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?
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