2010 June: Reinventing the Wheel

When Domino’s announced it had reformulated its pizza from the crust up, industry officials (including Pizza Today) took note: would the move simply be a bad decision in the form of New Coke, or would the American public embrace the new product? If the company’s 2010 first–quarter financial results are any indication, its new pizza is a hit. Domino’s domestic same-store sales grew a whopping 14.3 percent in the first quarter, while international comps were up 4.2 percent.

“The big thing that happened was we realized that there was no conflict in delivering fast, giving the best service, being known for value and having a terrific menu with great-tasting pizza –– the best available –– and a little bit of breadth to that menu as well,” says Patrick Doyle, the company’s CEO. “That was the big thing for us. We had always focused so hard on ‘we are just going to be the fast delivery, great service pizza chain, and that’s going to be enough.’ We realized that it simply isn’t. So while we always liked the pizza, and on an unbranded basis we did very well in terms of the taste of the pizza, our brand had only been known for being the pizza delivery guys. We realized that was simply too restrictive.”

Following focus groups, product sampling and polls, corporate officials took a hard look at their pizza and decided to go back to the drawing board. “With New and Inspired, that’s our core product. There’s a lot of risk with that. We worked on that for 18 months,” says Brandon Solano, Domino’s vice president of brand innovation (which also earns him the title of head chef in the company’s advertising campaigns).

The most important change was the cheese, but the most visible is the crust. “We didn’t want to make a small incremental change,” Solano says. “We wanted to have a meaningful change, and we wanted to have the best pizza in the category. That was our goal.”

And how was the new product received by the company’s 1,150 franchisees? “They’ve been very much included in this,” Doyle says. “When we were launching the new pizza, the New and Inspired Pizza, we took that out to all of our franchisees. We had four meetings around the country. … They all had the opportunity to come. We laid out the case for them –– here’s why we’re doing this –– and then we gave them a side- by- side taste test of the old pizza and the new pizza, and then we had a vote –– a show of hands. I think there were something like 12 people who raised their hand and said, ‘we prefer the old.’ There was overwhelming support from our franchisees for making this change.”

Doyle says the company invested more than 200,000 hours in retraining every pizza maker in the country to ensure a successful rollout. They trained a team of 100 at the company’s headquarters in Michigan before dispatching them into the stores. “There was no plan B,” he says. “You can’t go out and run advertising that says: ‘We recognize that a lot of you said you don’t like this old pizza. We’re listening to you. We get it and we’ve made a dramatic change to respond to your needs.’ You can’t back away from that.” (For more on the company’s bold marketing efforts, see page 67.)

Was there ever a concern that the move wouldn’t work? “No, there really wasn’t,” Doyle says. “We had done so much research on it over the course of almost two years. We had tested it with every possible demographic, with kids –– we had tested it very thoroughly. The only thing that we were nervous about as we were rolling it out was (if) we were going to execute it really well at the store level. We’re proud of the way our stores have responded and the way they’ve executed it and made terrific pizzas and given people a great experience.” The company is launching the new pizza market by market internationally, mainly because cheese varies greatly around the globe (based on cows’ varied diets).

Aside from its new pizza formula, Domino’s has recently unveiled several other new products as well. It took a direct aim at Subway with its Oven-Baked Sandwiches line in 2008, menued after just three months of testing, and rolled out several BreadBowl Pasta varieties that brought it head-to-head with competitor Pizza Hut’s pasta line. The American Legends specialty pizza line took Domino’s menu beyond the plain pepperoni pie. “We started with iconic American tastes,” Solano says, such as buffalo chicken and Philly cheesesteak. Acknowledging that its menu has been lacking in the dessert department, they introduced its high-quality Chocolate Lava Cakes –– looking more like they belong on a china plate in an upscale eatery than in a cardboard box on a coffee table.

“The plan all along was (to) get these new lines out. … There’s a lot of news quality. I think we’re going to surprise people because the food quality is terrific on these new lines that are sort of extensions of Domino’s,” Doyle says. “But at the end of the day, we’re a pizza company.”

Why so many at once? Solano says some were fueled by competitors –– such as the BreadBowl Pastas launch in response to Pizza Hut adding pasta to its menu –– to give Domino’s a stake in those areas. He says it takes on average six to nine months from an item’s conception until it is menued. “My biggest concern was that we were going to overwhelm our stores,” Solano adds. “We need people who can make all of these different things. … Our stores rose to the challenge. This business was founded on pizza and a Coke. The story is that Tom Monaghan didn’t want to add Diet Coke. He was afraid it would complicate operations.”

Taking its menu beyond pizza has proven to have its challenges for the company best known for delivery. “When we design a product, we design it with delivery in mind,” Solano says. “Delivery is still two-thirds of our business, although carryout is growing.” In the R & D test kitchen, there’s a large table for the staff to gather. Every test product is placed in the company’s Signature HeatWave bag and held for 20 minutes before consumption. “That’s a little longer than we would typically need for delivery, but we want a worst case scenario,” Solano says. They check the temperatures after 20 minutes, and take packaging and product design into consideration as well.

With so many new products, have pizza sales been affected? “At lunch, we’re seeing more singles andwich orders, which is what we expected,” Solano says, adding that the line increased lunch business “in a big way.” “It also works for what we call the veto vote,” Solano says. “Say everybody says ‘we’re going to order pizza today’ and (one person declines), in the past you’d have to go somewhere else. They can come to us and we can serve all of their needs.” ?

Mandy Wolf Detwiler is managing editor at Pizza Today.