This sixth post in the series on India’s Quick Service Restaurant (QSR) brands is on Domino’s Pizza. With this post, the series has so far covered seven leading QSR brands.
The concluding post in the series tomorrow will be an overview on the QSR industry.
Domino’s, the leader in pizza delivery (32% share of U.S. market), is celebrating it’s golden jubilee next year. It’s 8,900 stores in 60 countries, of which 5,000 are in the U.S., generated $5.5 Billion in revenue in ‘08.
In the U.S., it relies chiefly on small franchisees, there are about 1,200, each owns 3-4 outlets. They also have close to 500 company outlets : these provide the testing ground for new products and technology, among other things. In international markets, however, they rely exclusively on master franchisees.
In 1998, PE firm Bain Capital and others bought Dominos from the founder.
Domino’s is facing a challenging time in the home market due to the economic downturn. To this end, they have been looking at ‘day parts’ beyond dinner. They have also made innovations in the menu. In the last one year, they have launched Oven Baked Sandwiches, Bread Bowl Pasta, Lava Cake desserts and American Legends specialty pizzas. Of these, the Lava Cake, priced at INR 40, and pastas are in India already.
And as regards Oven Baked Sandwiches, they say that they are already – in a few months – the largest sandwich delivery company in the world. With sandwiches, the brand they are taking on – most obviously – is Subway.
One important past innovation: the Heat Wave hot bag, introduced in 1998.
This is a company that prides itself on operational efficiency; they have a focused menu (pizzas mainly), small store sizes that are optimized for home delivery and carry out (not for dining-in) and a much touted 30 minute delivery promise.
They use IT for business advantage. They have a proprietary point-of-sale system called PULSE. And they use GIS (geographic information system software) to identify optimal locations for new outlets.
Being in the pizza delivery (well food delivery actually, now that they have sandwiches, cakes et al) minimizes the dining-in space and associated real estate costs.
They work on the brand too; say they have spent $1.4 billion in the last 5 years. They ranked #1 in customer satisfaction in the American Consumer Satisfaction Index for 2009 for the limited service restaurants category, ahead of Starbucks, Pizza Hut, McDonalds and others!
Hungry Kya? The good news is that if you order a Domino’s in India, you need to wait for (an average of) only 22.5 minutes. What should actually make you feel good is that this waiting time is less than what Domino’s customers in other top 10 international markets encounter 🙂
Domino’s Pizza has been in India since 1996 via a master franchise, Jubilant Foodworks. Jubilant, promoted by the Bhartias and in which JP Morgan too holds equity, recently filed for an IPO. It’s looking to raise INR 3 billion and Morgan’s looking to exit.
Thanks to this IPO filing, there’s information available aplenty on average delivery time and other nitty gritty of the India operations.
India ranks 6th among Domino’s 59 international markets by number of outlets. As of end Aug ’09, there were 274 stores in 55 cities and another 5 in Sri Lanka.
It’s city-wise tally read 54 in the National Capital Region (including 33 in Delhi city), Mumbai 49, Bangalore 34, Hyderabad 16, Chennai 18, Pune 14, Kolkata 12 and Pune 14. The company sees this number going up to 400.
The country is served by four regional commissaries or production kitchens-cum-warehouses at Delhi, Mumbai, Bangalore and Kolkata, where pizza dough is prepared using a proprietory recipe.
21.74 million pizzas, including add-ons, were sold in the last fiscal year giving a revenue of INR 2806 million and a profit after tax of INR 67 million. Volumes grew about 40% over the previous year.
Not so good, this means they make just 3 Rupees per pizza (: Wonder why this is so low. Even customer spend on tips to the pizza delivery boys would be higher !
Ad spend, interestingly, is a generous INR 200 million. The company claims to have a 65% share in the organized pizza home delivery market.
The company employs 7,300 odd people, most of them at it’s stores. Hewitt Associates ranked it as the 9th best employer in Asia in 2009; it’s won other good employer accolades too. Here’s a company job posting with this list.
The company went through a difficult patch in earlier years.
Unlike it’s competitor Pizza Hut, Domino’s is a value-for-money brand.
I recently learnt that they have pizzas (regular 8″ size, fills one moderately hungry stomach 🙂 ) for as low as INR 39 (+10.2% tax).
On an average, an Indian who today eats pizza does so just once a year, says India CEO Ajay Kaul. Such low usage is typical of many consumer categories in an early market. In my experience it’s the outcome of having a large proportion of occasional users in the market ( a long tail effect).
Like Pizza Hut, which has its Very Into Pizza (VIP) Club (covered in post III of this series), Domino’s too has it’s WOW club. This is a CRM initiative to grow consumption.
Domino’s has both a national hotline and store-wise numbers where one can call for delivery.
A few months ago, in Aug ’09, the company said they were testing online ordering in Bangalore. It’s not yet live nationally, guess this could happen soon.
Online ordering accounts for 19% of the business in the U.S., is as high as 45% in some stores, and has higher ticket size than offline.
Online is indeed a convenient way for fast food customers to view and choose from a selection (menu). It is superior to calling in, since phone lines and service agents tend to be busy during the peak lunch / dinner hours.
I believe online ordering apps for iPhone and other mobile devices can be very successful. In addition to convenience, these apps would offer calorie counters and loyalty discounts.
And to round this off, here’s an unusual but most appropriate CSR / marketing initiative from Domino’s Pizza India.
Do you prefer Pizza Hut or Domino’s ?
In a blind product test of Domino’s vis-a-vis Pizza Hut, I guess many of us would find Pizza Hut tastier. On a pizza to pizza basis though, Domino’s is lower priced and (perception) somewhat faster with their home delivery, so some of us would probably choose Domino’s.
Pizza Hut would also be prefered when one wants to dine out / celebrate.
What is your preference !