case2 • Domino’sPizza,inc.

,2013 405 406 strategicmanagementcases

Exhibit 1 Domino’s Organizational Chart

Domino’s Pizza, Inc., 2013

Chairman, David Brandon

www.dominos.com, DPZ
President, CEO, and Director,
Patrick Doyle
Based in Ann Arbor, Michigan, Domino’s is the largest pizza delivery company in the USA hav-
ing a 22.5 percent share of the pizza delivery market. Domino’s digital ordering channels include
online ordering at www.dominos.com, mobile ordering at http://mobile.dominos.com, and order-
EVP
ing on iPhone, Kindle Fire, and Android apps. More than $2 billion of Domino’s pizza is ordered EVP Build
Communi- EVP
online annually. There are more than 10,300 Domino’s stores in over 70 countries. Domino’s had EVP and the Brand
cations, EVP EVP and Franchise EVP,
CFO, EVP and and EVP
sales of over $7.4 billion in 2012, with $3.6 billion of that coming from the USA. Michael CIO Chief
Legislative Franchise General Operations
PeopleFirst
Domino’s
Affairs, and Relations Counsel and Team USA
Lawton Marketing
Copyright by Fred David Books LLC. (Written by Forest R. David) Officer
Investor Development
Relations

History
Growing up in foster homes most of their childhood, Tom Monaghan and his brother James
borrowed $900 in 1960 to purchase a mom-and-pop pizza store in Ypsilanti, Michigan, named
Domi-Nick’s. After trading his brother James a Volkswagen Beetle for his half of the business in
1961, Tom changed the store name in 1965 from Domi-Nick’s to Domino’s Pizza Inc. The com- unit type structure by region (or by franchised versus company owned) may be more effective in
pany experienced steady growth during the 1960s, and by 1978, there were 200 Domino’s stores promoting delegation of authority, responsibility, and accountability.
in the USA. During the 1980s, the company expanded rapidly both in the USA and internationally.
By the end of the decade, Domino’s had more than 5,000 stores in the USA, Canada, United Business Segments
Kingdom, Japan, Australia, and Colombia. By 1998, there were more than 6,000 Dominos, with
1,500 located outside the USA. Tom Monaghan retired in 1998 and sold 93!percent of the company Domino’s provides financial information for four key business segments: (1) domestic
(worth $1 billion) to Bain Capital Inc. In the six years following the sale, Domino’s enjoyed great company-owned stores, (2) domestic franchise stores, (3) domestic supply chain, and (4) inter-
success under Bain Capital and in 2004 Domino’s became a publically traded company on the New national. Note in Exhibit 2 that the largest revenue-generating segment is the domestic supply
York Stock Exchange under the ticker symbol DPZ. The initial stock price was $16 per share and chain with more than 50 percent of all revenue. Note also the large revenue numbers for the
placed a value on the company at more than $2 billion (double the price Bain paid). relatively few company owned stores, because each Domino’s domestic franchisee owns his or
Domino’s changed its 49-year-old recipe at year end 2009 and started a heavily advertised her own store(s) and reports their revenues on their own personal financial statements rather than
marketing campaign called “new inspired pizza.” Domino’s stock price appreciated from around Domino’s. From franchisees, Domino’s reports only the royalties and advertising fees it receives
$8 a share at the start of 2010 to $60 in mid-2003. Fueled by the new recipe and new products, from franchisees as revenue. The financial data for the international supply chain centers are in-
Domino’s celebrated its 50th anniversary in 2010 and was awarded best pizza chain in 2010 cluded in the international division, not under the domestic supply chain division. Also note in
and 2011 by Pizza Today magazine, marking the first time ever that the same pizza chain had Exhibit 2 the slight revenue decline in 2012 for domestic company-owned stores.
received the award in consecutive years. Domino’s CEO Patrick Doyle was named the best CEO Exhibit 3 reveals that for 2012, Domino’s international stores had the highest growth in
of 2011 by CNBC. Domino’s was recently ranked number 1 in Forbes magazine’s “Top 20 revenue, followed by U.S. company-owned stores. However the sales growth among all three
Franchises for the Money” list. segments slowed in 2012.
About 96 percent of Domino’s stores are owned by franchisees. There are very few Exhibit 4 reveals that Domino’s growth in number of stores is highest outside the USA,
company-owned Domino’s stores. with the actual number of company-owned stores in the USA falling to 388. About 10,000
employees work for Domino’s, but counting all workers for all franchisees, this number is closer
Corporate Philosophy and Mission Statement to 205,000.

Domino’s does not have a stated vision statement, but the company mission statement is as
follows: “Exceptional franchisees and team members on a mission to be the best pizza delivery
company in the world.” Domino’s “guiding principles” are based on the concept of one united
brand, system and team: Exhibit 2 Finances by Segment (in millions)

• putting people first; revenue, revenue, revenue, Revenue

• striving to make every customer a loyal customer; Business Segment 2012 2011 2010 increase(%)
• delivering with smart hustle and positive energy; and Domestic company-owned stores $324 $336 $345 (3.6)
• winning by improving results every day. (2012 Annual Report) Domestic franchise 195 187 173 4.3
Domestic supply chain 942 928 876 1.5
Organizational Structure International 217 201 176 8.0
TOTAL $1,678 $1,652 $1,571 1.6
As indicated in Exhibit 1, Domino’s has 11 top executives, mostly executive vice-presidents
(EVPs). It appears that Domino’s operates from a functional organizational structure with Doyle Source: Company documents.
being “where the buck stops,” although for a firm of this size, a divisional or strategic business Note: Domino’s 2012 year ended 1-31-13.
 case2 • Domino’sPizza,inc.,2013 407 408 strategicmanagementcases

Exhibit 3 Same Store Sales Growth (Percent) Exhibit 5 Top 10 Countries Where Domino’s Are Located

U.s.company- U.s.franchise- international numberof numberof

ownedstores ownedstores stores country stores,2011 stores,2012 %change
2008 –2.2 –5.2 6.2 United Kingdom 670 720 7.5
2009 –0.9 0.6 4.3 Mexico 577 581 0.7
2010 9.7 10.0 6.9 Australia 450 464 3.1
2011 4.1 3.4 6.8 India 439 522 25.7
2012 1.3 3.2 5.2 South Korea 358 372 3.9
Canada 354 368 3.9
Source: Company documents.
Turkey 220 284 29.0
Japan 205 245 19.5
Exhibit 4 Growth: Total Number of Domino’s Stores France 195 215 10.3
U.s.company- U.s.franchise- international Taiwan 141 140 –
ownedstores ownedstores stores
Source: Company documents.
2008 489 4,558 3,736
2009 466 4,461 4,072
2010 454 4,475 4,422
2011 394 4,513 4,835
more than 75 percent of all Domino’s international stores. Note that the United Kingdom has the
most Domino’s of all countries, followed by Mexico. Among the company’s six “international”
2012 388 4,540 5,327
supply chain centers, four of these are in Canada, one is in Alaska, and one is in Hawaii. (It
Source: Company documents. is! unclear why Domino’s categorizes Alaska and Hawaii as international). As with Domestic
franchisee stores, most of the company’s revenue in the international division comes from
Domestic Supply Chain royalty!payments and advertising, as well as the sales of food and supplies to certain markets
(predominantly Canada, Alaska, and Hawaii). Note in Exhibit 5 the rapid growth in Domino’s
Domino’s domestic supply chain supplies franchisees with dough, vegetables, ovens, uniforms,
and much more, enabling better control, pizza consistency, and timely delivery of products. This stores in India, Turkey, and Japan. The largest Domino’s franchisee outside the USA operates
911 stores.
backward integration strategy enables Domino’s to offer pizza at lower prices and allows store
managers to focus on store operations rather than mixing dough on site, prepping vegetables,
and bargaining with independent suppliers for ingredients. Domino’s has 16 regional dough-
manufacturing and supply chain centers and leases a fleet of more than 400 trucks to aid in
Internal Issues
delivering products to stores twice a week. However, Dominos’ franchisees are not required!to Domino’s has a vertically integrated supply chain where they have backward control to some
purchase supplies from Domino’s, but interestingly more than 99 percent do purchase all its extent over many of its supplies such as dough, veggies, equipment, and uniforms and forward
supplies from the company’s domestic supply chain segment. To ensure this division remains control over around 400 retail stores that are company owned. Domino’s offers little to nothing
viable, Domino’s provides profit-sharing incentives to franchisees to buy its products from in terms of healthy food options on the menu, such as salads or fruit. Although this approach
Domino’s. In addition to the 16 domestic supply chain centers, Domino’s also operates 6 supply enables Domino’s to focus exclusively on pizza, this practice also increases the firm’s vulner-
chain centers outside the USA. ability to the increasingly health-minded customer and possible government mandates for fast-
food restaurants to stop using certain ingredients and preservatives, and potentially forcing all
Domestic Stores restaurants to label all nutrition information on the menu at the point of sale. Such a law would
The company’s domestic stores division includes a network of 4,540 stores operated by 1,026 not be favorable to Domino’s.
franchisees and 388 company-owned stores in the USA. Domino’s desires to have all of its stores Domino’s attributes much of its success to an incentive-based system for franchisees in
owned and operated by franchisees, but if certain stores are underperforming, Domino’s often which it actively shares in profits through increasing demand for new stores and through pur-
will purchase these stores in hopes of turning them around and then refranchising them at a later chasing supplies from the Domino’s supply chain. Domino’s individual franchisee stores and
date. Domino’s uses company-owned stores as test sites for new products, promotions, new po- company-owned stores also enjoy a simple and effective store layout enabling pizza delivery
tential store layout improvements, and as test sites for prospective new franchisees. and carryout orders to be processed and executed efficiently as compared to many competitors.
Although the typical franchisee of Domino’s operates 4 stores, the nine largest franchisees Unlike Domino’s, many rival pizza firms use a dine-in business model, which is much more
operate more than 50 stores, including the largest domestic franchisee that operates 135 stores. costly than Domino’s strategy. Competitive advantages such as these make Domino’s an at-
Currently, Domino’s has 1,077 different domestic franchisees with the average franchisee being tractive franchisee option in the quick-service restaurant (QSR) market because overhead and
in Domino’s system for an impressive 14 years. Much of this longevity can be attributed to investment is generally cheaper than competing firms.
Domino’s requiring prospective franchisees to manage a store for 1 year before entering into a
long-term contract with Domino’s. Domino’s feels this system is unique to the pizza industry
and provides a competitive advantage over rival pizza firms. Sustainability
Sustainability refers to the extent that an organization’s operations and actions protect, mend,
International Division and preserve rather than harm or destroy the natural environment. Many firms today develop
Domino’s has 5,327 franchise stores outside the USA. The company’s international revenues an annual sustainability report, similar to an annual report, to reveal to stakeholders its actions
as a percent of total revenues increased to 13.0 percent in 2012, up from 11.2 percent in 2010. and commitment to sustainability. However, Domino’s does not produce an annual sustainability
Exhibit 5 provides is a breakdown of Domino’s stores in the top 10 markets, which account for report nor does the company have a sustainability statement on its website.
 case2 • Domino’sPizza,inc.,2013 409 410 strategicmanagementcases

Advertising and Sales Force Exhibit 7 Domino’s Pizza, Balance Sheets (In thousands except share
Dominos domestic stores contributed 5.5 percent of all retail sales to support national and and per share amounts)
local advertising campaigns. Domino’s expects this rate to remain unchanged for the foresee-
2011 2012
able future. Much of those monies are devoted to mass-mail flyers promoting specials at the
local!Domino’s. ASSETS
CURRENT ASSETS:
Domino’s Pulse Point-of-Sale System Cash and cash equivalents $ 50,292 $ 54,813
To maximize efficiencies and provide timely financial and marketing data, Domino’s requires Restricted cash and cash equivalents 92,612 60,015
all stores to install and use its PULSE system that now exists in all company-owned stores Accounts receivable, net of reserves of $5,446 87,200 94,103
and 98 percent of franchisee-owned stores. The system enables touch-screen ordering that in!2011 and $5,906 in 2012
improves order accuracy and efficiency and provides the driver with directions and the best Inventories 30,702 31,061
route to take for multiple deliveries, saving time and money. In addition, the PULSE system Notes receivable, net of reserves of $324 in 2011 945 1,858
better enables Domino’s to ensure it receives full royalties from all transactions in what is!often and $630 in 2012
a cash business, assuming the franchisees are honest and always use the PULSE system when Prepaid expenses and other 12,232 11,210
receiving orders.
Advertising fund assets, restricted 36,281 37,917
Deferred income taxes 16,579 15,290
Finance Total current assets 326,843 306,267
Domino’s recent income statements and balance sheets are provided in Exhibits 6 and 7,
respectively. Note that Domino’s revenues increased 2.6 percent in 2012 and the firm’s PROPERTY, PLANT AND EQUIPMENT:
long-term debt rose slightly to $1.53 billion. Note the company has zero goodwill on its balance Land and buildings 23,714 24,460
sheet. Leasehold and other improvements 79,518 80,279
Equipment 171,726 168,452
Construction in Process 6,052 9,967
281,010 283,158
Exhibit 6 Domino’s Pizza, Statements of Income (In thousands,
Accumulated depreciation and amortization (188,610) (191,713)
except per share amounts)
Property, plant and equipment, net 92,400 91,445
2010 2011 2012
OTHER ASSETS:
REVENUES: Investments in marketable securities, restricted 1,538 2,097
Domestic company-owned stores $ 345,636 $ 336,349 $ 323,652 Notes receivable, less current portion, net of 5,070 3,028
Domestic franchise 173,345 187,007 195,000 reserves of $1,735 in 2011 and $814 in 2012
Domestic supply chain 875,517 927,904 942,219 Deferred financing costs, net of accumulated 16,051 34,787
International 176,396 200,933 217,568 amortization of $25,590 in 2011 and $5,201 in 2012
Total revenues 1,570,894 1,652,193 1,678,439 Goodwill 16,649 16,598
COST OF SALES: Capitalized software, net of accumulated amortization of 8,176 11,387
Domestic company-owned stores 278,297 267,066 247,391 $51,274 in 2011 and $48,381 in 2012
Domestic supply chain 778,510 831,665 843,329 Other assets, net of accumulated amortization of 8,958 8,635
$4,070 in 2011 and $4,404 in 2012
International 75,498 82,946 86,381
Deferred income taxes 4,858 3,953
Total cost of sales 1,132,305 1,181,677 1,177,101
OPERATING MARGIN 438,589 470,516 501,338 Total other assets 61,300 80,485
GENERAL AND ADMINISTRATIVE 210,887 211,371 219,007 Total assets $ 480,543 $ 478,197
INCOME FROM OPERATIONS 227,702 259,145 282,331 LIABILITIES AND STOCKHOLDERS’ DEFICIT
INTEREST INCOME 244 296 304 CURRENT LIABILITIES: 2011 2012
INTEREST EXPENSE (96,810) (91,635) (101,448) Current portion of long-term debt $ 904 $ 24,349
OTHER 7,809 – – Accounts payable 69,714 77,414
INCOME BEFORE PROVISION FOR 138,945 167,806 181,187 Accrued compensation 21,691 21,843
INCOME TAXES
Accrued interest 15,775 15,035
PROVISION FOR INCOME TAXES 51,028 62,445 68,795
Insurance reserves 13,023 12,964
NET INCOME $ 87,917 $ 105,361 $ 112,392
Legal reserves 10,069 5,025
EARNINGS PER SHARE:
Advertising fund liabilities 36,281 37,917
Common Stock—basic $ 1.50 $ 1.79 $ 1.99
Other accrued liabilities 29,718 34,951
Common Stock—diluted $ 1.45 $ 1.71 $ 1.91
Total current liabilities $ 197,175 $ 229,498
Source: 2012 Form 10K, p. 50.
 case2 • Domino’sPizza,inc.,2013 411 412 strategicmanagementcases

Exhibit 7 Continued Papa John’s International, Inc.

Headquartered in Louisville, Kentucky, and founded in 1985, Papa John’s operates 3,883 pizza
2011 2012 restaurants with 3,255 of these being franchisee-owned and 628 being company-owned stores.
LONG-TERM LIABILITIES: Papa John’s has restaurants in all 50 U.S. states and 32 foreign markets. The company currently
Long-term debt, less current portion $ 1,450,369 $ 1,536,443
has 16,500 full-time employees and markets its pizza under the slogan “better ingredients,
better pizza.” Between 2001 and 2012, Papa John’s was ranked number one (by the American
Insurance Reserves 21,334 24,195
Customer Satisfaction Index) among national pizza chains for 10 of the 11 years during
Deferred income taxes 5,021 7,001
this period. The company reported revenue of more than $1.2 billion for year-end 2011, and
Other accrued liabilities 16,383 16,583 consistent with the industry, it shows no revenue allocated to research and development. Papa
Total long-term liabilities 1,493,107 1,584,222 John’s carries $75 million in goodwill on its balance sheet; founder and CEO John Schnatter
Total liabilities 1,690,282 1,813,720 owns more than 20 percent of the chain. Papa John’s offers several different pizza styles and
COMMITMENTS AND CONTINGENCIES
topping choices, as well as a few specialty pies such as The Works and The Meats. Papa John’s
STOCKHOLDERS’ DEFICIT: stores typically offer delivery and carryout service only.
Common stock, par value $0.01 per share; 577 563
Exhibit 8 provides a comparison between Domino’s and Papa John’s. Note that Domino’s
170,000,000 shares authorized; 57,741,208 in 2011 appears to generate more revenue with less employees, but that is not true because employees
and 56,313,249 in 2012 issued and outstanding at franchised stores are not Domino’s employees. Pizza Inn’s 57 employees work at company-
Preferred stock, par value $0.01 per share; 5,000,000 – – owned restaurants, not franchised stores.
shares authorized, none issued
Additional paid-in capital – 1,664 Pizza Inn Holdings, Inc.
Pizza Inn is a relatively small chain of franchised quick-service pizza restaurants, with more than
Retained deficit (1,207,915) (1,335,364)
300 locations in the USA and the Middle East. Pizza Inns offer pizzas, pastas, and sandwiches,
Accumulated other comprehensive loss (2,401) (2,386)
along with salads and desserts. Most locations offer buffet-style and table service, whereas other
Total stockholders’ deficit (1,209,739) (1,335,523) units are strictly delivery and carryout units. The chain also has limited-menu express carryout
Total liabilities and stockholders’ deficit $ 480,543 $ 478,197 units in convenience stores and airport terminals, and on college campuses. Pizza Inn’s domestic
locations are concentrated in more than 15 southern states, with about half located in Texas and
Source: 2012 Form 10K, pp 48-49.
North Carolina.

Little Caesars
Competitors
Headquartered in Detroit, Michigan, and privately held, Little Caesars is famous for its adver-
Competition in both the USA and international pizza-delivery and carry-out business is tising slogan, “Pizza! Pizza!” which was introduced in 1979. The phrase refers to two pizzas
extremely intense, with Pizza Hut (owned by Yum Brands) being the largest competitor in the being offered for the comparable price of a single pizza from competitors. In November 2010,
industry. Pizza Hut’s revenues are more than 60 percent greater than Domino’s. Papa John’s Little Caesars introduced Pizza! Pizza! Pantastic, denying that the return of “Pizza! Pizza!”
and Little Caesars are also fierce rivals in the industry. In fact, Little Caesars was listed as the had any relationship to the recent success of Domino’s. Little Caesars operates under its parent
fastest-growing pizza chain in 2010, with revenues up 13.6 percent over 2009, followed by Pizza Little Caesars Enterprises and is estimated to be the fourth largest pizza chain in the USA. Little
Hut’s 8 percent increase and Domino’s 7.2 percent increase. In addition to the three main rivals, Caesars operates in 30 foreign countries.
Domino’s faces intense competition from many local mom-and-pop pizza stores, frozen pizzas
from the grocery store, as well as hundreds of non-pizza fast-food options. Pizza Hut, Domino’s, External Issues
and Papa John’s account for 51 percent of all consumer spending on pizza delivery stores in the
USA, with the other 49 percent coming from regional or mom-and-pop establishments. Domino’s competes in the Quick Service Restaurant (QSR) pizza category, which consists of
Internationally, Pizza Hut and Domino’s are the main players in the industry, but various two categories: 1) delivery and 2) carry-out. Delivery revenues for the industry in 2012 were
countries have numerous national companies and thousands of mom-and-pop pizza and Italian $9.6 billion, up only slightly the last few years. The delivery portion accounts for 30 percent of
restaurants vie for business as well. As with the domestic market, some customers consider local
pizza stores to offer better quality products than large chains and are willing to pay marginally
higher prices for this perceived quality.
Another competitor is Pizza Inn Holdings, Inc., based in The Colony, Texas. Pizza Inn owns Exhibit 8 A Comparison Between Domino’s and Papa John’s
10 stores and franchises out 300 more stores. Domino’s PapaJohn’s PizzainnHoldings

Pizza Hut Revenue 1.65B 1.24B 43.5M

A division of Yum Brands, Pizza Hut is based in Plano, Texas, and operates more than Market Capitalization 1.76B 1.16B 20.1M
7,200 restaurants in the USA and more than 5,600 restaurants internationally in more than Gross Margin 0.29 0.31 0.12
90!countries. In contrast to Domino’s, almost all Pizza Huts are dine-in restaurants. Pizza Huts Net Income 98.99M 55.97M 888K
serve pan pizza, as well as its thin n’ crispy, stuffed crust, hand tossed, and sicilian. Other menu EPS 1.63 2.24 0.10
items include pasta, salads, and sandwiches. Pizza Huts offer dine-in service at its famous red-
Price/Earnings Ratio 18.67 21.69 24.51
roofed restaurants, as well as carryout and delivery service. About 15 percent of all Pizza Huts
Number of Employees 10K 16.5K 57
are company-operated, whereas the remaining stores are franchised. The world’s largest fast
food company, YUM Brands also owns and operates Kentucky Fried Chicken (KFC), Long John EPS, earnings per share.
Silvers, and Taco Bell. Pizza Hut is Domino’s major pizza rival outside of the USA. Source: Company documents.
 case2 • Domino’sPizza,inc.,2013 413 414 strategicmanagementcases

the total QSP pizza revenues. However, the carry-out portion of the industry grew revenues from food products. Domino’s has recently capitalized on this well with the introduction of its
$14.1 billion in 2011 to $14.6 billion in 2012. Domino’s is the market leader in delivery and sec- artisan pizzas and new recipes (or higher quality products) for its crust, sauce, and cheeses.
ond largest in carry-out. Outside of the USA, pizza delivery is underdeveloped, with Domino’s In addition, Domino’s offers many pick up specials. Although an inconvenience over delivery,
and one rival being the only firms. many customers in today’s climate are willing to tolerate a degree of inconvenience that they
historically were not if they can get a better deal.
Nutrition Concerns Similar to Domino’s, many restaurant owners in the fast-food industry have experienced
An area of concern for all fast-food establishments, including pizza stores, is the growing stronger growth in international markets than domestic markets. This trend is expected to con-
health-minded customer, as well as the growing pressure from government agencies to label all tinue, especially in China and other developing nations because many U.S. fast-food options are
products with nutrition information. There have been battles between the restaurant industry and still novel, even in Europe. According to the S&P Industry Surveys, QSRs are expected to see
government agencies for many years, but much like the tobacco industry (in respect to labeling a sales increase of 3 percent in 2012 and orders to increase 1.5 percent as a result in large part
its products). It appears the war is close to being lost for the restaurant industry. Domino’s item- of consumers trading down to cheaper restaurant alternatives. There also is a steadily growing
izes nutrition information on its website, but forces the customer to add the calories for crust, international appetite for U.S. fast food and an improving global economy. These positive trends
sauce, cheese, and topping, and then divide by the number of slices to derive the total calorie are expected to continue into 2013 and should bode well for Domino’s with its strong interna-
count per slice. After doing the calculations, one large slice of hand-tossed pepperoni pizza for tional presence.
example has 300 calories and 12 grams of fat, and there are 8 slices in a pizza. To complicate
matters for restaurants such as Domino’s, it is difficult to provide accurate nutrition labels when Ethics and Corporate Citizenship
there can be an almost endless combination of ingredients on a pizza. For example, someone
may order a large sausage pizza with onions and olives whereas someone else might order extra Domino’s has two extensive “Code of Ethics” documents on its website: one statement for its
cheese and tomatoes. Having to print out nutrition labels for all these combinations would be employees and one statement for its executives. The documents outline matters such as: conflicts
of interest, how to report unethical conduct, fair dealing with all employees, compliance with
quite costly as opposed to a restaurant like McDonald’s where it can print the nutrition label
on the Big Mac because there is uniformity in ingredients and the label is understood to be for laws, proper way to use company assets, and much more.
the base item. However, Domino’s PULSE system could possibly be adjusted to resolve this In addition to Domino’s Code of Ethics statements, the company is noted for its corporate
citizenship record in particular with St. Jude Children’s Research Hospital. Since 2006,
potential issue.
Chipotle Mexican Grill claims to only use meat and dairy products from free-ranging Domino’s has donated more than $12 million to St. Jude and has hosted pizza parties for patients
and its families on St. Jude properties.
cattle, as opposed to cattle injected with growth hormones. Domino’s Pizza markets its pizzas
as having gluten-free crust. This is an attempt to win over health-conscious customers, comply In 1986, Domino’s launched its Pizza Partners Foundation with a mission of “team members
helping team members.” The foundation is 100-percent funded by team member and franchise
with government regulations, and make current customers feel a little less guilty about eating
contributions and has disbursed nearly $12 million to aid team members facing crisis situations
pizza. The tug of war between customers, governments, lawyers, and the restaurant industry on
such as fire, illness, or other personal tragedies.
health issues is likely to continue for some time.
In response to these challenges, many restaurants have opted for healthy menu options.
Wendy’s, for example, has promoted several meal combinations that contain less than 10 grams The Future
of fat. All of these items were originally on its menu, just not marketed in that manner. Wendy’s As CEO Doyle and his management team contemplate the future direction of Domino’s, it has
has added side salads and fruit to help cut down on calories, fat, and sodium. Subway is also much to consider. Should the firm continue its aggressive market development strategies and
famous for marketing its products as healthy alternatives to other fast-food options. Domino’s, accept the risk associated with expanding into markets it has little expertise operating within?
and many pizza competitors, offer few to no menu options for the health-conscious consumer. What new geographic locations or regions should Domino’s focus? Should Domino’s simply
follow Pizza Hut’s international rollout of stores? How would this expansion affect the corporate
Barriers to Entry structure of Domino’s? Would restructuring by geographic division and thus establishing offices
Barriers to entry are relatively low for the restaurant industry, but rivalry (competitiveness) in Asia, the Middle East, and South America better enable them to manage these more risky
among firms is exceptionally high. One large contributing factor for the low barriers to entry environments? Can Domino’s afford this financially? Should Domino’s consider offering salads
is many small entrepreneurs can open mom-and-pop establishments and bypass the franchise or a line of healthy menu options? Should Domino’s purchase trucks to deliver its products
fees, royalties, selection process, and so on of owning a franchised restaurant and lease an rather than incurring such heavy leasing expenses?
existing building relatively cheap. However, even avoiding high fixed costs, variable costs are
often high and small-scale entrepreneurs are not able to compete with larger franchise stores, Domino’s needs a clear three-year strategic plan. Prepare this document for the company.
who can better negotiate pricing on food, packaging, and other supplies. In the QSR industry,
the bargaining power of consumers is quite powerful, availability of restaurant options in most
places is abundant, and consequently there is intense price competitiveness among rival firms.
Even if you are sure you want pizza for lunch or dinner, you likely have many options.

Economic Factors
The current landscape in the QSR business is a bimodal population distribution with a large
population of bargain-minded customers seeking deals on cheaper end fast food options, and
another population of more affluent consumers targeting middle to higher-end restaurants.
Domino’s is well positioned strategically to target the first group of consumers because there are
many more of them; Domino’s often has excellent sales and discounts to target this group.
Among the subset of customers who are value shoppers, many of these are also shoppers
of quality and are willing to wait in line a little longer or pay a little more for better quality