Domino's Pays for Customers' $3 Delivery Tips
Chipotle & Delivery Hero post strong Q1s, Swiggy readies for IPO
Money, money, money! That’s what this edition is all about, with Domino’s throwing three dollar bills at its customers, Delivery Hero and Chipotle both beating estimates with strong Q1s and India’s Swiggy getting ready to go public. Read on!
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Today:
Domino’s Covering the Tip (As Long as Your Kinda Stingy)
Chipotle Posts Impressive Q1
Chart Time | Swiggy Swinging for an IPO
Delivery Hero Bounces Back with Strong Q1
PROMOS | Domino’s Subsidizing Customers’ Delivery Tips
Well that’s one way to fight tip inflation… Starting April 29, Domino’s will cover the cost of tips on behalf of its customers. Anyone that places an order online and leaves a tip of $3 or more will in return receive a coupon worth three dollars, usable the following week on another online delivery order of $5 or more.
The Big Picture: There are quite a few things to like about this; for starters, it taps into consumer sentiment that tipping has gotten out of control. But critically, it reinforces the behavior that a gratuity is necessary for services like delivery (unlike say, tipping your landlord.) And from Domino’s perspective, by structuring the reward as a coupon towards a future purchase, the company gets to drive repeat behavior and increase order frequency. Notably, the company seems to have seen a lot of success with that $3 price point, as it’s the same amount it’s used for previous promos like when it rewarded customers for opting for carryout.
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FINANCE | Chipotle Q1 Revenue Up 14.1%
Techie burrito slinger Chipotle just posted a Q1 almost as massive as its entrees, with revenue up 14.1% to $2.7 billion. Comparable restaurant sales increased 7.0%, with both foot traffic and average check size up, an all too rare combo these days. Operating margin was 16.3%, an increase from 15.5%. Net income was up 23% YoY, hitting $349 million. These nutritious numbers came in above analyst estimates, sending the stock up more than 6%.
The Big Picture: The company’s tech leadership continues to pay dividends, with digital sales representing 36.5% of total food and beverage revenue, up from 36.1% in Q4. The Orange County, CA based chain is also continuing its expansion spree, as it opened 47 new restaurants, 43 of which featured its innovative Chipotlane. It also helps to have a hot menu item on its hands; analyst Mark Kalinowski notes, “Chicken Al Pastor has sold so well in April that Chipotle has asked its general managers and restaurant employees to refrain from eating chicken at its restaurants until further notice. This is to help make sure that Chipotle has enough supply of chicken in the near-term."
CHART TIME | Swiggy Seeks IPO Cash to Fight Zomato
Indian delivery platform Swiggy is looking to raise $1.25 billion from the public markets, after delaying an earlier planned IPO last year. While the company has been valued in the $10-12 billion range, it’s come under increased competitive pressure as of late, with competitors Zomato and Zepto eating into its market share. The company also just launched a new tool called Smart Links, which aims to increase restaurants’ transaction volume and social engagement. Meanwhile, Zomato is piloting a priority delivery surcharge. On the macro level, the Indian government’s Central Consumer Protection Authority is investigating the entire sector to ensure all competitors are delivering as quickly as they claim.
FINANCE | Delivery Hero’s Strong Q1 Sends Stock Up 8%
Multinational delivery conglomerate Delivery Hero delivered a sorely needed strong Q1, with GMV growth of 8% YoY1 and Revenue growth of 21% YoY. Gross profit margin expanded by 60 basis points to 7.7%, while a refinancing of its debt left the company with a healthy €1.8B ($1.93B) of cash. The company saw strong growth from advertising (surprise, surprise) and related non-commission based revenues contributing a healthy 2.2% of GMV. Its q-commerce Dmart subsidiary also neared positive adjusted EBITDA, thanks to thinning its network by 17% to 895 locations.
The Big Picture: Delivery Hero’s had a rocky few months, with a weak FY23 followed by a failed effort to sell Foodpanda and Glovo exiting Slovakia. But maybe leaving that dang landlocked country was just the short in the arm it needed, as Glovo is now expected to be adjusted EBITDA positive in the second half of the year. Overall, the company raised its full year revenue growth guidance to 18%-21%, up from previous estimates of 15%-17%. The company’s German-listed stock was up about 6.5% post earnings release.
A Few Good Links
Key takeaways from Serve’s IPO pitch deck. Curbivore 2024 panel recordings released. NYC City Councilor introduces bill to force 3PDs to put tipping options up front, defaulting to 10%. (The real issue seems to be that post-wage increase, delivery in NYC is out of equilibrium with other entry level jobs. One way to resolve would be restricting labor supply a la a union hiring hall.) Deliveroo launches charter with GMB Union to promote positive relations between couriers and merchants. Uber Eats’ 2023 Merchant Impact Report. FCC reinstates net neutrality. GM’s Cruise looking for outside investments. Study says bus lanes good for job access. Uber celebrates $1B in Prop 22 benefits. DoorDash recommits to Dasher ID verification; expands SNAP acceptance to 7,800 Walgreens. White House doling out $1.5B towards freight decarbonization. On-demand van rental apps streamline fleet digitization. GoDaddy intros SMB POS. EU passes legislation to classify more platform workers as employees. The trouble with Earned Wage Access. Shipt picks 10 local retailers for its small biz accelerator.
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