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Domino's Pizza's delivery driver shortage is so bad that 40% of stores are 'utilizing call centers'

·Anchor, Editor-at-Large
·2 min read

If you call a local Domino's Pizza (DPZ) to place an order, you may be routed to a call center.

Domino's says the practice has freed up workers to deliver pizzas amid a driver shortage that has plagued the company for well over a year.

Utilizing call centers "allows team members to focus on making and delivering pizzas without having to worry about answering phones, especially during the busiest times of the store," Domino's Pizza new CEO Russell Wiener told analysts on an earnings call Thursday. "At the end of the [second] quarter, around 40% of our U.S. stores were utilizing call centers in some capacity."

A pizza comes out of the oven at Domino's Pizza restaurant in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson
A pizza comes out of the oven at Domino's Pizza restaurant in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson

The effort, while clever, may be having a minimal impact in terms of addressing lost sales from the labor shortage. Domino's reported delivery sales crashed 11.7% in the second quarter versus a year ago.

The company's U.S. same-store sales fell 2.9%, a sharp reversal from a 3.5% increase during the same quarter last year. Same-store sales at company-operated U.S. stores dropped 9.2% while franchise-owned stores dropped 2.5%.

International sales also fell 2.2%, worse than the 13.9% gain a year earlier.

"The decline in the U.S. same-store sales in Q2 was driven by declining order counts, which continued to be pressured by the challenging staffing environment, which had certain operational impacts such as shortened store hours and customer service challenges in many stores, both company-owned and franchise," Weiner explained.

That sales weakness led Domino to miss analyst profit estimates for the quarter. Adjusted earnings came in at $2.82 per share, down 7% year over year and below estimates for $2.89 per share.

Domino's Pizza stock fell on the news and is down 27% year to date.

"Existing challenges persisted during the quarter (e.g., labor availability, especially for drivers, and food cost inflation)," Jon Tower, analyst at Citi, said in a note to clients, adding, "although new pain points arose during the quarter (international same-store sales slowdown, FX headwinds mounting), these new pressures should come as little surprise to investors."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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