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Domino’s Pizza started in the 1960s as three small shops in suburban Michigan and has grown into the second-largest pizza franchise in the United States, behind Pizza Hut. The company has been riding a wave of global success, currently operating in more than 80 countries and delivering more than one million pizzas a day.
Russell Weiner, the U.S. president of Domino’s, appeared recently on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM Channel 111 to talk about what it takes to keep the humble pie a hot product in the ever-changing food industry. Weiner was also a speaker at the recent Retail and Consumer Packaged Goods Summit in New York. The event was organized by Knowledge@Wharton, Wharton’s Jay H. Baker Retailing Center and Momentum Event Group.
An edited transcript of the conversation appears below.
Knowledge@Wharton: Domino’s customers can now order online using an emoji. How did that concept come about?
Russell Weiner: You know, we’re obviously a pizza company first. We think we have the best pizza in the business. But once you have the best pizza in the business, then you have to figure out what else you want to stand for. How you get it to people? We’re in the business of getting it from tech to table. Heck, if you still have a rotary phone and you want to call us, that’s fine. But the fact is, technology is changing, and we want to be on the forefront to make it as easy as possible to order pizza. So yeah, you can order via an emoji on a text. You can order on your Apple Watch. You can order on your TV. If something exists that’s a platform, you can order Domino’s Pizza on it.
Knowledge@Wharton: How much has that added to the business of Domino’s at this point? I would imagine it’s still an adaptive process for a lot of consumers.
“We’re in the business of getting [pizza] from tech to table.”
Weiner: Our digital business is well over half of our business. So all this stuff, whether people order on it or not, it halos to the broader digital business. Maybe they won’t use the rotary phone if they see an ad for an emoji. Maybe they’ll use our mobile platform or go on our website, and we just know that’s a better experience for customers.
Knowledge@Wharton: How much of the business is old school, calling up Domino’s and ordering pizza over the phone?
Weiner: It’s less than half, and it’s shrinking.
Knowledge@Wharton: You’ve talked about the massive shift that Domino’s made to gain consumers’ trust back. How did that happen?
Weiner: People just are completely overwhelmed by media. I think the idea is you have to do something that breaks through the clutter, not in a kind of crude, obnoxious way but in a heartfelt way. I don’t know if you ever read The Art of War, but [Sun Tzu] talks about how do you win a war if it’s fought on an island? The answer is, you blow up the bridge. You blow up the bridge so your people can’t retreat, and if they can’t retreat, they fight to the death. What we did in this case was we blew up the bridge. We said our old pizza wasn’t very good, and that’s very different from when Coke launched New Coke. They never said old Coke was bad. We did. So, we blew up that bridge in an authentic way. This was back in 2009, 2010 when banks were going under. Consumers were just feeling like they were being lied to. It was a breath of fresh air that someone was willing to tell them the truth.
Knowledge@Wharton: You went to the people that told you what they didn’t like the pizza and basically laid out the new product for them.
“It’s super important to not just go spend in digital because that’s the latest and greatest thing. You want to know the ROI of every vehicle you’re advertising in.”
Weiner: This is not a gimmick. What you see in the ads, they are Domino’s people. When we say we’re making the product better, we make it better. And we go back to the people who said the old product was bad. I mean, everything you see is just 100% focused on delivering on that promise.
Knowledge@Wharton: How much has the marketing mix changed for Domino’s over the years?
Weiner: Obviously it’s changed tremendously. But TV is still a very, very good medium. Every 18 months or so, we do some advanced modeling to figure out what’s the return on investment of the different media vehicles. Certainly, digital has become a bigger and bigger part of the mix. But interestingly enough, some things that some people maybe think are good in digital, I would argue that not all of them are. It’s super important to not just go spend in digital because that’s the latest and greatest thing. You want to know the ROI of every vehicle you’re advertising in. The beauty for us, because we’re kind of a direct response business, is you see an ad, you order a pizza. It’s pretty easy to track.
Knowledge@Wharton: We’re also in a shift toward freshness with a lot of people’s eating patterns. That’s part of what Domino’s has to be involved with, correct?
Weiner: That’s what we were trying to show our customers. All of our stores get two, three, sometimes even more deliveries a week. The dough is always fresh. All our ingredients are fresh. I think in the past, before we were transparent about this stuff, people thought because we got them the pizza so quickly that maybe some of the stuff was pre-made. But it’s not. We are obsessive about getting you fresh, high-quality pizza. We just do it faster than everybody else.
“Sometimes it’s more expensive to do what the customer wants. Sometimes it’s risky. But that’s just been what we’ve done for the last few years. And luckily enough, we’ve been able to deliver.”
Knowledge@Wharton: Even the local pizza store now has 12 different types of pizza and all kinds of new items and ingredients. How do you balance having the core ingredients with some of the new items that are out there?
Weiner: Believe it or not, there are 34 million ways to make a Domino’s Pizza when you take all the ingredients and look at the different combinations. We’re definitely not hurting for combinations. People are surprised that we have feta cheese, fresh baby spinach. I was surprised when I first came to Domino’s on the quality of the experience, on the part of the ingredients. My job was to continue to improve them and to get that message out.
Knowledge@Wharton: Sales have risen markedly over the last few years. What are the key ingredients to continue this success?
Weiner: Our goal is to identify what we can do to make the customer experience better and then do it. I know that sounds ridiculous, but it’s pretty simple. Sometimes it’s more expensive to do what the customer wants. Sometimes it’s risky. But that’s just been what we’ve done for the last few years. And luckily enough, we’ve been able to deliver.
Knowledge@Wharton: But sometimes simple is the best way to go about things. From a business perspective, companies can convolute things and hurt themselves in the end.
“If you can’t move fast, someone is going to make your business nonexistent.”
Weiner: You’re right. In today’s digital age, we all need to move at the pace of digital. I tell people, obviously we’re a pizza company. But we are a digital company, an e-commerce company at the same time. That has to do with not only the way you order but the way you think and the way you make decisions. If you can’t move fast, someone is going to make your business nonexistent.
Knowledge@Wharton: Pizza is an item that many consumers think about almost on a daily basis when making a decision about what to eat. It’s not going out and having a $500 dinner at a great steakhouse with a great bottle of wine.
Weiner: Which is also great for the business as well. During tough economic times, what happens is people downshift from more expensive meals to a pizza. When times are good, they can afford to buy more. So, pizza is a great category from an elasticity standpoint.
Knowledge@Wharton: How did Domino’s make it through the recession?
Weiner: You know, we were a great value. People always think value is price. But a very simple equation is: Value is equal to the benefits of a brand over the price. We had a fair price. But we were introducing new benefits like better taste, easier ways to order, a fair price — all those kinds of things. I think that’s where a lot of retailers fall off. When they think of the value equation, they just think of price. They just think of the denominator. But the more benefits you can build in to your brand, the higher price you can charge because the value’s going up.