How did Domino’s Pizza become so successful? – Business Case Study

Domino’s is one among the foremost incredible companies of the 21st century. While most folks know Domino’s only due to its half-hour of free delivery policy. only a few folks know that from 2010 to 2017 Domino’s stock has performed so well that its stock price has gone up by 2000%. And it’s outperformed even giant companies like Amazon, Apple, Netflix and even Alphabet. and therefore, the better part is this meteoric stock rise was neither a bubble nor did a billionaire tweet about it. Instead, it had been a result of one among the foremost strategic, calculative and maybe the boldest move made in corporate history.

Stock Price in 2009

The question is What exactly was this strategy and more importantly how can entrepreneurs such as you and me apply this to our company. this is often a story that dates back to 2009 when the brand image of Domino’s was completely down the drain. The stock was selling at a the lowest price of just $6 per share, the shop sales were taking place drastically and Domino’s ranked last within the consumer brand preference survey.

The reason for the failure

All of these factors indicated that Domino’s was in serious trouble. This is when the company’s CEO, Patrick Doyle, decided to take a closer look at things, and they quickly admitted that there had been many blog entries about how horrible their pizzas were; some stated the crust tasted like cardboard, while others said the sauce tasted like ketchup. This was followed by a succession of social media posts that occurred on a regular basis.

If you’re taking a step back and check out to know things ; the situation is extremely delicate. The stock price of Domino’s was already hitting a the lowest , the American economy was still recovering from the 2008 crisis and through this point Domino’s, as a publicly listed company was already walking on a really tight rope.

Now during this case, what any normal company would do is that they would engage in great PR they might confirm that each one the bad reviews are overshadowed then , within the background they might make a couple of changes and perhaps even give out free pizzas, just to urge positive reviews. Or worst case, they might just ignore this altogether thinking that in any case in 2009 what could a blog do to a billion dollar company.

What exactly was the strategy

Domino’s opted for the foremost lethal weapon in advertising that no-one ever dares to use, especially when the corporate is failing. And this weapon was brutal honesty. Patric Doyle, CEO of the corporate took full responsibility of what was happening and that they publicly admitted that they weren’t doing an honest job. In fact, they called upon actually disappointed customers and got them to taste the pizzas to offer them feedback. And it had been perhaps the foremost difficult day at work because every one who walked in only put out some brutal phrases and told them how pathetic their pizzas were.

The team of Domino’s listened to them very patiently and took notes diligently. But what followed next was nothing in need of an adventure. For subsequent 18 months every single chef of Domino’s worked day in and outing without taking a weekend off, just to undertake every possible combination of ingredients to form the simplest pizzas they possibly can. and that they changed their pizzas from top to bottom.

And within the process of experimentation, they also realized the very fact that within the race of truly providing customers with half-hour delivery the company’s supply chain itself was compromised. the bulk of its ingredients were frozen, canned and even pre-made with great care that they might hamper in cost and to form it easier to assemble a pizza in record time. therefore the chefs and therefore the management got together and altered the whole supply chain of the corporate.

This was a unprecedented move because we are watching an entire revamp of processing, inventory, storage and transportation that’s getting to be executed to a sequence of quite 4200 stores which are spread across 9.93 million square kilometers which is practically 3 times the dimensions of India. But to everyone’s surprise they managed to tug it off within 18 months.

‘Oh yes we did’ campaign

Additionally, they ran a campaign called “Oh yes we did.” where they filmed their entire journey from producing horrible pizzas to making the most basic pizzas in the United States. In fact, there’s a really sweet video online where Domino’s top chefs personally visit the homes of their harshest critics and surprise them with their new pizza, which includes all of their feedback, and every single one of these critics was blown away that the top chef of Domino’s himself had come right down to deliver pizzas.

They tasted the pizzas, they loved it and that they were smiling and most of them couldn’t even believe that such an enormous company would actually take their feedback so seriously. aside from this they also included a special section within the website wherein they posted Facebook posts and tweets of the purchasers who expressed their delight after having the new pizzas. this is often how Domino’s reinvented itself and did everything in its capacity to urge back to creating the simplest pizzas within the us . and therefore the results ?

Well, while the pizza delivery business itself saw a decline of three an equivalent store sales of Domino’s increased by 14.3%. which is that the largest quarterly increase within the nutriment history. The Domino’s stock rose by 44% in only one month following the campaign. And by the top of the quarter, the stock had reached 75% increase. The campaign has earned 2 billion free media impressions till date and therefore the stock price just kept going and going for 7 years and rose by 2000%, outperforming Apple, Amazon and Netflix.

Lessons Learnt

This is how Domino’s set a benchmark for other brands to find out on the way to embrace criticism and the way to show it into a business opportunity. Now, there are 3 vital lessons that we’d like to find out from this case study.

Lesson 1: Customer criticism is a part of doing business, but it’s your job as a business owner to sort through the turmoil and find the flaw before it paralyses your company. The CEO could have easily ignored the blogs in this case, but because he chose to rectify it, Domino’s still exists.

Lesson 2 the value of rectifying an error is usually far but paying the worth for it when it’s already too late. during this case if Domino’s had considered revamping the availability chain to be 1,000,000 dollar expense it might have cost them their entire business but because they saw it as 1,000,000 dollar investment it gave them the chance to rise from their ashes.

And last and most significantly every brand must realize that the longer term of selling isn’t about discounts and fancy packaging. Although they’re important, at the top of the day the brand must connect with its customers at a private level and because of social media it’s become more easier now than ever. the instant the purchasers realize that they’re a neighborhood of your journey and therefore the incontrovertible fact that their contribution actually matters you’ll continue to realize a unprecedented level of brand name loyalty which is far and away the foremost powerful asset that you simply could possess as a brand. and therefore the best thanks to actually establish this connect would be to inform a gorgeous story. during this case, it had been the ‘Oh yes we did’ campaign.

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