Turnaround Strategy: How Domino’s Reclaimed Their Pizza Kingdom
Have you ever tried the “cardboard” pizza? Oh yes, you read it correctly, I wrote CARDBOARD. It’s actually referring to Domino’s Pizza. Shocking right? Why has our best pizza delivery restaurant been called a “cardboard”? Have we really been eating paper and boxes all this while?!
Today, Domino’s Pizza is the world’s largest pizza chain, the new pizza king that delivers delicious pizzas right to your doorstep. However, it wasn’t always the same. In 2008, Domino’s launched the very first Pizza Tracker - an online application that allows customers to keep track of their orders, from order placement to pizza delivery. Before launching, this new Pizza Tracker was estimated to boost online ordering profits by at least 20%. But sadly, things didn’t go as planned. Instead of sales growth, Domino’s was seeing an average of 5% sales decrease in each of their stores.
Convenience is important, but it can only do so much. If the company provides poor quality products and it does not satisfy the customers, no one will order - no matter how easy it is.
But, Domino’s didn’t sit back and wait for a miracle to happen. In 2009, they conducted a survey and asked for customer reviews. Some customers boldly claimed that “Domino’s pizza is the worst pizza I had'', “Tastes like cardboard”, and “Even microwave pizza tastes better”. In short, Domino’s pizza was bland and flavourless.
To make things worse, two Domino’s employees filmed a prank in their restaurant’s kitchen and decided to post it online. In the video, the two employees were performing unsanitary things to the customers’ orders: sticking cheese up their nose and adding it to a sandwich, putting a sponge that they would use to wash the dishes between their buttocks, etc. And of course, the video went viral. Although the employees later claimed that none of the pizza was sent out for delivery, thousands and millions of viewers had lost all their confidence in the brand.
TIME FOR TURNAROUND
Everything has gone wrong for Domino’s: unpopular new product, terrible food quality, and a food-safety scandal. Fortunately, their turnaround campaign was done exactly right - it saved Domino’s!
Domino’s didn’t make excuses. They recognized and admitted their pizza quality was sub-par. They apologized for focusing too much on delivery speed and sacrificing the pizza quality (used frozen and canned ingredients), sometimes even the drivers' safety too.
With their “Pizza Turnaround” campaign, Domino’s released a branded documentary video addressing their pizza quality in a brutally honest way. In the video, they gathered and showed the audiences their customers’ real and actual comments on the old pizzas, through both online reviews and focus group interviews. From market research to new recipe development and then to customers’ reviews on the new pizzas, Domino’s included them all in their documentary. And it worked!
Listened to the harshest critics, Domino's made their best pizza ever. New Crust, New Sauce, New Cheese. Once disappointed customers were impressed with the new pizzas: “This does not taste like Domino’s, the way I know Domino’s”, “Wow! There’s a lot of love in there. This is what I was talking about”, “Thank you for making a great pizza finally”. Through honesty and transparency, Domino’s created a new expectation, they gave people a reason to believe in them again.
In 2010, Domino’s saw a 14.3% increase in revenue over the previous year, and their stock shot up 130%. Ever since, Domino’s stock has reached 137x higher than pre-turnaround levels with a low of $2.83 per share and topping out at $390+ per share in April 2022. Thanks to their continued investment in technology and a commitment to cultivating their core competencies, Domino’s has officially overtaken Pizza Hut and Papa John's as the world’s largest pizza seller, becoming the new pizza king.
Allen, A. (n.d.). How Domino’s Turnaround Gained Nearly $12b in Enterprise Value. Retrieved from https://aaronallen.com/blog/dominos-turnaround
Campaign Us (2017, February 15). Case study: How Domino's and Crispin Porter & Bogusky transformed the pizza chain into a tech company. Retrieved from https://www.campaignlive.com/article/case-study-dominos-crispin-porter-bogusky-transformed-pizza-chain-tech-company/1422647
Domino’s (2011). Pizza Turnaround. Retrieved from https://thearf.org/2011-arf-david-ogilvy-awards-winners/
Gupta V. (2021, June 2). The Curious Case of Domino's Pizza Turnaround (Case Study). Retrieved from https://www.bizain.com/dominos-pizza-turnaround/
Haden J. (n.d.). 10 Years Ago, 'Cardboard' Pizza Almost Killed Domino's. Then, Domino's Did Something Brilliant. Retrieved from https://www.inc.com/jeff-haden/10-years-ago-cardboard-pizza-almost-killed-dominos-then-dominos-did-something-brilliant.html