
Lessons on product and marketing from the growth of Domino’s Pizza - smalter
https://producthabits.com/dominos-pizza-drove-90x-increase-stock-value-acting-like-tech-startup/
======
codingdave
> with new features like a virtual Pizza Builder that brought pizza toppings
> to life on users’ screens.

Ha! I worked on the first version of that! It was actually launched in 2002,
not the 2007 indicated on the timeline.

To be fair, their designer gave us a flash file of what they wanted, so my
part was implementing it along with their new CMS when it that launched, and
writing a vanilla JS version to go alongside the flash version... but it still
holds up today as the most visible of all my projects, even though the builder
itself was mostly a one-day job.

~~~
thelegendxp
that's cool! what does it feel like to use your own tool to order yourself a
pizza?

~~~
foota
I imagine it's cheaper, for one ;)

------
thisisit
I just can't get behind the article. Starting with headline. It just tacks on
the word - "startup". Companies re-orient and re-brand themselves routinely.
Some companies are more adventurous than others but that doesn't make them a
startup. They have a lot of legroom to make a mistake and still come out. But,
if we follow the advice of this article - Google also acted like a startup
when it created Alphabet. Or Coco Cola acts like a startup every time it tries
to rejig the formula.

Secondly, Stock Value as a KPI is just wrong. There are many ways to
manipulate the price - optimistic outlook, buybacks and dividends even if
earnings aren't that great. Sure market does come around to the truth
eventually. But as Keynes said - "The market can remain irrational longer than
you can remain solvent." So, finding out might take time.

The only thing which works for me is a description of Domino's digital
strategy. The Pizza tracker has worked in Dominos favor. Though I am a fan of
the tracker, over time it has become increasing clear it is just a
psychological trick. Show some progress bar to make people happy. Many times I
find the tracker stuck at "preparing" and only to update delivered directly.

~~~
sevensor
Yeah, it's a bit of a puff piece. The app, the social media push, none of that
would have worked if their pizza still tasted like unwashed feet. The biggest
thing Domino's did to turn the company around was to start making better
pizza.

~~~
jessaustin
Do they actually make better pizza now than they did at some point in the
past? I haven't noticed. I'll gladly eat frozen pizza before Domino's.

~~~
mywittyname
Yeah, it's noticeably better. Then again, the bar was so low that this isn't
much of an achievement.

It's not my favorite pizza, but if you live in an area with a Papa Johns, a
Pizza Hut, and some local crap-pie joint, then it's going to be your best
option.

They still sell "cheap" pizza, so there's an upper limit to how good it can
get. Their cheese quality can only be so high (since it's such a large portion
of the cost) and their offerings need to appeal to like 90% of customers.

~~~
tunesmith
Pizza Hut went in the opposite direction. Their pizza was actually good back
in the 80's and early 90's. Tried some recently and it was disgusting.

------
Joe8Bit
Domino's is an interesting example for many reasons, but one that hits
particularly close to home is: it's become a pretty canonical case for the
kinds of 'digital transformations' that large consultancies sell to big
lagging enterprises.

The reason I think that's interesting is 'digital' has only been an ancillary
or enabling factor in their turn-around (e.g. better converting channels +
lots of good marketing). The key has come from making a _better product_. In
effect the consultancies that use it as an example, are (deliberately or not)
misunderstanding the significance that digital played.

~~~
atonse
Yep. Cool pizza tracker or not, if the pizza doesn't taste good, I'm not going
back.

------
goodmachine
BigCo starts "acting like a startup" is a facile PR trend, and this article
fairly reeks of unlabelled, sponsored content.

Perhaps someone from producthabits can comment on that?

By no coincidence, Domino's is the kind of company that lobbies against useful
nutrition labelling:

[https://www.bloomberg.com/news/features/2015-03-03/junk-
food...](https://www.bloomberg.com/news/features/2015-03-03/junk-food-s-last-
stand-the-pizza-lobby-is-not-backing-down)

------
csours
How Headlines Cherry Pick Numbers to Sound Dramatic

If the absolute difference is not impressive, use the percent difference.

If the percent difference is not impressive, use the absolute difference.

In April 2007 Domino's share price was around $32 before it went to $2 (which
I can't even find in the stock price graph, the lowest I see is around $3)

If you go from a stock price of ~$20 to ~$180, that's a 9x increase in stock
value.

So the secret of 90x growth is to first drop from a reasonable value to trash,
then grow again.

\---

Nitpicking aside, Domino's really has had an amazing turnaround, and it seems
to be driven by focusing on the customer, not on share price and cost cutting.

~~~
jakear
Not really sure how stocks work, but isn’t the percent difference the only
thing that matters? If I invest X when it’s $2, I get 90X now. That’s all I
care about.

On the other hand, the absolutes are somewhat meaningless right? If they
wanted the absolute numbers to be bigger/smaller they can just split/coaelece
accordingly.

~~~
csours
Sure, if you happened to buy in at the absolute lowest price, you would see a
90X change, but most people would have bought either before or after the
absolute lowest. I will leave it as an exercise to the reader to figure out
the volume/value calculations.

The headline comments are just something to look out for. If you are told one,
check the other. For stocks, check the context and history.

------
prokes
"Chefs tested over ten types of crusts, fifteen types of sauces, and dozens of
cheese. They mixed and matched different combinations to understand what
flavors worked best together. In the end, they ended up with a completely new
crust, sauce, and cheese recipes. The entire pizza was new."

Not to undermine the turnaround but they had terrible pizza for 40 years. I
guess I'm just surprised they survived this long when the above could have
been done in a long weekend. Perhaps the hard part was just deciding to do it
and rolling it out, as the product was so well known.

~~~
forapurpose
> the above could have been done in a long weekend

I would guess that retooling the machines, processes, training, and supply
chain for over ten thousand locations worldwide, without disrupting operations
and losing customers or reputation, took more than a weekend. Even planning it
might take a little time.

------
oldgun
> What’s next for Domino’s Pizza?

> \- VR Pizza Construction

> \- Make pizza fly

> \- Marketing fueled by psychology

Damn, that's Silicon Valley in summary.

What a time to be alive.

~~~
debacle
Ordering pizza on the blockchain.

~~~
philbarr
Give a machine learning algorithm some flour, water, yeast, sugar and salt.
See how long it takes to make "perfect" pizza based on customer feedback.

------
drewmate
I'm surprised at some of the numbers from early on in their history. The
brothers bought the business with a $900 loan (maybe they had some of their
own money) and had $99 in sales (not profits) their first week, with _profits_
rising to $750 a week rapidly [0]. I can't imagine making that kind of return
that quickly in any business these days.

[0] [http://www.fundinguniverse.com/company-histories/domino-s-
in...](http://www.fundinguniverse.com/company-histories/domino-s-inc-history/)

~~~
jacquesm
The number of businesses with potential that you can buy for $900 is
relatively small.

------
al2o3cr
"by acting like a startup"

What, you mean by loading up with debt and using the cash to buy back stock to
goose earnings-per-share? (the question uses data from their 2015 buybacks,
but they did a billion $ moar in 2017 and have more scheduled this year)

[https://www.quora.com/Why-are-Dominos-Pizza-taking-up-
loans-...](https://www.quora.com/Why-are-Dominos-Pizza-taking-up-loans-to-buy-
its-own-stock-and-pay-down-its-already-big-loans-instead-of-only-paying-down-
on-its-loans)

------
Talyen42
a 90x increase in stock value, but only a 2x increase in revenue 2010-2018.
that's just about what the average company did. that's compared to 10-100x
increases in revenue at these startups it's being compared to.

the only reason for the 90x increase is because the stock was basically
worthless, assumed eventual bankruptcy, liquidation of assets style valuation.

then they successfully turned it around and doubled revenue in a reliable and
sustainable fashion, which made it actually worth something (90x more than
almost-zero)

dominos is definitely not growing like a startup

------
ajoy
Tangentially related to pizza, but its interesting how it spawned
wealth/companies in the ingredients that it uses [0]

0 - This Secretive Billionaire Makes The Cheese For Pizza Hut, Domino's And
Papa John's
([https://www.forbes.com/sites/chloesorvino/2017/05/23/james-l...](https://www.forbes.com/sites/chloesorvino/2017/05/23/james-
leprino-exclusive-mozzarella-billionaire-cheese-pizza-hut-dominos-papa-
johns/#3fee33514958))

------
atonse
About 5 years ago my wife and I actually started ordering from Dominos because
Pizza Hut and Papa Johns routinely took 60-90 minutes to deliver us cold
pizzas in our area (a DC Suburb). I was half-joking when I told her "nobody
ever eats Dominos anymore, I bet they'd have no queue and get us pizzas fast".

I had heard that they reinvented their pizza. We were pleasantly surprised and
really liked the pizza. Plus I was right, we regularly got our pizzas hot and
fresh within 30 mins. So we were Dominos customers for a while before we moved
(to another DC suburb). Now nobody delivers to us, which is crazy given that
we're not exactly in the boonies!

~~~
ghaff
Maybe part of fast delivery is that they're selective who they deliver to. I'm
about 4 miles from the nearest Domino's but I'm across the border in the next
town and can't get delivery.

~~~
HeyLaughingBoy
Exactly this. If I go to the Domino's website, it tells me that I'm out of the
delivery zone of the two closest stores. I think "corporate" is setting the
delivery range/route algorithms.

However, if I call the store directly, they'll take the order and are usually
here within 35 minutes.

------
clean_send
I think what is interesting here is how often do you see a room of executives
(the ones who actually make product decisions) watching what their users are
saying about their products? Fluff piece aside, working in tech is tough
because there is a level of "How do we deliver something new and innovative"
mixed with, "What do our users actually need." In this instance, they needed
one, fix their flagship product and two, they needed to innovate in the
delivery space. If more companies did this type of user-centered
retrospective, we would better products across the board.

------
franciscop
April 1st story with a video with a bad render shown as an example of how they
are beating tech companies. Not sure about the reliability of the rest of the
article...

------
xylo
They also changed the way they do log analysis.

[https://www.splunk.com/en_us/customers/success-
stories/domin...](https://www.splunk.com/en_us/customers/success-
stories/dominos-pizza.html)

------
dboreham
I'm old enough to remember when we would joke that "you could order a pizza
using the Internet" \-- hahahah. Initially you would get a GIF of a pizza but
it seems now you can get an actual edible pie. Amazing progress in 25 years.

~~~
geofft
... I remember ordering pizza on the internet in the late '90s or perhaps
early '00s, much less than 25 years after the first GIFs. "None pizza with
left beef" was from October 2007, so ordering pizza on the internet was well-
established by then.

~~~
dboreham
Different story in 1993.

------
forkLding
Issue is that again by overly focusing on convienence they might lose in pizza
taste as their competitors like Pizza Hut are focusing more on different
things and can overtake Dominos.

------
pcunite
I think their garlic-seasoned crust did a lot of good for their perceived
value in the market ... it just tastes good.

~~~
sudouser
Everything tastes better with garlic, even McDonalds fries

------
seattle_spring
So... Sliceline?

~~~
headcanon
I know its parody, but the idea of Sliceline is objectively not a bad business
model - lots of small pizza franchises could benefit from similar app-based
delivery services, and would pay to be able to compete with Domino's on that
front. I met a guy who manages an Indian restaurant that does dev work on the
side - he's operating an online ordering/fulfillment service for 3 other small
restaurants, and claims to take 7% commission from every order that comes
through the system. Not bad if you ask me.

~~~
selectout
So... this? [https://www.forbes.com/sites/amyfeldman/2018/04/10/pizza-
unc...](https://www.forbes.com/sites/amyfeldman/2018/04/10/pizza-unchained-
tech-startup-slice-helps-local-pizzerias-get-online-and-fight-back-against-
dominos/)

------
ohf
That article sure manages to say a lot without saying anything at all.

------
antidaily
Even Dave Brandon couldn't kill 'em.

------
ghaff
And the moral of the story is that, if you can successfully industrialize some
process, you can make lots of money even if the resulting product is
thoroughly mediocre.

~~~
slap_shot
> thoroughly mediocre

I was just watching Ugly Delicious[0], and there is an episode about pizza.
David Chang reveals that his FAVORITE pizza in the world is actually a thin
crust dominos pizza with a strange array of toppings.

He shares a pie with a brooklyn based pizza chef and another guy, and while
everyone agreed it was delicious, they said it wasn't pizza.

I live in NYC and eat a lot of pizza, and while I obviously wouldn't consider
Dominos in the class of a Robertas, Emily, Di Fara, etc, whatever it is
they're making is pretty damn good. And their numbers seem to indicate that as
well.

I live right next to a Joe's pizza, often touted as one of the best classic
American pizza slice in NYC. I would take a dominos deep dish or thin crust
over Joe's any time.

[0]
[https://www.netflix.com/title/80170368](https://www.netflix.com/title/80170368)

~~~
gilbetron
The two people he shared it with didn't say it was delicious, the just
awkwardly tried to say it wasn't as nasty as they feared. You could tell it
was 100% Dominos being some sort of sponsor. The pizza chef at the end even
threatened Chang about making him eat it again.

Dominos is terribad.

