Case: Pizza Chains of the United States and Pizza Hut
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Domino’s Pizza: A Case Study in Organizational Evolution
Case 7
John Bradley, Eric Friedman, Eric Jeanes, Edward Novotny, Kelly Schuler
Arizona State University
Tina Borja
Rice University
Introduction
Historically, Domino’s Pizza has been a strong player in both the domestic US and international out-ofhome pizza marketplaces. With more than 9,300 locations in 65 countries, Domino’s is the number two pizza restaurant behind Pizza Hut and number one in the pizza delivery segment with market share numbers approaching 20 percent.1 (See Exhibit 1 for a ranking of the top 50 pizzeria brands in 2009 by sales.) In recent years, how ever, Dom ino’s ha s com e un der c onsumer fire and, although masked by international revenue growth of 13.2 percent for the same period, the company posted a 16.3 percent decrease in domestic revenue from year-end 2005 through year-end 2009. While the economic recession could certainly be blamed at least in part for its lagging financial performance,2 Domino’s knew that this dip was more than just an economic indicator. In fact, the news reaching the executive suite indicated that Domino’s was suffering from a negative reputation in the marketplace. Central to consumer complaints was that Domino’s served low quality pizza with inferior ingredients that lacked taste. Coupled with the fact that consumers continue to become more and more educated about obesity and diet related health concerns and it was clear—Domino’s had to act. To stay competitive, Domino’s addressed both the taste deficiency complaints and the growing preference for fresh products by introducing a re-formulated pizza recipe in late 2009. To do so and in a move Advertising Age called “one of the riskiest marketing campaigns of all time,” Domino’s launched the “Oh yes we did” campaign.3 The campaign quite frankly and very publicly admitted the shortcomings of its previous recipe with TV com mercials sh owing foc us grou p p articipants
Domino’s Pizza: A Case Study in Organizational Evolution
Case 7
John Bradley, Eric Friedman, Eric Jeanes, Edward Novotny, Kelly Schuler
Arizona State University
Tina Borja
Rice University
Introduction
Historically, Domino’s Pizza has been a strong player in both the domestic US and international out-ofhome pizza marketplaces. With more than 9,300 locations in 65 countries, Domino’s is the number two pizza restaurant behind Pizza Hut and number one in the pizza delivery segment with market share numbers approaching 20 percent.1 (See Exhibit 1 for a ranking of the top 50 pizzeria brands in 2009 by sales.) In recent years, how ever, Dom ino’s ha s com e un der c onsumer fire and, although masked by international revenue growth of 13.2 percent for the same period, the company posted a 16.3 percent decrease in domestic revenue from year-end 2005 through year-end 2009. While the economic recession could certainly be blamed at least in part for its lagging financial performance,2 Domino’s knew that this dip was more than just an economic indicator. In fact, the news reaching the executive suite indicated that Domino’s was suffering from a negative reputation in the marketplace. Central to consumer complaints was that Domino’s served low quality pizza with inferior ingredients that lacked taste. Coupled with the fact that consumers continue to become more and more educated about obesity and diet related health concerns and it was clear—Domino’s had to act. To stay competitive, Domino’s addressed both the taste deficiency complaints and the growing preference for fresh products by introducing a re-formulated pizza recipe in late 2009. To do so and in a move Advertising Age called “one of the riskiest marketing campaigns of all time,” Domino’s launched the “Oh yes we did” campaign.3 The campaign quite frankly and very publicly admitted the shortcomings of its previous recipe with TV com mercials sh owing foc us grou p p articipants