Domino's Sees Gains With Loaded Tots And Carry-Out Orders

Domino's announced its new Loaded Tots in February, marking the first time the pizza chain had ever offered potatoes. The "loaded" aspect referred to the trio of topping varieties — cheddar bacon, melty 3-cheese, and Philly cheese steak — which are layered upon the tater tots style side dish. Originally rolled out to coincide with Super Bowl Sunday, the Loaded Tots have been selling for $6.99 as part of Domino's ongoing Mix and Match menu. According to Domino's executives, sales have been very good.

In a Reuters transcript of Domino's first quarter earnings call for 2023 (via Yahoo! Finance), Domino's CEO Russell Weiner noted that based on early results, Loaded Tots look to have outperformed other recent additions to menus at the pizza chain's 19,500 worldwide locations. For instance, Loaded Tots had a better initial showing than Dips & Twists, which premiered in late 2021, and Chicken Taco and Cheeseburger Pizzas, which debuted during the summer of 2020.

The Loaded Tots helped to drive a strong first quarter, company CFO Sandeep Reddy confirmed. Worldwide sales rose by 5.9% relative to the prior year's results, and Domino's carryout sales remained particularly robust, rising 13.4% relative to the same time period a year ago. But that's only part of the financial story for the company.

Delivery sales are down at Domino's

Loaded Tots contributed to an increase in revenue, but that doesn't mean the brand experienced an across-the-board sales boost. While carry-out sales were notably good, Domino's delivery sales actually dropped, Sandeep Reddy confirmed. Delivery sales have been plagued by lackluster sales numbers of late, dipping 2.1% during the first fiscal quarter. That continued a negative trend that was evident throughout 2022. The delivery difficulties have been tied to two main explanations.

One underlying issue is that people are dining out more and more now post-pandemic. The other is budgetary. Reddy thinks the extra charges required for delivery service (both tips and fees) have made people more inclined to eat at home. This dovetails with evidence suggesting that some consumers have gravitated to frozen pizza in place of restaurant meals. This budgetary focus has been exacerbated by inflationary food price hikes. Domino's, notably, has raised its own prices during the past year.

There may be good news on the Domino's delivery front, however. Financial analyst Siye Desta of CFRA Research is forecasting that delivery service will once again become a sales driver for the pizza chain, along with its thriving carryout business, and its successful new menu item. This shift should occur, Reuters reports, with the normalization of spending habits following pre- and post-pandemic swings.