Domino’s shares soar after striking a surprise deal - CNN

New York CNN —

Domino’s Pizza has long been a holdout of using third-party delivery apps in the United States. But now, the pizza chain has struck a deal with one of the world’s largest food delivery services.

Customers can soon order Domino’s full menu on Uber Eats and Postmates, with a partnership announced Monday that is scheduled to roll out nationwide by the end of the year.

It’s a major change for the world’s biggest pizza company, which had previously required customers to order directly from them — and was so anti-delivery-app that the chain even ran a PR stunt highlighting the apps’ delivery fees.

Shares of Domino’s (DMPZF) soared more than 10% on the news in early trading.

“Now that aggregators are at scale, the next logical marketplace for us to enter is order aggregation,” said Domino’s CEO Russell Weiner in a statement, adding that partnering with Uber Eats and Postmates “will be a meaningful amount of incremental delivery orders once it’s widely available.”

Domino's can be soon ordered on Uber Eats in the US.

Courtesy Domino's Pizza

It’s a sharp reversal from Weiner’s stance last year, when he said Domino’s avoided using these services because they charge a commission fee and wouldn’t solve its labor issues.

And in 2021 Domino’s even gave away $50 million in free food to counter the “surprise fees” from delivery apps. “Other food delivery apps charge customers with hidden city or service fees,” the company said at the time. “Not Domino’s. We charge customers one straightforward delivery fee because we believe that level of transparency is what customers want and deserve.”

Specific financial details of the Uber Eats deal, including how much of a fee Uber is taking, weren’t disclosed. However, Domino’s employees will still deliver the pizza rather than Uber Eats drivers, Weiner said.

The partnership could add $1 billion in new sales, he told the Wall Street Journal.

Delivery has been a problem for Domino’s in previous years because of a confluence of factors including including labor issues, fees and customers increasingly using third-party apps.

In its most recent earnings call in April, for example, Domino’s CFO Sandeep Reddy said “delivery business remains more pressured” with its first quarter same-store deliveries declining by 2% compared to the same quarter a year earlier.

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