Strategies to Tackle Global Economic Slowdown

Ashna Shrestha | Karan Shrestha

OVERVIEW
• In 1960, brothers Tom and James Monaghan purchased Dominick’s pizza store in Michigan which was later
renamed to Domino’s.
• Subsequently, James sold his share to Tom, making Tom the sole owner of the business.
• Domino’s first international franchise was granted in 1983 for a store in Winnipeg, Canada.
• In 1998, after 38 years of ownership, Tom announced his retirement and sold 93% share to Bain Capital.
• In February 2018, the chain became the largest pizza seller worldwide in terms of sales.
• As of September 2018, it has locations in 84 countries and operates stores in 5,701 cities worldwide (2,900
international and 2,800 in the US).
• In 2016, Domino's opened its 1,000th store in India.
• India is the largest international market for Domino's outside its home market, being the only country to have over
1,000 Domino's outlets. The company operates 1,127 stores across 264 Indian cities as of 2018.
FRANCHISE MODEL
Brand Owner Domino’s Pizza Inc.

Domestic Vs.
Domestic International
International

Model Own Store Franchise Master Franchise

• 10-20 Year Agreement

Business • 10 Year Agreement • Initial license cost
Self Managed
Model • 5.5% Royalty • Average Royalty 3%
• Store opening fees
INTERNATIONAL FRANCHISE
Domino’s Pizza Inc.

Domino’s Pizza Group Jubilant Food Works Ltd. Dominos’ Pizza Enterprise

• Australia
• India • South Korea
• UK • Nepal • New Zealand
• Ireland • Sri Lanka • France
• Bangladesh • Belgium
• Netherland
• Etc.
MASTER FRANCHISE MODEL

• Domino’s provides assistance in selecting the location of the stores.

• It provides regular training to its franchisees and the franchisees are required to train their
employees.
• A specific set of guidelines are required to be followed relating to menu items, ingredients, décor,
furnishing, etc.
• Financial services to the franchisees.
• Flexible working hours attracted many people during global economic slowdown.
• Many employees got a chance to own a franchise through this model.
OTHER STRATEGIES
• People preferred to eat at home rather than dine out at expensive restaurants.

• The ‘30 Minutes’ promise

• Aggressive marketing campaigns throughout the world.

• In India, the affordable ‘nano pizza’ was introduced in 2008.

• Adopted six sigma approach & purchased fuel efficient bikes for delivery to reduce operating costs.

• In Australia, promotions was focused on providing greater variety in the menu.

• In UK, strong advertisement through televisions.

• Use of technology such as the having dedicated mobile application and option to directly order via

TV remote.
USE OF TECHNOLOGY

CORRUGATED PIZZA BOX

PIZZA TRACKER

MOBILE APP PIZZA CAR

HEAT WAVE

STRONG SUPPLY CHAIN

DOMESTIC DOWNFALL
KEY DOMESTIC STRATEGIES

• Introduction of oven-baked sandwiches

• Aggressive marketing campaigns
• Campaign titled ‘The Big Taste Bailout’
• The ‘Secretary of Taste’
• By the end of first quarter of 2009, domestic sales grew by 1% compared to Q1 of 2008.
SWOT ANALYSIS
Strengths
• Hugely popular brand name and has high brand loyalty.
• Fantastic channel network comprising of more than 5700
outlets operating in 84 countries.
• The 30 minute delivery promise.
• Diverse range of product offerings apart from pizza.
• Leader in online and mobile ordering compared to its rivals.
Opportunities
• Improve efficiency and home delivery service which is
Domino’s strong point of differentiation.
• Introduction of new flavors and marketing schemes that are
region specific.
• Adding menu items that would cater to health conscious
consumers.
• Growing presence in emerging markets like China, India
Weaknesses
• Many legal and political issues of the master franchise
model.
• Lack of proper management due to wide range of outlets.
• Focus on take-away rather than dine ins.
• Ambience not up to expectations.
• High staff turnovers.
Threats
• Intensive competition from small competitors.
• Direct competition from Pizza Hut, Papa John, KFC, etc.
• Change in customer eating habits.
• Change in government policies and regulations.
PORTER’S FIVE FORCES ANALYSIS
High Threat of new entrants

• By innovating new products and services. It attracts both new and old customers.
• Building capacities and spending money on research and development.
• By building economies of scale so that it can lower the fixed cost per unit.

High Bargaining power of suppliers

• By building efficient supply chain with multiple suppliers.

• By experimenting with product designs using different materials so that if the prices go up of one raw
material then company can shift to another.
• Developing dedicated suppliers whose business depends upon the firm.
PORTER’S FIVE FORCES ANALYSIS
High Bargaining power of buyers

• By building a large base of customers.

• By rapidly innovating new products. Customers often seek discounts and offerings on established products so if
Domino's Pizza, Inc. keep on coming up with new products then it can limit the bargaining power of buyers.

High Threat of substitute products

• By being service oriented rather than just product oriented.

• By understanding the core need of the customer rather than what the customer is buying.
• By increasing the switching cost for the customers.

High Rivalry amongst existing competitors

• By building a sustainable differentiation

• By building scale so that it can compete better
• Collaborating with competitors to increase the market size rather than just competing for small market.
RECOMMENDATIONS & CONCLUSION

• Improve dining conditions drastically to attract premium segment of customers.

• Inclusion of music, TVs, kid’s zone and updating the overall ambiance of the stores.
• Add new menu items to cater to health conscious consumers.
• The use of multiple strategies simultaneously:
-Cost Leadership
-Differentiation