Ever wonder why the world loves Domino’s pizza? This post covers that and why Domino’s is winning the pizza wars of 2020.
Discussions around the restaurant business in the times of COVID-19 are have an overwhelmingly negative tone.
For good reason, with no revenues coming in, drastic reductions in occupancy, massive lay-offs, restaurants closing left and right, margins getting thinner than before (shifting towards more delivery business) – these are the dominant topics.
Even in these tough times, if a company stands out with stellar performance and is as strong as ever, it is worth exploring. This is exactly what we do in this piece. We learn about the pizza chain Domino’s, how and why they are outperforming the competition and its story of “re-emerging” as a brand.
Domino’s did not start the decade as everyone’s favorite.
Back in 2009, it was highly criticized and had a poor reputation. My friends and family know me well as quoting the quality of the product as cardboard-like in texture and taste. There was a growing negative sentiment towards the brand, not just in my household, as people criticized the pizza (even calling the sauce ketchup), calling it “void of flavor”.
Fast forward to 2020, and they are one of the few businesses running almost without interruption amidst the pandemic. It doesn’t stop there; they have defined 100% contactless delivery, demand has required them to add another 10,000 employees, and are seeing nearly 10% same-store sales increases showcasing Domino’s is a brand making leaps and bounds.
It’s stock is performing better than Amazon and Apple. They are one of the leaders in the pizza-delivery space. They have not just fans, but a group of fanatics and a huge and loyal one. This read will tell you what they did, how they did it, and how you can implement their successful playbook.
We will analyze some of the strategies they adopted in the trajectory that helped them gain success and, most importantly, pizza lovers’ praise.
Table of Contents
Bad Pizzas to New Heights of Glory
When you look at the steps the company adopted, they are simple but with a stroke of restaurant genius. Let’s try to learn from some of their master strategies.
Started From the Pizza College Core
College students and the younger crowd initially loved Domino’s. Not for their pizzas, but for their fast delivery times, value for the dollar, and convenience (drunken convenience perhaps).
In recent years, college students have evolved, so did their taste preferences, and Domino’s noticed that they were losing out this strong customer base. To stop this, we already discussed all the criticism for their pizzas. Domino’s knew it had a good concept (with their fast-delivery model) but realized it needed to reinvent the product.
The company was not afraid to start from scratch and create an entirely new product. Domino’s came out with a new recipe in 2009, and it took all of 18 months and millions of dollars to come up with it. You could wonder how a pizza recipe can take that long; after all, it’s a simple concept of dough, seasoning, sauce, toppings, and cheese.
Domino’s took another stance, and they said we are going to perfect each element! You are wondering how you could perfect those ingredients? Well, here is how (surprise it’s fairly simple); real and authentic mozzarella (flavored with provolone), bolder and herb-infused sauce, crust with hints of garlic and in-baked parsley are just some of the first few introductions from them.
Don’t think this means you have to invest millions of dollars in your next menu launch; instead, the key point you should take away is that revamping your products and going back to basics is the key to taking your business to the next level.
Continuous Product Innovation and Development
They made “product innovation” a part of their core values, part of the brand, and their company roadmap.
For instance, they introduced Handmade Pan Pizza in 2012, and it took three years to develop. Fresh dough, 2 layers of cheese, and longer bake times (this item is not included in 20 mins delivery). With this one, they even went one step further and sold it in a sleek black box, this innovative packaging had the customers taking notice, stating they loved the new packaging. The pan pizza was well received and still is highly loved to this day.
Over the years, Domino’s has also innovated on their sandwiches, pasta, side dishes, and now includes paid condiments in their menu. Their chicken strips, along with condiments are one of the most-ordered side dishes. This side-dish innovation results in an increased average check value and we all know how important that is!
All this talk of food, yum! 8 oven-baked sandwiches, premium specialty pizzas, bread bowl pasta, chocolate lava – I could go on and on, but you got the point, lots of simple and amazing dishes for everyone to enjoy.
Create an Engaged Fan-Base
You could have the best product out there, but if no one knows about it, it is unlikely to be a cult favorite (or widely consumed at all). You need to build a connection with the audience, in this case, your pizza audience.
This is precisely what Domino’s did after they were convinced their relaunched product was ready for the mass market.
Now, when you try to order a pizza from Domino’s from your computer. You log into your own personal profile, have a wide range of choice but also recommendations based on your history and taste, you pay with one click and get back to watching the game. Every now and then, you get a notification that ‘Pizza Maker 1’ has finished your order, ‘Pizza Maker 2’ has put it in the oven, and ‘Pizza Maker 3’ is out of the shop to deliver it. Within 20 mins, ‘Pizza Maker 3’ is at your doorstep. Before the pizza even starts to cool down, you are already knee-deep biting into that buttery crust with dripping sauce, making for the good life!
Essentially, what Domino’s did is made the whole experience, from ordering to getting it delivered on time – super quick, digitally advanced, convenient, and, most importantly, fun.
Domino’s wanted to bring back the college pizza fans. They even had a word for this target audience – boomerangs.
They knew that to connect with them and to appeal to them, they needed to be extra basic (unaware what this means, well ask your nearest teenager). They knew they needed to be everywhere where these ‘boomerangs’ were. Domino’s created an omnichannel plan. You can order a Domino’s pizza from its website, mobile app, Facebook messenger, via a Tweet, or even from an Amazon Alexa enabled device (just to start with).
For all of these channels, they also simplified the process by introducing one-clicks or one tweet to enable a super-fast order and, more importantly, extremely-fast re-order (customer lifetime value). Next, with real-time tracking and update notification features – they gamified the process and made the delivery wait fun again.
With this step, the customers are not the only beneficiaries. The omnichannel presence also means that the company has numerous touch-points with the customers allowing them to collect all that useful data. The company managed to collect vibrant data, which they use for everything from product development to marketing to increase sales to labor management.
What blew me away as they don’t just look at individual customer data, but your entire household, why do you ask? Pizza ordering is a household exercise.
Maybe you are craving just a pizza and soda, but when Domino’s sends you a quirky message to include those Parmesan bites (they know about your obsession with them from your previous 30 orders), you just cannot resist and are ready with a wallet in hand. I mean why wouldn’t you, you love them and your credit card is already entered. The power of data, as we all know, is fantastic.
This doesn’t mean you need to spend millions on building out your technology stack. What this suggests is that you should start to collect, review, and analyze data. Use data to make better decisions; this could be as simple as knowing when your peak delivery time is and building a better schedule around that. An easy win is to create a simple email list to get in touch with your regular customer, activating them with weekly specials or special offers.
The excellent product combined with fast delivery and super-advanced ordering experience, Domino’s had one of the best business recipes.
Mastered the Game of Marketing
When Domino’s turnaround began in 2008-09, the company took its marketing game to the next level. Instead of hiding the criticism back then, they took the self-deprecating approach.
Domino’s said that they realized they had a quality problem, they accepted responsibility for their poor reviews and now they are changing that to get back in the game.
People loved this honesty, and their marketing campaigns became a case-study in all textbook marketing tactics. They immediately noticed a robust ROI of their marketing efforts and a related increase in orders.
Honest messaging was not where Domino’s stopped. Over the years, they have had successful campaigns that gained a lot of traction and almost formed a cult-like following of their pizza. For example, In 2016, they even featured some of their “superfans” in their commercials. They went through thousands of fan submissions to pick out the fanatics and showcased them in one of their television ads.
Dominos tries to give their fans what they want. They even have a wedding registry where couples can register. The origins of this program are classic, a couple once had a wedding at a remote place, and the caterer screwed up. Being a Domino’s fan, the groom ordered pizzas for everyone, which resulted in a huge success. After this, the dominos started the wedding registry program.
Even though the company does not expect this program to be a huge driver of profits, this is their marketing efforts to express their support to the customers at every point in their life. A real master marketer at work.
Dominos excels at understanding where their fans are, what they want, and how to communicate with them. By including their fans in the commercial, providing wedding registry, and much more – they are building eagerness to be a fan and very successfully too.
Reliance on Technological Advancements (Technology)
We discussed the many fresh, and innovative tactics Dominos has employed over the years, from gamifying ordering to utilizing data to strengthen customize experiences. Needless to say, most of it requires sophisticated and new edge technology.
Dominos focuses a lot on creating these technologies in-house. They have their own research and development team at the World’s Resources Center in Ann Arbor. They have a space called the Domino’s Innovation Garage, where their cross-functional teams collaborate, create, and test new ideas for the company.
The innovative culture does not just allow Dominos to stand out from their competitors but also enables them to adapt to ever-changing situations quickly. For instance, during the time of Covid-19, they were very fast in enabling 100% contactless delivery and digital payments to minimize exchange between the delivery service providers and their customers.
Their key business moat is their online ordering system and apps, and an infrastructure to continuously develop and improve these systems. Additionally, this allows them to be flexible with demanding or challenging situations, continually enhancing their operations.
Depends on the country, but in some parts of the world, Domino’s allows order by just sending emojis. Currently, they are working with Samsung to allow ordering via smart TV. In New Zealand, they have drone delivery in and are testing autonomous deliveries in the US.
The real-time tracking is already a customer favorite and they have many new ordering experiences coming out in the near future. Some you may know about are the like of automated kiosks at the stores. Dominos is the most technologically advanced pizza chain that I know of.
Don’t Put All Your Pizzas in One Box
Domino’s is very open and transparent about their business strategies. One of the growth strategies which Domino’s sees as the backbone of the company is called “Fortressing.” It is simply put, opening more and more stores in the same or relatively close location with the motive to increase sales. Their stores have low operational costs and great profit margins. These factors contribute to making the fortressing possible.
The strategy not only boosts sales as it allows for a strong delivery footprint but decreases wait times, allowing them to beat out their competition. Domino’s claims that being closer to more customers helps them not rely on 3rd parties for delivery and also improves brand recognition. Does all of this sound too good to be true?
If you look closely at the performance of this strategy, you will start believing in the beauty of it. In an area in Las Vegas, they studied the performance of having three stores versus four stores in a particular square mile area. The fortressing (four stores) led to an average increase of $15k EBITDA for each store and an almost $42k increase in top-line sales.
Of course, they still have to be smart with the locations they pick where this would work. Additionally, they also have to account for cannibalization, but all in all, this has proved a successful approach for them.
Further, Domino’s has also extensively focused on international expansion. As of 2020, Domino’s operates 17,000 stores in more than 90 countries. So, if you are looking for inspiration and lessons on growing your company and franchisee, you can most probably find all your answers by studying how Domino’s did it.
Made Their Business Model Recession Proof
Domino’s business model is suitable even for economic downtimes. This can be attributed to 3 main factors: low prices, delivery model, and reliance on technology.
Domino’s has affordable offerings that fit almost every budget. More importantly, they are big on discounts and promotions. Not just for the sake of discounts and promotions, but they know it drives sales and has priced their products accordingly.
People order them since they love their pizzas, but also when the economy is down, and consumers are more money cautious, Domino’s is still an affordable option and a great way to splurge on a budget.
Their delivery system is deeply rooted in their restaurant business model. In general, very few people go to Domino’s stores to sit and eat, it is more of order at home, office, for a party, or a game type of thing. Their lack of in-store dining drastically reduces the operational cost of the branches, and they can pass this on to the customers with their discounts and value-pricing.
We have covered in-depth on how Domino’s relies on technology to help it stand out from its peers. It uses technology to connect strongly with its core consumers, collect information, and act accordingly.
It does this with the goal of making the pizza ordering process more convenient, resulting in Domino’s being the first choice even when there are similar options available on the market.
Packing It in a Box
Over the years, Domino’s has invested heavily to become who they are today. They have made some large bets that have paid off, most importantly, they were not afraid to pivot. It is an excellent example of a company that has mastered growth, mastered marketing, and mastered the technology.
Restaurants and food businesses of all kinds can learn from the many steps Domino’s has taken to be the industry leader it is today.
No, we can’t all spend millions on research and development. What we can do as restaurant owners and operators is focus on our core product, while not being afraid to reinvent the wheel. We can implement technology tools to drive our business forward without being afraid of the positive benefits of technology.
Most importantly, we can give excellent customer service in all facets of our restaurant that makes guests want to come back and join us again.
Domino’s, albeit carefully, is still going strong and is hopeful for growth even when the economic forecast is dwindling. Either way, they make for a fascinating study and an inspiring read.