You know that feeling when you're immersed in a game and those annoying hunger pangs hit? And, hey, a slice of pizza sounds really good right now. Well, Domino's Pizza (NYSE:DPZ) feels your pain, and it's about to make the process of ordering a piping hot pie as seamless as ever.
"Domino's, feed me!"
In fact, this already happened for Microsoft (NASDAQ:MSFT) Xbox One owners in the U.K. and Ireland, for whom the Domino's Pizza app rolled out last week. Better yet, those with the Xbox One Kinect accessory can simply utter the words "Domino's, feed me!" to open the app, which then recognizes hand gestures to pick ingredients and complete the process. Or, if you prefer, your controller will also suffice.
Better better yet, the app comes with an order tracker and can run with the Xbox One's Snap feature, which means you can return to your game and simultaneously monitor the progress of your delivery until the doorbell rings.
But while it may be tempting to call Domino's Xbox One app a gimmick, dig deeper into the pizza maker's business and you'll see that's not the case.
A logical next step
First, note that Domino's recently capped its 14th consecutive quarter of domestic same-store sales growth -- a metric which helps investors separate new locations' revenue from the performance of established restaurants. Part of that impressive streak involves Domino's drastically improved pizza quality over the past several years, but technology also plays a key role.
Digital orders now comprise roughly 45% of Domino's total revenue, driven by initiatives like "Dom," its slick new voice-ordering app, and a simplified online workflow. The trend is even more prominent in the U.K., where digital drives 70% of all delivery sales (this helps explain, by the way, why the Xbox One app launched in there first).
However, even as digital gradually trends upward as a percentage of total sales, Domino's CEO J. Patrick Doyle last quarter told investors the current digital mix is basically an even split between mobile orders and those from desktops and laptops.
Microsoft recently announced Xbox One unit sales are about to hit 10 million, so it makes perfect sense for Domino's to expand its digital presence further into the ripe-for-the-picking gaming community.
You'll spend more (and more often)
In addition, Domino's says digital orders have higher average ticket prices than traditional phone orders. That's not entirely surprising: Digital interfaces allow Domino's to more effectively control the order flow, and present hungry patrons with delicious-looking images and add-on items like drinks, wings, and other specialty items.
Not only will you spend more with each digital order, but you'll also place orders more frequently. Here's what Doyle said on the topic during last month's earnings conference call,
[Digital] has grown materially versus the year ago quarter, but the real gain on digital is from frequency. I mean, it's ultimately about the better retention of customers, better frequency of orders from customers. As they have a better experience with Domino's, we get more orders from them. That's really what drives it more than anything else.
It's apparent, then, that Domino's Xbox One app isn't an entirely selfless proposition. At the same time, though, the added novelty and convenience is also a positive for consumers, who are already more loyal to Domino's than all other national pizza chains. In the end, if Domino's can use the Xbox One app to help maintain that loyalty, there's no reason the stock can't continue to reward patient investors.As for consumers in the U.S. looking to order a pizza from their XBOX, they'll just have to wait. Despite the U.K. rollout there has yet to be word on availability for the service in the U.S.