Did you notice the Domino's ad from late 2023 that offered a free pizza? If you did, then you might be interested to know that despite giving away all that free pizza to customers, the move was a massive success for the pizza company.
Domino's had its Q4 2023 earnings call on Monday, Feb 26, and the company saw growth of 2.8% in its domestic sales for the quarter, a tick higher than the 2.2% that analysts estimated for the pizza chain.
The company also increased its quarterly dividend by 25% to $1.51 per share and announced a new buy back plan of $1 billion worth of its stock.
The news has caused a decent spike in the stock price, with its price current price at around $458 per share, which is a nearly 6% increase just today. The price was as high as nearly $473 per share earlier this morning.
One of the biggest drivers for the success for Domino's was its loyalty program, which saw three million new active members in 2023, with two million coming since it relaunched in September, according to Domino's CEO Russell Weiner.
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And a big reason for that boost in number was in fact the free "Emergency Pizza" that the company offered to customers. The mechanics were simple: Sign up to the Domino's Rewards program or use your already active account and buy anything worth at least $7.99 from the store. Customers then had 30 days to claim the reward.
"A big driver of the increase in active members as well as the early success of the program was our Emergency Pizza promotion, which was an innovative marketing initiative that drove increased order counts and acquisition of customers into Domino's rewards," Weiner said.
Weiner credited his marketing team for the successful promotion, saying the deal was pretty much similar to a typical Buy One, Get One scheme, but the framing of the deal was what really made it successful.
"This is your traditional buy one get one free that has been marketed in such a way that it really breaks through," Weiner said."We've done Buy One, Get One Free before — They've done nothing like this."
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Weiner also sees the company using the deal again in the future.
"We've got this Emergency Pizza piece now, and I expect this is ownable from our perspective," Weiner said. "And so this is something we'll be able to use in the future as well."
Domino's CFO Sandeep Reddy added that investors should focus on how the objective of the Emergency Pizza deal was really about adding people to the loyalty program, and it achieved exactly that. That will help continue to keep customers within the ecosystem of the company.
"The driver, rather than looking at Emergency Pizza by itself, is really Domino's rewards and how much which can drive and transaction growth for us," Randeep said. "This is a significant pillar of how we're going to drive transaction growth in 2024, both in delivery as well as carry."
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