Why Pizza Giants Want Customers to Click, Not Call, for Delivery

Pizza Hut, Papa John's, Others Hope to Boost Online Orders to 50%

The major pizza chains now do 20% to 30% of their business online, but they want that figure to climb a lot higher, to 50%. Getting there will take some doing, but the journey offers lessons for other marketers also seeking to build their business online: Know your customers, make it easy and offer incentives.

There are good reasons for pizza purveyors to move buyers to web ordering. Online customers spend more and are more satisfied, and serving them is more efficient for each individual store. People who order online are also more likely to jump on the promotions that marketers use to drive interest in new products. Bob Kraut, VP-marketing at Pizza Hut, which expects to do $1 billion in online sales by the end of 2012 -- a whopping tenfold increase from the May 2007 level of $100 million -- said the online pizza buyer is more recession-proof than most.

"We're seeing very healthy increases year over year with our web business," he said. "I think that's because the customer is a little higher income and has a greater connectedness to this form of ordering and tends to not be affected by the economic conditions as maybe other customers." Pizza Hut has also begun to compete more with casual dining by offering pasta dinners with breadsticks that serve four for $15.

Rob Weisberg, Domino's VP-multimedia marketing, said the average online buyer spends $2 more than one who orders by phone or in person. Domino's does about 75 online orders a second, and Mr. Weisberg said the chain now has fewer employees answering the phone and more of them making pizzas. He declined to give the percentage of sales from online.

Papa John's, which spurred its two much-larger competitors to action in the online arena several years ago, did not respond to requests for comment.

Suited to online sales
Sam Sebastian, director of local and B-to-B markets at Google, who works frequently with Domino's, Pizza Hut and Papa John's, said delivery pizza may just be better suited to online sales. All three chains have exploited that advantage by shifting spending to banner ads and search engine optimization from traditional media faster than their fast-food counterparts.

Mr. Kraut said a key for Pizza Hut has been trying to make its website "slippery" instead of "sticky." That means it is constantly looking for ways to help consumers place their orders more quickly.

Domino's, home of the pizza tracker, is working on that too. Mr. Weisberg said the company recognizes the first-time order as a barrier to entry because consumers have to take the time to input their addresses and credit-card information, set a password, and build their pizza. But the next time they log in and want to place the same order, it can be done in 15 seconds.

"There's more of a barrier to exit," he said. For that reason, Mr. Weisberg said, Domino's has cookies built into its site that recognize first-time users and offer special discounts. The Pizza Hut site does too.

Taking tie-ins
Pizza Hut and Papa John's are also attempting to drive online sales through entertainment tie-ins that have traditionally been the bread and butter of burger joints. Papa John's is partnering with "X-Men Origins: Wolverine," and Pizza Hut with "Terminator Salvation," starring Christian Bale. Pizza Hut will offer five minutes of exclusive content from director McG beginning in May. It's sure to please the fanboys.

Mr. Kraut said the event presents an opportunity to deepen relationships with current customers and attract new ones to the site. It doesn't hurt that the comic-book and video-game crowds also tend to be a younger, more tech-savvy bunch.

"We're engaging them on a level of popular and social currency of the movie while also getting people to opt in and buy Pizza Hut," Mr. Kraut said. "And we're generating customers that haven't visited PizzaHut.com before."

Pizza Hut has done similar promotions with eMusic and Rockstar Games.