Domino’s CEO on advertising spending: ‘We’re not slowing down at all’

As the coronavirus forces countless businesses to cut back on advertising, Domino’s Pizza is staying the course.

Ritch Allison, CEO of the Ann Arbor-based pizza chain, told CNBC’s Jim Cramer “we’re not slowing down at all” on promotional spending.

“In fact, we think that … at a time like this … we need to lean in even more to get the messages around value and around how we can safely serve our customers,” he said in a “Mad Money” interview Thursday.

Allison was responding to a question from Cramer about whether he thought that Domino’s could reap the benefits of potential fewer ads from competitors and other entities as the coronavirus situation changes consumer spending habits and business spending priorities.

The advertising industry is bracing for the fallout from the health crisis to hit their bottom lines. Marketing is among the first expenses that businesses pull back on in a recession.

“Should we see some pullback, you know, more broadly in the advertising space, it could help us … with delivery of eyeballs … to Domino’s ads and share a voice overall, but it’s still really early in the cycle to see how that ultimately is going to play out,” he said.

The comments came after Domino’s crushed Wall Street estimates in its first-quarter report. The restaurant reported earnings per share of $3.07 on $873.1 million in revenues, topping Factset forecasts of $2.32 and $869 million, respectively. U.S. same-store sales grew 1.6% in the first three months of 2020.

While nationwide shutdown orders to combat the deadly contagion have forced innumerable shops and restaurants to close and jobless claims to top 26 million in about past month, Domino’s has relied heavily on its delivery apparatus to continue its operations and hit its numbers. Same-store sales continued to grow by about 7% in the first month of the current quarter, the company said.

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Furthermore, Domino’s announced in March that it would hire 10,000 full-time and part-time workers during the pandemic and in early April said that its more than 6,000 locations nationwide would provide a total of 10 million free pizza slices for health organizations, children and their families, grocery stores and others in need.

The pizza giveaway is called “Feeding the Need.”

“We feel very fortunate that we’ve been able to remain open and operating during this crisis, and in serving our customers. … Demand has been very strong, and we frankly need more people … out on the road delivering food to our customers in time of need,” Allison said.

Dining in at eateries were banned, though restaurants can continue services like carry out and delivery, which is a tough low-margin operation. As society practices social distancing to decrease the chances of spreading Covid-19, Domino’s, like other delivery companies, introduced a contactless delivery strategy last month.

Domino’s uses what’s called a “pizza pedestal,” a recyclable throne that carriers place on the ground and set the delivery on so that workers can keep a safe distance away from customers.

“Along the way, I think … things are going to be different for quite a while,” Allison said. “I think delivery is going to continue to be important and contactless delivery is going to continue to be part of the new normal for quite some time to come.”

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