When it comes to direct-to-consumer (DTC) delivery one company stands out above all others. How have Domino's been so successful?

What is DTC delivery?

Each year in the UK we estimate that there are 700m on-demand food deliveries (grocery and takeaway). That's about one every two weeks for each of the 28m households.

The majority are placed via the big-3 food delivery aggregators but roughly 20% of orders are placed directly with the grocer or restaurant.

Why do businesses want to sell DTC?

There are many good reasons for wanting to offer your customers direct delivery:

1️⃣ Make more money by reducing the high commissions charged by aggregators

2️⃣ Deliver a better service by taking control of the whole experience to ensure your product and brand are protected

3️⃣ Get customer data to know who your customers are and communicate with them whenever and however you want

4️⃣ Reduce your risk by being less reliant on the aggregators who can damage your business by a change to their algorithm or commercial structure (a concern Toys’R’Us probably wish they'd considered more before deciding to sell through Amazon).

Massive companies like Tesco’s have launched successful on-demand delivery (Whoosh) but so too have start-ups with only a handful of stores (e.g. Yard Sale Pizza, Zia Lucia). New tech products like Storekit have made the process of setting up direct ordering easier and improved the customer experience.

Who is the best?

There is one undisputed champion of DTC delivery - Domino's.

Dominos are by far the dominant market leader in takeaway pizza and generate more profit in the UK than the big-3 food delivery platforms combined.

Each year they deliver 45 million orders in the UK, meaning that they are more than 1/3 of the entire non-aggregator market and more than 1/4 of the entire size of Deliveroo. With over 1,300 stores, that's more than 650 deliveries per store per week!

Over the past decade Deliveroo, Uber and Just Eat have spent billions (yes, with a 'b') of pounds launching and promoting their food delivery services. Millions of subsidised orders have been delivered at negative gross margins while enormous teams of engineers, marketers and analysts have spent years refining the product and improving efficiency.

Today, after cutting costs, cranking up fees for customers, squeezing restaurants for more commission and slashing driver pay, they are just about a break-even businesses but still have to spend more than £1 per order on administrative staff overheads.

During this same period Domino's have maintained their model of selling directly, grown their active customer base to 13.5 million people in the UK (2023), remained profitable, generated cash and paid out healthy annual dividends.

So how have they done it?

Customers have continued to order directly from Dominos despite the lure of the aggregators for one simple reason - a reliable product and a reliable service.

Domino's stores all have their own delivery drivers. This means that they are in full control of their customers’ experience: they decide how their pizzas are transported, what bag is used, when they arrive and how the driver behaves.

The result is that the pizza arrives hot, the right way up and quickly with an average delivery time of 24 mins!

Why is this not possible with outsourced delivery?

Employing drivers can be expensive and time consuming. Many businesses have therefore been tempted to outsource delivery. In the UK there are two main services for on-demand fulfilment: Uber Direct and Stuart.

However, both these services rely on the ‘gig economy’ model which means almost no control over who the drivers are or how they behave:

• drivers are allowed to rent out their accounts to anyone the want - there is no control over who is working on the platforms. Reuters suggests that 42% of drivers in London are working illegally!

• drivers are allowed to take multiple orders at the same time from different apps or restaurants.

• drivers receive no training - there is no in person onboarding, equipment checks or training.

• drivers are frequently paid below the minimum wage - it’s hard to expect a good service when driver fees have been repeatedly cut.

Imagine that you are the customer. You have been lured away from the Deliveroo app and placed your first order directly with your favourite restaurant. And then your food turns up cold, squashed and late. What are the chances that you order directly again? All of that work on building an ordering system and marketing your product is wasted.

Customers will only order directly if they have a compelling reason to switch away from aggregators - a superior delivery service provides this.

Does it need to cost time and money to sell direct?

Not any more. Domino's have spent decades building up their expertise in recruiting and managing delivery drivers. But it doesn’t need to be that complicated.

At Rodeo we have built the toolkit you need to build and manage your own delivery operation. You can use Rodeo to find, onboard, schedule, contract, manage and pay your own dedicated drivers, ensuring that you get all the benefits of the Domino's model but without the headaches.

If you want to find out more, please get in touch at hello@gorodeo.app.