How Domino’s Pizza Grew 13000% From 2008 To 2020

Pizza is an emotion and is a food which is known all over the world.  A good pizza could often leave an eater speechless and is one food which could be purchased anywhere in the world.  The fame of Pizza and it’s easy availability throughout the world could be attributed in part to the global pizza chains Domino’s Pizza and Pizza Hut.  It is quite easy to find these pizza outlets in multiple localities in any metropolitan and cosmopolitan cities.  While Domino’s Pizza is now a world famous outlet, raking in a lot of revenue owing to its multiple product offerings, it was not always the case.  At one point in time, Domino’s Pizza was struggling to stay afloat due to failing investor confidence in 2008, which is four years after the pizza chain applied for an initial public offering.  

Domino’s Pizza shares were $2.83/share in 2008 and grew to $367/share in 2020.  This is a whopping margin of 13,000 % growth and the way Domino’s Pizza achieved it is a story for the ages and business school case studies.  Keep reading to find out how Domino’s Pizza managed this fairytale turnaround.

Domino’s Pizza was founded in 1960 by 23 year old Tom Monaghan who dedicated his entire focus on reducing delivery time, reducing cooking time and increasing distribution.  Monaghan’s emphasis on speed and service led to groundbreaking growth with which competitors found it hard to compete.  The ‘30 Minutes or It’s Free’ slogan guarantee, only cemented their place in the hearts of the hungry people everywhere.  

In 2004, Domino’s Pizza applied for an IPO and by 2008 , they scaled to a multi billion dollar business.  But, prospects were looking dim in 2008 even after applying for an IPO because growth had stalled, competitive threats from Pizza Hut and a $ 1 billion dollar debt on Domino’s’ balance sheets.

ALSO READ: How KhataBook Grew From Simple SMS App To Leading FinTech App In India

Domino’s Pizza did a focus group analysis and found out they were good at everything else except pizza.  The focus groups found Domino’s pizza tasted like cardboard, totally devoid of flavour and the sauce tasted just like ketchup.  This was due to a number of trade offs which were made in the name of speed like canned and frozen ingredients.  

Patrick Doyle, the then CEO of Domino’s Pizza leaned into the feedback and launched an ad campaign which said “Our Pizza Sucks” and promised to go back to the drawing board to work on the criticism from the focus groups.  The culinary team had to reinvent their pizza and had to build it from scratch.  The culinary team ended up testing more than 7500 combinations.  Many on the executive team at that time were in fear of failure.  There was a fear of the testing leading to even larger problems and a chance of losing the advantage of speedy delivery.  

Doyle had to break through the loss aversion barrier which means the mindset of playing not to lose rather than playing to win.  Doyle would say “The pain of loss is double the pleasure of winning (sic,)” meaning even he advised caution during situations which demand creativity.  The reinvention paid off as customers loved every new recipe launched by Domino’s Pizza and an example would be the pan pizza which was released in 2012 and is still in circulation.  Doyle’s reinvention showed customers that Domino’s Pizza cared about their feedback.  Following the success of their newly reinvented pizza, Domino’s Pizza focused on improving distribution channels and delivery technology.  Since then, there has been no stopping Domino’s Pizza, and their share price in 2020 only serves to show the trust their customers have on them.

feaWe hope this article has awakened a craving for a Domino’s PIzza in you.  Do let us know in the comments if there are any similar growth stories you know off and we would be glad to cover them on Startup Stories.