Background of Domino’s Pizza
Aim of the paper
The aim of this paper is to analyze the success as well as failure factors of Dominos. An interview is taken of the store manager to identify the products as well as services that the restaurant offers in the store. The paper also discusses successful factors of a business and identifying the competitive advantage of Dominos. It analyzes external as well as internal factors of the business which affect the profitability and productivity of the organization. Technology is advancing, so that has a lot of consequence on the business. The challenges are analyzed which are barriers in front of success and profitability of the store. Apart from the success factors, there are also failure factors which are raised provide adverse effects on the brand reputation of Dominos.
Background of the paper
Domino’s Pizza is the largest pizza chain in Australia. In terms of network, Domino’s is largest franchisee for the pizza brand in the world and also in New Zealand, France, Belgium and Netherlands. With beginning of the year 1960, the pizza is registered in USA which consists of specialized chains that are created to answer to the requests. Domino’s pizza is opened in the year 1960 and for meetings with the customer’s requirements, the company decided to deliver pizza pies to the residencies of the customers. The company does not cease to innovate while proposing since in the year 1980, new types of pastes with the pizza and it is also proposed to deliver of delivery drink as well as a dessert to accomplish of pizza pie (Dominos pizza.az 2017). The success to deliver to the residences is not contradicted as well as allowed Dominos to provide rise to the restaurants throughout US. This particular study is based on successes as well as failures of Domino’s pizza since it is established aboard in the year 1983. There is identification of various critical factors which enabled the organization to succeed to set up overseas (Mackey & Gass 2015). The failures of Dominos is resulted from the failures to take into account some of the factors such as choice of local franchise partners, quality, local culture, control cost, training, install to develop market outlets, and competitive advantages are required.
Overview of the paper
Dominos is improving their business operations, leverages the brand throughout their franchising. Today, Dominos has 12,500 locations into 80 countries but they are falling of profits, therefore the company is decided to prelaunch of their brand in the year 2009. The company is reformulated their pizza recipe as well as changed its menu since introduction of new items in their stores (Hair & Lukas 2014). The customers are noticed that improvement into quality of product, memorable ad campaign, therefore CEO of Dominos are admitted the criticisms of customers included of old pizza tasted such as cardboard are valid. Dominos are not only restaurant chain to sale by reformulation of their products. The company is enhanced their operations using technology into their daily life, Domino’s pizza is used for innovations like the digital ordering for making user experiences more comfortable as well as convenient. 50% of their sales are coming throughout online platforms such as application of Dominos as well as their company’s websites (Armstrong et al. 2015).
Success factors of Domino’s Pizza
From the year 2008, the company started to launch their online ordering and taking of operations in their in-house in the year 2010. The company also introduced mobile applications as well as users of voice ordering applications. The company is created of tracker for Domino that allows the customers to follow of pizza from over to doorstep of their customers. In order to attract the customers, Dominos are provided with higher appreciation to their customers to attract them more towards their business (Harvey 2015, p.28). Dominos is not able to survive into the economic downturn throughout the marketing campaign as well as the combat of the problems of decreased foot traffic into the national pizza restaurant by being of the customers online; it becomes a second largest player into the market. There is a fiscal year of the year 2010; therefore Pizza hut is boasted over approximately $10 billion into the common areas. Based on three of the first opportunities, the company is capitalized on increasing sales, continued improvement as well as innovation into the products (Thomas, Silverman & Nelson 2015). There is also an international expansion into other countries.
Downturn into the world economics as well as rise into inflation is common factors which affect the business operations of Dominos. Keeping into view of the current economic situations, sales of Domino’s pizza is increased to 11% in next six weeks of the year 2008, due to most of people are preferred to deliver at home, instead of going to eat outs. Last year, there is rise in 14.7% sales; and there is rise into price across Domino’s menu. Holloway and Galvin (2016) stated that though the store is focused on customer’s satisfaction level, therefore volume as well as profits is increased each time which led to focus on simple and traditional menus. The results of Dominos are new; in this way they are not frosty their items in the store. This store was diversified in December 2010. Along these lines, for the initial three months, when this store was manufactured, it was under the corporate brand of dominos. Along these lines, three months after it was assembled, it was diversified (Kuntze & Matulich 2016, p.54).
Success factors of Domino’s pizza
Pizza is always considered as first preferences of customers, but opening of pizza shop does not necessary guarantee of business success. The key success factors of Dominos determine whether the business will turn profit or not. Following are the key success factors of Dominos such as:
Failure factors of Domino’s Pizza
Timely delivery of pizza: Cobb, Brookover and Cobb (2015) stated that the critical success factors are related to broad areas of Dominos, preferences of customers for pizza as the food items. It is delivered in 30 minutes of placing the order as well as store locations (Dwivedi, Rana & Alryalat 2017, p.45). Since, the business model of Dominos is based on delivering of food items to the home, speed to prepare the pizza as well as there is also delivering of pizza at mentioned time.
Improvement of product: Dominos is ubiquitous with 12,500 locations in around 80 countries, but it is falling of its profits, the organization, as well as the menu, is maligned, it is declined to re-launch their brand in late 2009. Babin and Zikmund (2015) concluded that the company is reformulated its pizza recipe and changed their menu then an introduction of new items are there in their recipe such as Handmade Pan Pizza in addition to Specialty Chicken. A unique taste of the pizza draws the attention of the customers. Dominos is focused on wide range of customer preferences for the pizza by offering them thick and thin crust, spicy as well as a mild sauce. The staffs are also offered of side dishes such as salads, breadsticks as well as chicken wings (Parsa et al. 2015). The staffs are paid attention to customer’s needs of the market and adjusted the menu to fit customer’s needs. Deep dishes pizza is famous among the customers who should be there on the menu.
Promotion and affordability: When the customers want to order pizza, then Dominos business name is at the forefront of the mind. The organization pints up magnets with the phone number, it is useful item means the customers should have a number on their hand. The organization also sends of fliers, placing of advertisements in yellow pages as well as coupon inserts into the local newspaper. DePoy and Gitlin (2015) discussed that the customers are viewed pizza as an affordable meal. The organization encouraged purchases by the offering of coupons and special deals in pizza. The customers can also offer of buy-one-get-one-free deal and discounts at slowest nights.
Enhancement of operations with technology: Dwivedi, Rana and Alryalat (2017) argued that technology is proliferated into daily life; Domino’s pizza is used of innovations included digital ordering to make of user experiences easier as well as convenient. In current market, there are 50% of sales throughout the online platforms such as app of Dominos and their website. From the year 2008, company launched of online ordering and taking operations in-house in the year 2010 by introduction of mobile applications as well as voice ordering application. The company is used of Domino’s tracker allows the customers to follow of pizza from over to doorstep.
Enhancing operations with technology
Failure factors of Domino’s pizza
Parsa et al. (2015) noted that Dominos are flourished to expand over continent as well as observed remarkable achievements but it is attained to expand globally. It is unable to manage of the domestic market with proficiency as well as consequences which are lost grounds into the domestic markets. The store is mobilized with the standard of the pizza industry to greater extends, keep with current economic situations where there is rise into price of commodity as well as decrease into the purchasing power. The store is struggling of keep tie among profitability as well as there is maintenance of business standards. Following are the failure factors such as:
Competition of more pizza business: Vartanian et al. (2017) concluded that there is an increase into competition into the fast industry which adds to cluster of the business challenges. The competitors of Dominos are pizza hut, McDonald’s, KFC, Starbucks and Subway. The competitors are performing greater as brand and fast food provider as compared to Dominos. They are specialized into taking out and delivering of pizza into number of stores. Therefore, intense competition has limited the market share of Dominos.
Cost of goods sold: Rise into inflation rate leads to increase the cost of raw materials which leads to a higher process of goods. Dominos has higher overhead cost than their competitors as their competitors have no restaurant to deal with; therefore there is low overhead cost than Dominos. Due to higher overhead cost, Dominos is charged with higher prices. DePoy and Gitlin (2015) stated that the company is not low cost provider, as they are charging of higher prices so that they are accountable for quality pizza as well as excellent services.
A deficit in stockholders: Dominos is carried with a deficit of stockholders of $1.7 billion. With no real foundation, the buying stock of a company is focused on future earnings as well as cash flow of a company. In the future quarter, interest expenses are a culprit which puts pressure on net income growth.
Quality and behavior of staff: Mackey and Gass (2015) mentioned that the business is not provided with required services to the customers. Therefore the customers are not satisfied with their services which affect the brand reputation of the company. The staff members are not provided with quality services to the customers by not responding to their responses. The behavior of staffs is not good as they are not provided with quality services along with quality pizza to their customers. Ledford and Gast (2018) discussed that it directly affects dominos as a whole and a brand as well which in turn affects the store. The difficulties are confronting when there is no business, attempting to eliminate staff also, and the other factor in business if there are insufficient deals and there will be more wages to give.
Conclusion
Armstrong et al. (2015) noted that in today’s market, Dominos pizza is becoming a leader to the delivery of pizza to the residences with more than 9 million of pizza pies which are delivered each week throughout the world. The success factors enabled the pizza industry to set up overseas. Berndt and Gikonyo (2015) argued that failures are resulted from failures to take into account of quality, cost control by adopting of basic models. The company is developed of technology to understand their gradual development of the market outlets as well as competitive advantage.
In order to conduct this study, the store manager of Dominos is interviewed. Wol Wol is the person those are giving the interview to analyze success as well as the failure rate of Dominos. The interview person is worked for five days a week, running the daily operations as a store manager. This store has been franchised for about 7-8 years. As with this report study, data is collected through the use of personal interview (Chaffey & Ellis-Chadwick 2016). Based on three of the aspects, the data collection method is selected such as the cost of data collection method, the accuracy of collected data and efficiency of collected data. The selected data collection method is a personal interview, which is referred for the purpose to evaluate among the interviewee as well as interviewer. This type of interview, the interviewer is gaining insight to provide answers by a treat of questionnaires such as there should be meaningful expressions. This type of interview method is considered as costly as well as time-consuming (Babin & Zikmund 2015). There are some of the advantages of selected data collection method such as personal interview which is summarized as:
- The personal interview helps with providing accurate screening. The interview individual should able to provide accurate information based on screening questions such as gender and age (Bryman 2016).
- The personal interview method captures verbal as well as non-verbal questions, but this method also affords to capture of non-verbal communication such as body language of the interviewer (Flick 2015). It indicates level of enthusiasm to analyze success as well as failure rate of Dominos.
- The interviewer should have control over the interview as well as they can keep the interviewee on track to complete the interview on time. This type of data collection method is free from the technological distractions (Neuman 2016).
- This method is also captured by emotions as well as behaviors of interviewee for capturing of verbal as well as non-verbal questions. It allows for in-depth data collection along with comprehensive understanding (Creswell & Creswell 2017).
- The interviewer is probe for explanations of the responses. There is more substantial, and more extended interview since the participants have more significant commitment to participation. Into the personal interview, the information is collected which provides detailed as well as reliable information (Ledford & Gast 2018). Detailed information is taken into account to supply of required information related to selected topic.
- There is longer duration of personal interview. The purpose of this study is to explain as well as detail of questions which are asked to get in-depth analysis of success as well as failure factors of Dominos. In case of positive response, supplementary questions are being asked and the collected information is reliable as it provides of first hand information (Singh 2015, p.137). The interviewer should gather of personal information of interviewee such as education, age of the respondents throughout personal observations through conduct of personal interview based on selected topic. Therefore, personal interview selection is considered as best method for collecting of data.
The results are analyzed both from the findings of the literature review as well as findings of the interview taken of the store manager. An interview is taken of the store manager of Dominos those are running the daily operations. The chosen store is franchised for about 7-8 years (Gronroos 2016). The products of Dominos are fresh; therefore they are not freezing their products in the store (Sheth & Sisodia 2015). This store was franchised in December 2010. So, for the first three months, when this store was built, it was under the corporate brand of dominos. So, three months after it was built, it was franchised by DCSDAPTA group. The current status of their store is that this store is the most profitable store out of all stores in northern suburbs in terms of profit, out of five stores in the Northern suburbs. Regarding the rating of the store, in the Google the rating is looked as 2.5 stars. As per the store manager, the rating on Google is incorrect due to anyone could go on Google and can rate the store, even though they have never been to the store. Most of the rating of this store is done through use of the company’s website (Kotler 2015). The ratings are done after the customer orders something from the store. So, the store will offer the customer to give feedback as well as rate their service. So, with that question the store manager says that the rating on Google is incorrect due to anyone can rate the store without visiting that store. The most successful actors of a business are having a business plan, managing employees, the demand of the employees have into the store (McDonald & Wilson 2016). The store manager tries to have much staff, trying to identifying competitive advantage, using technology as well as using economic conditions. Apart from this rating factor, there are also some external factors that would affect the business such as the customer service based store; therefore when they are not providing required services to the customers, it provides an adverse effect on the customers. The technology affects the business as there are lot of effects on business. There are slow down of internet connections affects the brand reputation of the store of Dominos. Therefore, web sales, in-store sales allow the customer to have the flexibility to order online and it also has a lot of effect on the business (Edelman & Brandi 2015, p.6). The measures which are taken to attract more customers are having deals for customers as in manager’s specials, having customer appreciation day where the store can sell pizzas for half price or twenty forty percent off to attract them (Cobb, Brookover & Cobb 2015, p.130). There is sending the staff members outside to promote the business in handing out flyers in addition to anything (Shukla, Vyas & Shastri 2018, p.120).
Low confidence of the employees, if the employees are not trained properly, they are not going to do the job a hundred percent. Failure factor of the dominos as the business and franchisee, so, not all their decisions make is implementation. Most of our product changes are implemented by the parent company also cost of goods as they buy the stock from a supplier which is also a significant factor. They are not allowed to purchase things from independent grocery store, and it is also a fact for unsuccessful business (Dwivedi, Rana & Alryalat 2017, p.37). The other factors caused the business to fail are quality furthermore behavior of staff. It directly affects dominos as a whole in addition to a brand as well which in turn affects the store. In terms of sales with averagely Monday-Wednesday, the company is selling about ($4000-$4500) for those days and on the weekends, which is starting from Thursday-Sunday head about $6000-$7000. When the customers are looking for great deal in the store, and they get the deal, then the business becomes successful.
Figure 1: Revenue of Domino’s pizza
(Source: Dominos pizza. az 2017)
Dominos is benefited from higher margin royalty fee it charged the franchise stores as well as revenue it gets from the ingredients as well as equipment it is supplied. From the above figure, the revenue of Domino’s pizza is analyzed from the year 2009-2017, the lowest revenue is in the year 2009, with a number of 1.4 while from the year onwards 2009, there is an increase in revenue from 2011-2017. Most of the revenue of the organization is in the year 2017 with a value of 2.79. 50% of their sales are coming throughout online platforms such as application of Dominos as well as their company’s websites. Therefore, Domino’s pizza is reported of better than expected quarterly revenue as well as profit.
Figure 2: Sales of Dominos vs Pizza Hut
(Source: Dominospizza.az 2017)
|
Dominos |
Pizza Hut |
|
|
2014 |
-2% |
-3% |
|
2015 |
6% |
6% |
|
2016 |
7.50% |
6% |
|
2017 |
8% |
-4% |
From the above figure, it is analyzed that both the same-store sales are analyzed such as Pizza Hut and Domino’s pizza. From the year 2014-2017, the sales are analyzed. In the year 2014, Dominos has sales of -2% while pizza hut has -3%. Next year, both the pizza industries has sales rate of 6%, therefore in this year both the industry are selling their products on same quantity. In the year 2016, as compared to pizza hut, Domino’s has sales rate of 7.5% which is more than pizza hut, i.e. 6%. While in the year 2017, there is a vast difference among the sales of pizza into the market such as 8% is for Dominos and -4% is for pizza hut. The ratings are done after the customer orders something from the store. So, the store will offer the customer to give feedback as well as rate their service. The ratings are done after the customer orders something from the store. So, the store will offer the customer to give feedback as well as rate their service.
The study is based on success as well as failure factors of Dominos pizza. When the customers are not happy with the product, the store management apologies to them, provides them what they want and provide something else in return of it. At the end of the day, the store satisfies the customer with 100% guarantee. The study also analyzes if there is an increase into staffs, there is any chance to reduce the time (Kramer 2014). Increasing the staff does not really decrease the time due to the amount of orders that the customers are getting in the store and also how long the oven times are. The oven time is 7 minutes so the staffs cannot really decrease how much time they send the orders out in the peak. Most stores are converting to the 4-minute oven so that can also have a significant effect on the amount of time they serve the product to the customer. As per the opinion, the cost of goods is probably (Vartanian et al. 2017, p.365). The franchise is a lot of pressure. Franchisees are also trying to earn a living so they would try or do extend measures to try and also have their own profits. At the end of the day it’s only a franchise so cost of goods, they are paying wages, paying the goods as well (Parsa & van der Rest 2017, p.388). So, that has a significant effect on the franchise.
The Domino’s pizza is jumped in most recent earnings which are adjusted the earnings per share which an increase of 26% as well as domestic same-store sales is growing to be 12% for this years. The track record is rare into the industry as well as it points towards continued growth for the chain of pizza. The market is caught into steady growth of the company; however, there is an expansion of abroad as well as impressive same-store sales growth momentum. The stock of Dominos are continued to jump odds as well as keeps moving higher (Berndt & Gikonyo 2015). As per the store manager, pizza is a popular choice for the customers, but they are opening a franchise. The store manager focused on the factors which are considered as the success factors such as there are unique taste of the pizza which are drawn the customers. At the time of owe of pizza franchise, it is used for the franchise’s recipe to create of pizza as the customers come to expect the pizza to taste as they are expected. Aside of all this, there are wide range of the customer preferences for the pizza. Promotion is one of the success factors which are taken at highest priority (Kuntze & Matulich 2016, p.54). Getting the word about the pizza company is required for success. When someone wants for ordering the pizza, then the name of business is forefront of the mind. The store should use of fliers, coupon inserts into the local newspaper as well as place the advertisements into the yellow pages. Customers are view of the pizza as affordable mean for the family (Brinkmann 2014, p.1009). The company is encouraged to purchase by an offering of coupons as well as exclusive deals in addition to certain pizzas. The total number of competing pizza huts into same area is playing a big role into success of the business.
There are right numbers of employees those are the critical factors in the success of the company. The employees are at first point of contact with the customers, and there are higher experiences to influence whether or not the customers are coming back (Panneerselvam 2014). It will not result into increasing of job satisfaction, but it helps to offer of suggestions to the customers those are ordering of food. Based on the failure factors, it is analyzed that the failure factor for any business would be lack of product, selling the same product all the time, not refreshing the menu. Also, poor image if the store is dirty, not clean. It has a significant effect on successful business as well. Low confidence of the employees, if the employees are not trained properly, they are not going to do the job a hundred percent. In terms of quality and behavior of staff may be an issue for the business. The successful as well as profitable of small in addition to small businesses are based on trying to cut down on GST, costs for goods as well, trying not to charge too much GST on goods. In terms of sales, here the store has both quiet days in addition to busy days that mean Monday-Wednesdays are the quiet days, and then there is head to the weekends where the store is very busy due to events; people are partying those are very busy days(Chow, Lea & Leaver 2016, p.277).
Thomas, Silverman, and Nelson (2015) stated that a significant portion of our item changes are actualized by the parent organization additionally cost of merchandise as they purchase the stock from a provider which is likewise a major factor. They are not permitted to buy things from autonomous market and it is additionally a reality for unsuccessful business. Alternate elements made the business come up short are quality moreover conduct of staff (Sheth & Sisodia 2015). Technology is not a destination, but the organization is invested in the technology at some point as well as there is nothing to change. There are number of factor which drives the customer traffic is size of establishments. There are larger size contrasts and there is better noticed. There is an investment before promotion and strongest influences on building of the market share s facility location as well as quality of food items. There are independent establishments which makes opt for lesser expensive locations; it helps to build the traffic throughout promotion and better foods (Shukla, Vyas & Shastri 2018, p.124). The research is suggested that there is establishments which spend more on the promotion as well as advertising which are more profitable in addition to more business can spend less.
Conclusion
It is concluded that the store of Dominos is focused to improve over quality of product, memorable ad campaign, therefore Dominos are admitted a criticisms of the customers incorporated of old pizza tasted such as cardboard are valid. The great path is to awe the client, get their requests on time, take as much time as is needed, having incredible item, conveying the awful item likewise has a ton of awful impact on the business. At the point when the clients are searching for awesome arrangement in the store, and they get the arrangement then the business winds up fruitful. The Parent Organization of the store is Dominos Pizza which is the biggest pizza chain in Australia regarding system, store numbers and furthermore deals and in addition biggest franchisee for the pizza mark. Into the business operations, success comes from combination of the ingredients, and the business of pizza is good one as there are better profit margins. The franchise is required to have ingredients into success of their business. It is analyzed that cost of pizza is equal to flavor ingredients as well as uniqueness. The customers are attached towards the business as the customers are discerned value of their products. Due to higher market value, the pizza industry becomes a competitor for other pizza industries as they are maintaining a balance among cost as well as quality for delivering the best values. The chosen business model is dictated by the store location along with demographic makeup of the target market. Pizza are same on hand, therefore the products of Dominos are unique to their customers. There is shortage into the competition among franchise of pizza as they are considered unique factors to make them stand out from the competitions.
The expectations of customers are met by various pizza franchises whether it is eaten on various day, in the same locations and there are thousand miles away. There are higher consistent indicators of the quality which are taken as customer reviews for various franchise pizza locations. It is considered as best indicator of how the franchisor makes sure of consistent quality. It is summarized that in order to evaluate the franchises of pizza, there are some key factors which help the business to gain customer values, accessibility, unique products as well as consistent quality. There are evaluations of franchise which are required to increase chances to find the franchise which is better fit with the business requirements. Thusly, web deals, in-store deals enable the client to have the adaptability to arrange on the web, and it likewise has a great deal of impact on the business. Additionally, poor picture if the store is messy, not spotless. It will highly affect effective business also. Low certainty of the workers, if the representatives are not prepared legitimately, they are not going to carry out the activity a hundred percent. The store will offer the customer to give feedback as well as rate their service so that they are measured the success rate of their services.
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