Domino's Pizza: Business Continuity Strategy During The Covid-19 Pandemic

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Domino’s Pizza: Business Continuity Strategy during the Covid-19
Pandemic
This case was written by Debapratim Purkayastha and Hadiya Faheem, IBS Hyderabad. It was
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compiled from published sources, and is intended to be used as a basis for class discussion rather
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than to illustrate either effective or ineffective handling of a management situation.

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Domino’s Pizza: Business Continuity Strategy during


the Covid-19 Pandemic
“I remain highly confident in our strategy and optimistic about the opportunity

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
and potential of our business. Our solid, resilient business model and strong
financial position will continue to serve us well in these challenging times.”1
– Ritch Allison, CEO, Domino’s Pizza, US, in March 2020

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“The restaurant chain is a tech leader within the food services industry and
weathering the COVID-19 crisis well.”2

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– Anne Burdakin, The Motley Fool, in March 2020

On March 31 2020, American multinational pizza giant Domino’s Pizza, Inc. (Domino’s) released
preliminary sales results for the first quarter ended March 22, 2020 (See Exhibit I). It reported
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same-store sales growth of 1.6% for its US stores and 1.5% for its international stores.3 While
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most dine-in restaurants were grappling with the impact of the novel Covid-19a pandemic on their
sales, Domino’s was one of the few companies which had not experienced a significant downturn.
This was attributed to its prowess in delivery and a new initiative – ‘çontactless’ delivery at all its
US as well as international stores. Commenting on the results, Ritch Allison (Allison), CEO of
Domino’s, US, said, “Across the globe, Domino’s will remain focused on execution, service and
value as we continue to navigate through the headwinds created by COVID-19. We are carefully
managing our balance sheet, cash flow and all areas of the business to ensure we are doing what
we believe will help us best manage through the near-term and, as always, position ourselves for
long-term success.”4
The Covid-19 crisis started in December 2019 in Wuhan, China. With awareness about the virus
increasing, consumers had begun taking precautions to prevent transmission of the disease. With no
cure or established treatment for the infection in sight, people in many countries were forced to stay
indoors. While this affected many industries, the restaurant industry was badly hit as they were no
longer allowed to serve dine-in customers. Worldwide, governments only allowed the food services
industry to fulfill takeout and delivery orders. Domino’s too was going through disruption with its 14
international markets closed and 23 international markets experiencing partial store closures. This
represented around 1,400 international stores, with key markets such as France, Spain, New
Zealand, and Panama accounting for nearly 900 of these temporary store closures.5
Analysts felt that Domino’s was, however, better positioned to tackle the crisis as delivery was not
new to its business. Banking on its strong delivery infrastructure, Domino’s launched contactless
delivery in January 2020 whereby consumers could choose the contactless delivery option while
ordering food online. The delivery boy would then leave the food outside the consumer’s home
and wait at a distance to ensure that the order was picked up. Analysts appreciated the contactless
delivery model as it was helping the pizza giant survive during the Covid-19 crisis. In fact, to cater
                                                            
a
Covid-19 or coronavirus is a pandemic caused by severe acute respiratory syndrome coronavirus 2
(SARS-coV-2), which started in Wuhan, Hubei province in China, in December 2019. As of April 15,
2020, more than 2 million people affected by Covid-19 were reported with more than 128,000 deaths,
according to John Hopkins University.

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to the increasing demand from consumers, Domino’s was planning to hire 10,000 new workers in
the US.6 However, the company also faced criticism for putting its employees at risk by expecting
them to come to work at a time when most people were being asked to stay indoors.
With this being early days of the pandemic, some critics opined that it could be a tough road ahead
for Domino’s as the company would have to grapple with the full impact of the Covid-19
pandemic. Would it be able to come out successful from this public health crisis? Going forward,
how should it balance the need for providing its service to customers with the need for keeping its
employees and customers safe? How should Allison and the senior management team at Domino’s
ensure business continuity amidst the pandemic?

BACKGROUND NOTE

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The history of Domino’s Pizza (Domino’s) dates back to the late 1950s, when Dominick DeVarti
(DeVarti) started a small pizza store called DomiNick’s Pizza on the Eastern Michigan University
campus in Ypsilanti, Michigan. In 1960, two brothers who were students of the University of
Michigan, Thomas S Monaghan (Thomas) and James S Monaghan (James), bought the store for

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US$900. In 1961, James sold his share of the business to Thomas.

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The pizza business did well and by 1965, Thomas was able to open two more stores in the town –
Pizza King and Pizza from the Prop. In 1966, DeVarti opened a pizza store in a neighboring town
with the same name, DomiNick’s Pizza. Thomas therefore decided to change the name of his store
to Domino’s Pizza (Domino’s). The advantage of this name, Thomas felt, was that it would be
listed after DomiNick in the directory. Domino’s philosophy rested on two principles – a limited
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menu and the delivery of fresh, hot pizzas within half an hour. In 1967, it opened the first franchise
store in Ypsilanti, and in 1968, a franchise store in Burlington, Vermont.
In 1982, Domino’s established Domino’s Pizza International (DPI) that helped in opening Domino’s
stores internationally. The first store was opened in Winnipeg, Canada. In 1983, DPI spread to more
than 50 countries and in the same year, i.e. in 1983, it inaugurated its 1000th store. Around the same
time, new pizza chains like Pizza Hut and Little Caesar had appeared on the scene and begun to
establish themselves in the US. Domino’s Pizza faced intense competition because its menu of
traditional hand-tossed pizza had remained unchanged over the years. The other pizza chains,
however, offered low-priced breadsticks, salads, and other fast food apart from pizzas. In the home
delivery segment too, Domino’s faced tough competition from Pizza Hut, while Little Caesar was
eating into Domino’s market share with its innovative marketing strategies.
By 1989, Domino’s sales had fallen significantly and its cash flows were affected due to the
acquisition of assets. In 1993, Thomas decided to expand the Domino’s product line in an attempt
to revive the company and tackle competition. The company introduced pan pizza and bread sticks
in the US. In late 1993, it introduced the Ultimate Deep Dish Pizza and Crunchy Thin Crust Pizza.
In 1994, it rolled out another non-pizza dish – Buffalo Wings. Though Domino’s did not
experiment with its menu for years, it had adopted innovative ways of managing a pizza store.
Thomas gave about 90% of the franchisee agreements in the US to people who had worked as
drivers with Domino’s. The company gave ownership to qualified people after they had
successfully managed a pizza store for a year and had completed a training course. Domino’s also
gave franchises to candidates recommended by existing franchisees. Outside the US, most of
Domino’s stores were franchise-owned. Domino’s was also credited for many innovations in the
pizza industry and for setting standards for other pizza companies. It had developed dough trays,
corrugated pizza boxes, insulated bags for delivering pizzas, and conveyor ovens.
In 1993, Domino’s withdrew the guarantee of delivering pizzas within 30 minutes of ordering and
started emphasizing Total Satisfaction Guarantee (TSG) which read, “If for any reason, you are
dissatisfied with your Domino’s Pizza dining experience, we will re-make your pizza or refund
your money.”

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In 1996, Domino’s launched its website. In 1996, it also entered India through a franchise
agreement with Jubilant FoodWorks Ltd.b, in Delhi. With the overwhelming success of the first
outlet, the company opened another outlet in Delhi. By 2000, Domino’s had outlets in all the major
cities in India.
In 1998, Domino’s introduced a patented pizza delivery bag that was designed to keep pizzas oven
hot until they were delivered to the customer.
In 2001, Domino’s opened its 7000th restaurant in Brooklyn, New York. In 2002, it acquired 82
franchised restaurants in Phoenix, Arizona. This was the largest restaurant acquisition in the
company’s history.
In 2004, Domino’s was listed on the New York Stock Exchange and became a public traded
company.

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In 2007, it became the first company in the Quick Service Restaurantc industry to offer ordering of
pizzas through mobile phones. Customers could order from around 2,500 of Domino’s 5,128 stores
in the US on mobile-dominos.com. Commenting on the launch, Rob Weisberg, Domino’s vice

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president of precision and print marketing, said, “With so many people living life on-the-go,
Domino’s mobile ordering delivers even more convenience for our customers’ busy lifestyles. With

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the addition of yet another order-taking channel, Domino’s is thrilled to lead the market with this
breakthrough technology that continues to change the way people think about ordering pizza.”7
In 2008, Domino’s started an online application called Pizza Tracker, which enabled consumers to
track the delivery of their pizzas in real time.
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In 2016, Domino’s in cooperation with California-based self-driving robotic delivery vehicles


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company Starship Technologies began supplying pizzas through self-driving robots in some of
Dutch and German cities. The same year, i.e. in 2016, Domino’s notched up another first by
delivering a pizza in New Zealand using an unmanned aerial vehicle using DRU Drone by Reno,
Nevada, US-based drone delivery company, Flirtey. Domino’s used the DRU Drone as a delivery
method and integrated the drone with online ordering and GPS systems. Commenting on the
initiative, Domino’s Group Australia CEO and Managing Director Don Meij said, “Drones offer the
promise of safer, faster deliveries to an expanded delivery area, meaning more customers can expect
to receive a freshly-made order within our ultimate target of 10 minutes. This is the future.”8
In April 2018, Domino’s announced that it was adding 150,000 HotSpots to its delivery locations,
which would enable pizza to be delivered to customers in a beach, park, museum, etc., without the
need for a physical address.9
In June 2019, Domino’s teamed up with California-based robotics company, Nuro, to launch a
pilot for driverless pizza delivery in Houston, Texas. The pizza giant aimed to use Nuro’s
driverless fleet of custom-built robot cars to deliver pizzas to residents in Houston who placed
online orders.
In 2019, Domino’s recorded total sales of US$14.3 billion, with international markets accounting for
US$7.3 billion (See Exhibit II). It had more than 17,000 stores in over 90 markets. Its key
international markets included Australia, India, and the UK. Independent franchise owners accounted
for 98% of its stores as of December 2019 (See Exhibit III).10 In the US, Domino’s had 6,126 stores,
of which 5,784 were owned by franchisees. Analysts felt that Domino’s was a poster boy for
globalization and franchising with 104 consecutive quarters of positive same-store sales growth. As
of March 2020, Domino’s and its franchisees employed around 400,000 people worldwide.11
                                                            
b
In 1995, Jubilant FoodWorks Limited (JFL), part of the Jubilant Bhartia Group, was founded by two
brothers Hari Bhartia and Shyam Bhartia. The Jubilant Bhartia Group has a strong presence in diverse
sectors like Pharmaceuticals, Drug Discovery Services and Life Science Ingredients, Performance
Polymers, Food Service (QSR), and Consulting in Aerospace and Oilfield Services.
c
A Quick Service Restaurant is a type of restaurant which serves fast food cuisine.

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THE COVID-19 PANDEMIC

Covid-19 was closely related to the severe acute respiratory syndrome (SARS) which started in
China in 2002. The SARS virus infected around 8,000 people and killed 800. Another coronavirus
was the Middle Eastern Respiratory Syndrome (MERS) that emerged in Saudi Arabia in 2012.
There were around 2,500 infected cases and 900 deaths due to MERS.
Covid-19 was different from SARS and MERS in that 80% of the people affected by it reported
only a mild infection. However, many people carried the disease without displaying any
symptoms, which made it difficult to control its spread.
The Covid-19 outbreak started in a wet market in Wuhan, which sold fish, birds, and both live and
dead animals. With live animals being kept and butchered on site, it was difficult to maintain

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
hygiene in these markets and they posed a huge risk as viruses from these animals could easily
jump onto humans. To add to the problem, the wet markets were densely packed, which meant the
disease spread quickly from species to species. Though the animal source of the Covid-19 was yet
to be identified, scientists believed that bats could be the original host.

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Covid-19 was known to spread via droplets when an infected person coughed or sneezed. When

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others touched the surfaces on which the droplets had landed with their hands, they could spread the
virus further. People could catch the virus if they touched their eyes, nose, or mouth with their
infected hands. The single most important thing that people could do to protect themselves from the
virus was to clean their hands by washing them frequently with soap and water or a hand sanitizer.
On March 11, 2020, the World Health Organization (WHO), the international public health agency
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of the United Nations, stated that due to the rapid increase in the number of cases outside China –
over 118,000 Covid-19 cases in more than 110 countries and territories – Covid-19 could be
characterized as a pandemic.12
While 80% of the people infected with Covid-19 showed mild symptoms such as cold and flu,
around 14% displayed symptoms of pneumonia and shortness of breath. Around 5% of the patients
suffered from septic shock, respiratory failure, and multiple organ failure, according to data
released by the Chinese authorities.13
Since there was no specific treatment for Covid-19, doctors were trialling existing drugs that were
used in the treatment of Ebolad, HIVe, and malariaf. Though the early results were promising,
doctors could not be certain whether the drugs were effective until full clinical trials were
concluded. A vaccine for Covid-19 was also not in sight. In mid-April 2020, the WHO said that
developing a vaccine for the Covid-19 pandemic might take 12 months or longer.
According to Johns Hopkins University, as of April 15, 2020, there were more than 2 million
confirmed Covid-19 cases with 128,000 deaths.14
With no treatment options in sight, governments across the world were relying mostly on social
distancing to arrest the spread of the disease. Many governments had imposed lockdowns, only
allowing essential businesses to operate. This had led to massive disruptions in business. Analysts
expected the restaurant business to be hit hard by the pandemic, as states in the US and elsewhere
forced restaurants to limit service to takeout and delivery in an effort to keep people from
clustering together to prevent transmission of the disease. According to the National Restaurant
Association, out of the one million restaurant locations in the US, about 3% had already closed
permanently, with another 11% anticipating closure by the end of April. They felt that restaurants
with delivery would fare marginally better.15
                                                            
d
Ebola is a virus that can cause bleeding and organ failure, which can eventually lead to death.
e
The HIV or Human Immunodeficiency virus attacks the cells in the human body that help in fighting
infections and diseases.
f
Malaria is a disease caused by the plasmodium parasite, which is transmitted by mosquito bites.

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DOMINO’S LAUNCHES ‘CONTACTLESS’ DELIVERY

Domino’s former CEO, Patrick Doyle, had famously said that Domino’s was a tech company
that sold pizzas. However, analysts felt that it had remained true to the company’s core
competency: pizza.
Domino’s, which accounted for a 36% market share in the US, had always been an advocate of the
delivery and takeout model rather than offering the dine-in facility to its consumers. As of January
2020, delivery accounted for 55% of its sales while carry out accounted for the remaining 45% of
the sales.16 The pizza chain also had an advantage as most of its consumers had the ability to order
online. In the US, Domino’s garnered 65% of its sales through digital channels such as Facebook
Messenger, Google Home, Apple Watch, Twitter, and Amazon Echo, in addition to its own

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
ordering platform, Domino’s Hotspots, that offered service to over 200,000 non-traditional
delivery locations. Analysts felt that Domino’s was well-positioned to tackle the Covid-19 crisis
with its dedicated delivery workforce and a customer base which was accustomed to ordering
online. According to R J Hottovy, an analyst with Morningstar, Domino’s “infrastructure is set up

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for something like this.”17

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With health concerns growing due to the Covid-19 pandemic, Domino’s decided to bank on its
strong delivery infrastructure and in January 2020, it announced its plans to offer contactless
delivery. This meant that the pizza chain delivery person would deliver the food to a consumer
without any contact or interaction between them in a bid to ensure safety. Explaining the
contactless delivery policy to its consumers, Allison said, “We also want to make sure that
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customers know that we will deliver any way they choose. Whether they prefer a delivery left at the
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front door or at a reception desk, our delivery instruction box is the place to put any special
directions. We know many people would like to choose contactless delivery right now and we want
customers to know we’re here to deliver.”18
Domino’s ensured that all its employees were complying with the hygiene and safety protocols
across all its restaurants which were open for delivery worldwide. The pizzas were cooked in an
oven at 260 degree Celsius and was then packed for delivery and were not touched by human
hands. In addition to this, temperature screening was done of all its employees and the delivery
fleet was asked to use face masks. Domino’s was constantly sanitizing its restaurants, delivery
bikes, delivery bikes’ boxes, and pizza delivery hot bags to assure consumers that the food
delivered by them was safe.
Domino’s launched contactless delivery across the majority of its US as well as international
stores. In India, the company’s licensee, Jubilant FoodWorks Ltd (JFL), launched zero-contact
delivery across all its 1,325 restaurants.19 In addition to this, Domino’s partnered with India’s
fastest growing FMCG company ITC Foods (ITC) to launch an initiative known as ‘Domino’s
Essentials’ wherein consumers could order groceries and other essentials by downloading the
Domino’s app. The service was launched after the Government of India announced a 21-day
lockdowng in the country from March 25, 2020, to April 14, 2020, due to the Covid-19 pandemic.
On April 14, the lockdown was extended till May 3, 2020, as the country reported more than
10,000 Covid-19 cases and 339 deaths, Commenting on the initiative, Pratik Pota, CEO and
whole-time director, JFL, said, “We will use the Domino’s supply chain and delivery network to
                                                            
g
On March 24, 2020, the Government of India announced a complete lockdown whereby wearing masks
in public places was mandatory. Educational institutions and religious places were closed during the
lockdown. International and domestic flights were suspended till May 3, 2020. Only essentials such as
groceries, meat shops, poultry and fish markets, vegetable and fruit shops, and milk booths were open to
the public. Industries in rural areas were allowed to function from April 30, 2020 with social distancing
norms. In addition to this, banks and automated teller machines (ATMs), hospital and medical facilities
were also functional.

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deliver essential goods such as Aashirvaad Atta [flour], spices etc. at people’s doorstep.
Customers can order using the Domino’s App and their order will be delivered safely and
hygienically using Zero Contact Delivery.”20
After placing the order on the Domino’s delivery app, consumers could make the payment by digital
mode to complete the order. The delivery executives would follow zero contact delivery to fulfill the
order by leaving the groceries at the consumers’ doorstep and waiting till the order was received. At
JFL, the Safe Delivery Experts or the employees of Domino’s had to undergo mandatory health
screening – temperature screening was done of every employee before they entered the restaurant
and the 20-second hand wash and sanitation protocol was followed every hour.
Initially, Domino’s Essentials was available in Bengaluru and the company had plans to offer the
service in the Indian cities of Noida, Mumbai, Kolkata, Chennai, and Hyderabad.

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
Allison said Domino’s was taking care of its employees during the crisis. According to him, “As
the single largest owner of Domino’s stores in the United States [we] will be expanding paid leave
for full and part time hourly employees of our company-owned stores and supply chain centers

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during this outbreak. All employees who are unwell are asked to stay home. Those with any

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possible exposure to the virus and in need of quarantine are also asked to stay home and will be
paid.”21 He added, “In our corporate stores and supply chain centers, we have implemented
enhanced sick pay policies, and we will provide additional compensation for our hourly team
members during this crisis.”22
Major Quick Service Restaurant chains such as McDonald’s, Yum Brands (which owned Pizza
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Hut, KFC, and Taco Bell), Wendy’s, and Dunkin’ Brands, had also switched to drive-thru, takeout,
and delivery only.23 While the total restaurant transactions declined in the US (QSR transactions
down by 34%; full-service restaurant transaction down by 71% in March 2020), the average check
sizes increased. This led to restaurants offering family meals/bundles. For instance, Torchy’s
Tacos started offering Family Packs and Black Bear Diner Family Packs and specially-priced
Family Meals. KFC started offering a US$30 Fill Up deal (instead of its US$20 Fill Up deal)
claiming that it would be enough to feed a family of four for two meals. Pizza Hut promoted the
Big Dipper for US$12.99; McDonald’s sold a Double Big Mac with four patties instead of two,
while Taco Bells promoted its massive “Tripleupa”. 24

OTHER INITIATIVES

Due the Covid-19 pandemic, many people were working from home and several others were out of
work. Thus, in April 2020, Domino’s announced plans to donate 10 million slices to people most
affected by the pandemic in the US. The pizza giant aimed to donate the food to hospitals and
medical centers, in addition to helping school children, grocery store workers, health departments,
and ‘others in need.’ According to Russell Weiner, COO and president of the Americas at
Domino’s, “We have a long history of feeding people during times of crisis and uncertainty. When
we were looking at how we could help, we knew we could use the reach of our national brand to
make a difference in thousands of local neighborhoods.”25
The pizza giant launched an initiative called ‘Feeding the Need’ under which all its 6,126
company-owned and franchise-owned stores across the US aimed to donate at least 200 pizzas to
people in their communities.26 The store managers were empowered to make the call to hand out
the pizzas to any local group in need.
In New Zealand, Domino’s started the “Meals For Seniors” initiative under which the company
distributed one free pizza meal every week during the coronavirus lockdown to New Zealanders
over 70 years of age.

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THE RESULTS

Domino’s contactless delivery initiative helped the company thrive despite the Covid-19
lockdown across many countries worldwide. In April 2020, Domino’s reported that its first-
quarter sales had increased by 4.9% in the US while its international stores recorded an increase
in sales of 6.8% for the same period. Despite an increase in sales, analysts pointed out that
though overall the results looked positive during the pandemic, Domino’s sales had been
impacted during this difficult time. The company reported that its US sales growth had fallen
from 3.6% in January 2020 to 1% for the period February 24, 2020, to March 22, 2020.
According to Allison, “U.S sales were impacted by many factors, which have varied in
magnitude across the cities and towns we serve.”27 He added, “Shelter in place directives,
pantry loading, university and school closures, event cancellations and the lack of televised

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sports have all impacted our business in ways that we cannot yet fully quantify.”28
Domino’s rivals such as Yum Brands predicted US Quarter 1 (Q1) same-store sales declines in the
mid-to-high single digits, while Papa John’s expected an estimated 5.3% growth in Q1, compared
to 2019.29

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On March 19, 2020, Domino’s stock shot up 11%, and analysts said that its stock’s relative

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strength line had risen, signifying that it had outperformed the S&P 500.30 (See Exhibit IV)
Domino’s international stores were hit the hardest with China being its first market to be
significantly impacted by COVID-19, according to Allison.31 However, the company’s sales were
recovering and increasing in the last few weeks of the first quarter, added Allison.
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Despite mixed results, several analysts appreciated Domino’s for using its strong delivery
infrastructure to survive amidst the Covid-19 crisis when most businesses restaurants worldwide
were shutting down. “The ones that win, or relative winners, are restaurants with drive-thrus,
restaurants that have big delivery business, restaurants who do a lot of take-out business — who
are known for takeout. If you’re mostly an in-dining room type restaurant, I think you’re going to
struggle,”32 said Peter Saleh (Saleh), analyst at global financial services company BTIG.

THE CHALLENGES

Though Domino’s was by and large appreciated for its contactless delivery during the Covid-19
pandemic, it faced a backlash from critics and some of its employees for keeping its stores open. A
campaign started against Domino’s in Change.orgh by Domino’s employee Issy Anna (Anna),
accused the company of putting its employees at risk at a time when states had entered a lockdown
or had urged residents to remain indoors to curb the spread of Covid-19. According to her, “We
are being forced to work in cramped stores, many that are not equipped to deal with the situation
at hand. Multiple employees are being forced to come in to work sick in fear of their jobs while
corporate refuses to bat an eye at the situation. “Contact-less delivery” has been anything but
successful, as some stores remain open for carryout with people piling into the lobbies of these
establishments even in the midst of shelter-in-place orders issued by many states, customers
continue to give cash which multiple employees are handling, and hardly anyone actually utilizes
the contact-less system.”33 Anna further claimed that the delivery drivers did not have constant
access to hand sanitizers or sanitizer sprays to properly disinfect the delivery bags. She wondered
how a pizza service could be considered “essential” when there were other options such as people
obtaining food from grocery stores or cooking themselves. She pointed out that American coffee
company Starbucks Corporation had shut its stores temporarily and was giving each employee an
option to take 30 days of paid sick leave.

                                                            
h
Change.org is a petition website started by California-based certified B corporation (corporations that
balance profit and purpose) for-profit Change.org Inc. It aims to facilitate petitions filed by the general
public. As of April 17, 2020, the website had 240 million users.  

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In early April, Angharad Maddock, a Domino’s employee in Llanelli, Carmarthenshire, UK,


accused the company of dismissing her for raising concerns about lack of masks, hand sanitizers,
and social distancing at the store. Domino’s refuted these allegations. A spokesperson for
Domino’s said that in addition to introducing contactless delivery, frequent handwashing and
increased sanitization, the company had stopped its collection service and cash handling. It had
also put screens in place and hazard tape on the floor “to help with social distancing for team
members to adhere to”34
The company started facing more criticism when a store worker at Domino’s in Eskbank,
Midlothian, Scotland, died on April 10, 2020, after contracting the coronavirus. Nina Arnott,
Domino’s spokesperson, offered condolences to the employee’s family on his demise but stated
that the stores remained opened in support of the UK government’s advice that food delivery

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
services should play an important role in keeping people at home during the Covid-19 lockdown.
In another incident on April 12, 2020, a Domino’s store in Crenshaw District in Los Angeles was
closed temporarily for thorough sanitizing after four of its employees tested positive for Covid-19.
A group representing Domino’s workers filed an emergency complaint with public health services

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firm Los Angeles County Public Health Department, demanding that they too shut the Domino’s

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store. The complaint filed by delivery driver Angelica Olivares on behalf of herself and 10 co-
workers stated, “Instead of closing the store temporarily and allowing exposed workers to
quarantine for 14 days with pay... Domino’s has stayed open without even providing protective
equipment to workers or disinfecting the store.”35
In mid-April, a pizza delivery boy tested positive for COVID-19 in New Delhi, India, which led to
Educational material supplied by The Case Centre

72 homes being quarantined as a precautionary measure. Domino’s issued a statement saying that
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this incident had nothing to do with it. The company reiterated that 100 percent of its delivery was
“zero contact delivery” and that its employees in its stores were being temperature screened daily
and followed hand washing protocols. Besides, the company was sanitizing restaurants, bikes,
pizza boxes, and hot bags every four hours, it said.36

LOOKING AHEAD

Analysts appreciated Domino’s strategy of gaining a larger portion of the pie during the Covid-19
lockdown. They opined that Domino’s strong delivery infrastructure in addition to its having a
strong digital consumer base helped it to capitalize on the contactless delivery trend. They pointed
out that smaller independent pizza chains and restaurants lacking the resources stood to lose their
share. According to Saleh, contactless delivery might not be a game changer but the service would
become “table stakes and par for the course” in the pizza industry as the coronavirus was
spreading continuously (See Exhibit V). Saleh added, “If you don’t have that in this environment,
you are going to lose share.”37
At a time when rivals such as The Cheesecake Factory and Union Square Hospitality were
announcing furloughs and layoffs respectively, Domino’s announced plans to hire 10,000 employees
in its US stores in March 2020 as the company was experiencing an increase in demand for its pizzas
with more and more people working from home amid the pandemic. The company’s UK division
was also hiring more store workers and delivery drivers since more consumers were ordering online.
In March 2020, the pizza giant’s Australian division had already taken on over 2,000 people to serve
consumers in the country.38 “While many local, state, and federal governments [are issuing orders
that close] dine-in restaurants, the opportunity to keep feeding our neighbors through delivery and
carryout means that a small sense of normalcy is still available to everyone… Our corporate and
franchise stores want to make sure they’re not only feeding people but also providing an opportunity
to those looking for work at this time, especially those in the heavily impacted restaurant
industry,”39 said Allison. Meanwhile, rivals such as Pizza Hut, Papa John’s, and Jet’s Pizza were
also on a recruitment spree involving thousands of new employees.

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Domino’s was optimistic about cashing in on the trend as it borrowed US$158 million in its
outstanding variable funding notes in a bid to improve its strong cash position and stay operational,
though the company had US$300 million on hand to increase its financial flexibility.40 Reflecting
the uncertainty of the global economy, Domino’s, however, withdrew its fiscal 2020 guidance.
James McCann (McCann), CEO of McCann Investments, which invested in early-stage companies
in the grocery tech, food tech, and consumer goods space, opined that while contactless delivery
was booming in the wake of the Covid-19 crisis for companies such as Domino’s, this service
would be prevalent in the future based on several factors such as how quickly employees and
customers accepted the practice and how long the threat of Covid-19 remained. He added, “If we
have nine months of high virus threat, then physical distancing will be normal. We will have
forgotten what the pre-normal was.”41

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  10
320-0148-1

Exhibit I:
Preliminary Estimated First Quarter 2020 Sales (Unaudited)
Period 1, 2020 Period 2, 2020 Period 3, 2020 First
(Dec 30, 2019 to (Jan 27, 2020 to (Feb 24, 2020 to Quarter
Jan 26, 2020) Feb 23, 2020 Mar 22, 2020) of 2020
Same store sales growth: (versus prior year)
U.S. Company-owned stores +4.0% +2.6% +5.0% +3.9%
U.S. franchise stores +3.6% +0.2% +0.8% +1.5%
U.S. stores +3.6% +0.3% +1.0% +1.6%

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
International stores (excluding +2.3% +2.4% (0.2%) +1.5%
foreign currency impact)
Global retail sales growth: (versus prior year period)

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U.S. stores +7.1% +3.6% +4.2% +4.9%

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International stores +7.2% +5.6% (1.1%) +3.9%
Total +7.2% +4.6% +1.6% +4.4%
Global retail sales growth: (versus prior year period, excluding foreign currency impact)
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U.S. stores +7.1% +3.6% +4.2% +4.9%


International stores +8.3% +8.0% +4.2% +6.8%
Total +7.7% +5.8% +4.2% +5.9%
Source: “Domino’s Pizza® Announces Business Update,” http://dominos.gcs-web.com, March 30, 2020.

Exhibit II:
Domino’s Consolidated Statement of Profit or Loss
(Dollars in thousands)
2019 2018 2017 2016 2015
Continuing Operations:
Revenue 1,435,410 1,153,952 790,861 705,702 539,138
Other gains and losses 17,433 19,529 18,566 9,758 6,444
Food, equipment and packaging (451,768) (385,675) (354,127) (286,069) (213,059)
expenses
Employee benefits expense (292,439) (242,340) (239,471) (217,703) (172,112)
Plant and equipment costs (24,560) (20,833) (19,776) (19,225) (18,278)
Depreciation and amortisation (62,785) (53,537) (46,369) (38,129) (27,480)
expense
Occupancy expenses (49,512) (44,318) (39,943) (36,683) (27,252)
Finance costs (14,004) (10,276) (5,491) (3,297) (2,451)
Marketing expenses (150,999) (49,704) (49,220) (48,251) (43,733)

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2019 2018 2017 2016 2015


Royalties expense (68,827) (59,564) (52,282) (46,655) (37,640)
Store related expenses (24,636) (21,406) (21,799) (19,785) (16,841)
Communication expenses (20,666) (17,889) (17,760) (15,486) (10,927)
Acquisition, integration, conversion (46,216) (20,934) (28,384) (12,735) -
and legal settlement costs
Other expenses (87,018) (72,529) (66,389) (70,139) (41,268)
Profit before tax 159,413 174,476 150,680 125,819 97,840

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
Income tax expense (45,034) (52,783) (44,876) (39,227) (29,419)
Profit for the period from 114,379 121,693 105,804 86,592 68,421
continuing operations

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Profit is Attributable to:

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Owners of the parent 115,912 121,466 102,857 82,427 64,048
Non-controlling interests (1,533) 227 2,947 4,165 4,373
Total profit for the period 114,379 121,693 105,804 86,952 68,421
Educational material supplied by The Case Centre

Earnings per Share from Continuing Operations:


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Basic (cents per share) 135.5 139.4 116.0 94.4 74.2


Diluted (cents per share) 135.4 139.0 114.7 92.2 72.8
Source: “Domino’s Annual Reports, 2019, 2018, 2017, and 2016,” https://investors.dominos.com.au.

Exhibit III:
Preliminary Estimated First Quarter 2020 Store Counts (Unaudited)
U.S. U.S.
Total International
Company- Franchise Total
U.S. Stores Stores
owned Stores Stores
Store counts:
Store count at 342 5,784 6,126 10,894 17,020
December 29, 2019
Openings 4 31 35 143 178
Closings*† (1) (4) (5) (104) (109)
Store count at 345 5,811 6,156 10,933 17,089
March 22, 2020*
First quarter 2020 net 3 27 30 39 69
store growth
* Temporary store closures due to COVID-19 are not treated as store closures and affected stores are
included in the March 22, 2020 store count.
† Unrelated to COVID-19, the South Africa market, reflecting 71 stores in total, closed in the first quarter.
Source: “Domino’s Pizza® Announces Business Update,” http://dominos.gcs-web.com, March 30, 2020.

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320-0148-1

Exhibit IV:
Domino’s Pizza Stock Chart (April 15, 2019-April 15, 2020)

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Source: https://finance.yahoo.com.

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Exhibit V:
Covid-19 Statistics – Top 25 Countries
(Data as of April 16, 2020, 12.33 GMT)
Country Total Cases Total Deaths Total Recovered Active Cases
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I

World 2,100,149 136,044 523,873 1,440,232


USA 644,417 28,559 48,708 567,150
Spain 182,816 19,130 74,797 88,889
Italy 165,155 21,645 38,092 105,418
France 147,863 17,167 30,955 99,741
Germany 134,753 3,804 77,000 53,949
UK 98,476 12,868 N/A 85,264
China 82,341 3,342 77,892 1,107
Iran 77,995 4,869 52,229 20,897
Turkey 69,392 1,518 5,674 62,200
Belgium 34,809 4,857 7,562 22,390
Netherlands 29,214 3,315 250 25,649
Brazil 29,015 1,760 14,026 13,229
Canada 28,379 1,010 8,979 18,390
Russia 27,938 232 2,304 25,402
Switzerland 26,422 1,269 15,400 9,753
Portugal 18,841 629 493 17,719
Austria 14,412 393 8,098 5,921
Israel 12,591 140 2,624 9,827
Ireland 12,547 444 77 12,026
Sweden 12,540 1,333 381 10,826

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Country Total Cases Total Deaths Total Recovered Active Cases


India 12,456 423 1,513 10,520
Peru 11,475 254 3,108 8,113
S. Korea 10,613 229 7,757 2,627
Japan 8,626 178 901 7,547
Chile 8,273 94 2,937 5,242
Adapted from www.worldometers.info/coronavirus.
 

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
End Notes:
                                                            
1
Keith Nunes, “Domino’s Weathering Covid-19 Storm,” www.foodbusinessnews.net, March 31, 2020.
2

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Anne Burdakin, “Domino’s Pizza: A Lockdown Winner Any Way You Slice It,” www.fool.com, March
28, 2020.

Taught by Laura Illia, from 25-May-2022 to 25-Nov-2022. Order ref F439694.


3
Joanna Fantozzi, “Domino’s Reports Q1 Same-store Sales Growth and withdraws Financial Guidance
during COVID-19,” www.nrn.com, March 31, 2020.
4
“Domino’s Pizza Announces Business Update,” www.bloomberg.com, March 31, 2020.
5
“Domino’s Pizza® Announces Business Update,” http://dominos.gcs-web.com, March 30, 2020.
6
Educational material supplied by The Case Centre

Amelia Lucas, “Domino’s Expects to Hire 10,000 Workers,” www.cnbc.com, March 19, 2020.
Copyright encoded A76HM-JUJ9K-PJMN9I

7
“Domino’s Pizza First in Industry to Offer Mobile Ordering,” www.webrtcworld.com, September 27, 2007.
8
“DRU Drone by Flirtey Delivers Domino’s Pizza in New Zealand,” https://insideunmannedsystems.com,
November 29, 2016.
9
“Domino’s Pizza Top 10 Innovations,” https://aaronallen.com, May 18, 2018. 
10
“Domino’s Pizza 2019 Annual Report,” http://dominos.gcs-web.com.
11
Anne Burdakin, “Domino's Pizza: A Lockdown Winner Any Way You Slice It,” www.fool.com, March
28, 2020.
12
Jamie Ducharme, “World Health Organization Declares COVID-19 a ‘Pandemic.’ Here’s what that
Means,” https://time.com, March 11, 2020.
13
Sarah Newey and Anne Gulland, “What is Coronavirus, How did it Start and How Big could it Get?”
www.telegraph.co.uk, April 10, 2020.
14
“Global Coronavirus Cases Top Two Million: Johns Hopkins,” www.cgtn.com, April 15, 2020.
15
Alicia Kelso, “Why Pizza Chains are Weathering the Coronavirus Downturn Better than their Restaurant
Counterparts,” www.forbes.com, April 1, 2020.
16
Alicia Kelso, “Why Domino’s CFO is Confident the Pizza Chain will Gain even More Market Share in
2020,” www.forbes.com, January 15, 2020.
17
Katie Arcieri, “Pizza Chains Aim for Larger Slice of Contactless Deliveries during Coronavirus,”
www.spglobal.com, April 6, 2020.
18
Daniel B Kline, “Domino’s Offers Contact-Free Delivery,” www.fool.com, March 17, 2020.
19
“Coronavirus: McDonald’s, Domino’s Pizza Introduce Contactless Delivery,” www.deccanherald.com,
March 16, 2020.
20
Bhumika Khatri, “Domino’s is now Delivering Essentials in Partnership with ITC Foods,” https://inc42.
com, April 11, 2020.
21
“A Letter to Domino’s Customers from Ritch Allison, CEO of Domino’s Pizza, Inc.,” https://biz.
dominos.com.
22
Ritch Allison, “Domino's CEO Pens a Letter Detailing the Impact of Covid-19 on Its Worldwide
Business,” www.franchising.com, April 2, 2020.

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23
Bill Peters, “Domino's Eyes Massive Hiring Spree While Coronavirus Ravages Restaurant Industry,”
www.investors.com, March 19, 2020.
24
Alicia Kelso, “Why Pizza Chains are Weathering the Coronavirus Downturn Better than their Restaurant
Counterparts,” www.forbes.com, April 1, 2020.
25
Michael Holan, “Domino’s to Donate 10 Million Slices of Pizza across US,” https://nypost.com, April 7, 2020.
26
“Domino’s 6,126 Stores give Communities 200 Pies each,” www.pizzamarketplace.com, April 6, 2020.
27
John Ballard, “Domino’s Pizza Reports Sales Increase amid COVID-19 Pandemic,” www.nasdaq.com,
March 31, 2020.
28
Jonathan Maze, “Not Even Domino’s can Escape the Coronavirus Impact,” www.restaurantbusiness
online.com, March 30, 2020.
29

Purchased for use on the Issues, Crisis and Stakeholder Management, at IE Business School (Instituto de Empresa S.L).
Alicia Kelso, “Why Pizza Chains are Weathering the Coronavirus Downturn Better than their Restaurant
Counterparts,” www.forbes.com, April 1, 2020.
30
Bill Peters, “Domino's Eyes Massive Hiring Spree While Coronavirus Ravages Restaurant Industry,”
www.investors.com, March 19, 2020.

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31
John Ballard, “Domino’s Pizza Reports Sales Increase amid COVID-19 Pandemic,” www.nasdaq.com,
March 31, 2020.

Taught by Laura Illia, from 25-May-2022 to 25-Nov-2022. Order ref F439694.


32
Kate Taylor, “Dominos-Papa-Johns-and-more-Chains-Thriving-amid-Coronavirus,” www.business
insider.com, April 2, 2020.
33
Issy Anna, “Close Domino’s Pizza due to COVID-19 Pandemic,” www.change.org.
34
“Coronavirus: Domino’s Denies Sacking Staff over Safety Concerns,” www.bbc.com, April 4, 2020.
Educational material supplied by The Case Centre

35
“L.A. Domino’s Closed for Sanitizing after Workers say they’re at Risk of Coronavirus,”
Copyright encoded A76HM-JUJ9K-PJMN9I

www.dailynews.com, April 11, 2020.


36
“Pizza Delivery Boy Tests Positive for COVID-19: Zomato and Domino’s Issue Clarification,”
www.dqindia.com, April 16, 2020. 
37
Katie Arcieri, “Pizza Chains Aim for Larger Slice of Contactless Deliveries during Coronavirus,”
www.spglobal.com, April 6, 2020.
38
Harry Wise, “Domino’s Pizza Cancels Dividend despite the Coronavirus Lockdown causing Huge Rise
in Demand for Deliveries,” www.thisismoney.co.uk, March 27, 2020.
39
Anne Burdakin, “Domino’s Pizza: A Lockdown Winner Any Way You Slice It,” www.fool.com, March
28, 2020.
40
Julie Littman, “Domino’s US Same-store Sales Growth Drops by Half in Q1,” www.restaurantdive.com,
March 31, 2020.
41
Katie Arcieri, “Pizza Chains Aim for Larger Slice of Contactless Deliveries during Coronavirus,”
www.spglobal.com, April 6, 2020.

  15

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