Why Domino’s gave out gift cards to local restaurants
Photo courtesy of Domino’s
Domino’s shines a light on restaurant delivery costs by offering gift cards to customers.
Specifically, operators gave delivery customers $ 50 gift cards to local restaurants in Boston, Phoenix, Louisville, Ky., Laredo, Texas and Denver. Local stores distributed over $ 100,000 in gift cards to 2,600 customers earlier this month.
“We love that Domino’s has supported other restaurants and brought their customers to those moms and dads who might really need help,” Irene Li, owner of Mei Mei in Boston, said in a statement.
This is not the first time that Domino’s has used its marketing weight to attract customers to other restaurants. In 2019, for example, the Ann Arbor, Michigan-based pizza chain began giving out loyalty points to customers for visiting other pizza concepts.
This time, however, the company is using the cards to highlight the fees restaurants pay for third-party delivery companies like DoorDash and Uber Eats.
Domino’s increasingly sees these companies as major competitors. “Frankly, the biggest long-term competition for us in delivery is this third-party aggregation channel,” CEO Ritch Allison said in July.
The company recently started publishing the fees these companies charge customers. Domino’s recently launched a campaign offering delivery customers “surprise free” or free items added to their orders to highlight these charges.
This time, Domino’s marketing targets the fees that vendors charge restaurants, which can range from 10% to 30% of an order amount.
Small restaurants, in particular, have bristled with such fees, which has led to fee caps in markets such as New York City as service becomes more important to the overall restaurant revenue model.
“Our franchisees benefit from being part of a brand whose operations and technology are designed for delivery,” said Russell Weiner, Domino’s chief operating officer, in a statement. “However, many small restaurants do not have a delivery system. Meanwhile, third-party delivery apps charge local restaurants high delivery fees, which takes a large chunk of their revenue away. “
Domino’s also urged customers in a statement to “skip delivery apps and order directly from a local restaurant” if they don’t order from the pizza chain. The company also made a video featuring some of the restaurant owners whose gift cards were handed out.
Domino’s has taken a stand against third-party delivery, refusing to use such services even though its competitors eagerly use them to supplement their own services and gain access to new customers.
Instead, the chain has built more locations to improve delivery times and increase take-out sales in a strategy it calls “fortress.” And now, apparently, he is strongly pushing back the pricing practices of delivery providers.
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