In an August 1 second-quarter earnings call, ride-share company Uber expanded on its new exclusive partnership deal with Domino’s Pizza which was officially announced on July 12.
The deal gives Uber (UBER) -) full rights to deliver Domino’s (DPZ) -) meals via Uber Eats and Postmates apps. The agreement is focusing on four U.S. test markets that begin operations this fall, with orders on both apps available by the end of 2023. Domino’s in-house drivers will handle all delivery orders, although the orders will be enabled on Uber Eats.
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"Given certain customers only order their delivery from the Uber Eats app, this deal could make Domino's available to millions of new customers around the world,” said Domino’s CEO Russell Weiner. “Domino's will still be the face our customers see at the door, while Uber will be providing us with adequate data to understand delivery efficiency and incrementally.”
Now Uber is weighing in on the deal, with comments from Uber CEO Dara Khosrowshahi on its Q2 earnings call.
“During the quarter, we’ve seen broad improvements across key input metrics like average delivery time, cost per trip, and supply hours, particularly as we continue to grow our selection across all segments, with active merchants up 9% year-over-year,” Khosrowshahi said. “Notably, we recently announced Domino’s Pizza as a partner, winning the largest enterprise merchant not currently operating on any delivery platform in the US.”
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As part of the multi-year partnership, the largest global pizza chain will be exclusively available on Uber Eats and Postmates in the U.S. for the first 12 months, “with an agreement to launch with Domino’s on Uber Eats in all 28 countries that we jointly operate in around the world,” Khosrowshahi added.
“Like other leading brands who have joined our platform, Domino’s recognized Uber Eats as a source of incremental demand to their own channel and a way to reach a broader cohort of customers who are active on Uber,” he noted. “This global partnership will also enable us to expand the selection in the Enterprise category for tens of millions of eaters who regularly use our app and cover 70% of Domino’s stores around the world.”
Uber’s partnership with Domino’s also “highlights the value of our global scale, platform advantages, and technical leadership,” Khosrowshahi added.
Analysts say Uber’s on the right track with its food delivery operation, which should only expand with partners like Domino’s and a rise in deliveries that go well beyond a pepperoni pizza.
“On the food delivery front, we think there is some stickiness in terms of pandemic traits sticking,” said Global X ETF research analyst Tejas Dessai. “Business-related food spending and expensed meals will likely drive volumes here as well.”
More importantly, Dessai believes Uber can easily leverage this hyperlocal network to easily expand into other product delivery verticals, becoming a last-mile delivery partner for other major marketplaces and commerce services.
“We see great potential in Uber's hyperlocal business, and we anticipate better margins here over time,” Dessai added.
