Domino's (DMP): Project 3TEN pizza delivery times in 2020

In August of 2019, Diligence Research published a research piece analysing the average delivery times (ADT) for Domino’s Pizza stores in Australia. Domino's envisioned a reality where their stores would make pizzas in three minutes, and deliver in ten minutes. They announced this initiative in June 2016, calling it "Project 3TEN".

Our research was included in an August 2019 Credit Suisse publication. Alan Kohler also referred to this research when asking the company about it in September 2019. The transcript is published on the Eureka Report.

Project 3TEN: "Project 3TEN is at the core of this goal: to prepare a hot, freshly made pizza ready for carry-out within three minutes, or safely delivered to our customer's door within ten minutes."

In Domino's Annual Report for 2020 the company devoted two pages to this topic under the heading "CRUSHING CONVENTION WITH PROJECT 3TEN". Given the company's continued emphasis on the importance of fast delivery times, we have revisited Project 3TEN's data with the intention of answering one question: does the data support Domino's assertion that they are crushing convention with Project 3TEN?

For over one year Domino's have been using Australian stores as an example of fast delivery times, including in this year's annual report.

"In August 2019, the Ferny Grove store set a new Australian record averaging 5 minutes, 27 seconds for a week of orders. The previous record was held by the nearby Albany Creek store: 6 minutes and 40 seconds..."

As of today, according to Domino's website, the Ferny Grove store's ADT is 22 minutes. This delivery time has not deviated much from 21-22 minutes over the past year.

For some time, Domino's have been saying "Customer satisfaction...significantly decreases after 20 minutes" when referring to ADT. According to Domino's own data, every state and territory currently has an ADT of more than 20 minutes, just as it did when we last ran the numbers over a year ago.

Since our last analysis, 14 months have passed. In time for the 2020 Annual General Meeting (AGM), here is an update.

The average delivery time for a store ranges from a low of 20.20 minutes in the Australian Capital Territory and a high of 22.62 in the Northern Territory. There are 16 stores which have an average of 15 minutes or less, with 12 minutes being the lowest. A large majority deliver in 20 minutes or more on average. More than 250 stores deliver in 23 minutes or more on average, with the highest being 37 minutes.

Average Delivery Times November 2020

Domino's Pizza - Average Delivery Times 2020 - Diligence Research

Average Delivery Times August 2019

Domino's Pizza - Average Delivery Times 2019 - Diligence Research

Domino's own data suggests that their 2016 goal of reducing delivery times down to 10 minutes is a long way off from being achieved. The data also suggests that even the handful of stores they claim for a period have delivered record delivery times are no longer maintaining them, which again raises the question of sustainability of the approach.

Investors and customers must think critically when determining the viability and sustainability of Project 3TEN. Not only about whether Project 3TEN promotes an unsafe workplace (does it encourage young workers to speed, run red lights, and deliver in dangerous weather), but is it sustainable in the first place?

Their own data suggests it isn't.

You can view our last post on Project 3TEN here:
Domino's (DMP): A little look at Project 3TEN

Research
The average delivery time research was conducted using the Dominos.com.au website. Average delivery times were gathered from the 701 store information pages available on the website.

Sources

This was compiled and prepared by Diligence Research Pty Ltd (Diligence Research). The information was collected using qualitative data collection techniques, with all research sources believed to be reliable. No representations or warranties (expressed or implied) are made by Diligence Research or their representatives, to its accuracy, completeness or correctness. Views, ideas, opinions and estimates contained within, stand as Diligence Researchs judgment as of the date of this post. Nothing in this constitutes legal, financial or investment advice, and it has been prepared without regard to individual financial circumstances or objectives of those who receive it. Diligence Research does not accept liability whatsoever for any direct or consequential loss arising from any use of this information.