What can a 60-year-old pizza company teach us about the importance of valuing customer experience during technological transformation? A lot, actually.
Let’s examine how Domino’s Pizza brought itself back from the brink by behaving like a tech company and a pizza company. Throughout this story, I will underline key principles and breakthroughs that drove this success.
Stuck for dinner? There’s an app for that. A fantastic one.
The real lesson here is how the company recovered and the role that technological transformation played in that recovery – a transformation built by striving for excellence in customer experience.
A few Sundays ago, my wife and I were on our deck, enjoying a cold beverage. The kids had been running in and out of the house all day – busy with friends. It was getting close to dinner, but we hadn’t yet talked about what to do about it.
Don’t get me wrong. We love our kids deeply. And care about feeding them. But the daily dinner game? Not always huge fans. Especially on those sorts of Sundays.
We were having one of those picture-perfect, living-our-best-deck-life moments. And we knew its magic would be broken the minute one of us stood up, put on our c’mon-now-kids game face, and declared dinner time.
I shifted in my Adirondack to start the clock on that well-worn playbook, but my wife stopped me. It turned out that she’d already taken care of it. Domino’s was on the way. Apparently, “John” had just put our pie in the oven, and he’d let us know when it was with the driver.
So said Domino’s Pizza Tracker app.
Now pizza doesn’t exactly occupy the top spot in our dinner-food roster, especially chain-store pizza like Domino’s. It’s fine, and the kids like it, but my wife swears by the app. In fact, she chooses Domino’s over other options because of the reliability of the ordering experience – made seamless by their app. And when I shared that story with a colleague the next day, he agreed. So-so pizza, but an app so compelling it trumps his taste buds.
That got me thinking – how could an app compel a customer to order food they only sort of like? So I did a little research. Turns out that the story of Domino’s Pizza isn’t really about slinging pepperoni pies. It’s a tale of “one of the most strategic and boldest moves in corporate history“ – one that transformed a pizza-making, multinational corporation facing ruin into a market-dominating superstar that functioned more like a tech startup than a pizza company.
And their stock valuation went along for the ride. In 2008, Domino’s Pizza was trading at an all-time low of $3 a share. Now? It’s at around $482. Seemed pretty clear to me that there was a lot more to digest here than a few slices of just-OK pizza. So let’s examine the Domino’s timeline.
In 1960, Tom Monaghan had to find a way to make ends meet. His childhood was troubled and his academic life less than stellar. But he made it to the University of Michigan to study architecture – only to find that he couldn’t pay his tuition. So he started a pizzeria. Then two more.
Monaghan put three dots on the Domino’s logo to represent the three restaurants he owned at the time, and he planned to add a dot for each new location. He jokingly said in an interview back in 2003, “As you can see, I wasn’t thinking of a national chain back then.”
Neither could he predict what three dots would come to mean in our smartphone-enabled world: knowing that you are in a real-time conversation with a responsive party – the kind of communication that can build trust. Something that would become a crucial driver of Domino’s renaissance and technical transformation 60 years later.
Monaghan worked his stores hard and lean to maximize profit and streamline service when he was starting out. And the business snowballed. By 1979 they had 287 stores nationally. To help keep things tasting the same from store to store, they pared back the variety of offerings to one – just pizza – and introduced a singular guarantee: 30 Minutes or It’s Free.
Domino’s saw an international expansion into Canada by 1985 and by then could boast 2300 units in operation. Business continued to grow despite heavy competition from Pizza Hut and some unintended marketing mishaps (including multiple fatalities caused by speed-demon drivers desperate to deliver on time).
After Monaghan retired in 1999, the new CEO David A. Brandon took things up a notch. He added nearly 800 new stores within two years and expanded the restaurant’s menu for the first time in 40. Customers appreciated it, but it also complicated things. Things like quality control and profitability.
By 2007, Domino’s saw revenue in the order of $2B per year from its US units alone. But it still faced stiff competition from Pizza Hut. So to gain an edge, it took its first steps in the digital landscape by developing an online ordering form and then an app shortly after that – including the first rendition of their much loved (by my wife and others) Pizza Tracker. It was so successful that big delivery companies (like Postmates) copied it.
But despite that success, something was growing amiss. You know that old saying about fast, cheap, and good – you can only ever pick two?
Well, after 40 years in the business, Domino’s had the fast and cheap parts of that equation down to a science – partly because they were ruthless when it came to shutting down unprofitable units and partly because of their evergreen commitment to fast, reliable delivery. But their success in the fast/cheap realm was also sustained because they could already rely on a stable, good enough product made that way by their time-tested menu that wasn’t really a menu at all. After all, it listed only one item. It’s easier to keep quality control to a high enough standard across 1000s of individual pizza parlors when they are all making a single food item using the same ingredients.
But when Brandon took the decision to expand the menu, he upended that delicate balance. Who knew adding cheesesteak to a pizza could cause so much trouble? (Well, the antacid industry, for one. But that’s not this story.) Now, that wasn’t the only reason for their decline. Let’s try not to focus on the cheesesteak. The real lesson here is how the company recovered and the role that technological transformation played in that recovery – a transformation built by striving for excellence in customer experience.
I don’t know if you can recall eating Domino’s during the mid to late 2000s, but I can. Back then, the pizza wasn’t just forgettable – it was borderline regrettable. And boy did their customers let them know it.
Negative feedback grew louder, the brand suffered, and share prices had crashed to an all-time low of under $3. The company was in crisis. Then came CEO Patrick Doyle, who, over a decade, led the company back from the brink to enjoy an increase in stock value that outpaced tech giants like Apple and Google.
So, what happened? Obviously, they had to fix their pizza. They undertook a complete overhaul of the recipe. Yet, instead of doing so behind the scenes, he and his marketing team took an approach of radical transparency by opening up their conversations with their customers, transforming the lousy press into brand buy-in. How? By telling the tale of the hero’s journey, pizza recipe edition, and writing honest (and often harsh) customer experience into the story – simultaneously demonstrating that they value conversations with their customers while building trust back into the brand.
That was brilliant marketing, but that’s not why Domino’s story stands out. They didn’t stop valuing and prioritizing customer experience after they improved the flavor of their flagship product. They didn’t see the book as written, the hero triumphant and well into retirement – save for a few special appearances (like the Noid). They didn’t see product alone as their prize – and their purpose.
Instead, they got back to basics and focused on the other core part of the brand and business – pizza delivery. Doyle’s clever move was to bet big on the power of technological transformation, leverage an already existing mobile app, and make it not only the best in the pizza biz but the best app in the app store, period. All by focusing on how well the app meets the needs of smartphone users – not just pizza buyers who also use smartphones.
So he built a technology division to function a heck of a lot like a tech firm. And he filled it with expertise that could produce a Domino’s app that would align with the needs and expectations of mobile users – period. He saw great customer/user experience as a universal principle that could be applied to any sort of transaction – one that is not connected to any particular product or service.
Domino’s keeps innovating their app. Recently they introduced delivery service to Hotspots. Domino’s will deliver a pizza to select popular locations without traditional addresses like parks, beaches, and more. You just put in your order and meet your delivery person at the Hotspot location – all done in the app.
That is why the Domino’s app is good enough to compel customers to order pizza that’s only so so. And that’s why their fast/good/cheap triangle is back in balance – and catapulting the company well beyond its competitors.
Placing a strong emphasis on customer experience can produce a technological transformation that drives business forward – independent of any particular product or service.
Not convinced yet? How about some pizza for dinner tonight? Go here: https://www.dominos.com/en/pages/order