Domino's Pizza

Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery.
Domino's is listed on the NYSE under the symbol "DPZ." Through its primarily
franchised system, Domino's operates a network of 8,449 franchised and Company-
owned stores in the United States and more than 55 countries. The Domino's
Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail
sales of nearly $5.1 billion in 2006, comprised of $3.2 billion domestically and nearly
$1.9 billion internationally. During the second quarter of 2007, the Domino's
Pizza(R) brand had global retail sales of over $1.2 billion, comprised of nearly $755
million domestically and approximately $493 million internationally. Domino's Pizza
was named "Chain of the Year" by Pizza Today magazine, the leading publication of
the pizza industry and is the "Official Pizza of NASCAR(R)."

Strategy and Policy

What is the company's vision for growth?

The company has a 20% share of the UK pizza delivery and takeaway market. This market was
estimated to be worth nearly £450 million in 2000. At present, 20 percent of all pizzas consumed
are delivered. This figure is expected to increase to 40 percent. Home delivery now makes up 70%
of the total take-away and home delivered food sector, up from 62% in 1997.

The Future Foundations report (see 'The Business' section of this case study) estimates that the
UK's home delivery pizza market will more than double by 2010 to approximately £800 million.

Domino's believe that their business model and brand strength place them well to exploit this
growth. Fast growth in franchised stores is planned, coupled with more aggressive marketing
including terrestrial TV advertising and local store initiatives

What is their policy on ensuring best quality product?

Domino's HeatWave delivery bags contain a patented disc that is pre-heated electrically. This
innovation, combined with the bag's 3M Thinsulate lining and water-repellent nylon exterior, keeps
the pizza hot during delivery.

Pizza packaging plays an important part in ensuring the quality of the product on which the success
of the business is based. Retaining heat and dispersing steam are the chief features of Domino's
pizza packaging.

Domino's training and operations, including career development and store check activities, through
its 'Flawless Executions' department, is another important element of the company's quality
management.

Packaging and the environment is clearly also a concern of Domino's. They state that more than
80% of the corrugated board used in their pizza boxes is made from recycled paper. The remainder
is sourced from sustainable forests. The company encourages its customers to recycle their box
packaging.

The packaging for a pizza plays an important part in the marketing of the business: it carries the
company's distinctive logo, and it also carries the product on which the success of the business is
based. Protecting the product, retaining heat and dispersing steam are the chief functional features
of Domino's pizza packaging.

Operations and Production

What is their field of operation?

Domino's Pizza The UK pizza delivery and takeaway market. This market was estimated to be worth
nearly £450 million in 2000

What are their main products?

Pizzas and other home delivery fast foods.

What are their main brands?

The Domino name carries the company's main brand as market leader in its field of operation. The
company's logo is a distinctive part of the business' brand. The three dots 'domino' image comes
from the founder's idea that originally he would open three stores.

Domino's HeatWave delivery bags, introduced into the UK in 2000, contain a patented disc that is
pre-heated electrically. The company's use of this innovation is used as a marketing tool in its cable
and satellite TV advertising.

Where is their head office?

The company's UK headquarters are at: Lasborough Road, Kingston, Milton Keynes. MK10 0AB. UK.

When did the company start?

The business was founded in the USA in 1960 by Tom Monaghan, who ran the business until retiring
in 1998, when he sold the company for $1billion. By using the concept of 'franchising' where other
people are encouraged to invest money to open their own pizza store, Domino's quickly expanded
to the point where it is the world's largest pizza delivery company and the eighth largest fast food
brand.

In 2002 there was a total of more than 7000 stores in 64 markets worldwide, employing over 250
000 staff and involving more than 2000 franchises. Domino's started trading in the UK in 1985 with
a store in Luton. In 2002 there were over 200 stores in the UK and the Republic of Ireland.
Who are its shareholders?

Domino's Pizza UK & IRL plc is quoted on the Alternative Investment Market of the London Stock
Exchange (symbol: DOM).

What is the company structure?

Domino's Pizza UK & ILR plc - Parent company listed on the AIM.

Domino's Pizza Group Ltd - Runs Domino's Pizza in the UK and Ireland, holds the exclusive franchise
license to own, operate and franchise the Domino's brand.

Domino's Corporate Team - Based at Milton Keynes, comprising over 200 employees.

The Leadership Team - Responsible for strategic decision-making.

Marketing - Understanding customers' needs and publicising the Domino's brand. Developing new
products and use of technology.

Food Service - Manufacturing fresh pizza dough and sourcing fresh ingredients. Buying in or
inventing equipment.

Information Technology - Technology and e-commerce activities.

Property - Acquires store premises, oversees planning permission applications and refurbishes
stores.

Flawless Execution - Not a form of capital punishment! Actually, Domino's training and operations,
including career development and store check activities.

Finance - Organises finance for franchisees, as well as overseeing cashflow, budget planning, sales
and purchase ledgers, payroll, accounts and credit services.

What is its mission statement?

"'Exceptional People On A Mission To Be The Best Pizza Delivery Company In The World'. This is
part of Domino's 'Vision and Guiding Principles' including these statements:

• 'We Demand Integrity

• Our People Come First.
• We Take Great Care Of Our Customers.
• We Make Perfect 10 Pizzas Every Day.
• We Operate With Smart Hustle and Positive Energy'
Who are their major competitors?

The UK pizza delivery and takeaway market consists of many small businesses and the big three
firms: Perfect Pizza, with over 200 outlets, Pizza Hut which has 170 restaurants and also delivers
and Domino's. In Britain, pizzas are delivered by restaurants and a large range of outlets that also
sell other food, like burgers and kebabs. It is estimated that there are as many as 4,000 pizza
delivery companies.

The Business
A look at a key feature of Domino's business

The Future Foundation Report (2003) was commissioned by Domino's Pizza to analyse the social,
economic, demographic and technological factors likely to impact on the UK pizza delivery and
takeaway market for the remainder of this decade. The following are some of the key points raised
by the report:

Lack of time - the research shows that, on average, adults in the UK eat out and/or eat
delivered/take-away meals around 80 times a year. The Foundation looks at the impact of freeing
up time normally spent on preparing food at home, as 'creating a time oasis'.

Higher levels of disposable income - real disposable household income is expected to increase by
nearly 12% over the next five years resulting in more opportunity for expenditure on home
delivered food.

Demographic change - over a twenty to thirty year period, the numbers of older people will continue
to increase. The research suggests that firms in the home delivery market can benefit from this by
building and keeping brand loyalty amongst a generation of people who have grown up as pizza
consumers and whose incomes and affluence are likely to grow.

In addition, there is expected to be a decline in the traditional family structure, which coupled with
increasingly individualised tastes, will result in fewer 'formal family meals' at home.

Leisure activities - the next decade will see more choice of a greater range of leisure activities. The
research suggests that spending on home-delivered food and take-aways will continue increasing by
2.5% a year on average during the next five years.

Technology - In the short term, (the five years from the date of the report), more people will have
access to interactive technologies, up from 70% today to 90%, and the number of broadband users
will rise. These people will become better at and more confident about e-commerce and buying food
online. The report indicates that home food delivery firms already active in this area are likely to be
especially successful.
Human Resources Management

What sort of people work for the firm?

Think about the type of person who wants to become a Domino's franchisee. What qualities do you
think potential franchisees should have? What are the risks and what are the potential benefits?

By how much has their workforce grown over recent years?

In both 2001 and 2002 Domino's opened more than 225 new stores. Running each store takes a
team of about 25 people. Team member numbers should therefore have risen significantly over this
period.

How are their employees motivated?

Employees (or team members, as Domino's term them) are motivated and trained to offer high
standards of customer service.

Franchisees and their staff teams have access to training programmes and can attend corporate
events in the UK and abroad. An awards system operates and some Domino's team members go on
to buy their own franchise.

It costs a fee of around £160 000 for the right to open your own Domino's Pizza store. This sum
buys a fully-fitted store and enables the franchisee to use the company brand image, ingredients,
recipes, marketing materials and packaging. The company does offer a finance service for
franchisees.

Marketing

Can I have some information about product development?

The company has developed or invented many of the systems and pieces of equipment that are now
used as standard by the industry. Examples of these include:

• Domino's HeatWave delivery bags, introduced into the UK in 2000, contain a patented disc
that is pre-heated electrically. This innovation, combined with the bag's 3M Thinsulate lining
and water-repellent nylon exterior, keeps the pizza hot during delivery.

• Nationwide service system through Internet and interactive TV ordering.

What is their brand positioning?

Domino's calculate that their brand awareness is 81% and that this is partly as a result of their
sponsorship of 'The Simpson's', and also their marketing of the launch of their HeatWave heated
delivery system.

Can you give me some information about a recent marketing campaign?

Domino's nationwide service system through Internet and interactive TV ordering is beginning to
show results, with its e-commerce net sales increasing by over 25% in the six months to July 2002,
totalling £1.9 million. The company believe that their continued sponsorship of 'The Simpson's' on
the Sky TV service and increased advertising on cable and satellite channels gives them an
unchallenged position at the forefront of delivered food by e-commerce.