New Delhi: Domino’s Pizza Inc. DPZ -0.47% decrease; downward red triangle is investing in electric vehicles for some of its US stores to help attract drivers and overcome a labor shortage that has limited pie supplies across the industry this year.
The world’s largest pizza chain by stores and sales said it will supply 800 Domino’s Chevrolet Bolts to 37 of its own stores and hundreds more operated by its U.S. franchisees.
Domino’s said it will begin deploying branded vehicles this month and that the company expects to order more from General Motors Co. GM 1.14% up; green up division showing triangle after opening round.
“We have a long way to go, but we will have the largest fleet of electric vehicles in a pizzeria,” Domino’s CEO Russell Weiner said in an interview.
Store owners can let employees use the cars to deliver pizzas as a way to help recruit new drivers, some of whom don’t have their own vehicles for work, Domino’s said.
As part of an operational review, Domino’s found that store owners cited cars as a barrier to getting enough delivery drivers. Some pizza drivers said the lack of used cars during the pandemic, high fuel costs and other factors have limited their interest in continuing in the industry. Drivers usually pay for their vehicles.
Mr. Weiner said electric vehicles should help the company attract drivers who have other job options or don’t have bikes. Those factors, he said, have limited Domino’s business. The new vehicles also advance the company’s environmental goals by reducing the carbon dioxide emissions produced by traditional gas cars.
The move is part of a broader embrace of electric vehicles by American companies. Amazon.com Inc. said it plans to deploy a fleet of EVs, FedEx Corp. started operating electric vans and Tesla Inc. said it plans to deliver its first electric semi-trailer to PepsiCo Inc. next week. Uber Technologies Inc., which has struggled with a shortage of its own drivers, is also pushing for electric cars.
Domino’s, along with competitors such as Pizza Hut and Papa John’s International Inc., have struggled this year to hire and retain enough delivery drivers, a mainstay of their business. Pizza sales have soared during the Covid-19 pandemic, but demand for drivers has also increased as more restaurants have rushed to add their own delivery services, usually through apps that employ gig drivers, pizzerias said.
Domino’s said last month that its same-store sales for delivery fell 7.5% in the three months ended September 11 compared with the year-earlier period. In April, the company identified driver shortages and other delivery bottlenecks as its biggest near-term challenges in the US.
Domino’s shares have fallen 33% since the start of 2022 through Monday’s close, while the S&P 500 is down about 17%. Domino’s said earlier this year it would review its ongoing operations, including assessing whether third-party food delivery apps could play a role.
It’s executives said many drivers have opted to work gigs during the pandemic, given the rise of delivery services and the promise of more flexible schedules. A review of the company found that customers sometimes canceled orders when it took too long to make an appointment on the phone or for the pizza to arrive, hitting Domino’s sales, executives said.
Some Wall Street analysts have pushed Domino’s to make deals with food delivery companies. Pizza Hut and Papa John’s have turned to third-party apps to help deliver pizza to customers.
Domino’s chose the Chevy Bolt because of its total cost of ownership and other factors, Mr. Weiner said. The company would not say how much it was spending on the cars, although Mr. Weiner said the investment was minimal.
A car rental unit of Enterprise Holdings Inc. will help procure cars and provide maintenance for franchisees, along with installing on-site chargers if they choose, Domino’s said. Franchisees have until March to place their first orders, the company said.
Electric vehicles could save Domino’s money in the long run, said Pavel Molchanov, managing director of renewable energy and clean technologies at Raymond James & Associates Inc. The cost of installing a local charger should be several thousand dollars to power passenger vehicles. Distance deliveries and could quickly pay for themselves in saved fuel and maintenance costs, he said.
Domino’s has previously invested in delivery experiments, including autonomous vehicle tests with Ford Motor Co. in 2017 and the startup Nuro Inc. in 2019. The company has tested some autonomous vehicles on the road and its research is still ongoing, but not all customers want a robot to pick up their pizza, Mr. Weiner said.
Mr. Weiner said Domino’s will continue to look for ways to improve its driver positions, including creating more flexible shifts. He said he doesn’t completely rule out working with third-party apps for US delivery.
“My job is to make sure every pizza is delivered,” Mr. Weiner said.
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