Domino’s Pizza invests in electric-vehicle fleet to help stores recruit drivers

AFP
AFP

Summary

  • World’s biggest pizza chain signs deal with General Motors to purchase EVs

Domino’s Pizza Inc. is investing in electric vehicles for some of its U.S. outlets to help attract drivers and overcome a worker shortage that has hobbled pie deliveries industrywide this year.

The world’s largest pizza chain by stores and sales said it would procure 800 Domino’s-branded Chevrolet Bolts for 37 of its own stores and hundreds of others run by its U.S. franchisees.

Domino’s said it would begin deploying the branded vehicles this month, and that the company expects to order more from the General Motors Co. division after the initial round.

“We’ve got a long way to go, but we will have the biggest fleet of electric vehicles in the pizza industry, period," Domino’s Chief Executive Russell Weiner said in an interview.

Store owners can let employees use the cars for pizza delivery as a way to help recruit new drivers, some of whom don’t have their own vehicles for work, Domino’s said.

Domino’s, as part of an operational review, found that shop owners identified cars as an impediment to getting enough delivery workers. Some pizza drivers have said that a dearth of used cars during the pandemic, high fuel costs and other factors limited their interest in continuing in the industry. Drivers typically pay for their vehicles.

Mr. Weiner said the electric vehicles should help the company lure drivers who have other job options, or lack wheels. Those factors have crimped Domino’s business, he said. The new vehicles also will advance the company’s environmental goals by cutting carbon-dioxide emissions produced by traditional gas-fueled cars.

The move is part of American companies’ broader embrace of electric vehicles. Amazon.com Inc. has said it plans to deploy a fleet of EVs, FedEx Corp. has started operating electric vans, and Tesla Inc. said it plans to deliver its first electric semitrailer truck to PepsiCo Inc. next week. Uber Technologies Inc., which has struggled with its own driver shortage, is also making an EV push.

Domino’s, along with competitors such as Pizza Hut and Papa John’s International Inc., have struggled this year to hire and retain enough delivery drivers, a linchpin of their businesses. Pizza sales surged during the Covid-19 pandemic, but demand for drivers also jumped as other restaurants rushed to add their own delivery services, typically through apps that employ gig drivers, pizza companies have said.

Domino’s said last month that its same-store sales for delivery declined 7.5% in the three months ended Sept. 11 compared with the year-prior period. The company in April called a lack of drivers and other impediments to its delivery business its biggest short-term challenge in the U.S.

Domino’s shares are down 35% since the start of 2022, while the S&P 500 has fallen roughly 17%. Domino’s said earlier this year it would review its to-go operations, including assessing whether third-party food-delivery apps could play a role.

Domino’s executives have said that many drivers opted for gig work during the pandemic, given a surge in the delivery business and promises of more flexible schedules. The company’s review found that customers sometimes canceled orders when it took too long to get through on the phone or for pizzas to arrive, hitting Domino’s sales, executives said.

Some Wall Street analysts have pushed Domino’s to strike deals with food-delivery companies. Pizza Hut and Papa John’s have turned to third-party apps to help ferry pizzas to customers.

Domino’s chose the Chevy Bolt because of its total ownership cost and other factors, Mr. Weiner said. The company wouldn’t say how much it was spending on the cars, though Mr. Weiner said the investment was minimal.

A unit of car-rental company Enterprise Holdings Inc. will help procure the cars and provide maintenance for franchisees, along with installing on-site chargers if they choose, Domino’s said. Franchisees have until March to place initial orders, the company said.

Electric vehicles could save Domino’s money in the long run, said Pavel Molchanov, managing director of renewable energy and clean technology for Raymond James & Associates Inc. The cost to install an on-site charger should be several thousand dollars to power passenger vehicles making short-distance deliveries, and they could quickly pay for themselves in saved fuel and maintenance expenses, he said.

Domino’s has previously invested in delivery-vehicle experiments, including autonomous vehicle tests with Ford Motor Co. in 2017 and startup Nuro Inc. in 2019. Those tests are ongoing, but not all customers want to pick up their pizza from a robot, Mr. Weiner said.

Mr. Weiner said Domino’s will continue searching for ways to improve its driving jobs, including creating more flexible shifts. He said he didn’t completely rule out working with third-party delivery apps in the U.S.

“My job is to make sure every pizza is delivered," Mr. Weiner said.

This story has been published from a wire agency feed without modifications to the text

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