Running head: DOMINO'S PIZZA DECISIONS

Domino's Pizza Decisions Name ECO 550 Date Professor

DOMINO'S PIZZA DECISIONS Domino's Pizza Decisions Dominos Pizza, one of the major pizza chains in the United States, is thinking about

opening a new franchise in the Kissimmee area. To make sure that the decision is well plan there are some test that where performed based on: price, income on the selected area, price of advertising, and price of substitution, such as McDonalds Big Mac. In the Regression results, the R Square represents the coefficient of determination of the variables at .955, and the Adjusted R Square has a .946 as is shown below.

Regression Statistics 0.977477 Multiple R 28 0.955461 R Square 83 Adjusted R 0.946085 Square 38 42.41122 Standard Error 73 Observations 24

Looking at this results and the population in the Kissimmee area where the new Dominos Pizza will be establish, is safe to say that the location is a good alternative. Taking in consideration that a few details that the census shows, the franchise owners have to target certain areas with the marketing, such as ethnicity, age, gender, and language. The statistical significance of the variables and the regression equation tests results indicating how it will impact the decision to open the pizza business are the following: T-test With the DF = 19 and the Tc = 2.093, the Intercept, Pizza Price, Income, Price of Competidor and Price of Big Mac were all rejected. According to the T-test there is a rejection to

DOMINO'S PIZZA DECISIONS the Ho: a = 0 and accepting the Ha: a 0. The variables present a statistically significant effect on the numbers of pizza sold per month. F-test With the DF = 19 and the Ft = 2.90 the Fc comes out to be grater than the Ft so it is also rejected. P-test For this test we will evaluate the numbers to a 5% or 0.05. After comparing all the variables to the table we found out that the Null (Ho) is rejected and we accept the Alternative (Ha). Using the regression equation, QL=a+bt+c1D1+c2D2+c3D3, for the next consecutive four months, will show us the demand for pizza in the Kissimmee area. Q25= 2926.45-11.34(t) Q25= 2926.45-11.34(25) Q25=2926.45-283.5 Q25= 2642.95

Q26= 2926.45-11.34(t) Q26= 2926.45-11.34(26) Q26=2926.45-292.24 Q26= 2634.21

Q27= 2926.45-11.34(t) Q27= 2926.45-11.34(27)

DOMINO'S PIZZA DECISIONS Q27=2926.45-306.18 Q27= 2620.27

Q28= 2926.45-11.34(t) Q28= 2926.45-11.34(28) Q28=2926.45-317.52 Q28= 2608.93 The most important assumption we make in this calculation is that the regression equation does indeed truly symbolize the request changing aspects of the specific zone. The regression coefficients used were found in an investigation of all the counties, by doing a demand calculation. For instance the clients in that community have some inherent higher preference for pizza than the rest of the residents (Olivera, 2013). Established on the demand analysis, Dominos Pizza must launch a franchise in the neighborhood. Even though there are a few pizza establishments in the community, none of Dominos direct competitors Pizza Hut or Papa Johns has an outlet. The regression analysis clearly shows that the main demographic demand driver is population, which is likely to be stable going forward. Even though the earning stage in the neighborhood is lower than normal, this is less of a fear as pizza demand is expected to turn the income inelastic. This is a excellent time for Dominos Pizza to launch a franchise in an area where there is limited competition. Logically, a verdict to release an opening will also depend on additional aspects, counting costs and profit. The current study only illustrates the demand is there (Olivera, 2013).

DOMINO'S PIZZA DECISIONS References McGuigan, J. R., Moyer, R. C., & Deb. Harris, F. H. (2011). Managerial Economics. Mason, OH: Cengage Learning. United States Census Bureau (2013) Kissimmee State & County QuickFacts. Retrieve from: http://quickfacts.census.gov/qfd/states/12/1236950.html