Domino’s Pizza Essay
Domino’s Pizza experienced a decrease in revenue of 16.3% from year-end 2005 through the year-end 2009. It is true that the economic recession was partly at blame. However, the enterprise suffered from a negative reputation in the marketplace. Domino’s Pizza delivered pizzas that did not quite meet the demands of consumer taste. Their costumers would use social media to protest the ill delivery of pizzas and terrible taste. In addition, consumers were now more educated about their eating habits and had a growing concern with diets that led to obesity. Moreover, these facts combined with competition including companies such as Pizza Hut and Papa John’s, posed a hostile environment for Domino’s Pizza.
In order to overcome these pitfalls, Domino’s pizza not only introduced a new recipe but also launched one of the riskiest advertising campaigns to this day. The recipe was a reinvention of their pizza with new ingredients that improved flavor. The advertising campaign “oh yes we did” guaranteed customer satisfaction otherwise they would return their money and deliver another pizza free. Another aspect of this marvelous campaign was the use of real life costumers who participated in the making of the pizza in televised commercials. Here is a comparison between pre-2009 strategies with its new approach. And, some qualities that were engaged to implement the revised strategies.
Dominos was focused on producing pizza for as cheap as possible.
8.35% of pizzas sold in U.S
Second behind Pizza Hut 13.7%
Bad rep for poor quality pizza
Worst tasting pizza in its industry
Market share fell 2% from 2005-2009
“Oh Ye We Did Campaign”
Dominos renewed focus on “ Better ingredients, Better Pizza” and a broader menu. Focused on improving taste of its pizza
Added garlic and butter to crust
Added new side dishes and desserts
Match competitors taste
Expanded overall product choices
David Brandon – C.E.O
Expand brand scope
Everything on the menu is heavily tested and demanded by our customer All menu items are integrated
“Get the door, Its Dominos” – Industry leader in efficiency Gathered feedback from employees
“whats up dominos?”
“Lunch with Dave”
Brandon would learned a lot from his employees
Unique leadership style
Always looking to improve even when successful
Domino’s sales distribution is both domestic and internationally. The company gets 53 percent of its sales domestically and 47 percent internationally. In 2010, domestic sales were $3.3 billion and internationally it was $2.95 billion. Not only did fiscal year 2010 revenues show a healthy return, but cost of sales decreased by 3.25 percent between fiscal year 2008 and 2010. Domino’s showed a very big decrease in its sales because the consumers were concerned about the quality of the pizza that dominos offered compare to the other companies in the industry. 2005 was the peak of the company where it made the most net income, since then revenues have been declining. Revenue declines aside, due to interest, repurchasing of stock, and other financial implications, after a 65 percent fall from 2006 to 2007, net income increased over the last four years.
Domino’s current strategy is working well in the sense of income and revenue wise. The Net income increase was $37.9 million in 2007, $54.0 million in 2008, $79.8 million in 2009, and $87.9 million in 2010, which is annual increases of 42.5 percent, 47.7 percent, and 10.25 percent respectively. The result of the revenue increase also helped eliminate debt from 2007 to 2010 from when they took a big decrease in sales and popularity from 2006 to 2007. By 2010, Domino’s became the leading pizza company in the industry; it had higher revenue and a higher net income than the leading Papa Johns. On the other hand, Dominos is only leading in revenue because it has more locations than the other pizza stores do. Compared to Papa Johns in 2010, Dominos has 9300 stores worldwide, while Papa John’s has only half of that with 3,600 worldwide. Dominos generates $170,000 per store and Papa John’s generates $313,000 per store.
Dominos needs to focus on creating more revenue per store so they can provide better value to their shareholders. Taking on a better strategic approach by introducing new items to the menu and increasing the quality of the pizza did help the company get back on track from when it took the fall in 2007. The most recent year 2014, revenues almost doubled than it did in 2013 with a revenue of 589 million in 2014 and 295 million in 2013. Dominos have increased over the last six years in revenues, net income, and Earnings Per Share. Based on these numbers, the company has executed a good strategic plan. We one of most important thing any food establishment should do listen to what their consumers want. They have look into what feedback their consumers are giving them and then have a quick response to consumer’s feedback. A food chain can have all the technology in the world but if they don’t know what their consumers want they will never grow.