Chicken. Anyone see what Domino’s did to Philly Style; Just sayin… So how are they going to compete with other restaurants that are entering the delivery segment when that’s been their ONE competitive advantage all along? Now what?

The skinny is that these on-demand companies are tapping only about 5-10% of the market right now. Let that sink in for a minute – 5-10%! Yet they’re causing sales declines in the pizza chains of at least that much and comfortably medium double digits in some others. That’s just with a paltry 5-10%. What’s going to happen when that number doubles or triples? There’s only so much of the proverbial pie to be split and then then it’s a matter of rearranging the deck chairs on the Titanic.

Beyond that, the numbers are speaking.

Is anyone listening?

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