Strategic Pizza Infrastructure Goes High-Tech

BN-HF942_0304_c_G_20150304135445http://blogs.wsj.com/cio/2015/03/04/strategic-pizza-infrastructure-goes-high-tech/?mod=wsj_ciohome_cioreport

Stuffed crust isn’t the only battle ground for Domino’s Pizza Inc. and Pizza Hut. The chains are promoting smartwatches, connected cars, retinal scanning and other interactive technology for order and delivery – and learning what works and what doesn’t in customer experience.

Ordering pizza is a time-honored proof of concept for new technology. The very first retail purchase on the Web was a Pizza Hut pizza, the company claims. Now it and Domino’s are experimenting with just how much change customers can tolerate as technology remakes the noble task of ordering a pepperoni pie. Domino’s, for example, lets customers order in Ford Fiestas with voice commands and on Pebble smartwatches with a touch interface. Pizza Hut lets gamers order through their Xbox and in the United Kingdom is testing retinal scanning technology that detects where a customer’s eyes rest on a digital menu board and adds toppings accordingly.

“Pizza companies are paving the path for technology in other kinds of restaurants,” says Darren Tristano, an analyst at Technomic Inc., a food industry consulting firm.

And both companies watch the tech moves of one another — and those of other retailers – closely. Domino’s CIO Kevin Vasconi says customers will jump to Pizza Hut or another competitor the moment an ordering system hiccups. “If you’re on Dominos.com and not having the best experience, it’s not hard for you to go to one of our competitors,” Mr. Vasconi says. “We want to not only have best experience in your car, but on your watch and in other venues, too.”

Pizza Hut is building an in-car ordering and payment system with Accenture and Visa Inc., which announced the project Monday at the Mobile World Congress in Barcelona. Testing is expected to start this spring. The system’s beacon technology can alert restaurant staff when the customer pulls into the parking lot, says Carol Clements, U.S. CIO for Pizza Hut, which accounted for $1.1 billion of the $13.3 billion in sales reported last year by parent company Yum Brands Inc.

Anticipating customer behavior influences where Pizza Hut invests, Ms. Clements says. Aside from drivers, IT is the fastest growing part of the business. Pizza Hut wants to add 100 people, including contractors, to its 160-member technology and digital staff, focusing on analytics talent and mobile developers to build out tablet and self-service kiosk apps. But not every new technology is ripe, she says, including wearable devices. “When you’re ordering a pizza, there’s a lot of information we need. Whether we can do that on a little, 2-inch by 2-inch watch in a way not frustrating for customers, we’ll continue to evaluate.”

At Domino’s, tech investments must pay off in sales, conversion rates or new-customer acquisition, Mr. Vasconi says. About half of its $2 billion in 2014 sales came from digital platforms and half of that was from mobile devices, he says. At 200 people, IT is one-third of the company’s corporate staff and they want to hire 50 or 60 more this year. Domino’s measures itself against Pizza Hut and other competitors, looking at website load time, number of steps to order and user-interface design. But Mr. Vasconi also studies innovators outside the pizza business, including Zappos.com and Uber. (He promises no surge pricing on pizza.)

A partnership with Ford Motor Co. to use the Sync AppLink connectivity system lets drivers in Fiestas, Mustangs and other cars order Domino’s with voice commands. But it’s not a high-traffic ordering vehicle, Mr. Vasconi says. ”Customers say it’s a great idea but they’re not going to use it every day.”

Still, it’s one more avenue for orders, and being everywhere can increase customer loyalty, Mr. Tristano says. “People want the ultimate convenience of being able to get what they want when they want it.”

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