University of National and World Economy

Faculty: International economics and politics

Specialty: International economy relations

Done by: Iva Yarmova

Fac. Number: 18114178

Content:

1. History of the company

2. Strategy for success
3. Business model and strategic investments
4. The benefits of franchising
5. Organizational structure
6. Domino’s marketing automation strategy
7. Conclusion
8. References
 Domino’s pizza
Privately held Domino's Pizza, Inc. is the largest pizza-delivery company in the
world, operating more than 17,600 stores in over 80 countries. Domino's was built
on simple concepts, offering only delivery or carry-out and an extremely limited
menu.

The story of Domino’s Pizza all started with two brothers named James and Tom
Monaghan who bought a small Michigan Pizzeria named Dominick’s. The pizzeria
was initially run by the both of them until James decided to sell his share for a
second-hand Volkswagen Beetle leaving Tom to manage the business. Tom
Monaghan established the pizza business to support himself while he studied to be
an architect. Soon after, however, he dropped out of school to build the business.
He purchased two more pizzerias and wanted the additional stores to have the same
branding, but the original owner of Dominick’s forbade him to do so, that’s why he
later revamped its image and changed its name to Domino’s Pizza in 1965. By the
late seventies, Domino’s Pizza had a total of 200 franchise pizza branch all over the
United States. And in 1983, Domino’s showed that they were ready to go global as
they opened their first international branch in Winnipeg and on that same year, it
opened its 100th store in Vancouver, Washington.[ CITATION EFr98 \l 1033 ]

In 1994 the first Domino's store in Eastern Europe opened in Warsaw, Poland. In
that same year the first agreement to develop Domino's in an African country was
signed by Specialized Catering Services, Inc. In 1995 Domino's Pizza International
division opened its one-thousandth store. In 1998, Domino’s founder and CEO
Tom Monaghan announced his retirement after 38 years of ownership. He sold
almost 93 percent of Domino’s Pizza to Bain Capital Inc. for one billion dollars.
And from then on he stopped being involved in day-to-day transactions and
operations of the company.[ CITATION EFr98 \l 1033 ] In 2004, the Company
listed on the New York Stock Exchange under the ticker symbol DPZ, raising
around USD 339 million in its initial public offering.

Even if they had locations in different parts of the world, Domino’s Pizza remained
to be a traditional company. Domino's basic business strategy has been to offer a
limited menu through carryout or delivery only. For more than thirty years, the
company offered only two sizes of pizza, eleven topping choices, and until 1990
only one beverage, cola. In 1992, the pizzeria introduced its first non-pizza item to
their menu by including breadsticks and chicken wings. Before competition forced
them to add varieties in their menu, Domino’s Pizza only had one type of pizza
crust which the dough is shaped by tossing and pulling, and they only had just two
sizes of dough. Beginning in 1992, however, Domino's began to expand its menu
options and during the next five years it added Ultimate Deep Dish Pizza, Crunchy
Thin Crust Pizza, Roma Herb Crust Pizza, Garlic Crunch Crust and Pesto Crust
Pizza.[ CITATION EFr98 \l 1033 ]

As Domino's grew, its success was attributed to a simple but powerful idea:
Monaghan, who had been raised in Catholic orphanages and foster homes, believed
that people who ordered pizzas were hungry. To keep them happy a company must
not only deliver pizzas, but promise fast delivery. Domino's went on to guarantee
pizza delivery in 30 minutes or less. [ CITATION EFr98 \l 1033 ]
One of the main reasons they did so well over the past decade has been the
alignment of their business and their business model. In 2009, Domino’s made a
number of decisions to align their strategy to their business model.[ CITATION
Ada201 \l 1033 ]

First, they completely overhauled their product. The food went from tasting like
cardboard to tasting like, well, real pizza. And they even ran an ad campaign
owning up to their previously bland product and describing how they had improved
it. Then, they invested in technology.[ CITATION Ada201 \l 1033 ]

For beginning of Domino’s delivery journey, it needs to be stated that pizza

deliveries were not so common in the time when Domino’s was established. This
model was an innovation for its time from the start. Then again with the years
Domino’s has turned into the leading delivery food-chain. And there is a solid
explanation behind this. Food delivery has high fixed costs. The courier requires a
minimum wage. The ingredients can only be so cheap. There just aren’t a ton of
things throughout the food delivery value chain that restaurants can innovate on
without significant technological advances. Domino’s realized this very early. They
were the first to both offer mobile ordering and to build a Pizza Tracker on their
website, a concept that delivery start-ups have since copied. This not only helped
them with ordering and logistics, but also helped them build a strong digital brand
in which they interact directly with consumers. Moreover, Domino’s stores are
optimized for delivery and takeout, not in-store eating. In contrast, competitors
have followed more traditional models: Pizza Hut has a dine-in focused model and
other pizza chains don’t have the technology or delivery infrastructure. While all of
these decisions helped Domino’s in its development, one of the biggest drivers of
investor returns was their franchise business model. It should not be understated
how closely their strategic decisions played into becoming one of the most
successful franchises in history.[ CITATION Ada201 \l 1033 ]

When a business wants to grow, they need to use existing profits or raise new
capital to fund that growth. However, a franchise business is the opposite. The
franchisor can add new locations, but doesn’t need to front the capital themselves.
Instead, they can source the capital required to open new locations through their
franchisees.[ CITATION Ada201 \l 1033 ]

In return for the brand awareness, trade secrets, and operating best practices,
franchisees pay monthly commissions to the franchisor. For the parent company, it
becomes a cost-free royalty, a perpetual stream of cash. And if a franchisor is
performing well, they can actually distribute cash back to shareholders even as they
grow, instead of needing cash to fund expansion. [ CITATION Ada201 \l 1033 ]

Pizza is a cheap and standard product that is easy to make- dough, sauce, cheese,
toppings. Domino’s invested in technology and built an independent, digital-first
brand before anyone else. Additionally, their stores are optimized for delivery
instead of dining in. Their store locations are selected based on the best delivery
routes, not the most foot traffic. And because people typically order more than one
pizza, the delivery expense tends to be a small percentage of the average order
value. All these decisions funnel quality control to the parent company and make it
much easier to hand off a store to a franchisee. When more of the consumer
experience is provided by the parent company, the only thing operators need to
have is money and grit.[ CITATION Ada201 \l 1033 ] But still the company's
franchising system provides ownership opportunities only to qualified internal
candidates, as of the late 1990s. A candidate is required to have successfully
managed and/or supervised a Domino's store for one year, and must have also
completed required training courses. External candidates are not considered for full
franchise status. However, external investors, approved by Domino's, can become
49-percent owners in a franchise supporting an internal candidate.[ CITATION
EFr98 \l 1033 ] Unlike an old-fashioned franchise model, Domino’s controls the
supply chain on top of its franchising operations, which encourages a more
cohesive economic tie between the franchisor and its franchisees. Domino’s Pizza
brings the restaurant franchise model to the next level one store offering two
businesses (delivery and carryout) with low initial capital expenditures, smaller
space requirements and same-store-sales growth potential.[ CITATION Ste20 \l
1033 ]

Domino’s much like the other companies of similar structure is hierarchically

based. There are several types of jobs available in the company, from the top rank
hierarchy to a number of smaller jobs in the outlets and stores. Here are a few
hierarchically structured posts in the Domino’s company.

The President- like most corporate of its rank, the post of the president of the
company is the highest post in this restaurant chain and international franchise. It is
the duty of the president to provide the company with the right leadership. It is also
up to him to supervise the production of the company. There are two posts of
presidents in the company, the president of Domino’s international and the
president of Domino’s United States of America. The first post holder is supposed
to look after the company’s international section, while the other president is to
concentrate on the company’s functioning within the American territory.
The Chief financial officer- the duty of the chief financial officer of a company is
to look after and manage the financial affairs department of the company. It is the
responsibility of the chief financial officer to look after the cost of production and
the earnings, and the profits of the company.

Manager, human resource- in any company of repute human resource management

is an important work. In the Domino’s company too there are a number of human
resource managers who are responsible for development of human resource and
therefore a growth in the production system. Under the Human resource managers
there are several assistant managers of human resources, whose duty is to look up
to their own teams and report to the main managers.

Manager, fast food- among several managers of several departments there is also
the manager of fast food section, whose duty is to keep an eye on the food
production and food quality among other things.

Currently the operating CEO is Richard Allison. He began as Domino's chief

executive officer in July 2018, previously serving as president of Domino's
International since 2014.

Not even 10 years ago, Domino's was the underdog in a crowded market of
delivery pizza. Shadowed by Pizza Hut (the market leader at the time), Domino's
was drowning in customer complaints and bad media coverage.[ CITATION Mat19
\l 1033 ]With little to lose, the company opted for a huge shift, launching improved
pizzas with different ingredients and a new image. This called for a huge marketing
campaign dubbed "Oh Yes We Did" — a television spot that admitted the pizza
was bad, and it was changing. Although slightly self-deprecating, the new product
and campaign worked- sales boomed by 32.2%. After enormous success in
changing its brand image, Domino's set out to forge long-term growth, with the aim
of becoming the world's largest pizza company. The company upheaved its entire
philosophy and underwent a rapid digital transformation, hiring tech staff like
developers and digital marketers to drive food delivery into the tech space.
Domino's was a fast-food retailer no more, and instead became "an e-commerce
company that happens to sell pizza." Today, Domino's is seeing the benefits of
being an early adopter to digital transformation. While competitors like Pizza Hut
sat on their hands with outdated marketing strategies, Domino's innovated their
way to a dominating position in the fast food market. They are now the world's
largest pizza company and to this day are still continually innovating. While
Domino's are known for some of their crazier stunts in the marketing industry (like
drone-delivering pizzas), they are also consistently driving promotions and growth
via SMS, email and digital advertising channels.[ CITATION Mat19 \l 1033 ]

SMS- Domino's sends out countless text messages to an enormous database every
day. At the start of the online ordering process, the website logically asks for a
delivery address or pickup location. Collecting this location information has an
extra benefit beyond delivering a pizza. It can be attached to any personal
information provided (like phone numbers) to aid in later geo-targeting. Because
location data is attached to phone numbers, the marketing team can automate
location-specific messages based on variables such as the weather. [ CITATION
Mat19 \l 1033 ]

E-mail - As part of a holistic multi-channel marketing strategy, Domino's also takes

advantage of the email addresses of opted-in customers. With email, the same
location-specific messages can be used.
Google ads- Serving ads on Google can be pricey, but also very effective when
used right. Domino’s has also put Google Ads campaigns to good use with search-
based Google advertising. Domino’s has overtaken Pizza Hut in paid advertising of
its own keyword. This isn't something all brands can do; the expense on dominating
high-performing keywords is quite high. This particular strategy is more effective
in a fast-moving retail brand like Domino's since audiences are making a quick
decision. When searching "Pizza Hut" they're thinking about ordering a pizza, so
clicking on Domino's instead of Pizza Hut isn't a huge stretch from the original
search. It's a tactic that quickly captures an audience who are ready to purchase.
[ CITATION Mat19 \l 1033 ]

Domino’s is now enjoying the fruits of their labour because of the company’s
farsightedness to adjust for delivery, set up stores in low-price and route-enhanced
sales sites, and make a digital brand and app that really works. Know-how
marketing, innovative tech and creative ordering methods made Domino's
outperform its pizza peers. The story of Domino’s Pizza is a hero’s journey. It’s a
story of reinvention. Domino’s had a 180-degree company overhaul and turned
critics into fans by being honest with themselves about their weaknesses. At the
same time, the company has been perceptive about where their true value is for
customers. They know customers love them because they’re convenient-and in
recent years they’ve used technology to double down on the convenience and
reliability that define the core of their brand. This self-awareness, and the guts to
act on it, has paid off. Domino’s Pizza went from being an underperforming
company in a very traditional industry with a bad core product to an inspiring,
once-in-an-industry example of flawless brand awareness, product development,
and marketing.[ CITATION Nat18 \l 1033 ]

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