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Domino’s Leads Pizza Hut in Online Ordering

Beating market leader Pizza Hut to the punch, Domino’s Pizza plans to roll out online pizza ordering services at Dominos.com for more than 160 of its franchisees by the end of the month, bringing its total number of stores offering the service to 300. Another 200 to 300 locations are in the works for the end of April.

Pizza Hut appears to be trailing far behind as it is testing an online service at one location in Topeka, KS.

“They’ve had a big battle going on between the two of them. There are lawsuits and a lot of stuff going on,” said Karen Sack, senior equity analyst for retailers and restaurants at Standard & Poor’s, New York. “It’s a battle for market share.”

Competitors Papa John’s has established a Web service, and Little Caesar’s did not feature one at press time. All of the pizza companies will inevitably offer online services, said Sack. “If one’s doing it, they all pretty much have to do it,” she said.

Pizza Hut leads the field at $4.8 billion in annual earnings, followed by Domino’s at $2.3 billion, Little Caesar’s at $1.3 billion and Papa John’s at $1.2 billion, according to Standard & Poor’s 1998 industry figures.

If these offerings prove successful, the company plans to offer the service for all of its domestic locations, said Jack Scheible, senior director of CRM at Domino’s Pizza LLC, Ann Arbor, MI.

However, before Domino’s rolls out the service to all stores, it wants to gauge consumer shopping patterns as well as the service’s functionality. Although it was too soon to see the effects on consumer behavior, Scheible said the system is working fine.

“So far so good,” he said. “There are no glitches.”

Pizza Hut refused to comment directly about the Topeka test. However, Stephanie Feaster a spokeswoman for Pizza Hut, Inc., Dallas, said, “it’s not a national test. We don’t know if it will be or it won’t. The challenge with the food industry is it’s not like ordering a book or CD. Although it seems to be where consumers are moving toward, everyone’s loving purchasing on the Internet. The test will help us get a better handle if there’s a huge opportunity there.”

Feaster also added the company has its eye on one West Coast franchisee who has set up their own online ordering service. She refused to comment about any of Pizza Hut’s competitor’s online activities.

Domino’s service is being advertised regionally as part of existing television campaigns. Local stores are also marketing the site through grassroots means such as box toppers.

The company is experimenting with ordering capabilities for interactive television and wireless devices, according to Ray Anderson, president of QuikOrder.com, Chicago. “We’ve done tests with wireless devices and plan to roll it out over the next six months.”

Domino’s is not particularly concerned about third-party vendors such as Kozmo.com getting into the pizza business.

“For warehousing a myriad of hard goods, Kozmo wouldn’t be bad,” said Scheible. “I don’t see prepared foods in those types of services. The third party adds length to the delivery.”

Domino’s also began testing the offering for 18 corporate-owned stores in Las Vegas last week. Domino’s has been testing the QuikOrder.com service since July 1999 when it was available for two stores. There are 4,500 Domino’s locations in the United States, 650 of which are corporate owned.

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