How the world’s largest pizza chain aims to sell more pies, sides and wings

“Why shouldn’t we be one in two?" said Domino’s Chief Financial Officer Sandeep Reddy. While the chain hasn’t set that as a specific target, Reddy said it is taking a number of steps to sell more pizzas and sides.

The pizza company is working to boost sales by making it easier for loyal customers to get rewards and is pumping up its offerings with a new yearly target for menu additions. Domino’s also last year reversed a long-held stance against working with food-delivery companies. The changes, announced throughout 2023, are all in effect for the first time this year.

So far, they are doing what was intended. Domino’s is selling more pizzas and bringing in new customers when some other restaurant chains have said consumers are reducing their visits and buying fewer items.

But the chain is pushing for more of the pizza market by potentially expanding to other food delivery apps after a one-year deal with Uber Technologies ends and adding a second new menu item to follow the New York-style pizza introduced earlier this year.

Domino’s and rival chains Pizza Hut and Papa John’s International benefited early in the pandemic from a flood of delivery and carryout orders as restaurants closed dining rooms. But a slew of restaurants pivoted to delivery or takeout options as people sheltered in place and then diners started going out more as restaurants reopened. This meant consumers had more delivery options and at the same time were ordering takeout and delivery less, which hit pizza chains’ sales, analysts said.

Same-store sales at Domino’s U.S. stores soared in 2020. But those sales dropped considerably starting in the second quarter of 2021 and either declined or were close to flat in six of the 10 subsequent three-month periods. Executives detailed plans to turn the business around late last year, and the effects are showing. U.S. same-store sales growth came in at 4.8% in the three months ended June 16 compared with the same period last year. Revenue of nearly $1.1 billion was up 7.1% in the latest three-month period compared with a year earlier.

To reach more customers, Domino’s is offering up menu items such as pizzas, pasta and wings through Uber. The agreement with Uber lasts through the first quarter of next year, at which point the company could go to other third-party apps.

Working with Uber made sense given the company’s willingness to share information about customers who ordered on its platforms, Reddy said. And exclusivity comes with better rates, he said, declining to discuss specifics related to the agreement. Expanding to other apps will likely mean giving up some of the more favorable terms, but the trade-off is potentially reaching more customers, according to the CFO.

“The checkpoint is the first quarter of 2025," Reddy said. “Once we get through this year and see how we are stacking for next year, we can make that call."

Analysts expect that Domino’s will move to other apps. Domino’s aims to generate $1 billion in third-party delivery sales by around 2027. “That’s going to involve other players," said TD Cowen senior research analyst Andrew Charles. TD Cowen forecasts the move to other platforms, such as DoorDash, will happen in the second quarter of 2025, he said.

The chain also expects its menu to draw in customers, last year setting a goal of adding two new menu items a year.

Domino’s in the past was less definitive about updating the menu. New menu items are expensive, according to Reddy. There is extensive testing and even more costly is the operational rollout to ensure that stores have the ingredients and know-how to make a new item, he said. So Domino’s has been measured with its menu additions.

“Limited time offers are talked about by a lot of the competition; those are very expensive exercises because of the amount of work that goes into it," Reddy said. “So philosophically, we are very much in the mode of, let’s take as much time to test it and get it right."

Two a year strikes the right balance from a cost perspective and as a lure for customers, Reddy said, noting New York-style pizza has been added to the menu this year. “Which implies one more is coming," the CFO said, declining to share specifics on when the second will come and what it may be.

Domino’s also revamped its loyalty program to make it easier to get rewards such as stuffed cheesy bread and a medium two-topping pizza. The updated rewards program, which was launched in September, is bringing in more new customers and increasing their number of transactions, according to Reddy. Domino’s will share specific numbers at the end of the year, he said.

Even as orders grew in the latest quarter, Domino’s is seeing some challenges. The chain cut its forecast for store openings worldwide this year by up to 25%, to between 825 and 925 stores. This is primarily because of challenges with Australia-based master franchisee Domino’s Pizza Enterprises in a couple of international markets. Store growth in the U.S. remains strong, executives told analysts last month. Meanwhile, some analysts wonder if the changes going into effect this year will create only a short-term lift for Domino’s.

Reddy said that’s not the case. New menu items will continue to draw in customers, as will third-party apps. And the revamped loyalty program is expected to create a boost well beyond the first year, the CFO said, pointing to yearslong benefits that came from a rewards program that Domino’s launched in 2014.

“It’s a multiyear comp driver with multiyear compounding impacts," he said.

Write to Jennifer Williams at jennifer.williams@wsj.com