Domino’s Pizza
11/18/2016
Executive Summary
Domino’s is a brand we have all come to know and love. From the early inception of a cartoon character, to the heat wave bag, to catchy commercials we know them to be a brand of value and consistency. In the next few pages we are going to discuss how Domino’s has used their supply chain to remain competitive, increased their brand transparency, used a centralized supply chain model, and if the same model should applied to the international division. Let’s take a look of what it takes to remain one of the top pizza chains in the world!
Introduction
When Thinking of Domino’s, I always think of the small store beside Kroger that is always packed and accrues many cars parked where I get my cart. When thinking of that, it seems so simple to the average person but so complicated to many who worked so hard for the store to be there. A carry out the only store at the end of a shopping trip, and thoughts of the food you will have to prepare, when the kids say “hey let’s just grab a pizza mom” and then suddenly it seems too easy, you will have pizza that night. Studies show that the majority of us shop when we are hungry, and that “Most of us are well acquainted with hunger-driven over-spending. The purchasing of a family meal for one after a long day at work, or the ordering of twice as much food as you could eat at a restaurant.” (Spickernell, 2015) This is not an accident by Domino’s but rather a complex strategy that delivers a fast, nutritious, and fulfilling product that goes out the door in minutes, with minimal overhead cost, and at the convenience of the customer it serves.
Supply Chain Value
The supply chain is the central hub of where management and the company produce and sells its product. There can either be a smooth process or a disaster on the rise, the goal of the management team and all its members is to ensure a seamless process when gathering and distributing the finals goods that are required to make the product and get it out the door. Mackstood understands how this process works, being a part of a team that was essentially a “market watch team” and being able to estimate and forecast the wheat, corn, and dairy issues in 2007-2008, he understands the need to communicate with all team members to establish a strategy moving forward. The commodity market outlook meeting is crucial when projecting business implications were moving into new quarters each year. Having this tool allows Domino’s to adjust to the market retroactivity instead of reactively, thus preventing an influx of widespread panic when the price of goods inflates into an enormous cost. The same can be said about another supply tool that affects the domestic supply. While only owning a little over 400 stores out of the 1,150 franchises Domino’s is willing to guide and assist everyone in their business and refers to themselves as a resource. They offer many menu options for everyone including sandwiches, wings, and even salads into the mix, so you just don’t have to eat pizza when visiting, and even introducing some pasta dishes to compete with Subway and Pizza Hut since they did not offer a traditional “eat in” dine area, they had to remain competitive with its peers. Adding value items to the menu, simple things like a variety of crusts and eliminating waste with inventions such as the refrigerated cheese tray create a quality and cost saving the culture that the company tries to display at all times.
“A supply chain is a network of a company and its suppliers to produce and distribute a particular product, and the supply chain represents the steps it takes to get the product or service to the customer” ("Supply Chain Definition | Investopedia," n.d.) moving right along with this idea there are significant strides made by Domino’s to increase the value of its product to the customer. I completed my undergrad at the University Of Dayton which developed the “Heat Wave Bag” for Domino’s to deliver a warm and delicious product to the customer with a guarantee to customers that it would arrive quickly or receive a $3 off voucher. Small strides like this that allow the pizza to stay 40 degrees warmer from completion to delivery are the final touches on many hours of hard work that starts from process planning to gain raw ingredients at a market cost. (Drummond, 1998) Domino’s as brand requires franchisees to manage a store for at least one year before being offered a franchise, this protects the brand and ensures the quality from a management team that they home come to expect from corporate to the customer.
Combine the effort in trying to retrieve materials at a low cost, driving new innovative ideas, the franchise structure, and moves at top management positions by hiring executives from Pepsi Co. which is known for making excellent management personnel from its rich training and comprehension training and you get a company that is ready to compete for the top position in the food industry.
Increased Transparency
Brand image can make or break you, depending on what exactly you want for your company. Sadly the reason I know about the issue in 2009 is that my mother hasn’t ordered Domino’s since then. Several things came into play as a result of the snot, and gas passing incident of 2009. If you searched for "Domino's" on Google on April 17, the video, entitled "Disgusting Domino's People," was the third result (the president's video apology, entitled "Disgusting Dominos People — Domino's Respond," was the fourth). If you searched for "Domino's and disgusting," the whole first page of results dealt with the incident. One link screams "Never Eat at Dominos Again." (Gregory, 2009) The company posted an apology on its website, made an apology video, and thrust itself into the next century by creating a Twitter handle, YouTube account, and Facebook pages so that it would not miss if something like this happened again.
The second issue also in the same year was when after ad campaigns failed the company realized that it was ranked last with the worst tasting food right with chuck-e-cheese. Instead of hiding from the criticism and continuing to allow business as usual, they embraced it and started airing ads in which they feature the criticism. “"The old days of trying to spin things simply doesn't work anymore," President Patrick Doyle, who will become CEO in March, told The Associated Press in an interview. “Great brands going forward are going to have a level of honesty and transparency that hasn't been seen before" (Edwards, 2010) and with this Domino’s brought consumers into the kitchen, allowed them to taste the new product and even introduced them to the process of tomato and dairy farmers take to ensure quality freshness. This was a new process and introduced flavor and choices into an already known process, and was rolled out during the Super Bowl and New Year’s celebrations. New ingredients, new process, better tastes, better quality, all delivered to the people on the time of year when the most pizzas are delivered, great results on marketing. The risks with both of these campaigns could have been historical in a sense everyone could have turned on them and only stopped going to the restaurant. I believe the first step in change is admitting you were wrong and then making an action plan on how to correct what has gone wrong in the past. Admitting you had a “cardboard” product and then immediately addressing what you have done to resolve the issue lets people believe you are owning your mistake and are willing to acknowledge that, and correct it. This could create a new customer base on younger people who don’t remember the awful pizza but only remember the choices and deliciousness of the current product, given to them by their parents who were willing to give Domino’s another shot.
Centralized Supply Chain Model
Having everything is one place makes anything easier, so when Domino’s sought to expand its brand to include more items there was some work to be done. Domino’s was built on being straightforward from the beginning. Not having a sit down store and only offering the base models of pizza allowed them to expand rather than retract when it came to menu offerings. Centralized supply chain could be defined as centralized decision-making where supply chain decisions are made at the corporate level by an approved department or personnel, this being said supporting all franchise by having a central hub create a standard for everyone moving forward, in a world where the actual company does not own all of its stores. This being said all of the stores operated to the same standards of cleanliness and customer satisfaction. With some leeway such as being able to purchase their ingredients from an approved supplier, it allows for some flexibility but 99% of the stores buy directly from Domino’s. This creates a “one stop shop_ as opposed to seeking our suppliers and having to deal with market fluctuation within the process of buying fresh goods and services. You can control quality, keep costs low, and focus on the things that are more important than what kind of toilet paper you will be buying for the next month. I believe keeping with this model creates more of a family franchise where everyone depends on the same model and gets the same quality of goods delivered at a premium price.
Being different in the pizza industry could be a good or bad thing, but when most of the menu offerings are the same as your rivals, you must make yourself stand out in quality and taste. Being centralized ensure that you will do this bot only with food options but in the same way, the food is prepared in the back. Being economic in how the food is prepared and dispended allows for low hanging fruit to disappear. The “make-line” station was an assembly line station hat was given to everyone, to support speed in the food preparation process. The refrigerated catch tray that we mentioned earlier allowed no cheese to be wasted when spreading it over dough and mostly reused the cheese instead of it laying on a table or floor, these changes allowed a head pizza maker to complete a pizza within 24 seconds from start to finish. Allowing no microwaves or other quick cooking fixes ensured that al products were made fresh and not refrigerated and then reheated for the customer.