Domino’s Pizza CEO Slams Competition’s ‘Value Meals,’ but Is He Right?

Domino’s Pizza CEO Russell Weiner has come under fire for attacking the premise of “value meals” launched by the chain’s competition, such as McDonald’s, Del Taco, and Burger King. Weiner claims that the practice is nothing more than a gimmick and that customers aren’t getting the proper value for their dollar. But does Weiner have a point? Let’s take a look.

Domino’s Pizza CEO: ‘That’s Not Value’

According to Bloomberg, Domino’s Pizza CEO Russell Weiner tried alleviating the fears of investors who were concerned that the pizza giant’s stock had tumbled 14% recently, which was “its worst one-day stock decline in more than a decade.”

The franchisee announced in mid-July that it plans to close up to 80 low-volume stores in Japan and intends to cut the number of locations overall in France by 10 to 20. Weiner said that the company maintained its outlook for sales and earnings and that areas like China and India, where store numbers are expanding, somewhat offset the weakness globally.

Even while same-store sales fell short of estimates in the second quarter, experts saw the chain’s increase in order counts in the U.S. across all income cohorts as a good development. According to Weiner, the surge resulted from both new and returning customers placing larger orders.

Weiner said that the company’s offerings, which he is attempting to position as superior to those of rivals, are mostly responsible for this. Chains like McDonald’s have introduced deals with discounts on select menu items for a limited time. Domino’s, in comparison, offers almost any two items on its menu for $6.99 each when you buy two or more, such as specialty pizzas and stuffed cheesy breads.

“It’s like ‘hey, the rest of our menu is expensive, but you can get this one thing you may or may not like cheaper,’” Weiner said. “That’s not value.”

He continued: “Just because something is cheaper, if it’s not what you want, it’s not valuable. If you want a big sandwich and you end up getting a little sandwich cheaper, you’re not happy.”

Increased Pizza Pickups

The Domino’s Pizza CEO may have a point, as a recent report revealed that the McDonald’s value meal, in particular, has shown mixed results in its initial launch. The fast-food chain has since announced that the promotion will be extended through August.

Meanwhile, Weiner also informed Business Insider that the chain’s carry-out orders have increased drastically. Weiner explained that the distinction is due to the kinds of consumers who choose pickup over delivery. He claims that because they value convenience, customers who order food for delivery are willing to cover the extra expenses and tip their driver. Domino’s Pizza offers delivery services via Uber in addition to operating its own delivery company. About 1.9% of the chain’s sales are derived from the third-party provider.

“Our carryout business is on fire,” he said. “This is something we didn’t even contemplate years ago.”

Weiner did point out that many American customers see delivery as an “expensive convenience,” while other more frugal patrons realize they can receive “more than another pizza” for their money when it comes to tipping and delivery fees.

A rising number of customers are opting to travel to their local Domino’s Pizza to pick up their purchases for another reason: control. Many carryout customers choose this option over delivery because they are worried about what to do if something goes wrong with their delivery order or whether it will arrive in time for a party.

In addition, the business has brought in a significant number of additional carryout customers by increasing the number of its restaurant locations and decreasing the distance that patrons must drive, thereby simplifying order pickup.

But there’s been an unanticipated side effect of this rise in pickup sales, and it has to do with the stock price of the company, which fell 1.82% to $417.45 on Friday, July 26.