Few pizza chains or restaurant chains, for that matter have generated the excitement that Ann Arbor, Michigan primarily based Domino’s Pizza has over the course of the previous 12 to 18 months. With the launch of a number of new merchandise, to a brand new president, a viral video scandal and a groundbreaking revitalization of its core product to not point out elevated retailer gross sales Domino’s Pizza has rightfully earned the title of 2010 Chain of the 12 months. Within the subsequent 10 pages, you’ll discover out precisely why.
Though Domino’s Pizza gained’t really have fun 50 years within the trade till this December, it has come a good distance since 1960 when two brothers borrowed $900 and opened a pizza store in Ypsilanti, Michigan. At the moment’s Domino’s encompasses 9,000 home and worldwide shops with gross sales topping out at greater than $5.6 billion. Even higher, the corporate reviews its home gross sales elevated 14.3 % within the first quarter of 2010, whereas worldwide gross sales are up 4.2 %.
General, the corporate noticed same-store gross sales rise 4.8 % in 2009. It closed 97 franchise shops and 23 firm owned models, however opened 346 internationally.
Almost 50 % of gross sales come from the corporate’s worldwide division, says Jenny Fouracre, director, investor relations and legislative affairs, and that quantity is rising. “Most likely in three to 5 years, worldwide might be larger than home. We’re in over 60 international locations, and if you consider it, these are very immature pizza markets. There’s numerous alternative, and numerous retailer progress potential.” The corporate has seen 16 years of same-store gross sales progress on the worldwide degree, and it grew 4.3 % final yr.
“We’ve targeting our prime markets, particularly our prime 10 markets,” Fouracre says. Learning progress charges in these markets is vital. Outdoors of the U.S., the corporate depends on grasp franchise fashions. “What we do is we discover a actually well-financed native household or native enterprise particular person. They’re Domino’s Pizza for that nation or area,” Fouracre says. The shops are both corporate-owned or sub-franchised, relying on nation. Not like home franchisees, worldwide Domino’s house owners are allowed to personal different ideas. The corporate opened its 9,000th retailer in India final spring, the corporate’s largest progress market.
In all, there are 4,461 franchised shops and 466 company-owned shops. “Our franchisees are actually the guts and soul of our system,” Fouracre says. “We’ve obtained slightly over 1,100 franchisees. We’ve obtained a fantastic long-term relationship with them. Lots of them have been right here over 30 years. … They pay royalties weekly and we’ve obtained a 99 % assortment price on our royalties.” A lot of the firm’s franchisees personal three to 4 shops with its largest working 143.
Other than Domino’s home and worldwide shops, it additionally owns and operates its personal dough manufacturing and provide chain services. It’s in these 17 models that the corporate’s contemporary dough is made, greens are processed and its skinny crust is produced.
The corporate has undergone numerous modifications prior to now 18 months, from the resignation of its CEO, David Brandon, who left to function athletic director on the College of Michigan, to a revamp of its menu capped by an entire new pizza from the crust up. (For extra on Domino’s new merchandise, see web page 62.)
“The change we made with our pizza I imply, it’s our core enterprise is one thing we’re going to speak about for a very long time,” says CEO Patrick Doyle. “There’s an evolution of how we’ve talked about it.” There’s a degree of pleasure concerning the model on the company and native ranges regardless of the main focus group criticisms that fueled its product revamp and a viral video scandal that led to adverse gross sales within the second quarter of final yr (see web page 70). It is a complete new Domino’s Pizza, figuratively and actually. “Look, it’s pizza. We are able to’t take ourselves too significantly,” Doyle says, “and we don’t need the buyer to. Pizza is enjoyable. It’s a unique event for households after they order in pizza. Guidelines are damaged. Initially, all of them collect for the pizza. There’s no forks and knives, and possibly not even a plate. It could simply be a serviette. It’s a enjoyable expertise, and so that you see that from us and admittedly you see it from the entire class.”
Because of Domino’s splashy promoting campaigns and new merchandise, rivals like Pizza Hut and Papa John’s have needed to step up their ‘A’ video games as properly. That has resulted in a return to the aggressive pizza wars of the Nineteen Eighties. All three firms have slashed costs, with Domino’s providing two medium one-topping pizzas for $5.99 every. Papa John’s and Pizza Hut responded with $10 giant pizzas together with specialty choices. Since Domino’s New and Impressed recipe is pricier, how are they in a position to keep meals prices in mild of its product improve? Doyle says profitability “must be an ongoing a part of how we function. On the similar time, there’s positively a unique client mindset on the market than there was a part of the equation. Our view is that the proper reply is to strike a steadiness. Have a steadiness between worth and premium. With the American Legends line that we’ve been promoting at $12.99 for a big pizza, it did very properly for us. If we will steadiness that with good worth factors for shoppers who’re extra value-oriented, as the buyer mindset shifts again slightly bit, we’re in a terrific place.”
Pizza continues to be worth for shoppers, however much less so than 10 years in the past, Doyle says. “I feel a part of that’s the reason the class was not doing in addition to it ought to going again (a number of years). We weren’t getting the expansion within the (QSR) class that we as soon as had been. We predict worth must be an necessary a part of that. We predict it’s why you noticed the class be slightly bit softer than all of us would have appreciated. We predict us delivering worth, and our rivals delivering worth to the buyer, is in the end a wholesome factor for the class.”
The corporate has a conservative progress plan of elevating home same-store gross sales between one and three % yearly, whereas they imagine worldwide gross sales might prime out at 5 % yearly. Longterm targets are to open 200 to 250 new models yearly with the addition of latest worldwide markets. “Worldwide has been an absolute rocket shot for us,” Doyle says. “It’s been doing extremely properly.” Balancing home and worldwide operations has really been a profit, as new merchandise could be shared, like the corporate’s latest dessert providing which originated from Turkey. “That sharing of concepts and utilizing different markets’ successes or failures as a spot to study is a part of what makes the system work,” says Doyle. “The truth that we have now this booming worldwide enterprise is barely a profit for the U.S. enterprise.” ?
Domino’s Pizza by the Numbers
2009 gross sales: $5.6 billion
Complete models: 9,000 Complete variety of franchised models:
Home 4,461
Worldwide 4,073
Complete variety of company shops: 466
Common gross sales quantity per unit:
Home – $614,000
Worldwide 642,400
P.c supply: 71%
P.c Carryout: 29%
Variety of staff: 180,000 systemwide
Franchise payment:
$0 for current franchisees
$25,000 for brand spanking new franchisees
Royalties: 5.5%
Common value to open a retailer: $175,000 – $250,000
Domino’s Prime 10 Worldwide Markets
? Mexico*
? United Kingdom*
? Australia*
? South Korea
? Canada
? India*
? Japan
? France
? Taiwan
? Turkey *
These point out publicly traded firms of their dwelling international locations.
Mandy Wolf Detwiler is managing editor at Pizza At the moment.
