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Swot Analysis:: Strengths Weaknesses
Swot Analysis:: Strengths Weaknesses
Strengths
Leading pizza delivery company in the US
with more than 5,000 stores in the US Weaknesses
Global franchise operations - more than Slow growing and declining same-
3,500 in over 50 countries store sales
Strong brand equity supported by heavy Weakening bottom line
advertising & marketing campaigns
Supply chain & distribution network
Threats
Opportunities
Changing consumer habits towards
Growing presence in emerging markets,
healthier food choices
particularly in India, China
Franchise operations affected by
Leverage supply chain & distribution
currency exchange fluctuations
system to introduce new products
Intensive competition from a
fragmented number of small competitors
PERIOD ENDING Jan 3, 2010 Dec 28, 2008 Dec 30, 2007
Assets
Current Assets
Cash And Cash Equivalents 158,649 124,243 92,295
Short Term Investments - - 440
Net Receivables 87,974 79,053 77,435
Inventory 25,890 24,342 24,931
Other Current Assets 6,155 26,613 31,781
Liabilities
Current Liabilities
Accounts Payable 169,053 118,781 130,379
Short/Current Long Term Debt 50,370 340 15,312
Other Current Liabilities - 30,433 29,817
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 586 570 597
Retained Earnings (1,341,961) (1,421,705) (1,444,938)
Treasury Stock - - -
Capital Surplus 24,487 1,853 -
Other Stockholder Equity (4,106) (5,341) (5,798)
Dominos Pizza is the second largest franchised pizza chain in the U.S.A., and the history of
Dominos Pizza is similar to its rival Pizza hut; two brothers started it with borrowed equity in the
sixties. Tom and James Monaghan bought a small Michigan Pizzeria called Dominick's, which
was jointly run by them until James traded his share for a second hand car. Tom revitalized the
image by changing the name to Dominos Pizza .
By the late seventies there were over 200 franchise pizza businesses in the States and Dominos
Pizza was ready to go International. In 1983 Dominos Pizza opened its doors in Winnipeg, and in
the same year opened its one thousandth store. Later that same year Domino's corporate history
was to begin in Australia with its first franchise in Brisbane, on the East coast.
The locations for Dominos Pizza grew quickly from here as they sprung up in all sorts of diverse
places including Bogotá. Despite Domino's Pizza springing up diverse locations, 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. Domino's Pizza dough
was shaped by tossing the dough and pulling it into shape. The pizza menu included just two
sizes of dough, it was not until much later that competition forced them to add a medium and
extra large sized pizza. There were no such things as side orders you could have Pizza, pizza or
Pizza and you could only drink a Coke with it.
In 1989 the history of Domino's Pizza was to change when the Deep Pan pizza was introduced,
for the first time in twenty five years the company was being forced to react to market demand.
This move consolidated the financial base and ensured the growth of Domino's Pizza , as the
same year they opened their five thousandth store.
The wind of change had started and by 1992 they were to introduce the first non pizza itemto
their menu, this was obviously a reluctant move as it was bread sticks. Domino 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 movie which specified the "pizza dude has 30 seconds" to complete the
delivery. The turtles pizza was late and they received a refund of $3 for "being two minutes late,
dude!" However the benefits to Domino Pizza was enormous as millions of kids were to hear the
name of Domino Pizza endorsed on celluloid. In 1993 Domino Pizza discontinued this policy and
stated that if a customer was unhappy they could have a new pizza or a refund.
By 1994 Dominos Pizza marketing policy widened as chicken wings were introduced to the
menu. At the same time the company hit the African continent as they opened a store in Egypt .
By 1996 Dominos Pizza website was launched and the company declared global sales of nearly
$3 billion.
Despite their reluctance to add a wider range menu they have as a company given the pizza
industry many innovations that have now become standard. The belt driven pizza ovenwas the
invention of Domino Pizza and they began using corrugated cardboard delivery boxes which
were very effective at holding the heat within the pizza during the delivery time. Ever mindful of
the fact that a cold pizza must be about the worst dining experience on earth Dominos pizza
introduced the "Heat Wave," a portable electrical bag system that keeps the pizza hot during
delivery.
Industry Restaurants
Website www.dominos.com
1 History
o 1.1 Early years
o 1.2 International
expansion
o 1.3 Sale of
company
o 1.4 Current era
2 Products
3 Corporate governance
o 3.1 Charitable
activities
4 Advertising and
sponsorship
5 30-minute guarantee
6 International operations
7 See also
8 References
9 External links
[edit]History
[edit]Early years
In 1960, Tom Monaghan and his brother, James, purchased DomiNick's,[4] a small pizza store in Ypsilanti,
Michigan. The deal was secured by a US$75 down payment and the brothers borrowed $500 to pay for the
store. Eight months later, James traded his half of the business to Tom for a used Volkswagen Beetle. As
sole owner of the company, Tom Monaghan renamed the business Domino's Pizza, Inc. in 1965. In 1967,
the first Domino's Pizza franchise store opened in Ypsilanti. The company logo was originally planned to
add a new dot with the addition of every new store, but this idea quickly faded as Domino's experienced
rapid growth.[5] By 1978, the franchise opened its 200th store. [6][7]
In 1975, Domino's faced a lawsuit by Amstar Corporation, maker of Domino Sugar, alleging trademark
infringement and unfair competition. On May 2, 1980, a federal appeals court found in favor of Domino's
Pizza.[8]
[edit]International expansion
On May 12, 1983, Domino's opened its first international store, in Winnipeg, Manitoba, Canada.[9] That
same year, Domino's opened its 1,000th store overall, and by 1995 Domino's had 1,000 international
locations. In 1997, Domino's opened its 1,500th international location, opening seven stores in one day
across five continents.[6]
[edit]Sale of company
In 1998, after 38 years of ownership, Domino's Pizza founder Tom Monaghan announced his retirement
and sold 93 percent of the company to Bain Capital, Inc. for about $1 billion and ceased being involved in
day-to-day operations of the company.[10] A year later, the company named David A. Brandon Chairman
and Chief Executive Officer.[11]
[edit]Current era
In 2004, after 44 years as a privately held company, an employee of Domino's Pizza rang the opening bell
at the New York Stock Exchangeand the company began trading common stock on the NYSE under the
ticker symbol "DPZ".[12]
Industry trade publication Pizza Today magazine named Domino's Pizza "Chain of the Year" in 2003 [13] and
did so again in 2010.[14] In a simultaneous celebration in 2006, Domino's opened its 5,000th U.S. store
in Huntley, Illinois, and its 3,000th international store in Panama City, making 8,000 total stores for the
system.[15] Also that year, the Domino's Pizza store in Tallaght, Dublin, Ireland, became the first in Domino's
history to hit a turnover of $3 million (€2.35 million) per year. [16] As of September 2006, it has 8,238 stores
which totaled US$1.4 billion in gross income.[17]
In 2007, Domino's introduced its Veterans and Delivering the Dream franchising programs and also rolled
out its online and mobile ordering sites.[7] In 2009, Domino's introduced the Pizza Tracker, an online
application that allows customers to view the status of their order in a simulated "real time" progress bar. In
addition, the first Domino's with a dining room opened in Stephenville, Texas, giving the customers the
option to either eat in or take their pizza home. Since 2005, the voice of Domino's Pizza's national phone
ordering service 1-800-DOMINOS has been Kevin Railsback. [18]
In a 2009 survey of consumer taste preferences among national chains by Brand Keys, Domino's was last
— tied with Chuck E. Cheese's. In December that year, Domino's announced plans to entirely reinvent its
pizza. It began a self-flogging ad campaign in which consumers were filmed criticizing the pizza's quality
and chefs were shown developing the new product.[19][20] The new pizza was introduced that same month,
and the following year, Domino's 50th anniversary, the company acquired J. Patrick Doyle as its new CEO
experienced a historic 14.3% quarterly gain. While admitted not to endure, the success was described by
Doyle as one of the largest quarterly same-store sales jumps ever recorded by a major fast-food chain. [21][22]
[23]
[edit]Products
A makeline at a Domino's
The current Domino's menu features a variety of Italian-American entrees and sides. Pizza is the primary
focus, with traditional, specialty and custom pizzas available in a variety of crust styles and toppings.
Additional entrees include pasta bread bowls and oven-baked sandwiches. The menu offers chicken side
dishes, breadsticks and salads, as well as beverages and desserts. [24]
From its founding until the early 1990s, the menu at Domino's Pizza was kept simple relative to other fast
food restaurants, to ensure efficiency of delivery.[25] Historically, Domino's menu consisted solely of one
pizza in two sizes (12-inch and 16-inch), 11 toppings, and Coke as the only soft drink option. [26]
The first menu expansion occurred in 1989, with the debut of Domino's deep dish, or pan pizza. Its
introduction followed market research showing that 40% of American pizza customers preferred thick
crusts. The new product launch cost approximately $25 million, of which $15 million was spent on new
sheet metal pans with perforated bottoms.[27] Domino's started testing extra-large size pizzas in early 1993,
starting with the 30-slice, yard-long "The Dominator".[28]
Domino's tapped into a market trend toward bite-size foods with spicy Buffalo Chicken Kickers, as an
alternative to Buffalo Wings, in August 2002. The breaded, baked, white-meat fillets, similar to chicken
tenders,[29] are packaged in a custom-designed box with two types of sauce to "heat up" and "cool down"
the chicken.[30]
In August 2003, Domino's announced its first new pizza since January 2000, the Philly Cheese Steak
Pizza. The product launch also marked the beginning of a partnership with the National Cattlemen's Beef
Association, whose beef Check-Off logo appeared in related advertising. [31]Domino's continued its move
toward specialty pizzas in 2006, with the introduction of its "Brooklyn Style Pizza", featuring a thinner crust,
cornmeal baked in to add crispness, and larger slices that could be folded in the style of traditional New
York-style pizza.[32]
In 2008, Domino's once again branched out into non-pizza fare, offering oven-baked sandwiches in four
styles, intended to compete with Subway's toasted submarine sandwiches. Early marketing for the
sandwiches made varied references to its competition, such as offering free sandwiches to customers
named "Jared," a reference to Subway's spokesman of the same name.[33]
The company introduced its American Legends line of specialty pizzas in 2009, featuring 40% more cheese
than the company's regular pizzas, along with a greater variety of toppings. [34] That same year, Domino's
began selling its BreadBowl Pasta entree, a lightly seasoned bread bowl baked with pasta inside, [35] and
Lava Crunch Cake dessert, composed of a crunchy chocolate shell filled with warm fudge. Domino's
promoted the item by flying in 1,000 cakes to deliver at Hoffstadt Bluffs Visitor Center near Mount St
Helens.[36]
In 2010, the company changed its pizza recipe "from the crust up", [37] making significant changes in the
dough, sauce and cheese used in their pizzas. Their advertising campaign admitted to earlier problems
with the public perception of Domino's product due to issues of taste. [38][39]
[edit]Corporate governance
Domino's management is led by J. Patrick Doyle, CEO from March 2010, formerly president of Domino's
USA. Previous chief executive David Brandon, made athletic director of theUniversity of Michigan in
January 2010, remains chairman.[40] Among 11 executive vice presidents are Michael Lawton, CFO; Asi
Sheikh, Team USA; Scott Hinshaw, Franchise Operations and Development; and Kenneth Rollin, General
Counsel.[41] Domino's operations are overseen by a board of directors led by Brandon. Other members of
the board are Andrew Balson, Diana Cantor, Mark Nunnelly, Robert Rosenberg and Bud Hamilton. [42]
[edit]Charitable activities
In 2001, Domino's launched a two-year national partnership with the Make-A-Wish Foundation of America.
That same year, the company stores in New York City and Washington D.C.provided more than 12,000
pizzas to relief workers following the September 11 attacks on the World Trade Center and The Pentagon.
Through a matching funds program, the corporation donated $350,000 to the American Red Cross' disaster
relief effort.[6] In 2004, Domino's began its current partnership with St. Jude Children's Research Hospital,
participating in the hospital's "Thanks and Giving" campaign since it began in 2004, raising more than $1.3
million in 2006.[43]
In the 1980s, Domino's Pizza was well known for its advertisements featuring The Noid. That concept was
created by Group 243 Inc. who then hired Will Vinton Studios to produce the television commercials that
they created. The catch phrase associated with the commercials was "Avoid the Noid."
Due to a glitch on the Domino's website, the company gave away nearly 11,000 free medium pizzas in
March 2009. The company had planned the campaign for December 2008 but dropped the idea and never
promoted it. The code was never deactivated though and resulted in the free giveaway of the pizzas across
the United States after someone discovered the promotion on the website by typing in the word "bailout" as
the promotion code and then shared it with others on the Internet. Domino's deactivated the code on the
morning of Tuesday, March 31, 2009 and promised to reimburse store owners for the pizzas. [44]
Domino's sponsored CART's Doug Shierson Racing, which was driven by Arie Luyendyk, and the team
won the 1990 Indianapolis 500. In 2003, Domino's teamed up with NASCAR for a multi-year partnership to
become the "Official Pizza of NASCAR."[45] Domino's also sponsoredMichael Waltrip Racing and
driver David Reutimann during the 2007 season in the NASCAR Sprint Cup Series.
[edit]30-minute guarantee
Starting in 1973, Domino's Pizza had a guarantee that customers would receive their pizzas within 30
minutes of placing an order, or they would receive the pizzas free. The guarantee was reduced to $3 off in
the mid 1980s. In 1992, the company settled a lawsuit brought by the family of an Indiana woman who had
been killed by a Domino's delivery driver, paying the family $2.8 million. In 1993, Domino's settled another
lawsuit, this one brought by a woman who was injured when a Domino's delivery driver ran a red light and
collided with her vehicle. The woman was paid nearly $80 million. The guarantee was dropped that same
year because of the "public perception of reckless driving and irresponsibility", according to Monaghan. [46]
In December 2007, Domino's introduced a new slogan, "You Got 30 Minutes", alluding to the earlier pledge
but stopping short of promising delivery in a half hour.[47]
[edit]International operations
Domino's Pizza is located in more than 60 countries. [48][49] The rights to own, operate and franchise
branches of the chain in Australia, New Zealand, France, Belgium, the Netherlands and the Principality
of Monaco are currently owned by Domino's Pizza Enterprises, having been sold off by the parent company
between 1993 and 2007. The master franchises for the UK and Ireland were purchased by Domino's Pizza
Group, now publicly traded as Domino's Pizza UK & IRL, in 1993.[50]
Aruba Lebanon
Australia Malaysia
Bahamas Mexico
Belgium Morocco
Brazil Netherlands
Canada Nicaragua
Chile Panama
Colombia Peru
Cyprus Qatar
Denmark Russia
France Singapore
Syria
Germany (soon to be re-entering)
Greece Spain
Guatemala Switzerland
Honduras
Iceland Trinidad and Tob
India Turkey
Jamaica Venezuela
Jordan
Republic of Korea
Kuwait
The international fast food pizza delivery corporation, Dominos Pizza, is a renowned and popular choice amongst
people for relishing their favorite fast food, the Pizza. With its headquarters located just outside Ann Arbor,
Michigan, US, the Dominos Pizza has interesting background. Today, this huge franchise has a profound global
impact and has 8,000 corporate and franchise stores in more than 54 countries. In 2004, it was the second
largest pizza chain in the United States when it went public for less than $15 a share. To know interesting
information about the history and origin of Dominos Pizza, read the following lines.
Interesting Information on the Background of Dominos Pizza
It all started in the year 1960, when two brothers named Tom and James Monaghan bought a small pizzeria in
Michigan by the name of Dominick’s Pizza. They bought it for $500 and gave a down payment of $75. After 8
months, James quit and traded his shares with his brother for a second hand Volkswagen car. This led Tom to
revitalize the image of the eating joint and name it Dominos Pizza.
In the year 1968, a fire destroyed the company’s headquarters. In the year 1975, another hindrance came in the
form of a trademark-infringement lawsuit by Amstar, the maker of Domino sugar. Despite these obstacles,
Dominos Pizza expanded as a brand and in 1978, the 200th Dominos Pizza franchise was opened. Before the
end of the seventies, there were over 200 franchises of Dominos Pizza in US and it started to prepare to launch
itself on an international scale.
In the year 1983, Dominos Pizza opened its first international franchise at Winnipeg, Manitoba, Canada. This was
a major step in decentralizing its operations. By the end of 1983, it also opened another franchise at Brisbane,
Australia. Yet another milestone in that year was the opening of the 1000 th Dominos Pizza outlet. From here on,
the number of Dominos Pizza franchises increased quickly all over the world.
Despite international recognition, Dominos Pizza primarily remained as a traditional fast food joint. It had a very
simple menu and only sold one type of pizza crust that was named the ‘regular pizza’. The pizza dough was
shaped by tossing it in air and pulling it into shape. Only two sizes of the pizza dough existed before they added
medium and extra large owing to growing competition. There was absolutely no concept of side dish and side
others and the only beverage that was available with it was Coca Cola Classic.
This traditional outlook of Dominos was changed in 1989, when the Deep Pan Pizza was introduced. The
company was being forced to change according to the market demand. This in fact consolidated the financial
base of the brand and also ensured further growth of Dominos Pizza as a brand. The move to change the menu
and add items that was preferred by general public made it popular among many and that year, Dominos Pizza
opened its 5000th store. Till this time, Dominos rigorously marketed their brand and made it popular all over the
world.
In 1992, they introduced their first non-pizza item on the menu, which was breadsticks. Dominos was also the
first brand to sell chicken wings as a side dish in the year 1994. It was around this time that Dominos also
opened its franchise in Egypt, Africa. The Dominos Pizza website was launched in the year 1996 and the
company reached total global sales of $3billion. They also brought about new innovations in the pizza industry
that have now become the standard worldwide.
These include belt driven pizza oven, corrugated cardboard delivery boxes to retain heat while delivering and
also the ‘Heat Wave’, which is a portable electric bag that keeps the pizza hot while being delivered. In the year
1997, the company developed their new logo and the image was brightened up. The same year, the brand
opened seven outlets in one day, on five different continents. The most hectic pizza delivery day of the year in
2004 was recorded on the Super Bowl Sunday when over a million pizzas were sold, which increased their
normal Sunday trading volume by a staggering 42%. Today, the company continues to grow exponentially and
has over 8000 outlets worldwide.
IMPORTANT(REFER):
Domino's Pizza is recognised as the world's leading pizza delivery company. Our
expertise and passion for delivering hot and fresh pizzas has earned us numerous
awards and the loyalty of millions of pizza lovers around the world.
Over 20,000 team members work in our UK and Irish stores and in a range of
support functions ranging from marketing, IT and training to fresh dough production
at our three commissaries in Milton Keynes, Penrith and Naas, Ireland. The majority
of our stores are owned by franchisees who are responsible for delivering our
brand's high standards to customers.
There are over 620 Domino's Pizza stores in a growing number of towns and cities
throughout England, Scotland, Wales and Ireland.
For more information about Domino's Pizza Group, download the Company
Information Pack at the bottom of this page.
Domino's Pizza UK and Irl plc recognises that its day to day operations impact the
environment. The Company is committed to delivering great tasting, hot pizzas and
will aim for continuous improvement in all aspects of its environmental performance,
while continuing to deliver a great service to its customers.
GROWTH PROFILE :
Tom Monaghan, founder of Domino's Pizza, was born in 1937 near Ann Arbor,
Michigan. Following his father's death in 1941, Monaghan lived in a succession of
foster homes, including a Catholic orphanage, for much of his childhood. His mother,
after finishing nursing school and buying a house, made two attempts to have Tom
and his brother live at home with her, but she and Tom failed to get along. During
these years Monaghan worked a lot of jobs, many of them on farms. His father's aunt
took him in during his senior year of high school, but after that he was once again on
his own. A quote from Monaghan in his high school yearbook read: "The harder I try
to be good the worse I get; but I may do something sensational yet."
For several years Monaghan worked to try and save money for college; he joined the
Marines and saved $2,000, but gave it in several installments to a fly-by-night "oil
man" he met hitchhiking, who took the money and ran. Monaghan returned to Ann
Arbor to live with his brother Jim, who worked for the Post Office and did occasional
carpentry work at a pizza shop called DomiNick's. When Jim Monaghan overheard
the pizza shop owner discussing a possible sale, he mentioned buying it as a
possibility to Tom. With the aid of a $900 loan from the Post Office credit union, in
December 1960 Jim and Tom Monaghan were in business in Ypsilanti, Michigan.
Within eight months, Jim Monaghan took a beat-up Volkswagen as a trade for his
half of the partnership. Tom moved in across the street from his shop. The store
Monaghan bought had little room for sit-down dining; from the start, delivery was
key. The first drivers, laid-off factory workers, agreed to work on commission. After
only $99 in sales the first week, profits climbed steadily to $750 a week. Early on,
Monaghan made decisions that streamlined work and greatly enhanced profits: on
two separate occasions he dropped six-inch pizzas and submarine sandwiches from
his menu when he was shorthanded at his shop, reasoning that he and his staff could
handle the rush better without making special-sized pizzas or sandwiches in addition
to regular pizzas. When he went over the numbers the day after, both times
Monaghan found that his volume and profits had increased. Keeping the menu
simple made financial sense.
Although his salary rose to $20,000 a year, Monaghan was not satisfied. On the
advice of Jim Gilmore, a local chef with some restaurant experience, Monaghan
opened a Pizza King store offering free delivery in Mt. Pleasant, near the Central
Michigan University campus. Gilmore ran the original DomiNick's as a full partner
with Monaghan. By early 1962, although the Ypsilanti store was not doing well,
Gilmore persuaded Monaghan to open a Pizza King at a new Ann Arbor location,
which Gilmore would oversee while Monaghan went and whipped the original
DomiNick's back into shape. Gilmore convinced Monaghan to continue expanding in
a financially dangerous way: since Gilmore had been bankrupt when the partnership
began, all papers were in Monaghan's name. By 1964, when Gilmore became ill, he
made his differences clear: he liked sit-down stores while Monaghan ran delivery. He
asked for $35,000 for his share in the pizzerias. Though Monaghan considered the
price preposterous, he did want to separate from Gilmore. He hired lawyer Larry
Sperling, who worked out a deal whereby Monaghan would pay Gilmore $20,000.
Gilmore would keep two restaurants in Ann Arbor; Monaghan, two pizzerias in
Ypsilanti and one in Ann Arbor. Though their partnership was dissolved, Monaghan
was still dependent on Gilmore's success in business. In February 1966 Monaghan
bought one more shop from Gilmore, but later that year Gilmore filed for
bankruptcy, with a total debt of $75,000, in Monaghan's name. Monaghan managed
to sell Gilmore's restaurant, leaving him immediately responsible for only $20,000,
with the new owner of Gilmore's to pay off related debts on a month-by-month basis.
The first franchisee, Chuck Gray, was a man visible in local and state politics; he took
over an original store on the east side of Ypsilanti. While Sperling and Monaghan
hammered out financial matters--the former wanted to control costs, the latter to
build sales--Domino's Pizza slowly gathered a base of corporate staff. The second
franchisee, Dean Jenkins, was handpicked by Monaghan to take over the first store
to be built from the ground up. By July 1967, when Jenkins's store was up and
running, Domino's Pizza moved to East Lansing, home of Michigan State University.
Its dormitory population, at approximately 20,000, was the largest in the nation.
Dave Kilby, originally hired to do some radio copywriting for Domino's, later bought
into a franchise, then began working at company headquarters, located above the
Cross Street shop in Ypsilanti. Kilby then worked on franchisee expansion with
Monaghan.
In February 1968 a fire swept through Monaghan's original pizza store. Advertising
manager Bob Cotman escaped the building just in time, climbing down a fireman's
ladder. While the pizza shop reopened within two days, headquarters was wiped out
and Domino's first commissary, with $40,000 of stored goods, was destroyed. The
staff pulled together, with each existing store location responsible for producing one
pizza item--cheese, dough, chopped toppings--which drivers then ferried from one
store to the next to keep operations running.
The biggest challenge for Monaghan was not simply covering the total fire losses of
$150,000 (only $13,000 paid for by insurance), but also paying the leases on five
new franchises and finding store operators as soon as possible. While Tom worked
on his task, Margie Monaghan brought in Mike Paul, her contact at the Ypsilanti
bank, who soon joined Domino's to run the commissary. Paul fired half of the staff
and cleaned up operations; he introduced caps, aprons, and periodic spot checks for
employee neatness.
Monaghan learned a lot in the early years of Domino's, due in part to road trips he
took to research business and learn from competitors. When observing the
competition didn't result in better methods, Monaghan innovated. Looking for
equipment ideas at a Chicago convention, he found a meat-grinder which he used to
chop cheese as well as mix consistent pizza dough in less than a minute, in contrast
to standard mixers, which took eight to ten minutes to mix dough. Dough, once
mixed, was stored on oiled pans; although covered by towels, the outside edges of the
dough hardened. Monaghan discovered an air-tight fiberglass container that stored
dough very well, and his practice later became a standard in the industry. Monaghan
was also dissatisfied with standard pizza boxes: they were too flimsy to stack, and
heat and steam from the pizza weakened them. Monaghan prodded his salesman to
work with the supplier and devise a corrugated box with airholes, which also became
an industry standard.
Plans began in earnest for Midwest expansion as Domino's jumped on the 1960s
franchise bandwagon. While Monaghan had worked on his plan to expand on college
campuses, opening a new store a week in late 1968 proved to be the beginning of a
nightmare. Monaghan opened 32 stores in 1969 and was hailed as Ypsilanti's boy
wonder. Spurred by McDonald's great success going public in 1965, Monaghan
planned to do the same. With the aid of loans, he bought a fleet of 85 new delivery
cars, and spruced up his personal image; he also hired an accounting firm to
computerize the company's bookkeeping. When moving information from paper to
computer, Domino's lost all its records. Perhaps as a result, the company underpaid
the Internal Revenue Service by $36,000. Monaghan was forced to sell his stock for
the first time to raise the money to pay the IRS.
Monaghan tried to do too much, too fast. Ohio stores opened before Domino's
reputation had spread that far and sales were poor. This was only the beginning of
the downturn: on May 1, 1970, Monaghan lost control of Domino's. Dan Quirk, who
had bought Monaghan's stock, recommended that he contact Ken Heavlin, a local
man known for turning businesses around. Heavlin, in exchange for Monaghan's
remaining stock, would run the company, get loans to cover IRS debts, and after two
years keep a controlling 51 percent interest in the company, with Monaghan getting
49 percent. In the meantime, Domino's became the target of lawsuits from various
franchisees, creditors, and the law firm Cross, Wrock.
In March 1971 Heavlin ended his agreement with Monaghan, who shortly went to
speak with each franchisee, persuading them that Domino's would survive the crisis
and they would all fare better working with him rather than against him. Their
lawsuit was dropped. Monaghan pushed on, and Domino's was back in business,
however tight its financial strings. One man instrumental in the growth of the early
1970s was Richard Mueller. Originally from Ohio, Mueller bought a franchise in Ann
Arbor in 1970, during Domino's lowest period. After Mueller ran this store for a year,
Monaghan sent him to Columbus to revive an ailing store; within three months, sales
shot up from $600 to $7,000 a week. Mueller soon operated ten Domino's franchises
and incorporated as Ohio Pizza Enterprises, Inc. Within six-and-a-half years Mueller
opened fifty stores. As Domino's grew, Mueller went on to become vice-president of
operations in 1978.
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The year 1973 was a turning point for Domino's. The company introduced its first
delivery guarantee, "a half hour or a half dollar off," as stated in the company
newsletter the Pepperoni Press. The College of Pizzarology was founded to train
potential franchisees. The company decentralized as well: accounting was moved
from Ypsilanti headquarters to local accountants, while the commissary was
reorganized as a separate company.
Domino's introduced its corporate logo, a red domino flush against two blue
rectangles, in 1975. The company was sued the same year by Amstar Corporation,
parent company of Domino Sugar, for the right to use the name. After a five-year
battle, Domino's won, but not until after having opened more than thirty new stores
under the interim name Pizza Dispatch.
Free to expand, Domino's planned to grow by 50 percent each year. By the late 1970s,
several acquisitions contributed significantly to company growth. Domino's merged
with PizzaCo Inc., in 1978, gaining 23 open stores plus a handful more under lease.
The merger with this Boulder-based company allowed Domino's to move into
Kansas, Arizona, and Nebraska. The following year, joining with Dick Mueller's Ohio
Pizza Enterprises, Inc., Domino's added 50 stores in Ohio and Texas, for a total of
287 stores. The company ended 1979 by announcing plans to expand internationally.
The 1980s were a decade of phenomenal growth for Domino's Pizza, but this time the
company was prepared. While Monaghan had always feared that formal budgeting
systems promoted bureaucracy, with the advice of Doug Dawson, Monaghan decided
to design company-wide budgeting procedures, which Domino's continued to use as
training tools for potential franchisees. Dawson implemented the new accounting
methods and moved on to become vice-president of marketing and corporate
treasurer. Instrumental in Domino's surge was John McDevitt, a financial consultant
Monaghan met in 1977. Among other accomplishments, he created and became
president of TSM Leasing, Inc., a financial services company which loaned money to
franchisees who could not find other start-up financing.
To Monaghan, operations was the backbone of the business. When Dick Mueller left
the post of vice-president of operations in 1981 to work as a franchiser once again,
Monaghan decided to regionalize Domino's operations. Mueller's previous job
entailed far too much travel, and changes were necessary. Monaghan set up six
geographic regions, with a director fully responsible for each territory. The regional
system, as Monaghan stated in Pizza Tiger, "gave us the long communication lines
with tight controls at the working ends that we needed for rapid but well-
orchestrated growth."
At the executive level, Bob Cotman took over as senior vice-president of operations,
including marketing. Dave Black advanced from field consultant and regional
director to vice-president of operations. Both men (like Dick Mueller and Monaghan
himself) had climbed every step of the Domino's ladder, after beginning as delivery
driver and pizza maker. In 1981 Black carried Monaghan's favored "defensive
management" strategy--whereby each store concentrated on keeping the customers it
had—ø a new level, by moving the company's focus away from its top-performing
stores to its weakest ones. Bringing the lower performers up worked extremely well.
As the company added an average of nearly 500 stores each year through the decade,
newer, weaker stores were constantly given attention to improve sales.
One other element vital to Domino's 1980s growth spurt was choosing Don Vlcek,
formerly in the meat business, to head the eight commissary operations. Vlcek
focused on focused on uncovering best practices and disseminating them throughout
the organization. When he discovered that one commissary saved on laundry bills by
rinsing out the towels used to dry trays, making them last a week before cleaning was
necessary, Vlcek made all other commissaries do the same. When he found that
another commissary's manager was buying from a local cheese distributor instead of
a less-expensive national one, the manager reworked his purchasing policies. Vlcek
moved sauce-mixing from the commissaries to the company's tomato-packing plant,
which resulted in highly consistent, quality pizza sauce. Once Vlcek had taken care of
the basics, in one eight-month period he opened a new commissary a month, all with
state-of-the-art equipment.
All the support Monaghan received gave him time to fulfill boyhood dreams on a
dramatic scale. In 1983 he bought the Detroit Tigers baseball team, which went on to
win the World Series in 1984. He followed with the establishment of Domino's Farms
in Ann Arbor, a $120 million corporate headquarters modeled after architect Frank
Lloyd Wright's Golden Beacon tower. Wright advocated the integration of a high-rise
building in a rural setting, rather than an urban one. Monaghan planned to set up a
working farm adjacent to the tower.
In 1985, Advertising Age placed Domino's "among the fastest-growing money
makers in the restaurant industry." The company had to keep pace with not only its
own growth but with that of its competition, including the industry leader, Pizza Hut,
which had more than 4,000 units to Domino's 2,300. Domino's stepped up
advertising, increasing media spending 249 percent over the previous year. Pizza Hut
entered the delivery business in 1986, posing a huge threat to Monaghan's empire.
Domino's sales reached $1.44 billion by 1987. The company had grown to 3,605
units, spreading to Canada, Australia, the United Kingdom, West Germany, and
Japan. While 33 percent of U.S. stores were company-run, international units were
franchised, usually to one operator who could opt to subfranchise. The international
marketing challenge was to convince buyers of the need for delivery. Back in the
United States, Domino's imitated McDonald's by tailoring an ad campaign to attract
the Hispanic market. Competition in the late 1980s got so tough that Monaghan was
quoted in Advertising Age as saying, "I want people here in the company to think of
it as a war." Unfortunately, with wars come casualties.
By 1989 more than 20 deaths had occurred involving Domino's drivers, calling the
company's 30-minute delivery guarantee into question. A Pittsburgh-based attorney
representing a couple whose car was broadsided by a driver subpoenaed Domino's
for its records. Citizen's groups, major news networks, and the National Safe Work
Place Institute joined in the heated criticism. Domino's responded with a national ad
campaign and with various tactics at the franchise level. One franchisee hired an off-
duty police officer to track his drivers to ensure that they obeyed the law.
Domino's opened its 5,000th store by January 1989, moving into Puerto Rico,
Mexico, Guam, Honduras, Panama, Colombia, Costa Rica, and Spain. U.S. sales hit
$2 billion. Monaghan named Dave Black as president and chief operating officer,
announcing his own intentions to spend more time on community work. In May
Domino's introduced pan pizza, its first new product in 28 years. This news was
hardly as big, however, as Monaghan's October announcement of his intent to sell
the company. After a buyout attempt in the form of an employee stock ownership
plan failed, Monaghan went shopping for buyers. By April 1990 Domino's cut its
public relations and international marketing departments and continued cutting
executive and corporate support staff as part of a company-wide effort to improve
profitability. Payroll that year decreased by $24 million. Kevin Williams, who made
his name as a regional director, replaced Mike Orcutt as vice-president of operations.
At the store level, Domino's opened fewer than 300 units in both 1989 and 1990.
With Domino's sales slipping, and rivals Pizza Hut and Little Caesar's gaining market
share, Monaghan returned to Domino's in March 1991 to pull his company back on
track. By December he had fired David Black, along with other top executives.
Former franchisee Phil Bressler became vice-president of operations. Domino's
closed 155 stores, cut regional offices from 16 to 9, and unloaded extravagances such
as corporate planes, a three-masted ship, a travel agency, a lavish Ann Arbor
Christmas display, and various sports sponsorships. Monaghan made some personal
sacrifices too, leaving his post on the boards of directors of 16 Catholic colleges and
organizations. Domino's 1991 revenues remained flat at $2.6 billion, and the
company posted a loss of $67 million.
Adding three new senior executives, the company geared up to battle Pizza Hut,
which had aired an ad showing unkempt Domino's drivers buying Pizza Hut
products. Domino's moved its advertising accounts to New York's Grey Advertising,
Inc., from the local ad agency Group 243. While Monaghan was away, Pepsico's Pizza
Hut had converted half of its 7,000 units for home delivery.
In November 1992 Monaghan shook up his upper ranks by replacing his longtime
adviser and vice-president of finance, John McDevitt, with Tim Carr, another
financial executive at Domino's, and hiring Larry Sheehan, a former executive vice-
president of Little Caesar's, as vice-president of marketing and product development.
Sheehan immediately put his stamp on the turnaround effort, convincing Monaghan
to experiment with new strategies and products, including salads, thin-crust pizza,
and submarine sandwiches. "Tom Monaghan is now very open about the pizza
business," he said. "He believes we need to take a different approach to this business
and be willing to change."
And the changes seemed to work. Earnings for 1993 picked up, after dropping
significantly the two previous years. In yet another change, Domino's dropped its
famous 30-minutes-or-less pledge after a jury awarded a $78 million settlement to a
woman who had been hit by a Domino's delivery driver in 1989. Monaghan stated
that "with our success in home delivery has come a negative public perception that
we are not committed to safety."
In January 1994 Larry Sheehan left Domino's, after a dispute with Monaghan over
the size of his year-end bonus. While his departure was widely considered a loss to
the company, his changes had taken hold, and Domino's revenues crept upward, to
$2.5 billion in 1995. Shortly thereafter Domino's celebrated the opening of its
1,000th international store, in a suburb of Perth, Australia. With a stated goal of
having more international than domestic stores, Domino's opened stores in Ecuador,
Peru, and Egypt in 1995, and planned to have 3,000 international stores by the year
2,000. By 1996 foreign sales stood at $503 million, and in 1997 Domino's entered its
50th international market.