About 40% of Domino Pizza Inc.'s customers use digital methods of ordering, with about one-third of those customers choosing the mobile app.
The Domino's iPhone app was debuted in mid-2011, with an Android version following in early 2012 and a Windows Phone 8 version this year. Domino's now covers 95% of the smartphone market, says Chris Brandon, a spokesman at Domino's.
The mobile app "is very fast and very convenient people are really responding positively," Brandon says.
Mobile ordering and payment with an app "is going to entirely replace the need to call for food or delivery," says Gil Luria, an analyst with Los Angeles-based Wedbush Securities.
With mobile apps, consumers don't have to worry about repeating and spelling names and addresses and giving sensitive payment information over the phone, Luria says. Plus, mobile apps are more intuitive than PC-based ordering because most people order pizza from their couch, he says.
With the Domino's app, regular customers access their "pizza profile" to see their ordering history and other information. Customers can order and pay for their pizza in about thirty seconds, says Brandon.
Customers can either choose to pay with their plastic cards on their mobile device or pay with cash when the delivery arrives, Brandon says. He would not disclose how many customers choose to pay with cards on their mobile device.
While not all industries will be able to succeed in mobile payments, several merchants have done well with a closed-loop approach, says Luria.
Starbucks and Domino's apps "are closed-loop with retailers that have a frequent customer base," Luria says. "But there's a finite number of dedicated apps people are willing to have."
Retailers that consumers frequent, such as grocery stores, coffee shops and other quick-service restaurants will likely see success with closed-loop apps, he says.
PayPal is taking a broader approach. The eBay unit partnered with Eat24, a merchant services business, opening up users to a network of restaurants where they can order and pay with PayPal before picking up their food in-store.