indeed, domino’s pizza must be a company that can’t bypass the classic business case study in the catering industry.
on the one hand, in an extremely ordinary pizza track, damelor has opened nearly 20000 stores in 90+ markets around the world. In 21 years, the Gmv of global stores has reached US $17.8 billion (Pizza Hut US $12.96 billion), becoming a well deserved top 1 global pizza brand.
on the other hand, since its listing in 2004, the return on stock investment has reached an astonishing 40 times, even far higher than the world-famous Internet company “Google” listed in the same year.
then, how does Domino’s become so “tough”? Here, Mr. K summarizes and shares some personal observations and thoughts, and looks forward to in-depth discussion with friends in the catering industry.
for the entrepreneurial background of Domino’s, old K thinks that there are mainly the following factors:
first, pizza is very popular in the United States, especially among young people. In terms of market space, pizza is the second largest fast food category after Hamburg.
second, in the 1960s, the United States already had a very developed food industry system. There were already processed cheese, sausage and dough in supermarkets. Anyone could easily make pizza. In addition, the products of various pizza shops in the market are also seriously homogenized.
third, the pizza will not taste good when it is cold, which causes consumers to have doubts about the quality of pizza sold abroad. However, in many real scenes, pizza needs to be delivered. Especially in the live broadcast of super major sports events, almost every male member of the family is not willing to leave the sofa in front of the TV. Their greatest enjoyment is sitting on the sofa while eating and watching TV.
fourth, in the United States at that time, there were pizza hut, a relatively influential head pizza brand.
because if the pizza can be delivered within 30 minutes after the customer orders, it is not only faster than the customer making it at home, but also can ensure the best taste of the pizza.
of course, “fast” is also the most direct and quantifiable consumption experience. At the marketing end of
, Domino’s successively put forward the slogans of “half price for delivery time exceeding half an hour” and “completely free for overtime”, and the novel promotion attracted a lot of attention and media reports at that time. In the 1980s, Domino’s spent a lot of money on TV advertising, and continued to emphasize its convenience and ease: “one call does it all”.
slowly, in the minds of customers, Domino’s was equated with fast delivery.
even now that Domino’s has become a well-known global catering brand, the company still continues to do marketing promotion. In the past five years, the advertising investment of Domino’s light in the US domestic market has reached 2.4 billion US dollars.
in order to ensure “fast”, Domino’s has made a lot of layout at the performance end:
first, it adopts the model of “with modern capital expenditures” to minimize the investment of stores.
second, scientific kitchen and meal preparation program design, menu simplification and other measures make the pizza cooking time shorter. At the same time, Domino’s will hold a similar “the fastest pizza maker” competition to encourage store employees to continuously improve the meal delivery speed through honors and material awards.
third, carefully select the store address, and define the responsible area of the store by comprehensively analyzing the surrounding consumer groups, communities, streets, road conditions, traffic light duration, etc.
fourth, the original English meaning of “domino” is “domino”. We can see that the founders hope to continue to open a second and third stores in the form of small stores, and finally form a domino effect. The founder of Domino’s knew that only more intensive store distribution could enable consumers to obtain more convenient products. Therefore, the company has implemented the franchise strategy to realize the store layout as soon as possible since 1967.
it is worth mentioning that in order to ensure the rapid promotion of the franchise strategy: on the one hand, Damela charges very low franchise fees for franchisees, and the money charged is basically invested in brand marketing and promotion.
on the other hand, in order to realize the price advantage and quality assurance of the supply chain, domino has made in-depth research on each food material, such as the production and processing of wheat, to understand the price fluctuation factors behind it, and met with suppliers every month to understand the market situation, and finally decided on the best buying time. At the later stage of
, Domino’s also used financial instruments such as futures to ensure the stability of food prices. Based on this, Damela has also gradually established its own dough manufacturing and supply chain center, thin skin manufacturing factory, vegetable processing center equipment and other supplies supply centers.
up to now, about 98% of Domino’s stores are franchised stores. It is said that 90% of the franchisees of Domino’s are former employees, and they are basically promoted from the lowest level employees.
Lao K believes that excellent enterprises not only have the formulation of service standards or the training of personnel skills, but also have excellent corporate culture, spirit and mission. From the documentary about Domino’s Pizza life on station B, we can feel the powerful internal culture building ability of domino.
fifth, in addition to the franchise policy, Domino’s has even expanded its pizza stores to more regions through mergers and acquisitions.
sixth, in 1984, the stores of Domino’s expanded to 1900 stores. At this time, Domino’s had become the second largest pizza empire after Pizza Hut and the largest pizza delivery company in the United States at that time.
in 1998, the founder of Domino’s “Tom Mona” retreated and chose to sell his controlling stake to Bain Capital, a well-known consulting company.
driven by Bain Capital, the company began a new round of reform, including: more accurate marketing strategies to improve customers’ repurchase rate; Further improve and renovate store location; Comprehensively reform the international business, withdraw from the loss making market in time, and enter the profit-making market on a large scale.
later, in order to further enhance the competitiveness of the company and improve the debt problem, domino applied for listing on the New York Stock Exchange in 2004.
however, due to the two fast food giants McDonald’s and Yum! Brands in the market at that time, and the poor financial data at that time, the future development of Domino’s was not optimistic by Wall Street analysts. The IPO raised only US $337.5 million (24.1 million shares), which was lower than the lower limit of the range expected before listing.
however, almost everyone was surprised by the final share price performance of Domino’s, which has achieved an astonishing increase of nearly 40 times in the more than ten years since its listing.
, CEO of Domino’s, took “fast” as the core KPI in the process of rapid development, and finally encountered a major crisis.
at that time, in order to reduce costs and achieve rapid delivery, the ingredients in pizza were mostly frozen, canned or prefabricated food. Therefore, more and more consumers’ comments on Domino’s pizza are “the worst pizza I’ve ever eaten”, “the sauce tastes like tomato sauce” and “the skin tastes like cardboard”…
in February 2009, domino was exposed a major scandal: an employee mixed “contaminated” cheese into pizza dough in a self shooting video, and the pizza was delivered as takeaway. After the video was exposed, the click through rate quickly exceeded one million, and angry customers began to wantonly attack the food safety problem of Domino’s, so the brand image of Domino’s collapsed instantly, and the share price also began to plummet.
fortunately, Patrick, the new CEO of Domino’s, chose to face up to the challenge. Instead of blocking the news and curbing the spread of the scandal, he spent a lot of money to rent the giant screen in Times Square in New York, broadcast it in real time and encourage people to roast about Domino’s, and even prepared a cash award for the person with the highest click through rate.
for a while, almost everyone, whether competitors, media or consumers, was talking about domino’s. However, the happy “roast” of everyone has made Domino’s the hottest phenomenal topic, and the attention of the brand has been soaring.
since then, “self hacking marketing” has become a reserved project of Domino’s (some domestic brands have begun to learn this skill and take the initiative to regularly expose hidden dangers of food safety in stores). On its twitter home page, domino has placed a real-time, unfiltered twitter message stream to show customers’ views on pizza, which is called “thinking oven”.
of course, in addition to admitting its mistakes, Domino’s has also taken a series of measures to improve product quality. In terms of products, all dough is restored to low-temperature fermented dough, fresh and ready-made. Cheese, the key ingredient, insists on using high-quality raw materials, and continues to carry out product innovation. In terms of channels, Damela invested heavily, built some self operated stores, continued trial and error, and launched products more in line with consumers’ tastes. In terms of
marketing, Domino’s has provided consumers with the opportunity to make 1.4 million different pizzas online, and even let consumers name them and share them on social networking sites. Through this process, the whole process of pizza design and production will be clearly and transparently announced to the public. In reality, convenience and appropriate sense of participation are the things that consumers pursue at the same time.
in the end, Domino’s “salted fish” emerged from the crisis of brand trust. One year after the crisis broke out, Domino’s announced that the same store sales in the first quarter of 2010 increased by 14.3% year-on-year. At that time, pizza hut, the main competitive product company, increased by 5% and John’s Pizza decreased by 0.4%.
in addition, Domino’s has made every effort to implement the member loyalty plan and the marketing of members becoming shareholders, and even split various members through community marketing, topic marketing and “Marketing Commission”. In 2021, Damela had 70million registered members and 29million active members.
it can be seen that enterprises that hope to have a lasting foundation must finally adhere to the most basic user value creation – making products well.
so what is the essence of the so-called technology company? Old K believes that it is the extreme pursuit of efficiency, the unremitting adherence to innovation and the real recognition of digital driven operation.
therefore, theoretically, so-called “technology companies” can appear in any industry, and the traditional catering industry is no exception.
based on the development history of Domino’s, we can find that the company has always been very sensitive to the latest technologies.
from early telephone ordering to online ordering, and later to mobile ordering, autonomous vehicle, zero click ordering and UAV distribution services, domino often took the lead. For example, as early as 2007 (China’s “thousand regiments war” was 2010), domino began to promote mobile ordering.
in 2013, domino hit a global digital sales volume of 2billion US dollars, 35% of which came from mobile terminals.
nowadays, Domino’s allows customers to place orders on almost every platform, including Google home, Facebook Messenger, apple watch, Amazon echo, twitter and so on.
it is said that customers can send an Emoji expression of pizza to the official account of Domino’s on twitter, and domino can deliver the pizza. Domino’s even launched the controversial “zero click” ordering function, that is, 10 seconds after the user starts the application, Domino’s will automatically place a pizza order.
however, can the research and development of these technologies bring tangible benefits to Domino’s? Maybe not.
but it is certain that these marketing methods have earned enough attention, especially bringing technology and a sense of sophistication to pizza, a fast food that fills the stomach. These are the values that young people attach great importance to. According to the latest financial report of Domino’s, more than half of the company’s global retail sales in 2021 will be realized through digital channels.
in addition, at the store operation end, the store intelligent scheduling system developed and launched by Damela can predict the store order volume in each period in combination with historical orders, weather, promotion information and other factors. For different link processes such as “order receiving → baking → food preparation → delivery”, it can intelligently schedule the store employees, and “flexibly” adapt to the peak and valley of orders, which really improves the operation efficiency of the store.
in practice, all catering companies can examine their unique innovations in the so-called technology field, but they should also ensure that each innovation can promote the realization of the company’s core mission.
at present, the top ten countries in the international market of Domino’s are India, the United Kingdom, Japan, Mexico, Australia, Turkey, Canada, South Korea, China and France.
according to the latest prospectus disclosed by Domino’s China (“Dashi shares”), Domino’s China currently has about 500 stores, more than half of which are in Beijing and Shanghai. At the same time, the overall revenue scale of Domino’s is not large (1billion yuan +) and it is in a state of continuous loss. It is not only an order of magnitude gap compared with its old rival pizza hut, but also a large distance from the Chinese local brand Zunbao pizza.
in fact, there are many reasons for the current situation, but in the view of old K, the most fundamental thing should be the matching between the model positioning and the development stage of the entire Chinese market.
in the past 20 to 30 years, the main concept of Chinese people on Western food was still on the high side, that is, the so-called “foreign flavor”. In this regard, pizza hut is very flattering. After entering the Chinese market, it has adopted the strategy of opening a store in the core area, paying great attention to decoration and providing more space and social environment.
therefore, the relatively simple positioning and the main delivery pizza, Domino’s, cannot meet the mainstream demand for pizza in the Chinese market. However, with the gradual maturity of the Chinese market, the residential culture and the atmosphere of white-collar fast food are becoming more and more mature in the first and second tier of China, and the pizza delivery model will certainly usher in development opportunities in the future.
it is obvious that a temporary setback will not make international catering giants such as Damela abandon China, the world’s largest potential market.
almost since 2017, Domino’s China has started to make efforts. The landmark event is the introduction of former McDonald’s executive Aileen Wang to operate Domino’s China business. In addition, Domino’s continued to increase capital investment and recently chose to apply for the listing of Hong Kong stocks to show its strategic determination.
from the prospectus of Domino’s, we can also see that since 2017, the number of stores in Domino’s China has tripled. In 2021, more than 100 stores were opened against the trend, and the same store sales have maintained positive growth and the profitability has been continuously improved in each quarter.
a thriving company must know its core values and what the market needs. In general, K is optimistic about the market prospect of Domino’s China.
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