The Domino's effect

06 October 2005
The Domino's effect

When Domino's Pizza UK chief executive Stephen Helmsley blew the candles out on the company's 20th birthday pizza in July his wish must have been for the next two decades to be as successful as the last.

Since its first store opened in Luton in 1985, the company has established itself as the leader in the UK pizza home-delivery market, with just short of 400 outlets in the UK and Ireland. Last year Domino's UK boasted sales of more than £174m.

It was also in 2004 that the company won the British Franchise Association's Franchisor of the Year award and, according to Helmsley, it is the company's structure, with all stores being franchised to third-party proprietors, that is at the heart of its impressive success.

The vast majority of the 9,000 Domino's Pizza workers in the UK are not employed directly by the company but by the 150 or so franchisees, who own stores as far apart as Plymouth and Inverness.

"This leaves about 250 of us to concentrate solely on areas such as marketing, product innovation and distribution," says Helmsley, who joined the company as finance director in 1998 before being appointed chief executive in 2001.

But while this clear separation of roles enables different parts of the group to focus on their individual areas of responsibility, head office - in Milton Keynes - stays in touch with its franchisees in a variety of ways.

For example, a small number of franchisees sit on a menu development committee, which decides on new additions to Domino's offerings and feeds back customer reactions to the latest toppings and sauces.

The company runs six menu campaigns a year where new pizzas and discount offers are launched. This regular update of products, says Helmsley, keeps the menu fresh and gives Domino's a reason to send direct mail to customers and hang posters in stores informing them of the good news.

The last two pizza toppings launched by the company - the Jamaican Barbecue and Hotdog Pizza - were actually invented by franchisees as part of a competition run by the company.

The undoubted success of recent years, however, is the Double Decadence Pizza, an innovative cream cheese sandwich between two thin, crisp crusts. Helped by some memorable TV advertising featuring actor Leslie Nielsen, Helmsley says sales increased 20% on the back of its launch last year.

Getting the marketing mix right has been essential, says Helmsley, and he points to Domino's clinching the sponsorship of The Simpsons cartoon on Sky TV in 1998 as "the best day's work our marketing director has ever done". Because The Simpsons appeals to 18- to 35-year-olds - Domino's target market - "there's not a viewer wasted," he says.

Here, Helmsley can't resist a swipe at rival Pizza Hut, which soon began sponsorship of Channel 4's Simpsons broadcast. "Either their marketing director is inspired, or lazy," he says, with a mischievous grin.

But spot-on marketing is not the main reason for Domino's dominance, according to Helmsley. What really makes the company stand out from the likes of Pizza Hut and Perfect Pizza, he claims, is its product quality and service.

Helmsley proudly declares that every Domino's pizza is made from fresh dough, and that this will never change on his watch.
While this may improve the taste, maintaining such a high standard comes at a cost. Fresh dough requires more space to store compared with par-bake varieties, which drives up storage and distribution costs, and Helmsley says much work has been done to streamline operations in this area.

Every Domino's store takes delivery of its quota of fresh dough and other produce three times a week from one of the company's three commissaries, located in Milton Keynes; Penrith, Cumbria; and Dublin.

Being the sole supplier of produce to its stores is not only a nice little earner for the company, it also allows it to assure the quality of the food being served at each outlet.

Another way the company maintains regular touch with the stores is through the standardised electronic point of sale system that is installed in each outlet. Every night, details of the day's takings are batched through to a centralised database, which helps head office keep an eye on the performance of individual stores and provides customer lists for direct-mail campaigns.

When asked about the future, Helmsley's eyes light up. "We've got a lot of plans," he says.

First and foremost, it's the potential of new technology to improve customer service and bring efficiencies to the business that gets Helmsley excited.

The company plans to extend its e-commerce service, which has really taken off since the mass adoption of broadband and now accounts for 10% of all sales. Domino's is also looking at selling pizzas via mobile phones and will shortly be trialling a text-message ordering system. It is also researching the possibility of introducing a loyalty card system.

Touch-screen tills for staff and innovations in store design so smaller units can become Domino's stores are also round the corner, says Helmsley.

But where technology will have the biggest impact is on the logistics and distribution areas of the business.

The company is experimenting with alternative fuels and different types of vehicle to reduce costs and has recently invested 200,000 in a new software system aimed at improving routing, vehicle loading and driver rostering.

Helmsley says the company is already saving 15,000 a month on fuel costs and hopes further savings will be found as the system beds in.

Improved distribution will be essential if Domino's is to maintain its present rate of expansion, with one new store opening almost every week over the past few years.

According to Helmsley, there is room in the UK and Ireland for 1,000 Domino's stores, 600 more than currently exist.

At least 200 of these he aims to open in non-traditional locations such as sports stadiums, shopping malls and university campuses, locations that have proved popular in more mature markets like the USA and Australia.

Helmsley will also be leaving for a fact-finding mission to Cornwall soon, where, on a recent holiday, he spotted the potential for more Domino's outlets in towns like Truro and Newquay.

It's testament to Helmsley's commitment that, even when away on holiday, he is thinking about where to take Domino's next.

Twenty years of Domino's Pizza UK

  • 1985: The first Domino's Pizza store in the UK opens in Luton, Befordshire
  • 1989: The first Domino's franchise store opens in Stapleford, Nottinghamshire
  • 1995: The 100th store opens in Purley, south London
  • 1997: Domino's is first to trial interactive TV ordering, with Yes Television in Wales
  • 1998: The first online Domino's pizza order is placed. Domino's launches its sponsorship of The Simpsons
  • 1999: The 200th store opens in the Docklands, London. online ordering goes nationwide
  • 2003: The 300th store opens in Aldershot, Hampshire.
  • 2004: The company wins the British Franchise Association's Franchisor of the Year award. Domino's delivers a pizza from Feltham in south-west London to Melbourne, Australia, breaking the world record for the longest pizza delivery.
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