When it comes to online ordering, the pizza industry is ahead of the curve—and few pizza customers have been faster on the online uptake than Domino’s British patrons.
Domino’s Pizza Group (DOM:LN)—which operates and franchises the brand’s pizza chain in the U.K. and Ireland, as well as a few dozen stores in Germany and Switzerland—saw online orders rise to 69.4 percent of delivered sales in the U.K. during the first quarter. In the U.S., about 40 percent of Domino’s (DPZ) sales are made online.
Ordering a pizza online is a natural progression from ordering by phone, and pizza purveyors arrived early to the Internet: Pizza Hut (YUM) claims to have accepted the first online order in 1994. But why would Americans trail Europeans when it comes to summoning a pizza with the help of the Web?
“There are a few factors at play here,” Domino’s spokesman Tim McIntyre wrote in an e-mail. Customers in Asia and Europe have adapted faster to digital platforms in general than Americans, he says, and the company’s overall consumer base and store footprint in Europe is smaller. So while the rate of online orders may be larger, it’s coming from a smaller number of orders.
Online shopping is particularly prevalent in the U.K., where the vast majority of Domino’s Pizza Group stores are located. About 13.5 percent of all retail sales in the U.K. occurred online in 2010, according to a BCG report (PDF), compared with 5 percent in the U.S.
The British also spend more time on their smartphones than Americans and use the devices for shopping more readily, according to Nielsen (NLSN). So it makes sense that about one-third of Domino’s online sales in the U.K. are made through a mobile device. McIntyre says the company has found that some customers even choose to order from the mobile app when they’re near a computer at home.
Other European markets are still catching up. Online orders are only about 30 percent of Domino’s sales in France, according to Domino’s Pizza Enterprises (DMP:AU), the company that franchises there.
For Domino’s, the benefit of the shift to digital is that the chain can update menus more easily, which means it’s easier to promote such new items as the recently successful pan pizza. It also helps with targeted marketing based on a customer’s order history. Online orders free up restaurant staff from answering calls. As Domino’s chief financial officer, Michael Lawton, explained at a 2012 conference: “On a busy Friday night, you can have one less phone operator, two less phone operators.”
On the most basic level, however, customers are becoming more averse to yakking on the phone. “We look at surveys of our customers, and they’re pretty clear in telling us they like ordering on digital better than talking on the telephone,” Lawton said at an event last month. Allowing them to avoid that call is one less reason for them to order from someone else’s website.