What’s the reason behind the massive success of Domino’s?
Updated: Dec 29, 2021
It’s Pizza Time! And when we say it’s pizza time, one of the prominent names that come to our is that of Domino’s.
Remember the Veggie Garden or Margherita along with the garlic bread you ordered last time for your friends or family. But as a brand manager and strategy enthusiast, one thing that always intrigues me is how did Domino’s manage to become such a big brand and how did it manage to capture millions of hearts all across the world?
Domino's is one of the most incredible companies of the 21st century. While most of us know Domino's only because of its 30 minutes of free delivery policy, very few of us know that from 2010 to 2017, Domino's stock performed so well that its stock price, shot up by 2000%, and it managed to outperform even giant names like Amazon, Apple, Netflix and even Alphabet.
And, you the what the best part is? This meteoric stock rise was neither a bubble nor did any influential billionaire tweet about it. It was a result of one of the most strategic, calculative and perhaps the boldest moves made in corporate history.
Now, the question arises, what exactly was this strategy and more importantly how can entrepreneurs like us learn from this and also somewhere apply this to our business?
THE STORY FROM ASHES TO TOP OF THE MOUNTAIN
To get the background story of this massive success, let’s take a trip back in time to 2009. During 2009, the brand image of Domino's was completely down the drain. The stock was selling at a rock bottom price of just $6 per share and the store sales were going down drastically. Not only was it affecting the market image, but Domino's was also even ranked fairly bad in the consumer brand preference survey.
All of these things combined made it immensely clear that Domino's was falling apart. During this time of stormy waters, the then CEO of the company, Patrick Doyle
decided to take a closer look at the situation and soon enough he found out that multiple blog posts were saying how bad their pizzas were.
Some of the customers even mentioned that the crust of the pizza tasted like cardboard
while the others said that the sauce tasted like ketchup. This hate train was then followed by a series of social media posts that consistently appeared online lashing out on the quality and service of Domino’s.
If you keep yourself in the shoes of the CEO, it is relatively understandable that the situation is pretty delicate. The stock price of Domino's was already hitting a rock bottom and that too at the time when the American economy was still recovering from the 2008 crisis.
Also, during this time, Domino's, as a publicly listed company was already walking on a precariously tight rope.
WHAT WOULD YOU HAVE DONE?
If you had been the CEO of Domino’s at that time, what would you have done?
Stepping into the shoes of a CEO, the first step any organisation would do is to ring up the PR. They would make sure that all the bad reviews are overshadowed and then, in the background, they would make a few changes, maybe even try to give out free pizzas, just so that they can get some positive limelight.
Flipping the coin and looking at the other side, they would just ignore this altogether
thinking that after all in 2009 what could a blog do to a billion-dollar company.
So, the question here is, what did exactly Domino’s do?
WHAT DID DOMINOE’S DO?
Domino’s opted for the most lethal weapon in advertising history, that only a handful of organisations ever dare to use, especially when the company is on the complete verge of failing.
And this weapon was brutal honesty.
Patric Doyle, CEO of the company took full responsibility for what was happening and they publicly admitted that they were not doing a good job. They called upon disappointed customers and got them to taste the pizzas to give them true feedback.
Perhaps, it might have been the most difficult day at work for all the Domino’s staff because every person who walked in just put out some brutal phrases and told them how pathetic their pizzas were. But the team of Domino's listened to every single one of them patiently and took notes diligently.
And this was just the starting of the ride to a very long adventure. For the next 18 months every single chef of Domino's worked a day in and day out without taking a weekend off (which we do not suggest or appreciate), just to try every possible combination of ingredients, to make the best pizzas they possibly can.
And they changed their pizzas from top to bottom. Following the process of experimentation, they also realized that in the race of actually providing customers with the iconic 30 minutes delivery, the company's supply chain itself was getting compromised.
The majority of its ingredients were frozen, canned and even pre-made just so that they could cut down the overall cost and ultimately, make it easier to assemble a pizza in record time.
So, the chefs and the management got together and changed the entire supply chain of the company. Now, this was regarded as an extraordinary move because it involved a complete revamp of processing, inventory, storage and transportation that was going to be executed to a chain of more than 4200 stores which is spread across 9.93 million square kilometres. Just to give you a fair estimate, the area is practically 3 times the size of India.
But to everyone's surprise, Domino’s managed to pull it off within just 18 months. On top of that they launched a campaign called the 'Oh yes we did' campaign, wherein they documented their entire journey of how they went from making terrible pizzas to making the best pizzas in the United States.
There is also a great video online where the head chefs of Domino's personally go to the houses of their harshest critics and they surprise them with their new pizza after incorporating all of their feedback and each one of these critics had their mind blown not only with the fact that the head chef of Domino's himself had come down to deliver pizzas but also with the rejuvenating taste.
The smile on their faces was ethereal as none of them could believe that a big company like Domino’s would even pay some heed and take the feedback of the customers pretty seriously much less incorporate it.
Along with this activity, they also included a special section on the website where they posted Facebook posts and tweets of the customers who expressed their delight and gratitude after tasting the new pizzas.
THE RESULTS OF THE SUCCESS STORY
This is how Domino's reinvented itself and did everything in its capacity to get back to making the best pizzas in the United States. And the results?
Well, while the pizza delivery business itself saw a decline of 3%, the same-store sales of Domino's increased by 14.3%, which is the largest quarterly increase in the fast-food history.
Domino's stock rose by 44% in just one month following the campaign, and by the end of the quarter, the stock had reached a 75% increase. The campaign has earned 2 billion free media impressions to date and the stock price just kept going and going for more than 7 years and manage to rise by 2000%, outperforming Apple, Amazon and Netflix.
This is how Domino's set a benchmark for other brands to learn how to embrace criticism and how to turn it into a business opportunity.
Now, there are 3 more important lessons that we can take from this case study.
IMPORTANT LESSONS TO LOOK UPON
Lesson number 1- customer criticism is a part of the business although, sometimes no doubt there might be meaningless hate, as a business owner, it is our responsibility to filter through the chaos and identify the weakness before it paralyzes the business. In this case, the CEO could have easily ignored the blogs and the chaos online, but because he decided to fix it, Domino's still existing and flourishes every day.
Lesson number 2- the cost of rectifying a mistake is always far less than paying the price for it when it's already too late. In this case, if Domino's had considered revamping the supply chain to be a million-dollar expense it would have cost them their entire business but because they saw it as a million-dollar investment it allowed them to rise from their ashes.
And last and most importantly, Lesson number 3- every brand needs to realize that the future of marketing is not about discounts and fancy packaging. Although they are important, at the end of the day the brand needs to connect with its customers at a personal level and thanks to social media it has become easier now than ever. The moment the customers realize that they are a part of your journey and the fact that their contribution matters anyone will go on to achieve an extraordinary level of brand loyalty which is by far the most powerful asset that you could possess as a brand.
And the best way to establish this connection would be to tell a beautiful story. In this case, it was the 'Oh yes we did' campaign.