The Curious Case of Domino's Pizza Turnaround (Case Study)

I must confess that I love Domino's Pizza. When it comes to taste, they serve the World's most crunchiest & juiciest pizzas. And, their customer experience has always been top-notch. I regularly order their pizzas via their android app. It's almost a routine. So much so that my mother sometimes gets annoyed by my love for Domino's Pizzas. Yes, I'm their loyal follower & fan. And, they've earned it.

Today, Domino's Pizza is World's largest pizza chain. But, it always wasn't the same. In 2009, Domino's Pizza was losing customers, struggling to maintain its reputation (whatever was left), and its share prices were at record low ($ 3 per share).

Domino's Pizza in 2009 was all about bad pizzas. The pizza's crust was like cardboard & the sauce tasted like ketchup. The worst part? To honour their commitment on 30 minutes delivery, they used stale, frozen & canned vegetables. Not a good recipe for a food business, right?

Related: How To Turnaround A Struggling Business In 100 Days

In fact, when Domino's surveyed their customers, some customers boldly claimed that "Domino's pizzas were the worst pizzas they had" & "Even microwave pizzas at home taste better". In short, Domino's pizzas were bland & tasteless.

The 2009 Social Media Crisis

Domino's Pizza's experienced the worst when two of its employees, at a franchise location, uploaded a video to YouTube demonstrating disgusting things they do before delivering a sandwich.

Within hours, the video went viral. The damage was done. Domino's, at the start, thought that the video will eventually settle down & there's no need to take a panic action. But, it didn't.

The video was spreading like wild-fire (viewed by more than a million people) & people including Domino's left over fans were angry. If one searched for "Dominos" on Google, the results were all about that embarrassing YouTube video.

Remember, 2009 was a time when social media wasn't that big. Imagine something like that happening today. After seeing the video, Domino's customers (ex-customers?) started tweeting that they vowed to not to go to Domino's ever again in their life.

So, what did Domino's do? Initially, they released a press statement defending themselves & explaining their commitment to food safety. Did it work?. No, because they were targeting the wrong medium. If your reputation is getting damaged on social media, you need to act on social media & not on any other platform.

And, the worst part was that Domino's at that time wasn't even having a social media channel.

Later, Mr. Weisberg, VP-Communications, prepared a video as a response & uploaded the same on YouTube. In that video, he said the following:

"We sincerely apologize for this incident. We thank members of the online community who quickly alerted us and allowed us to take immediate action. Although the individuals in question claim it's a hoax, we're taking this incredibly seriously."

Yes, that's like a typical corporate response.

"We're Sorry" Campaign

But, the real response & change happened with J. Patrick Doyle was appointed as CEO & President in March, 2010.

They then ran the very famous "We're sorry" campaign & that changed the game altogether for Domino's.

In this video, Doyle says:

"You can use negative comments to get you down or use it to excite & energize the process of making better pizzas, we chose the later."

The whole idea was to work on customers' feedbacks & change the product recipes from the core. They worked on their pizza crust, sauce, cheese & toppings. At the end of the day, they came up with a superior product, pizzas that tasted exactly how their customers wanted to.

Dominos didn't make excuses or tried to shove off the criticism. They embraced their shortcomings. They brought their core team together & told "Look, we got to reinvent ourselves, change the way we do things from scratch".

The results started to show. In Q1 results, the company saw 14% increase in revenue & by the end of 2010, the company's share price went up by 130%!

Technology & Pizza

The second round of revolution at Domino's Pizza came when the company decided to use technology to power up their delivery & customer experience.

From the delivery point of view, Domino's went on to make it really easy for their customers to order pizzas from the comfort of their home or office. Today, you can order Domino's pizza from their android/apple app, website or by dialling them out or even by tweeting or texting them an emoji!. Also, they support ordering from devices like apple watch, television & amazon echo.

And, the technology also helped them to become more transparent. Meaning, when you order a pizza, you can check your order's entire cycle in real time. Their app exactly shows when the order was received, when it was baked, when it was packed & when the delivery person took the order for delivery. The best part? They've got GPS tracking enabled delivery vehicle. So, you can also track where the delivery person is right now & how much time will she/he take to reach your home.

All these in just 30 minutes.

I also like how Domino's keeps track of its customers choices & preferences. When I phone call their number to order a pizza, I'm instantly greeted by my name (that's makes me feel special, LOL). And, the person over there can easily browse across my past orders & offer me suggestions. No confirmation of name, address or anything. Just a smooth ordering experience.

In fact there're more than 400 people working in technology & analysis at the Domino's headquarter (there're 800 employees in total there). That shows the kind of attention they give to technology.

They're the ones who use a single POS system to power their business. Unlike, most other businesses, they haven't outsourced their tech part. The POS system that they use has been in-built by their own team. That's the POS that even their franchisees have to use. They don't have the luxury to choose a POS of their choice.

And, Doyle is right when he says that they're into pizza delivery business & not just pizza business.

The Results

Domino's big moment came in 2017 when they overtook Pizza Hut as the World's largest pizza chain.

What's even better is the fact 60% of Domino's revenue comes from digital channels. In fact, in 2018, Domino's was among one of top 5 online retailers in the World (along with giants like Apple & Amazon).

Domino's share price today is at $ 338 (remember, it was $ 3 in 2008). What a turnaround in just 10 years of time.

Today, Domino's counts around 16,000 stores worldwide. Its seeing strong growth in countries like Brazil, India & Japan.

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So, what can we learn from Domino's turnaround?. Here're my 2 cents:

1. Collect & Act On Your Customers' Feedback

Making a business successful is actually quite a simple process. Listen to your customers & act on their feedback. Isn't it? Then why do we make it complicated?

Domino's knew something was seriously wrong with their product & experience. So, they decided to act. They didn't conduct a series of top-level meeting in an air-conditioned room. They didn't do in-depth analysis or post-mortem. And, most importantly, they didn't come up with multiple technical proposals. Their process was straight & simple. Hit the street, collect customer feedback & improve your product.

2. Reinvent Your Core Product & Everything Else Will Follow

Most companies make a fault of making only "cosmetic" changes to their product based on their customers' feedback. Domino's didn't do that. They actually went on to re-engineer their pizzas recipes from bottom to up.

Domino's worked intensively on all parts of its recipes - crust, sauce, cheese, toppings, etc. For example to make their sauce really tasty, they came up with plenty of innovative recipes. Each recipe's samples were tested on live audiences. And those feedback helped them shape the final sauce recipe.

Once you've your core product as per the likings of your customer, the half of the battle is won. Next up, it's all about improving your customer experience. Show them some love.

3. Embrace Technology To Improve Customer Experience

No restaurant chain in the World is as technology-obsessed as Domino's. They live & breathe technology. And, that's because they've found the success formula of a successful pizza business i.e. tasty pizzas + technology = great pizza business.

As I pointed out earlier, the main objective of Domino's technology is to make it easy for your customers to order pizza. Whether its Google Home or Alexa or Apple watch, you can literally order pizza with a few clicks.

In India, they've even started delivery in trains. That's a brave move because with trains you can't go wrong with the time. You got to be on time & deliver it to the right customers. There're many variables involved like coach number, berth number, seat number, etc.

And, I read somewhere, they're even working on innovative delivery mediums like drones & robots. And, they're also trying to leverage AI to respond to their customer queries.

4. Make It Easy For Customers To Order

With or without technology, your aim should be to make it easy for customers to order products. Remove hassles like long ordering forms, redundant details, & other bottlenecks that encourage your customers not to order.

In Domino's stores, I've always seen adequate number of frontline employees. You don't need to stand in queue & wait for your turn. And, have you noted that menus displayed right at the top of the ordering counter? They have all been designed to make the ordering process quick & enjoyable.

5. Make A Brand Promise That Creates A Buzz

Domino's had the brand promise of "Pizza within 30 minutes" even before the 2009 crisis. When you've a differentiating brand promise that creates a buzz, word-of-mouth marketing kicks in.

And, as you know, word-of-mouth marketing is a no-cost marketing technique. Domino's created a brand promise that has helped Domino's market itself without incurring a marketing expense.

You too can create a brand promise for your business. Think about a differentiator that's remarkable & specific. What do you do that your competitors don't? That's your brand promise. Note, a good brand promise shouldn't be directly related to your product. Instead, it should be peripheral to your product. Example: Domino's didn't make a brand promise of "tasty pizza" "better pizza" "fresh pizza", etc. because these attributes are not differentiators. Every other competitor is promising the same. So, what makes you different?

6. Streamline Your Company's SOP (Standard Operating Procedures)

One of the biggest takeaway from Domino's is their well-structured SOPs.

Have you noticed what happens to your order after the same gets fed into the system? It automatically shows on the kitchen display. Then, the chefs do their part. The crust part is taken care of by the crust chef, the sauce is taken care by the sauce chef & so on. It all happens automatically as a streamlined process. Their is no chaos. Everybody in a Domino's store knows her or his role.

That's the SOP in action for you. The advantages for SOPs? You get a standard Domino's Pizza no matter you order from any part of the world. They all will taste the same because they're a product of a stringent SOP*.

*Note, when it comes to taste, Domino's does add some local flavours based on customer preferences in some countries.

7. Happy Franchisees Means More Business

Domino's works on franchise model. That means as a franchise you can use Domino's branding & recipes to sell branded Domino's pizzas. Generally, the real estate & employees part is taken care of by the franchisees. Domino's, on the other hand, takes a percentage of sales as royalty.

Therefore, for chain stores like Domino's, franchisees are a core part of their eco-system. Unlike most other chains, Domino's is well-known for sharing a good margin with the franchisees. They value & respect their franchisees.

In 2016, Domino's franchisees earnings stood at $ 133,000. That's a massive 300% increase from the figures of 2009.

8. Social Media Presence In More Than Important

Having learnt their lessons, Domino's now is super-active on almost all social media channels. Do check their twitter account that buzzes with delicious tweets.

They even take orders from chat messengers like Facebook messenger, WhatsApp, etc.

Social media is a great way to stay in touch with your customers. Not only does it help you answer queries but also helps nurture a relationship with your customers. If used carefully, social media can help you turn your customers into fans & vice-versa.

9. Be Transparent With Your Business

Domino's is ridiculously transparent. As I explained earlier, their ordering process involves showing various stages of orders like approval, baking, out for delivery, on road, etc.

Even if you visit their store, you can look into the kitchen right from outside. They've nothing to hide & leave no stone unturned when it comes to transparency.

In each store, they also have a monitor display that shows number of orders this week, number of orders of other stores (nearby) this week, average amount per order, franchisees ranking, etc. It's also a great way to motivate employees to do better.

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