MINI-CASE ON DOMINO’S PIZZA, INC. (DPZ) TO GROW GLOBALLY THE RIGHT WAY = FOLLOW DOMINO’S?

Headquartered in Ann Arbor, Michigan, Domino’s is the second-largest pizza chain in the United States behind Pizza Hut. Domino’s has over 10,000 delivery-only stores in about 70 countries and in all 50 states. Among the 5,000+ Domino’s in the United States, only about 400 are company-owned; all others are franchised. Between 2011 and 2015, Domino’s opened 1,800 stores in 10 countries. Many of the business communication, culture, and climate facts, figures, and information presented in this chapter impact the choices made by companies deciding where on the planet to launch new endeavors. Currently, Domino’s has reported 85 consecutive quarters of positive same-store sales in its international business. Domino’s earnings and revenues are rising dramatically. The company remains committed to accelerate its presence in high-growth international markets to boost its busi­ness. Domino’s clearly is growing globally the right way.

In addition to building new stores and adding new franchisees, Domino’s has also recently revitalized its menu with Pan Pizza and Specialty Chicken. In addition, it has instituted mandatory reimaging of stores, which has received an overwhelming positive response from franchisees. The company has completed redesigning almost 15 percent of its U.S. stores and just over 25 percent of international stores. Given the response of customers at the reimaged stores, Domino’s intends to con­tinue remodeling both its company-owned and franchised stores. Furthermore, Domino’s is investing heavily in technology-driven initiatives such as digital ordering to boost sales.

However, like other food chains, Domino’s margins have suffered due to higher commodity costs. Costs of cheese, pork, and other meats have recently risen sharply. Prices of food commodities are expected to continue rising due to worldwide agricultural supply and demand imbalance and other macroeconomic factors. These rising costs are expected to continue to hurt margins further.

Source: David Fred, David Forest (2016), Strategic Management: A Competitive Advantage Approach, Concepts and Cases, Pearson (16th Edition).

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