Pizza Chains Want a Larger Slice of the Delivery Pie

For millions of Americans, Friday night was always pizza delivery night. But today, with mobile-based food delivery and ordering apps popping up left and right, Big Pizza is taking a hit. America's largest pizza chains are playing defense, and using technology and social media — to sometimes great and sometimes gimmicky effect — in an effort to get back on top.

According to Statista, consumer spending on pizza delivery has gone down since 2004. Consumers in the U.S. spent approximately $9.7 billion dollars on pizza delivery in 2015, down from the $11.9 billion they spent in 2004.

Statista

Meanwhile, a survey released in February by information research company NPD Group shows delivery traffic outside of pizza is growing; It's been up by 33 percent since 2012. While it still accounts for the bulk of delivery traffic, pizza delivery is losing its luster.

The major chains — Pizza Hut, Domino's, and Papa John's — have an advantage over smaller chains and independent shops. Bonnie Riggs, a restaurant industry analyst with NPD Group, explained in a call with Eater that "it's the small chains and independents that are causing that decline. The big guys are able to advertise and promote. Having said that, even the major guys are up against other options that we now have available."

Pizza still accounts for the majority of delivery traffic —  but it's the other channels (burgers, quick service, full service) that are actually driving overall food delivery growth.

When comparing 2015 to 2012, overall visits to restaurants are up just one percent — on par with population growth, says Riggs. Dining in at a restaurant is up two percent, carry-out is flat, and drive-thru use is down three percent. Delivery traffic, meanwhile, is up nine percent.

"Delivery is providing the ultimate convenience and is winning at the expense of drive-thru," says Riggs, who adds that pizza delivery companies now have fiercer competition to contend with. "Full service restaurants are going to get into the delivery game, too; Amazon and Uber are going to be delivering meals. Everybody is kind of seizing on that opportunity."

NPD

Pizza chains, eager to set themselves apart from the pack, have unleashed a slate of unique ways to order a pie. Pizza Hut has taken a page from Uber's playbook in its launch of  "Visible Promise Time" on digital orders, allowing customers to see an estimated timeline of when their food will be ready prior to actually placing an order. "Before you place your order on any of our mobile channels, you'll be able to see, for instance, that delivery is going to take 45 minutes, but pick-up might be 15 minutes," says Pizza Hut's Chief Digital Officer Baron Concors. "When people get a notification that they can pick it up faster than it can be delivered, they might pick it up."

Papa John's is trying its hand at innovative delivery, too. According to Senior Director of Public Relations Peter Collins, the company is testing hands-free ordering, a partnership with Google, in its Bay Area stores. The hands-free system allows customers to download an app and, when checking out at a restaurant, simply stand in front of a cash register and say their name aloud (a sensor detects whether they have the app and bills them later). "It's yet another opportunity to push the possibilities of digital payment solutions for our customers," he says.

Leading the pack when it comes to high-tech pizza delivery is Domino's. "Domino's is winning the war when it comes to technology," says Riggs. "In terms of getting the pizza to the consumer faster and letting the consumer pay via their phone and order via their phone. They've been very, very innovative."

At Domino's, ordering a pizza for delivery can be as easy as opening an app or tweeting a pizza emoji (though that service hasn't always proved successful). Dennis Maloney, Domino's Vice President and Chief Digital Officer, says the move toward becoming a more tech-focused company began in earnest in 2010, as part of the brand's overhaul.

"For about the past six years, the brand has really been in a state of transformation," says Maloney. "Starting in 2010, when we really sort of re-launched the brand, in effect. Our philosophy then was to be really honest and transparent, and part of that transparency is, 'Hey we're a brand in progress.' And part of that really became our innovation story." That transformation first led to the company's pizza tracker app, which launched in 2010. The creation of profiles — the ability save your preferred size and toppings for future orders — came shortly after, and "simplified a twenty-click process down to five clicks," says Maloney.

Though he won't comment on specific numbers (how many customers order via Amazon Echo, for instance), Maloney says that "more than half" of Domino's orders come from digital channels and that the company is "very happy with the adoption rates" of all its apps.

Maloney notes the new modes of ordering serve the brand in three different ways. "They get people to order pizza that wouldn't order pizza anyway. We want to enable that. They also work very well as public relations stories — our reinvention and focus on technology. And they also work as marketing vehicles. It enables us to reach out to millennials and younger audiences who respond to these platforms."

As for whether the company now considers other, non-pizza delivery services to be competitors, Maloney says: "We definitely watch [what companies like GrubHub and Postmates] are doing. I wouldn't say it's had a significant impact on us, though." He adds that today, the vast majority of staffers at Domino's corporate are focused on "data, metrics, testing, all of those types of things."

"For a long time, we were a pizza company that allowed consumers to order online," he says. "Now, we’ve become an e-commerce company where the product is pizza."