Diving brief:
- Forty-four percent of drivers prefer the flexible schedules offered by rideshare providers like Uber and Lyft over more structured pizza delivery jobs, according to a BTIG survey of nearly 300 active rideshare drivers emailed mail to Restaurant Dive. This number rose to 56% among drivers aged 18 to 24. All-inclusive salary was a determining factor for 40% of all drivers.
- Rising gas prices have also prevented 40% of survey respondents from taking food delivery jobs, and a third of drivers said they deliver food but now only carpool .
- Chains that rely on self-delivery, like Domino’s and Papa Johns, may need to increase flexibility, raise wages and offer fuel reimbursements to stay competitive as they seek to increase the number of drivers, BTIG said.
Overview of the dive:
The current shortage of delivery drivers was evident in the latest round of quarterly earnings reports, as major pizza chains – Domino’s, Papa Johns and Pizza Hut – all hinted at the challenge. Same-store sales in Domino’s delivery channel, for example, fell 10.7% in the first quarter, with executives citing driver shortages as the main culprit.
Yum Brands executives said on the company’s first quarter 2022 call that it was working to increase Pizza Hut’s workforce to address driver shortages. The company is also adding third-party delivery companies to its model for the first time, allowing aggregators such as DoorDash and Uber Eats to fulfill orders during peak hours, and adding its presence on their marketplaces to expand its customer base.
Domino’s is also facing problems recruiting drivers. New CEO Russell Weiner said his company was pursuing a “deep dive into the work of drivers”, which could even include partnerships with third parties, because “nothing is off the table”.
Weiner added that he doesn’t think the driver shortage is a result of salary, as Domino’s has increased salaries by more than $30 million over the past three years. He said marketing will play a recruiting role in the future as the company features stories of franchisees who started out as delivery drivers.
Papa Johns added third-party partnerships in 2019, but CEO Rob Lynch noted on the company’s first-quarter call that driver staffing had been a challenge for more than a year, exacerbated by an Omicron surge in January. Still, the company’s third-party relationships, along with investments and “productivity tools,” “gave us what we need to meet our customers’ needs,” Lynch said. These strategies helped Papa Johns increase same-store sales by 1.9% in North America in the first quarter.
Lynch said Papa Johns is still investing in technology to help its drivers be more productive and earn more money in hopes of increasing retention.
Fuel reimbursement programs likely attract workers to third-party delivery companies. The average cost of fuel has been over $4 a gallon since March, and DoorDash, Grubhub and Uber have added programs to help drivers. BTIG believes such incentives drive drivers away from pizza delivery and, in some cases, delivery and toward ride-sharing services. However, some pizza chains have started implementing their own incentives as high fuel prices persist. Papa Johns recently started offering prepaid gas cards, according to BTIG.
“Catering concepts with their own delivery network will either need to supplement with an aggregator or modify their driver business model to resemble the flexibility of ride-sharing options,” BTIG Restoration Analyst Peter Saleh said in the report.
Domino’s, at least, envisions such flexibility as part of its deep dive. On his first quarter call, outgoing CEO Ritch Allison said, “There are a lot of people looking for more flexibility, maybe shorter shifts, maybe fewer hours during of the week. So we look at that planning component to make sure that how we ask our team members to present themselves matches their expectations of what they want to do.
