April 9, 2020
Domino’s Pizza: Greatest Turnaround in Recent Business History

Domino’s Pizza: Greatest Turnaround in Recent Business History

I’m Alex Berman and you’re watching SELLING
BREAKDOWNS Domino’s Pizza have undergone one of the greatest
turnarounds in recent business history. In under a decade, they have gone from being
a punchline about quality, with a share price below $10, to being the second largest pizza
company in the world and a darling of the stock market, priced over $150. Domino’s stock has outperformed Google,
Facebook, Apple, and Amazon in this decade. Today, we’re going to briefly look at the
history of Dominos and then focus on how they turned around their fortunes by realising
that their product wasn’t just pizza, it was delivering pizza. The company started back in 1960 when Tom
and James Monaghan bought a pizza shop called DomiNick’s. James sold his share within just 8 months
since he didn’t want to give up his full time job at the postal service. The shop couldn’t use the original name
so they eventually settled on Domino’s Pizza. Their logo used a Domino tile with three dots,
representing the three pizza shops they had acquired by the mid-sixties. Before the 70s started, they were already
franchising and had grown to over 200 stores by 1978. Over the next few decades they grew steadily,
both in the US and overseas so that when Tom Monaghan finally retired in 1998, he sold
93% of the company to Bain Capital Inc for $1 billion. Soon, Bain moved to take the company public
and it went on the stock market in 2004. But by 2009, the shares were down at $8.76
and the public perception was that Domino’s made some of the worst tasting food in America. Patrick Doyle was installed as CEO in 2010
and began a revolution across every aspect of the company. First, they fixed the pizza. They ran a hardline, honest advertising campaign,
criticising the quality of their previous output and showing what they had done about
it. Next, he trained all his franchises to have
team member empowerment so that every worker had the authority to fix customer issues. This meant that if you called up, complaining
that your pizza was late, the kid answering the phone didn’t need to hunt around for
the manager and ask what to do, they could do whatever they had to make you happy, right
then and there. New pizza would be sent for free, extras would
be added to orders, vouchers were sent our. They bent over backwards on customer service. This had been the plan early on, with the
famous “30 minutes or it’s free” promise that Domino’s had began back in the 70s,
but it had fallen by the wayside. Complaints and quality wasn’t all that changed. Doyle realised that it wasn’t enough to
have good pizza, you had to fix the whole ordering and delivery process. This meant a huge investment in technology,
not just websites and apps but physical inventions too like custom vehicles with pizza warmers
and bags to trap the heat. Because of that investment in technology the
Domino’s online ordering system is maybe the best in the pizza industry. Not only is the ordering system quick and
logical, but you can track the status of your order live, making it so much easier to use
your own time, rather than sitting in limbo for an hour, waiting for the doorbell to ring. And a full blooded commitment to customer
satisfaction has not gone unnoticed by the general public. It seems like the honest ad campaign, accepting
criticism, acted as a clean slate so that all this new innovation is met with optimism,
rather than cynicism. Share prices will soon cross 200 dollars and
there are 10,000 franchises spread around the globe so Dominos is going to keep taking
a bigger and bigger bite of the pizza industry. So, what can we learn from this? Well, most important is to realise that even
a company with one core product, like pizza, is still much more than just a product producer. No matter how good or bad what you produce
is, half the battle is how customers find it, order it, receive it and review it. You might beat all your competitors in a blind
testing but if you don’t care about the full customer experience, you’ll struggle. And finally, we learn that it’s never too
late to change. If something is not working, take the complaints
on board and see what you can do to fix them, even if that means a radical new approach. Wanna learn more about business theory and
history? Be sure to like and subscribe to be notified
of our next segment.

29 thoughts on “Domino’s Pizza: Greatest Turnaround in Recent Business History

  1. I'm not sure what it's like o/s, but in Australia, dominoes is struggling due to the parent company setting prices to low for the franchisee to follow. Franchises resort to a lot of dubious (illegal) practices to help the bottom line.

  2. Hey Alex, I just wanted to say good job, I love the video. The only thing I wanted to pass is that it sounds like you need a pop filter/screen. Some of your P's are exploding in my headphones.

  3. as someone who worked for domino's, no we don't have the authority to give out free pizzas, we can only give maybe free sides but many of us will still ask our manager, because it could potentially lose us money especially when a fair amount of people try and get a number of things free.

    Also many of the stores couldn't afford the "innovative" cars that they tried to push because they were so exorbitant, so much so that somewhere within the realm of like 90% of stores couldn't buy them, or rather lease them since you couldn't buy them. Really though in reality the biggest change to dominos was their recipe with much of their toppings and dough which they are steadily improving even now.

    We do nothing different with delivering aside from the fact that there are heated bags, that being said there are bad location and good ones, and that is heavily dependent on the store owners who vary greatly in how they conduct their business.

    As for the ad campaign they ran, it was bogus, they didn't change how the pizzas were made or anything, they didn't change the delivery system aside from the actual order system, but they tried to lay blame on the actual pizzerias, and workers, when they should be laying blame on neglectful owners, because the workers were sometimes completely untrained, or in best cases overwhelmed by the people ordering because of how bad the delivery of dough and toppings were organized on a national scale (which they are having an issue with again).

    They also showed the cheese on the top of the box, and I have to say if you order more than 2 or three pizzas there is a fair chance it will still happen, the boxes don't hold all that much weight and ordering sides only concentrates the mass into the middle. If you want it fixed complain about the boxes.

  4. In Malaysia, it's vastly superior compared to Pizza Hut or Papa John's. Also their online ordering style influenced the other chains.

  5. They had known for decades "that their product wasn’t just pizza, it was delivering pizza." That's what caused them to compromise quality for speed of preparation leading to pizza they had to apologize for in the first place. The new recipe is better but still not a match for any halfway decent independent.

  6. I agree, what has happened with the domino's turnaround is pretty amazing. How a company selling terrible pizza was able to convince enough people that their product is anything other than awful has been pretty fascinating.

  7. Lol I wish it was like that at my store, I always have to hunt around for manager to fix issues for customers :/

  8. Great video! What's crazy to me is that I used to absolutely hate Domino's. However one of their older locations in my town saw a big renovation, so I decided "You know, it's been years since I tried it let's see if it's as garbage as I remember". Whatever their recipe is for the crust and sauce blew me away and with their $5.99 for 2+ items has cemented them as my go to for cheap/good pizza.

  9. Domino’s always made me sick as a kid in the nineties. It was horrible. Now I eat their pan pizza whenever I can. It’s getting too expensive to get pizza anywhere though.

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