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Domino's (DPZ) GPS Tracker Boosts Digital Delivery Services

Zacks Equity Research

Domino's Pizza, Inc. DPZ has recently tested its new GPS delivery tracking technology or Domino's Tracker to stores across the United States. The addition is expected to simplify the management of in-store logistics and provide better customer experience.

Domino’s Tracker includes features such as estimated delivery time, text notifications along with optional navigation and one-touch customer callback capabilities. The GPS delivery tracking technology is not only beneficial for customers but also for store managers and delivery experts owing to its transparency.

Customers who order from stores that have GPS delivery tracking capabilities will be able to monitor their order through a delivery expert on an interactive map found on their order confirmation page. This transparency enhances delivery experience for everyone involved.

Moreover, this move is in line with Domino’s consistent effort to reach out to a greater number of customers. The company has been trying to augment technological capabilities in a cost-effective way.

Domino's stores across the United States will now have this new technology. By the end of 2019, approximately a quarter of locations nationwide will have this technology and a major portion of the remaining stores are expected to have the GPS delivery tracking technology available in 2020.

Focus on Digital Offerings

Domino’s continues to bolster sales through various remodeling initiatives. The company is also investing heavily in technology-driven initiatives like digital ordering to boost sales.

Recently, the company partnered with Nuro — a robotic company for the delivery services, for driverless pizza delivery services in Houston, TX. It has been underway in the Houston metro area since March 2019. Nuro's vehicles are specially designed to optimize the food delivery experience. This will enhance unmanned delivery experience and provide its operators an additional delivery solution during a busy store rush.

Meanwhile, the company’s digital loyalty program — Piece of the Pie Rewards — continues to contribute significantly to traffic gains. The extended ways to order a pizza has positioned Domino’s at the forefront of digital ordering and customer convenience. On the delivery front, the company, in collaboration with Ford Motor, initiated research on consumers’ responses to pizza delivery, using self-driving vehicles.

Notably, digital leadership is helping the company to expand the brand in the domestic market as well as overseas. In 2017, Domino’s invested $90.3 million in its proprietary point-of-sale system Domino’s PULSE, digital ordering platform, supply chain centers, new company-owned stores, reimaging existing company-owned stores’ internal enterprise systems and other technology initiatives.

However, high costs have been exerting pressure on Domino’s margins for some time, which in turn have affected earnings. Notably, shares of the company have gained 13.7% in the past year compared with the Zacks Retail - Restaurants industry’s 15.9% rally.



Our Take

We believe that the introduction of GPS delivery tracking technology will help Domino’s reach out to more customers and drive comparable sales. In the third quarter, the company’s global retail sales (including total sales of franchise and company-owned units) were up 5.8% year over year. The uptick can be attributed to solid comps at international stores (up 5.7%) and domestic stores (up 6%). However, the company’s global retail sales compares unfavorably with 8.3% growth in the year-ago quarter.

Excluding foreign currency impact, global retail sales increased 7.5%. Notably, the third quarter marked the 34th consecutive quarter of positive U.S. comparable sales and the 103th consecutive quarter of positive international comps.

Zacks Rank & Key Picks

Domino’s currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Chuy's Holdings, Inc CHUY, Arcos Dorados Holdings Inc ARCO and Brinker International, Inc EAT. Chuy's Holdings sports a Zack Rank #1, whereas Arcos Dorados and Brinker International carry a Zacks Rank #2 (Buy).

Chuy's Holdings has three-five year expected earnings per share growth rate of 17.5%.

Arcos Dorados’ and Brinker International’s current year earnings are expected to rise 72.2% and 8.1%, respectively.

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