🍕Bleeding Profits: Domino’s Pizza Could Soon Detach From Zomato, Swiggy
Domino’s Pizza missed Wall Street’s expectations for Q2 over the ongoing shortage of delivery drivers.
Its operator, Jubilant FoodWorks, is also considering taking some of its business away from Zomato and Swiggy in an attempt to raise commissions.
The pizza chain has alleged the food delivery platform on the grounds of anti-competitive practices.
The probe is being investigated by the Competition Commission of India (CCI) after Domino’s charged the two with preferential treatment and exorbitant commissions.
However, the delivery apps deny any wrongdoing.
Dominate like a domino
26–27% of its India business was generated from online platforms, including its own mobile application and website, this month.
After expressing concerns over potentially higher commission to the watchdog, Jubilant’s next move would be shifting more of its businesses from online restaurant platforms to the in-house ordering system.
Smartphones and irresistible discounts on food delivery platforms are on the rise in India.
Amidst the scenario, Jubilant had shared that its Domino’s app was installed over 8.2 million times during the quarter to December 2021, and its “own app sales continued to grow faster than the aggregators.”
The ‘Domino effect’ has been seen catching up lately by many restaurants who allege that Swiggy and Zomato have been hurting their business.
In its defense, Zomato, which is backed by China’s Ant Group, said it had no plans to increase partner commissions at the top end.
“The delivery business continued to be more pressured for Domino’s in Q2 due to staffing problems”, said CFO Sandeep Reddy. Delivery sales at stores fell 11.7% year-over-year in the quarter.
US sales were hit, too, as they saw a 2.9% decline in the same period.
Silver Lining
In these tough times, Domino’s has seen soaring demand for delivery — over 8% compared to Q2 of 2019, before the pandemic.
To fix the delivery problem, the pizza chain has been using call centers to free up employees and is considering offering more flexible schedules to drivers.
Too long? Here’s a one-liner: Domino’s is considering detaching business from Swiggy and Zomato over exorbitant commissions, meanwhile struggling with delivery problems and declining profits in Q2.
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