It's Delivery Week here at Eater, five lazy days of celebrating staying put and summoning sustenance directly to your couch. Today, we consider how, despite all the conversation about how delivery startups in major cities on the coasts will change the world, in flyover country, the most technologically sophisticated restaurant delivery service is a little Michigan-based pizza chain called Domino's.
or all the millions of dollars that venture capitalists have sunk into delivery startups, with their talk of precision-engineered craveably virtuous foodstuffs and artificially intelligent, bot-powered routing systems and logistics, there is no dish that is as optimized for delivery as pizza, and no delivery platform that reaches as many people as Domino’s.
Long before UberEats promised "delivery at the tap of a button," Domino’s, purveyor of one of our national dishes, the BOGO medium two-topping pizza, pursued the technology and infrastructure to practically beam its wares into the home of anyone craving an eight-piece buffalo wing order, no matter where they lived in the vast expanse of territory that comprises the continental United States. While urban dwellers can rely on whichever app they feel least guilty about using at a given moment — is it a Seamless or Caviar kind of night? — for much of the rest of the country, Domino’s is as good as online delivery gets, maybe even as good as delivery is ever going to get.
GrubHub Seamless, perhaps the most sweeping of the online delivery services, covers 1,100 American cities. The scope is impressive compared to most other food concierge startups, but there are some 19,000 municipal governments in the U.S., 90 percent of which have populations smaller than 25,000 people. UberEats is available in 27 major American cities; Caviar is in just over a dozen; and Amazon’s PrimeNow service offers restaurant delivery in "select cities," which appear to number two dozen or so. It’s not just suburban and rural America that is missing out, either: Maple, which preps its meals in a commissary kitchen in Brooklyn, and has boasted of producing 1,100 meals in one hour, can deliver anywhere in Midtown and lower Manhattan in 30 minutes or less, but can’t do so in Brooklyn, where its own central kitchen is located.
The same social and technological conditions that have been conducive to the rise of delivery startups are favorable for Domino’s too
And even if one does live in a coveted, high-class zip code where apps compete to be the most popular vector for organic gluten-free paleo burritos, the cost is often prohibitive: Postmates has a nine percent delivery fee and variable pricing that often ends up much higher than the quoted estimates; Caviar has a $15 minimum and an 18 percent service charge on top of the delivery fee; and DoorDash marked up menu items without clearly disclosing the increase until earlier this year (it now charges a separate service fee instead). Despite the untold fortunes subsidizing these lukewarm care packages from restaurant aggregators and startup commissaries, technologically refined delivery remains beyond the reach of many Americans, in both service and cost.
Except when it comes to Domino’s. The company, which has more than 5,000 locations in the U.S., launched online ordering in 2007 with order tracking and a "pizza builder" to give customers an idea of what the pizza will look like (now in 3D!) the following year. More recently, as commerce has become virtually frictionless — thanks, apps — Domino’s software has evolved to match anything that might come out of a Stanford dorm room. What it calls AnyWare is built on the idea that anyone can instantly order a pizza, whether they’re watching TV or waiting at a stoplight, from just about anything: a smartphone (iPhone or Android), smartwatch, smart TV, Twitter, Amazon Echo, chatbot, or even Ford automobile. (Though "Dom," Domino's chatbot, certainly has his limits.) AnyWare is delivery software that is not merely platform or medium agnostic, but unconcerned with spacetime itself. It’s this kind of convenience, breathtaking in the scope of its unbridled ambition and sheer pointlessness — the kind that is now the expected fabric of reality in the gilded lands of San Francisco and Manhattan — that has led to hundreds of headlines over the last several years proclaiming Domino’s not a multinational pizza factory, but a tech company.
If you bought $1,000 worth of shares in Domino’s in 2008, they would be worth about $50,000 now (it’s up 35 percent in 2016 alone)
But this is not the standard Harvard Business Review case study of an aging brand hopping on a glorified digital bandwagon plastered with garbage startup slogans. Domino’s has been gathering and collating customer data ever since the glory days of "30 minutes or it’s free": ZIP codes, frequency of orders, and delivery times. Of course, these days, far more metadata are harvested from each order, like customer’s precise location, the type of device the order came from, and any notable pizza preferences. Domino’s internal data are supplemented by third-party sources, which provide area demographics and a snapshot of the local competition. With this robust trove of information, the elderly pizza giant can determine everything from the types of coupons a neighborhood receives to the number of people needed to staff a store on a rainy Saturday night during a college football game.
The same social and technological conditions that have been conducive to the rise of delivery startups are favorable for Domino’s too: More smartphone users, better delivery networks, and the growing ranks of the underemployed willing to work as independent contractors with few or no benefits — both to drive its cars and order its $5.99 medium pizzas. (Also: When there is social and political unrest, demand for delivery goes up, especially for pizza.) Driverless cars, oft-presented as a solution to Uber’s labor dilemma, will be another boon for Domino’s pizza transportation network: They will remove the cost and inefficiency of human drivers while simultaneously increasing the density of productivity and availability (of cheap pizza). Cost savings could be passed on to consumers in the form of pucks of dough, cheese, and sauce that border on free, or could allow delivery to be viable in even more far-flung locations. Unsurprisingly, Domino’s and its robotics unit have already started testing both autonomous delivery vehicles and flying pizza drones to patrol our streets and skies, surgically striking targets with low-moisture mozzarella.
It is delivery software that is not merely platform or medium agnostic, but unconcerned with spacetime itself
With VC funding for delivery services shrinking from $2 billion in Q3 2015 to just $320 million in the most recent quarter, there’s more pressure than ever on startups to produce results, even though a recent report from Morgan Stanley shows that 71 percent of respondents would spend no more than five dollars, excluding tip, for restaurant delivery, with 15 percent refusing to pay any delivery fees at all. In the meantime, Domino’s has posted year-over-year growth since 2010, with increased market share, store sales growth (driven by its technology initiatives and a new digital loyalty program), and international expansion — it’s projected to grow earnings at an average rate of 15.98 percent for the next five years. If you bought $1,000 worth of shares in Domino’s in 2008, they would be worth about $50,000 now (it’s up 35 percent in 2016 alone); if you bought the same amount of Chipotle stock in 2008, and held it until it peaked in 2015, you’d reap half that much profit.
The illusion that a delivery startup is going to "change the world" has largely faded for all but the most captured Valley sycophants, though internet-powered delivery will obviously continue to evolve and expand, so that eventually everything will be one tap or voice command away — or less — as most of us work longer hours, wages remain stagnant, and food costs, especially for fresh produce and unprocessed goods, continue to soar. Delivery startups, pushed by their backers to continue scaling and piling on the number of "active diners" they serve, may expand beyond desk lunches in urban centers, pursuing ever-elusive profits by enticing ever more distant consumers too tired to cook for themselves. But for most of us, Domino’s is already there, reliably delivering affordable meals day after day, in the biggest cities and the tiniest towns and everywhere in between. So what if the pizza kind of sucks.
This post has been updated to reflect DoorDash's newer pricing model.
Read more from Eater's Delivery Week:
A Day in the Life of a Delivery Guy on a Bicycle
When Delivery Is Not a Luxury
It's 2016. Where Are the Pizza Delivery Drones?
Counterpoint: Don't Order Delivery
Did Someone Order a Pizza?