Should Domino's invest in developing its own delivery fleet or continue partnering with third-party services?

Introduction

The key trade-off we're examining is whether Domino's should invest in developing its own delivery fleet or continue partnering with third-party services. This decision has significant implications for Domino's operational efficiency, customer experience, and long-term market position in the competitive food delivery landscape. I'll analyze this trade-off by considering the business context, user impact, technical feasibility, resource allocation, and strategic alignment.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about Domino's current market position and delivery capabilities. Could you provide more information on Domino's existing delivery infrastructure and its performance compared to third-party services?

Why it matters: Helps assess the starting point and potential gaps to fill Expected answer: Domino's has a partial in-house delivery system but relies heavily on third-party services in many areas Impact on approach: Would influence the scale of investment needed for a full in-house system

• Business Context: Based on industry trends, I'm assuming delivery is a significant portion of Domino's revenue. Can you share what percentage of orders are currently delivered versus picked up, and how this has changed in recent years?

Why it matters: Indicates the strategic importance of delivery to overall business Expected answer: Delivery accounts for 60-70% of orders, with steady growth over the past 5 years Impact on approach: Higher percentage would justify larger investment in delivery capabilities

• User Impact: Considering customer expectations, I'm curious about current satisfaction levels with Domino's delivery. Do we have data on customer satisfaction scores for in-house versus third-party deliveries?

Why it matters: Highlights potential areas for improvement and customer pain points Expected answer: In-house deliveries have slightly higher satisfaction scores, but third-party services offer wider coverage Impact on approach: Would help prioritize between improving satisfaction or expanding reach

• Technical Feasibility: Thinking about the complexity of a delivery system, what's our current technological capability to manage a full-scale delivery fleet?

Why it matters: Determines the feasibility and timeline for implementing an in-house solution Expected answer: Basic routing and tracking systems in place, but would need significant upgrades for full-scale operations Impact on approach: Influences decision between building in-house or acquiring existing delivery tech

• Resource Allocation: Considering the scale of this decision, what's our budget range for this initiative, and how does it compare to our current spending on third-party services?

Why it matters: Helps evaluate the financial viability of building an in-house fleet Expected answer: Budget is comparable to annual third-party service fees, with potential for long-term cost savings Impact on approach: Would guide the scope and timeline of the in-house delivery project