Earlier today, another pizza chain boasted about another quarter of incredibly strong sales growth. This time it was Papa John's, which just reported a 7.4-percent increase in same-store sales in its third quarter. Just three weeks ago, rival Domino's reported comps of 7.7 percent.
Both chains are taking advantage of an economy well-suited with what they have to sell — pizza is a pretty economical meal for a family, and families are still on tight budgets after years and years of stagnant income growth.
But there is another reason for their outperformance: Technology. Both Papa John's and Dominos have made it easier for customers to order their food.
The pizza sector, far more than any other part of the restaurant industry, has done a phenomenal job of integrating technology into their ordering process. More than 40 percent of Domino's orders come through various digital channels. Papa John's boasts nearly 50 percent. Ordering a pizza is now as easy as pressing a couple of buttons and there's no waiting on hold.
Consumers expect this from their pizza chain. And as I noted in my story today, Janney Analyst Mark Kalinowski said this technology will give pizza chains a leg up on smaller concepts that can't spend the money on that kind of technology. Chains that can't keep up on the technology front will lose customers.
I'll take it a step further: Technology is giving Papa John's and Domino's a leg up in the battle for so-called "share of stomach." The ease of ordering, combined with a value perception, is making a night with a pizza or two an easy choice for harried families. And because they've been so good at it, for so long, they've trained their customers to use that technology.
An estimated 164 million people have a smartphone, and that's expected to increase to 183 million next year. Consumers know this technology exists, and more of them want to use it. I went to a Chick-fil-A for lunch recently. It was busy, and though the chain did a good job of getting us through the long line, a couple at the next table asked why they didn't have an ordering app. (Actually, it does.)
Other chains are following the pizza example, with varying degrees of success. In addition to Chick fil A, Taco Bell has an ordering app. Wendy's has a mobile pay app. Panera Bread and Sonic are working to improve their ordering systems. Starbucks does a great job with its loyalty card and with gift cards overall. McDonald's quickly got on board with Apple Pay. Casual dining chains are adding tabletop tablets. But until recently, technology adoption outside the pizza sector has been slow. And because they've been slow, their customers will take a while to adopt the technology.
Nigel Travis, the current Dunkin' Brands CEO and former Papa Johns CEO, once joked that moving to QSR from pizza was "like going back in time." Not surprisingly, Dunkin' has been increasing its use of technology under his watch.