Pizza Redo: Domino's Sizzling Secrets
It hasn’t even been four years since Domino’s Pizza CEO Patrick Doyle stared into a television camera and admitted to the American public what it already knew: His pizza tasted like cardboard.
Yeah, Domino’s was good for a quick meal delivered to your doorstep. But quality fare? Nah. This was grub for college kids to inhale during an overnight cram session, or that a single dad would serve up every other weekend. A 2009 survey of consumer taste preferences ranked Domino’s tied for last among the major pizza chains.
Willing to admit reality and improve his product, Doyle could have tried any number of turnaround strategies. But to start by simply acknowledging his product was subpar? It was virtually unheard of in food service circles. “You can either use negative comments to get you down, or you can use them to excite you and energize your process of making a better pizza. We did the latter,” Doyle said in the “Pizza Turnaround” video that began to change his company’s fortunes.
Domino’s chefs reimagined their pizza from the crust up, and executives retrained roughly 25,000 employees in 5,000 stores and then listened as reviews came in.
Many were good, and sales spiked some 10 percent the following year, 2010. But Domino’s still suffered a few knocks, like complaints that the pizzas in commercials bore little resemblance to the ones delivered to doorsteps. So the company adopted a “no faked photography” policy, and Doyle also encouraged customers to upload their own pizza photos on social media. When a few less-than-appetizing pies popped up, the company baked new pizzas, tracked down the same customers and filmed the surprise deliveries. Accountability and transparency surpassed speed as a mantra.
Since reaching its low point in late 2008, Domino’s stock price has rebounded twentyfold, and SUCCESS wanted to know the secrets to Doyle’s winning approach.
Q: Why did you opt for such a radical change instead of making gradual improvements?
A: In 2007–08, as the economy was starting to slow down and through some issues of our own, our domestic business had slowed down a lot. We had a couple of years in a row of negative same-store sales, and we finally got in a room and said, “We need to fix what we know has always been an issue,” which was people’s perceptions about the quality of our pizza.… If we tested [our pizza] from a brown box with no brand, they actually liked it better than when we put our brand on it. Not many businesses survive by having negative brand equity, and that was the position we were in.
I think most organizations know where the big hill is. The question is whether or not you are willing to take the big hill.
Q: What factors did you weigh before deciding to broadcast the company’s problems?
A: The most important thing was to get our franchisees on board. Getting them to believe in what we were doing was the single most important thing we had to do.
The other big calculation was, How do you launch it? We could have gone with the classic “new and improved.” Frankly, consumers would have yawned. They wouldn’t have paid any attention. So we thought that there was some compelling tension, if you will, in going out and admitting to people, “Look, we recognize that you have a problem with our pizza, we’re listening to you, and we’re gonna fix it.”
Q: How did you get companywide buy-in?
A: We did it face to face. We went out, over the course of a week, and had five meetings around the country, one a day, to start laying out the case for making a change. Then we showed our franchisees the old pizza and the new pizza, had them try both, took their feedback, and then at the end asked, “How many of you would prefer to stay with the old pizza?”
I think out of 1,000 franchisees, 13 said they wanted to stay with the old pizza. Getting in front of franchisees was critically important. If they weren’t heard going into this process, it would have failed.
Q: How did you analyze the potential risks and benefits of your strategy?
A: In my mind, the risk is having a strategy that doesn’t depend on listening to your customer. Twenty to 30 years ago, big brands could go out and buy hundreds of millions of dollars’ worth of advertising and basically tell consumers what to think about their products. It was a one-way conversation. Today every consumer has the ability to share his opinion with hundreds, or thousands, or—if your last name is Kardashian—tens of millions of people.
Q: What else do executives need to know about today’s consumer?
A: Consumers today trust their friends and families and, in general, they don’t trust big organizations—businesses, banks, governments. So the brand lives in social media. In many cases, [consumers] will trust an anonymous poster on Yelp more than the brand itself. So it’s fairly low-risk to embrace that feedback because it’s the only path to success right now.
Q: Lots of organizations are tapping you for turnaround advice. What do you tell them?
A: Three things: First, almost all organizations know what their big problem is. It’s about fixing the problem and deciding you’re going to take on that big hill.
Second, recognize the power of social media and build a two-way conversation with your customers.
And third, in a world where there are hundreds of television channels and people online choosing what they are going to engage with, you need to do something pretty different if you’re going to break through. A slightly improved version of what you used to do or what others are doing is not going to drive you to great success.