Domino's India Logistics Management
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BACKGROUND NOTE contd...Domino's philosophy
rested on two principles – limited menu and delivering hot and fresh pizzas
within half-an-hour. In 1967, it opened the first franchise store in
Ypsilanti, and in 1968, a franchise store in Burlington, Vermont. However,
the company ran into problems when its headquarters (the first store) and
commissary were destroyed by fire. In the early 1970s, the company faced
problems again when it was sued by Amstar, the parent company of Domino
Sugar for trademark infringement.
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Thomas started looking for a new name and came up with
Red Domino's and Pizza's Dispatch. However, there wasn't any need for it
because Domino's won the lawsuit in 1980. In 1982, Domino's Pizza
established Domino's Pizza International (DPI) that was made responsible
for opening Domino's stores internationally.
The first store was opened in Winnipeg, Canada. Within a year, DPI
spread to more than 50 countries and in 1983, it inaugurated its 1000th
store (Refer Exhibit II for worldwide revenues). Around the same time,
new pizza chains like Pizza Hut and Little Caesar established themselves
in the US. |
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Domino's Pizza faced intense competition because it had not
changed its menu of traditional hand-tossed pizza. The other pizza chains
offered low-priced breadsticks, salads and other fast food apart from
pizzas. Domino's faced tough competition from Pizza Hut in the home delivery
segment also. Little Caeser was eating into Domino's market share with its
innovative marketing strategies.
By 1989, Domino's sales had reduced significantly and cash flows were
affected due to the acquisition of assets. In 1993, Thomas took measures to
expand Domino's product line, in an attempt to revive the company and tackle
competition. The company introduced pan pizza and bread sticks in the US. In
late 1993, Domino's introduced the Ultimate Deep Dish Pizza and Crunchy Thin
Crust Pizza. In 1994, it rolled out another non-pizza dish – Buffalo Wings.
Though Domino's did not experiment with its menu for many years, the company
adopted innovative ways in managing a pizza store. Thomas gave about 90% of
the franchisee agreements in the US to people who had worked as drivers with
Domino's. The company gave ownership to qualified people, after they had
successfully managed a pizza store for a year and had completed a training
course.
Domino's also gave franchises to candidates recommended by existing
franchisees. Outside the US, most of Domino's stores were franchise-owned.
Domino's was also credited for many innovations in the pizza industry and
setting standards for other pizza companies. It had developed dough trays,
corrugated pizza boxes, insulated bags for delivering pizzas, and conveyor
ovens.
In 1993, Domino's withdrew the guarantee of delivering pizzas within
30-minutes of order and started emphasizing on Total Satisfaction Guarantee
(TSG) which read: “If for any reason, you are dissatisfied with your
Domino's Pizza dining experience, we will re-make your pizza or refund your
money.” Domino's entered India in 1996 through a franchise agreement with
Vam Bhartia Corp[2] in Delhi. With the overwhelming success of the first
outlet, the company opened another outlet in Delhi.
By 2000, Domino's had outlets in all major cities in India. When Domino's
entered India, the concept of home delivery was still in its nascent stages.
It existed only in some major cities and was restricted to delivery by the
friendly neighborhood fast food outlets. Eating out at ‘branded'restaurants
was more common. To penetrate the Indian market, Domino's introduced an
integrated home delivery system from a network of company outlets within 30
minutes of the order.
Goutham Advani (Advani), Chief of Marketing, Domino's Pizza India, said,
“What really worked its way into the Indian mind set was the promised
30-minute delivery.” Domino's also offered compensation: Rs.30/- off the
price tag if there was a delay in delivery. For the first 4 years in India,
Domino's concentrated on its ‘Delivery'strategy.
DOMINO'S LOGISTICS MODEL
FIGURE I - DOMINO'S LOGISTICS MODEL
EXHIBIT I - THE PIZZA HOTLINE
EXHIBIT IV - MCDONALD'S-OUTSOURCING THE INGREDIENTS
[2] Promoted by the Bhartia brothers – Shyam and Hari – known for their ventures in chemicals and fertilizers.
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