Domino’s delivery charges still risk misleading consumers

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At the top of its website, Domino’s proudly proclaims its pizzas are “now with no delivery service fee.”

The statement comes after the pizza company said it planned to remove the 7% fee to help New Zealanders with the cost-of-living crisis.

Domino’s website previously explained it introduced the fee in July 2022 to cover the costs of operating a delivery business in the face of mounting economic pressures. But this explanation is no longer available to customers.

A spokesperson for the restaurant said, “We want our customers to be able to enjoy the convenience of delivery, for great value. It’s clear to us now that great value means no delivery fee.”

However, a “delivery fee” is still included in the price of the pizzas, and the more pizzas you buy, the higher the fee is.

The spokesperson said there’s no confusion about the “two different [fees],” but we’re not convinced.

(Photo : Image file] Domino’s Pizza logo detail on a recycled pizza box.

No delivery fee?
Kerry ordered a veg trio pizza from Domino’s value range for delivery. She added a gluten-free base and dairy-free cheese. Before clicking the bright green order button, she double-checked the price – a whopping $31.81.

Curious, Kerry tried ordering the same pizza, this time for pick-up. It was only $12.73. So, what accounted for the difference of nearly $20 when the delivery service fee was only $2.08?

Pricing breakdown
We checked out the cost for two separate orders after the delivery service fee was removed, one to simulate an order of one or two customers, and the other for a family or larger group. Then we checked the prices for pick up and compared them with delivery.

Each pick-up order was placed at our closest store and each delivery order was to the same address. No extended delivery fees applied.

The breakdown shows the actual delivery cost was more than $12 for the smaller order and nearly double that for the family order. Yet, many consumers are unlikely to realise they’re paying extra for delivery.

On its website, you’ll find Domino’s says the inflated price covers the extra labour and fuel costs.

Domino’s explains they cover their delivery costs “partly in the price of the first pizza delivered and then a discount is applied to further pizzas after that to reward customers that order more.”

But we didn’t think the extra cost could be fairly called a discount. Instead, we discovered that customers who buy more pizza are paying more delivery fees for the same service.

Why are you charged more for multiple pizzas when it takes the same resource as delivering one pizza? Your delivery comes in one car either way.

After the first pizza, Domino’s applies their discount to the delivery cost in stages. For the second pizza, the $12 delivery cost is halved; for the third, it’s 75% off.

Without the “discount,” customers would be paying $12 per pizza in their order for delivery alone.

Last year’s investigation into pizza pricing
Kerry’s complaint comes after Consumer NZ investigated the pricing practices of Domino’s and Pizza Hut. We found both restaurants increased the cost of every item in a customer’s order if it was delivered.

We complained to the Commerce Commission and said their pricing practices weren’t transparent enough and risked breaching the Fair Trading Act (FTA). The FTA prohibits misleading and deceptive conduct by businesses, including pricing.

Following our complaint, the Commission assessed the enquiry and contacted Domino’s in September 2022 to remind it of its obligations under the FTA.

“Our engagement advised that if Domino’s continued to incorporate a cost of delivery in the headline price of the delivered goods, without sufficiently informing consumers, it would risk breaching the Fair Trading Act.”

After meeting with the Commission, Domino’s added an explanation about its pricing to its website.

We say delivery fees should be more transparent
Even without the fee, we still don’t think Domino’s has got it right. We think the claims of no delivery service fee are likely to mislead customers, creating the impression that delivery is free.

Source ; Consumer NZ Magazine

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