Rethinking Domino's Expansion Plan

Sky is the Limit

In November 1999, Pavan Bhatia took over as the CEO of Domino's. He seemed to be very ambitious and wanted to make Domino's the largest fast-food chain in India. Pavan Bhatia went about opening Domino's outlets across the country. The number of outlets multiplied four fold to 100 between March 2000 and January 2001. It was the fastest growth Domino's had in any of the 63 countries it operated in. From an average of four stores every year in its first four years of operation, Domino's expanded to more than 100 outlets in 10 months across 30 cities. Domino's entered into an agreement with a real estate consultant CB Richard Ellis to help with locations, conduct feasibility studies, and manage the construction.

Pavan Bhatia said, "We are in the business of selling pizzas, not hunting for real estate. And one of the biggest impediments in retailing is real estate, so we decided to hand over the entire real estate operations to estate consultants CB Richard Ellis." Pavan Bhatia realized that fast track growth could be achieved only by focussing on the core business of selling pizza.

He said, "We realised we'd be wasting too much time, money and resources trying to do it all ourselves. For instance, just acquiring a bunch of permits for each store in each city is itself a big job. Then there are the brokers, city laws, markets, licensing, title, infrastructure, water, power, lease agreements, signage and most important, dealing with competing restaurants."

CB Richards not only managed to take care of all these hassles but also furnished the outlets. Domino's also opened outlets at large corporate offices, cinema halls and university campuses. In early 2000, Domino's had opened an outlet at the corporate office of Infosys, Bangalore, which was very successful. It also had outlets at cinema halls – PVR in Delhi, Rex in Bangalore, and New Empire in Kolkata.

Pavan Bhatia wanted quantum growth and felt that Domino's needed to tie up with airports, railway stations and petrol pump stations. Incidentally, CB Richards was already working with oil companies, advising them on how to go about making their petrol pumps ready for competition once private players came in. CB Richards made a recommendation to Indian Oil Corporation (IOC) to let Domino's operate in its petrol pump premises.

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Case Details

Case Code : BSTR014
Themes: MNCs in India
Case Length : 9 Pages
Period : 2001
Organization : Dominos Pizza India
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Food, Beverages & Tobacco

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