DOMINOS PIZZA CASE ANALYSIS

A Case-study analysis Presented to

Batangas State University - Batangas City

2nd Year Bachelor of Science and Hospitality Management in

Applied Business Tools Technology (PMS)
KRISTINE JOY AREOLA SAMONTE

DECEMBER 2019
Table of Contents
I. INTRODUCTION ............................................................................................................................... 1

II. BACKGROUND ................................................................................................................................. 2

III. BUSINESS INTRO ............................................................................................................................ 3

3.1 Activities and Organization ......................................................................................................... 4

3.2 Value of and Demand for the establishment and the department .............................................. 5

3.3 Product and Service ...................................................................................................................... 6

3.4 Other Services .............................................................................................................................. 7

3.5 Distribution Channel ..................................................................................................................... 8

3.6 Competition .................................................................................................................................. 9

3.7 Market Risk ............................................................................................................................... 10

3.8 Regulatory Risk ......................................................................................................................... 11

3,9 Risk Management ..................................................................................................................... 12

IV. SWOT ANALYSIS .......................................................................................................................... 13

V. CONCLUSION & RECOMENDATION .......................................................................................... 14

I. INTRODUCTION

Dominos Pizza is the second largest franchised pizza chain in the U.S.A Tom and James
Monaghan bought a small Michigan Pizzeria called Dominick’s, Tom revitalized the image by
changing the name to Domino’s Pizza. By the late seventies there were over 200 franchise
pizza business in the States and Dominos Pizza was ready to go international.

In 1993Dominnos Pizza opened in doors in Winnipeg (Canada), and in the same year
opened its one thousandth store. The location for Dominos Pizza grew quickly. Despite
Dominos Pizza springing up diverse location, they were still a very traditional company.

Domino’s Pizza menu had been kept very simple and streamlined; they only sold one
type of pizza crust which they named the regular pizza. The Pizza menu included just two
sizes of dough it was not until much later the competition forced them to add a medium and
extra- large sized pizza. There were no such things as side orders you could have Pizza and
you could only drink a Coke with it.

In 1989, Domino’s reacted market demand first time in twenty five years and
introduced Deep Pan Pizza. This moves ensured the growth of Domino’s Pizza, as the same
year they opened their five thousandth store.

In 1992, they were to introduced the first non pizza item to their menu this was
obviously a reluctant move at it was bread stick. Domino's Pizza dough was already on
hand and the making of bread sticks is not so different. For many years the company had
advertised that if the delivery of their pizzas took longer than thirty minutes then the pizza
would be delivered free. This was parodied by the Teenage Mutant Ninja Turtles which
specified the “pizza dude has 30 seconds”, to complete the delivery. This turtles pizza was
late and they received a refund of 3 dollars for “ being two minutes late, dude. How ever the
benefits to domino's pizza was enormous as millions as millions of kids were to hear the
named of Domino's Pizza endorsed on celluloid, In 1993 Domino's Pizza discontinued this
policy and stated of that if a customer was unhappy they could have a new pizza or a refund.

By 1994

II. BACKGROUND

Domino's pizza restaurant history began in 1960 with just one location. Back then,
Domino's was called DomiNick's, and two brothers named Tom and James purchased it for
just $500! Tom renamed the restaurant Domino's Pizza five years later.

Industry: Restaurant
VISSION : “illustrates a company of exceptional people on a mission to be the best pizza
delivery company in the world.”

MISSION: “committed to an inclusive culture which values the contributions of their

customers, team members, suppliers, and neighbors.”

VALUES:

 Treat people as you'd like to be treated.

 Produce the best for less.

 Measure, manage and share what's important.

 Think big and grow.

 Incentivise what you want to change.

 Set the bar high, train, never stop learning.

 Promote from within.

 We are not ordinary, we are exceptional.

III. BUSINESS INTRO

3.1 Activities and organization

3.2 Value of and Demand for the establishment and the department

3.3 Product and Service

The Domino's menu varies by region. The current Domino's menu in the United States features a
variety of Italian-American main and side dishes. Pizza is the primary focus, with traditional, specialty,
and custom pizzas available in a variety of crust styles and toppings. In 2011, Domino's launched
artisan-style pizzas. Additional entrees include pasta, bread bowls, and oven-baked sandwiches. The
menu offers chicken and bread sides, as well as beverages and desserts.
3.4 Other Services

3.5 Distribution Channel

In the highly competitive pizza business, Domino’s have to create various strategies to make sure
itself comparable with other pizza company. With their long time experience on pizza business, they
know that time take for the food arrive to customer door is crucial. Domino’s Pizza introduced a 30
minutes delivery guarantees and free delivery idea. Domino’s is the only pizza company that
guarantees customer’s order will arrive within 30 minutes with free delivery. If the order cannot make
it within 30 minutes, then Domino’s Pizza will give you a free Regular Pizza Voucher. When delivering
pizza, Domino’s use a special heat wave bags to keep the pizzas hot during transit. These deals have
significantly attracted customer to consume at domino’s pizza.

3.6 Competition

Below are the top 8 Dominos competitors:

1.KFC

2.Pizza Hut

3.McDonalds

4.Subway

5.Burger King

6.Smokin Joes Pizza

7.Taco Bell

8.Papa John's Pizza

3.7 Market Risk

3.8 Regulatory Risk

3,9 Risk Management
IV. SWOT Analysis

Strength

Good Returns on Capital Expenditure – Domino's Pizza is relatively successful at execution of

new projects and generated good returns on capital expenditure by building new revenue
streams.

Strong Free Cash Flow – Domino's Pizza has strong free cash flows that provide
resources in the hand of the company to expand into new projects.

Strong distribution network – Over the years Domino's Pizza has built a reliable
distribution network that can reach majority of its potential market.

Strong Brand Portfolio – Over the years Domino's Pizza has invested in building a strong
brand portfolio. The SWOT analysis of Domino's Pizza just underlines this fact. This brand
portfolio can be extremely useful if the organization wants to expand into new product
categories.

Superb Performance in New Markets – Domino's Pizza has built expertise at entering new
markets and making success of them. The expansion has helped the organization to build
new revenue stream and diversify the economic cycle risk in the markets it operates in.

Automation of activities brought consistency of quality to Domino's Pizza products and has
enabled the company to scale up and scale down based on the demand conditions in the
market.

Highly successful at Go To Market strategies for its products.

Strong dealer community – It has built a culture among distributor & dealers where the
dealers not only promote company’s products but also invest in training the sales team to
explain to the customer how he/she can extract the maximum benefits out of the
products.
 Weaknesses

Need more investment in new technologies. Given the scale of expansion and different
geographies the company is planning to expand into, Domino's Pizza needs to put more
money in technology to integrate the processes across the board. Right now the investment
in technologies is not at par with the vision of the company.

Not very good at product demand forecasting leading to higher rate of missed opportunities
compare to its competitors. One of the reason why the days inventory is high compare to
its competitors is that Domino's Pizza is not very good at demand forecasting thus
end up keeping higher inventory both in-house and in channel.

Limited success outside core business – Even though Domino's Pizza is one of the leading
organizations in its industry it has faced challenges in moving to other product segments
with its present culture.
Days inventory is high compare to the competitors – making the company raise more capital
to invest in the channel. This can impact the long term growth of Domino's Pizza

The company has not being able to tackle the challenges present by the new entrants in the
segment and has lost small market share in the niche categories. Domino's Pizza has to build
internal feedback mechanism directly from sales team on ground to counter these
challenges.

Not highly successful at integrating firms with different work culture. As mentioned earlier
even though Domino's Pizza is successful at integrating small companies it has its share of
failure to merge firms that have different work culture.

Organization structure is only compatible with present business model thus limiting
expansion in adjacent product segments.

Opportunities
The new technology provides an opportunity to Domino's Pizza to practices differentiated
pricing strategy in the new market. It will enable the firm to maintain its loyal customers with
great service and lure new customers through other value oriented propositions.

The market development will lead to dilution of competitor’s advantage and enable Domino's
Pizza to increase its competitiveness compare to the other competitors.

Opening up of new markets because of government agreement – the adoption of new

technology standard and government free trade agreement has provided Domino's Pizza an
opportunity to enter a new emerging market.
Stable free cash flow provides opportunities to invest in adjacent product segments. With more
cash in bank the company can invest in new technologies as well as in new products segments.
This should open a window of opportunity for Domino's Pizza in other product categories.

Economic uptick and increase in customer spending, after years of recession and slow growth
rate in the industry, is an opportunity for Domino's Pizza to capture new customers and increase
its market share.

The new taxation policy can significantly impact the way of doing business and can open new
opportunity for established players such as Domino's Pizza to increase its profitability.

New trends in the consumer behavior can open up new market for the Domino's Pizza . It
provides a great opportunity for the organization to build new revenue streams and diversify
into new product categories too.

New customers from online channel – Over the past few years the company has invested vast
sum of money into the online platform. This investment has opened new sales channel for
Domino's Pizza. In the next few years the company can leverage this opportunity by knowing its
customer better and serving their needs using big data analytics.

Traits

No regular supply of innovative products – Over the years the company has developed
numerous products but those are often response to the development by other players.
Secondly the supply of new products is not regular thus leading to high and low swings in the
sales number over period of time.

Imitation of the counterfeit and low quality product is also a threat to Domino's Pizza’s
product especially in the emerging markets and low income markets.

Intense competition – Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only profitability but
also on overall sales.

The company can face lawsuits in various markets given - different laws and continuous
fluctuations regarding product standards in those markets.
Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.

Changing consumer buying behavior from online channel could be a threat to the existing
physical infrastructure driven supply chain model.

Liability laws in different countries are different and Domino's Pizza may be exposed to
various liability claims given change in policies in those markets.

Increasing trend toward isolationism in the American economy can lead to similar reaction
from other government thus negatively impacting the international sales.

V. Conclusion and Recommendation