Apple, Microsoft, and Domino’s?

Doing my daily scroll through Twitter, I happened to come across a TechCrunch article about how we have to readjust the way we value companies. While an interesting read on it’s own, there was a section about how companies are redefining themselves to keep up with this new era of digital business, and one line stood out from the rest: “Domino’s is now a tech company that happens to make pizza.” Yeah, I scratched my head too and just chalked it up to Domino’s trying to stay relevant. But then, I dug a little deeper…

2008:doms

Domino’s, Pizza Hut, and Papa Johns, the three giants of American pizza. While they’ve all been around for as long as I can remember, this name recognition wasn’t doing much for Domino’s. Their stock price hit a record low of $2.83 in the year of 2008. Long  gone were the days that receiving pizza in less than 30 minutes was enough to pull the trigger. A lack of desire for Domino’s coupled with an economic recession put them on a downward spiral.

2010:

Fast-forward 2 years: Spearheaded by Chief Marketing Officer Russell Weiner and Chief Executive Officer J. Patrick Doyle, Domino’s attempted something new. They admitted their pizza sucked. They got back to the drawing board, created a new recipe, and relaunched their pizza coupled with a new series of ads apologizing for their previous quality. The result? Their sales were up 10% that year.

2011-2016:

Domino’s didn’t stop there. Led by Weiner, they launched a Think Oven, “a Facebook platform where customers and fans can submit their suggestions in two categories: the Idea Box (for general ideas, e.g. new menu items, tips for going green, etc.) and Current Project (for specific things Domino’s needs help with, e.g. this month’s topic of “New Domino’s Uniforms”)” and they let people Tweet whatever they wanted to (good, bad, etc) and posted it on their website. Domino’s whole new pizza roll-out wasn’t specifically about the pizza, they wanted to let the customers know that what they want mattered. This presence on Facebook and Twitter was to make sure another “we suck” campaign wasn’t in the works. Domino’s even began to call their new brick-and-mortar stores “pizza theaters,” wanting the consumer to feel that they had unadulterated access to the process of pizza making. Essentially Domino’s strategy boils down to “transparency is key.”

With the very essence of Domino’s back in order (quality of the pizza), they have slowly shifted the business of what it does. Domino’s isn’t about making pizzas anymore. Domino’s is in the business of ordering pizzas. Perhaps the most famous facet of any pizza ordering system in the world right now is Domino’s live tracker. I think all of us here at BC have had at least one or two Friday nights at 1:30 AM, anxiously watching the tracker work it’s way to the right, waiting for the out for delivery sign.

doms

The Future:

Tracker’s are old news now, as everyone from the local pizza place down the corner to the multinational pizza establishment has one. Domino’s is looking ahead. With nearly half of all of their sales being digital, Domino’s is trying just about every way it can to make people continue to order their pizza. The pizza giant has led this effort through its AnyWare platform. First, consumers need to build a profile, providing Domino’s with all the essentials (name, address, pizza you want, etc). Then, if you can communicate with it, you can probably order a Domino’s pizza with it. Thanks to this profile, you could tweet an emoji of pizza and have a pizza delivered to you. You can download Domino’s Zero Click app and order pizza simply by opening an app. Then there’s Ford Sync, Samsung Smart TVs, Amazon Echo, Facebook Messenger, Tweeting, your phone’s personal voice assistant, and smart watches. These are all devices you can order pizza from. Oh and yes, you can still call and order.

Domino’s efficiency is a 2-way street and they know that, so Domino’s is trying to decrease delivery times on their end too. In the past year, Domino’s has unveiled their DXP or Delivery ExPert. It’s a Chevy Spark with an oven built in, capable of carrying 80 pies. Even though delivering pizza in a car/oven makes even emoDomino's to roll out tweet-a-pizzaji ordering sound un-gimmicky, Domino’s seems serious about this venture. There are currently 154 DXPs in the United States right now and some are in use around the Boston area. Plus, the car was put together by Roush Enterprises, the same group that worked on Google’s self-driving cars.

 

So what did all this innovation and change lead to?

Well, that $2.83 stock price? As of right now, it is $153.49 a share. The price has risen 177% in the last three years alone. Furthermore, Domino’s market share has increased from 9 percent to 12.3 percent since 2014. While they are still second to Pizza Hut, who has about 14.4 percent, Pizza Hut’s market share has been slipping since 2014. Even while being second in market share, the latest figures show that Domino’s has done $4.7 billion annually in global digital sales. And it seems like we can expect the company drive’s to innovate to continue judging by this statement CEO Doyle made in a recent interview with PricewaterhouseCooper

“Smart companies are finding ways to use technology to dramatically improve their customers’ experience and we’re going to see more and more of that.
What you’ve seen to date are a lot of businesses that have been simply about social media or very specifically around only the technology. What you’re seeing today, with the different car services, is about taking the technology and putting it together with bricks and mortar, with the real world, and coming up with some really unique ways of changing business models.

And that’s what we’ve done here. We’ve gone from no online orders a decade ago to where we’re quickly approaching half of our business is in digital. It’s been pretty transformative for us and for our customers’ experience with the brand. I think that’s what you’re going to see more of going forward, these great ideas paired with the real-world experience for customers. This is the place where the most innovation is happening.”

While Domino’s may not compete directly with Apple or Microsoft, just know next time you order a large pepperoni (via emoji of course), that you are ordering from a tech company, not a pizza one.

(In case you were getting hungry, click here for some Domino’s)

Sources:

https://www.fastcocreate.com/3030869/behind-the-brand/how-dominos-became-a-tech-company

https://www.marketplace.org/2015/09/24/business/corner-office/dominos-ceo-patrick-doyle-tech-side-pizza

http://money.usnews.com/investing/articles/2016-03-08/4-reasons-dominos-pizza-dpz-keeps-delivering-growth

http://forwardthinking.pcmag.com/none/343258-why-domino-s-is-now-a-tech-company-that-sells-pizza

Domino’s now lets you order pizza just by launching an app – no clicking required

http://www.pwc.com/us/en/ceo-survey-2015/ceo-interviews/patrick-doyle-dominos-pizza.html

http://www.seattletimes.com/business/dominorsquos-revamps-stores-with-lsquopizza-theaterrsquo/

 

9 comments

  1. magicjohnshin1 · ·

    Wonderful blog post with great pictures and outline. It is so true that companies nowadays are shifting to a technology cornerstone. Its essentially impossible to run a top performing business without incorporating digital spaces into your value proposition. I absolutely love Domino’s live tracker for pizza. It really allows the customer to fully experience and track every step of the pizza. Its absolutely mind blowing to see that you can tweet an emoji of a pizza and have them deliver to you. Overall wonderful read to how technology can change a company, not only in performance, but also its core business value. Thanks and cheers!

  2. alinacasari · ·

    Really interesting to think of Domino’s as a tech company, and also surprising that this is completely valid to do! It’s kind of crazy to see how much they have changed their own business over the past few years to keep up with changing technology. Anytime I order from Domino’s I keep the pizza tracker open- and I thought that was great! However, it seems like that is going to be thing of the past now that you can tweet a pizza emoji (low key really dangerous for me). I wonder how the DXP will change Domino’s delivery business? It seems like a cool idea, but I’m not sure how quickly it will catch on. Are other pizza companies innovating in similar ways to Domino’s?

    This was a really cool display of how Domino’s has changed between the past, present, and future. I like how you included videos as well and thanks for the link to order at the bottom- I might have to use that!!

  3. Great post. I’m not sure if you’d remember it or not, but in 2009 (ish) there was an incident with Dominos where employees filmed themselves doing gross stuff when preparing pizza. The video went viral, and then people crowdsourced it to figure out what particular Dominos franchise was guilty. It went out of business shortly thereafter. One of those early cautionary tales in social media and business.

  4. I had no idea half of Domino’s sales were digital! Crazy stat… but when I think of it, I would never look for a Dominos location or pick up the phone to call them for that matter. If I am leaving my house for a pizza, unfortunately the quality of Domino’s would not bring me in. I think, although they changed their pizza a while back, changing their business model was way more effective. Domino’s consumers probably don’t rank quality the order winner, but response time and convince and using technology to enhance these two competencies was brilliant for Domino’s. Great post and loved the historic set up!

  5. Great blog about a company that uses social media and digital business very successfully. Domino’s first step in their rebranding campaign focused on rebranding, transparency, and gaining customer trust back. Once they were successful with this step they continued with momentum and went digital. One key aspect of the digital transformation for Dominos seemed to revolve around speed and ease of the order. There are times, usually late weekend nights, that customer’s first priority is how easy the order will be, and how quickly it will arrive. They do not want to talk on the phone, or deal with an online order where they have to input all of their information. Dominos has targeted this customer very successfully. Ordering a Pizza is like calling an Uber: two clicks and its on its way, and you can tell exactly when it will arrive. Many other late night, quick food places should follow suite.

  6. Great post! You highlighted a lot of the points about Domino’s comeback and there’s a clear difference since the stock hit a low of 2.83. Dominos really set the precedent for a lot of technology, as pizza companies were not asking for feedback nor implementing a pizza tracker until they saw the success of Domino’s pizza tracker. How much of the impact do you think comes from technology? I think it’s arguable that a complete change in recipe made an impact, although social media did play a roll in magnifying its effects. I’m very interested to see the new technology that Dominos will roll out, I hope they have more in store that will keep them ahead.

  7. Great post, Jagpal! I think you highlighted some great points and the evidence is very clear. Like you outlined in the case, I’m most shocked about the share price of the firm. I think their use of getting user data is critical here – it’ll definitely help them sustain a competitive advantage over other pizza shops. As soon as they are able to lock that position of being *the* pizza delivery service, they’ll be able to use this data to continue to create switching costs. Great to see that any kind of business can leverage customer data – not just online retailers like Amazon, making suggestions to their customers. Thanks for sharing this story, Jagpal.

  8. dabettervetter · ·

    Something interesting that I have noticed about Dominos is actually their image quality on Twitter and Facebook. I have previous experience working on a social strategy team and one of the most important things we valued was the quality of our assets. However, on Twitter specifically the pictures I have seen Dominos posting of their pizza has been burnt and frankly unappetizing (disclaimer I love Dominos and I am not hating on their pizza), but seeing how technology savvy they have been in the past couple years it is surprising that their picture quality is not up to par. Maybe in the future that is something Dominos would consider investing a little more money in to catch up to the strength of all of their other technological standards.

  9. Very interesting stuff. Dominos is a wonderful example of a company that has embraced technology and made it core to its business. In a world of artisan dough and imported mozzarella, Dominos had to find another way to differentiate and compete. Technology was its answer.

    I’ll admit that I have thought about ordering a Dominos pizza simply because I can ask Alexa to have one delivered. Maybe tonight after class…

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