Editor's note: This column has been updated to provide attribution to original sources.

In 1960, Tom Monaghan began delivering pizza to college students as a way to afford college. "I started out in architecture school and got into the pizza business to pay my way through school," Monaghan told Philanthropy Roundtable. He grew the business, originally purchased with his brother for $900, and turned it into Domino's Pizza. Domino's biggest innovation was delivery, which they successfully sold through the famous promise to deliver your pizza within 30 minutes of ordering, or it was free. This idea only came about after years of finding ways to make the entire process faster (including developing a new flat-bottomed sauce ladle and corrugated, stackable delivery boxes to protect the pizza and keep it hot).

Monaghan slowly bought up other local pizza shops as he expanded his business, creating a network of stores, so one location was always close to a customer's location. After franchising the business, the network effect continued to work, since new locations were often clustered around existing clients. Domino's 30-minutes-or-free guarantee became the standard for home-delivered pizza and no other competitor could match it. By 1985, Domino's was the fastest-growing pizza company in the United States, and now has 5,371 U.S. locations and 8,440 more in 85 other countries.

Then, in the spring of 2009, a YouTube video of Domino's workers went viral. An employee at a store in North Carolina filmed a coworker putting cheese up his nose and adding snot to a sandwich. The video prank led the health department to shut down the restaurant temporarily and Domino's had the two employees arrested for tampering with food. The president of U.S. operations recorded a two-minute apology.

After the crisis, Domino's decided they needed to change their public image. According to Bloomberg, at Domino's Farms, executives knew their food wasn't good. They had gotten customer complaints such as "The crust tastes like cardboard", "The sauce tastes like ketchup" and "This is an imitation of pizza." In consumer taste tests, if subjects knew the pizza was Domino's, they actually liked it less than if they didn't know who made it. Domino's realized they had a serious problem if they didn't drastically change the taste and image of their brand.

Other chains that are face losses might also change their menu. McDonald's Corp. tried to sell healthier food like salads and parfaits, but McDonald's didn't stop selling Big Macs. The difference here was that Domino's listened to their customers, admitted their basic product was awful, changed it entirely, and asked for another chance.

Domino's started an ad campaign promising they would make their pizzas better. Morning shows did taste tests, and people started calling in orders again. After seeing how the honest self-deprecating humor worked for their tasteless cardboard pizza, the executive team discussed other similar campaigns. They decided the photos they used for marketing needed to reflect the actual product, rather than what they called "cheese porn"-- stylized, beautiful food shots created by professionals. Domino's made a TV spot showing what really happens in a photo photo shoot and then promised to only use photos that its employees had actually made.

The photo campaign was well-received and they climbed back up to the top. Then, they focused on adding more technology to their existing infrastructure. For the past five years, the company has been improving their ordering system to be more appealing to a younger demographic. Young people dislike talking on the phone, so customers can also order a pizza with minimal human interaction. New ordering methods include: Facebook, Twitter, Twitter with emojis, Apple Watch, voice-activated, "zero click," and wedding registry (?). Customers can even track their pizzas as they're being made until they're delivered to their door (only in San Diego, so far). A Domino's franchise is using drones to deliver pizza in New Zealand.

In 2009, sales were floundering and Domino's ranked at the bottom for customer satisfaction. Since reinventing their pizza recipe and stream-lining the ordering and delivery process, their share price has increased 60-fold. The company is now worth $9 billion. By listening to its customers and admitting where they were weak, a nearly 60-year-old company staged an almost impossible comeback.

 

Published on: Mar 31, 2017