DOMINOS PIZZA INDIA Of Product, Price, Pizzas & Pastas The 30 Minutes Story From its Early days

s to Creating a Strong On-time Delivery Recall, Dominos Journey in India was a Case Study Screaming to be Documented. And we Did!

It seems a little like love when you see a half-starved teenager dive into the warm square-foot cartoon package, delivered-and-promised within half-an-hour. For Dominos, the joy is mutual. 70% of all pizzas that are home-delivered in the country end up contributing to the coffers of this quick service restaurant (QSR). In fact, one out of every two (non-home made) pizzas that are consumed in any part of India, is a Dominos-baked product. Numbers are enough to prove how dominant a force this brand has become in India. But heres the real surprise: For Dominos, the flight apparently is yet to begin.

Dominos (in reality, Jubilant Foodworks; the company managing the show) considers the domestic market to be the most important in Asia. Its rare that a US-based $1.57 billion-a-year sales generating multinational giant chooses to bet bigger on a country other than China. But this is true. Blame the company for being over-optimistic if you may, but what it is betting heavy on is the rising clan of middle-class and the youth segment which forms a large percentage of the Indian population. And considering the rising levels of conspicuous consumption and economic conditions, Dominos is hoping its calculations are right. The Indian market is already amongst the top 10 contributors to Dominos global topline. J. Patrick Doyle, Global President & CEO of Dominos Pizza told 4PsB&M during his last visit to India, By 2014, we expect India to be amongst the top five earners and our plans to achieve this goal are in action with new launches. With the QSR market in India growing at 25% and with 26,000 pizzas being sold per day in India (as per CII; FY2010), Doyle may be hitting the right spots in his forecasts.

To their credit, the present times represent a solid growth phase for Dominos. A CAGR of 40% (which Dominos has in India) in any market is considered obscenely high. And the fact that it is the market leader in India is even better news for the company. But victory for it has come at a price more than a decade of toil. In fact, some talk about how Dominos learnt the secrets to success in the Indian market the hard way, right from its very early days in India (when McDonalds initially stole the show with its easy-on-the-pocket menu). Its first outlet was opened in January 1996, in New Delhi. Then, the concept of home delivery was still in its nascent stages in India. It wasnt easy work for Dominos to inculcate the home delivery concept in a market where eating out was only restricted to branded restaurants. But the company managed to put in place an integrated home delivery system never before seen in India.

Within the first year, the company also realised that it had to quickly change its Western offerings to suit Indian tastes if it was to succeed locally in the long run. Where KFC failed in its first go in Bangalore (and closed down at that time), Dominos succeeded. It did so with the introduction of localised toppings like Peppy Paneer and Chicken Chettinad. In fact, many even mocked at the companys localised strategy, but Dominos India knew that if it had to spread its wings beyond just the metros, into the mini-metros and tier II & III locations especially, it had to give in to local palates. It did so in good time. Of course, during the initial years, like any other MNC, we too had teething problems. It took us time to understand the Indian market. But that situation lasted for just two years post-entry into the Indian market, confessed Doyle to 4Ps B&M.

So, beginning 2000 (it had concentrated heavily on its delivery strategy till then), the brand started re-structuring its product portfolio, with a more economical pricing menu. This, when supported well by its strong proposition of on-time delivery, made the QSR a strong competitor to the likes of Pizza Hut and McDonalds. The company also tried hard to establish a strong brand recall with the 30 minutes delivery proposition. Guess what, it worked.

In fact, to enhance the delivery proposition, the brand started rolling-out stores on a franchisee model across the country, in locations which could cater the local demand within 30 minutes. But the choice of location didnt come easy. Before we gave the final approval, any one of us had to take a scooter ride through all possible lanes and corners of that locality. That was to make sure that we could actually deliver the product in 30 minutes, recalls Dev Amritesh, who was the Chief of Marketing of Dominos Pizza India till March 31, 2011. *Amritesh is currently serving as the President & COO of Dunkin Donuts, another venture of Jubilant.]

But did not the idea of managing stores through the franchisee model put the offering quality at risk? [Considering this huge trade-off, McDonalds has always stayed away from this expansion strategy in India.+ Amritesh brushes aside such an issue. The efforts of franchisees and team members have helped us to conquer very big markets. Our team in India is one of the two-largest and best franchisee organisations in our country. We are confident of our network and the quality, says he. There was another interesting twist to the tale in 2005. Despite having put in place a strong network of 102 outlets by the end of 2005, the brand was still finding it difficult to run past McDonalds. Its on-time delivery promise was not strong enough to convince many to switch tastes. Worse, that very year, even Yum! Brands re-launched KFC with a price-reduction. That was when Dominos India cut across a sharp turn it started working on plans to unleash a low priced menu. That seemed like the power punch that could unsettle its competitors. Much was expected.

But everything didnt go as planned. As an analyst points out to launch low-priced pizzas, one needed to have considerably advanced supply chain systems, so that costs could be minimised, and the desired levels of quality could be maintained. These were not at Dominos disposal then.

But the company continued advertising and spreading the word about its core competencies (30 minute delivery, quality, menu offerings...). In 2006, after having served Paresh Rawals and Anupam Khers funny act to the Indian audience, Dominos India roped in Arshad Warsi as its new brand ambassador in its continuing endeavour to keep developing a huge recall for the brand and its delivery promise. But Dominos knew that if they had to be market leaders in India, they had to master the low cost wave, and for that, they kept fine tuning all the connecting value chains in their supply chain.

The low-cost dream finally came true three years later in August 2008 when Dominos rolled-out its first low-priced product (pizzas) starting at just Rs.35. It was the lowest in the branded pizza segment, and was meant for the masses. And even though many would forcibly remember 2008 as a slowdown marred year, Dominos would be proud of it as the year which opened the next stage in the QSR battle. Other players like Yum! Brands and Nirulas suffered a fall in revenues, but Dominos managed to keep its head handsomely above the water. Its low-cost strategy was already eight months into operation before the first tremors shook consumer sentiments in the Indian market, and its new launches were well accepted by the Indian consumers who had just become more careful about their expenditures. This nano model became an easy substitute to dosa chole batore, says Ajay Kaul, CEO of Jubilant FoodWorks Ltd. With 60 Indian suppliers, Dominos was able to cut production costs significantly. Add to this the new 360 degree ad-campaigns (with a new tag line kushion ki delivery) and you had a worry-free Kaul through 2008 & 2009.

And then came the big year 2010, when Jubilant came out with its IPO (in mid-Jan). It was oversubscribed 31.11 times, reflecting the positive sentiments of the market towards the brand. And the stock has lived up to the expectations of the secondary market. During Q4, FY2010, total income for Jubilant increased y-o-y by 67.2% to Rs.1.24 billion. The post-IPO days of Dominos have been eventful too. Since then, it has ventured into six new Tier II cities (with a focus on sit-and-dine), and has also diversified its product offerings.

Today, the company operates 364 outlets, across 87 locations, with a workforce of 9,700 in India. Despite the fact that India has just about 1/25th of the global count of outlets (9064 outlets worldwide) and even behind markets like Australia (with 500 outlets), the companys slow-but-sure expansion strategy in India has ensured maximum returns with minimum risks so far. Going ahead, in the remaining months of FY2011, the company plans to open 20 more outlets, across smaller towns. Its still a long way before Dominos India becomes a role model for the art of distribution across the world, but in the QSR industry, it already is one.

But soon, even this model this might change. The company now seems to be trying its best to bring to the table offerings beyond just on-time delivery. The companys latest ads also focus the spotlight

on product details than delivery. So do we see a new avatar of Dominos soon? Answers Harneet Singh Rajpal, Senior VP Mktg., Jubilant FoodWorks, We are not moving away from our delivery quotient. But we definitely have launched innovative product like Dominos Double-burst pizza and it needs to be communicated. That explains our ads.

Clearly, the concept of home delivery would never die down till people live in homes. But what could change is the mode of booking. Even today, to order a Dominos product, a majority use the phone. Could the India of the future see this communication channel changing over to the world of 4G internet, where chefs would take the order on a web cam while talking and seeing their prospective clients? You could think up more such methods, but the fact is, Dominos would be ready for it all. Well, its a matter of coming amongst the top five profit centres for the $1.1 billion-worth Dominos global. And thats too juicy to miss. Ajay Kaul, CEO Jubilant FoodWorks Even a Dosa can be a Substitute... You have been the market leader in the pizza category. However, when it comes to the overall QSR category, cafe-chains and McDonalds are hogging the market. Do you see them as a potential threat? Not really. Having said that, we do see them as a substitute. And why only cafe-chains? Even a dosa can be a substitute to our product. The point here is that consumers have lots of options. So, in order to ensure that we become a mass brand, we have to be available and affordable in the Indian market.

Since the past decade, the 30 minutes or its free campaign has become a very strong element for Dominos. Why did you shift to other campaigns like Kushion ki delivery? 30 minutes or its free was a promise to the consumer and the campaign was a part of Dominos promotional strategy that has contributed immensely to the value of the brand. We do stick to such value-propositions, but at the same time, we thought of giving something extra and thats delivering happiness.

What are the other brand propositions that differentiate Dominos from Pizza Hut (from Yum! Brands)? When it comes to the product-portfolio, though you have more number of outlets, doesnt Pizza Hut have wider options than yours? As I said, availability, affordability and at the same time, innovative quality for consumers is our primary focus. As for your second question, yes, we have a much wider presence. But in terms of product portfolio, we have rolled out new products like pastas and muffins. Many such additional categories will be made available by 2014 and we will try to keep them as economical as possible.

Harneet Singh Rajpal, Sr VP, Jubilant FoodWorks India is a Highly Fragmented Market In recent years, you have started focussing a lot on the value for money proposition supported by new product launches. Economical pricing in QSR works, but dont you think by rolling out products like pastas and muffins, your brand-identity as a pizza-maker is getting disturbed? The new launches are with a mission to give more offerings to the consumer. But our main product will always remain pizzas. These new launches are complimentary offerings, or you can say an attempt to provide a complete menu and happy feeling. In future, we will continue focussing on products where we can make our consumers indulge more into newer food categories.

During your Double-burst pizza launch promotions, we noticed that even Borges brand of oil was being promoted through your TVCs. Are we right there? Yes. We do have certain tie-ups. But they are not exclusive tie-ups or strategic tie-ups. For instance, the Borges tie-up was more to show to our consumers that we use the finest quality of olive oil. So, we are open to such tie-ups with global brands.

Dominos is known for its BTL activities. Any new BTL plan soon? Yes. It will be more through family offers like discount coupons. We would also be resorting to digital tools for promotions, monthly mailers, sending SMSes to our customers in our database. Of course, the budget needs to be considered in a QSR business.

Nima DT Namchu, Executive Creative Director, Contract Advertising Has Dominos Shifted Focus? The creative account of Dominos Pizza India has been with Contract Advertising for the past eight years now. The agency did its impressive bit in 2008 with the Khushiyon ki home delivery positioning, which made out the element of happiness in Dominos public tone. It was some change, for over the past one decade, one had heard very little of anything else other than on-time delivery from Indias largest QSR. Incidentally, it was on the back of the same new campaign (Khusiyon...) that Contract Advertising retained the account after a quick pitch two years back. Nima Namchu, the brain behind Dominos advertising campaigns for close to a decade now (including the latest one which conveys the launch of its two new products Mexican Wrap and Italian Pasta), talks to 4PsB&Ms swati sharma, about the brand Dominos and the ad-campaigns revolving around the brand.

Since it opened its first outlet in 1996, Dominos India has come a long way to become Indias no.1 QSR. How, according to you, has the brand evolved over the years? What started off as a purely convenient and functional brand which came to mind only when the stomach started growling, I believe, has today evolved into a brand which has a much stronger emotional connect with the consumer. It has managed to appeal to the hearts of the masses, and it is difficult to imagine anyone not trusting Dominos for its quality and service quotients.

From humour as a key (in all its TVCs aired till early 2008), to the sentiments of sharing (Khushiyon ki home delivery) Dominos has used different emotional vehicles to spread its messages. Isnt that too wide a span? Humour is never the message. It is only a means of delivery. Through humorous scripts and execution styles that complimented them, we did what was required then hammer in the message of unmatched punctuality of our delivery service until it got etched into the consumers mind. 30 minutes or free! The idea of sharing that you refer to has only been used for a particular product it is not the brand idea. Khushiyon ki delivery is the positioning the brand stepped up to three years ago. And, with it, forged a deeper and stronger emotional connect with our consumer. But that does not mean that we have completely dropped humour, as the idea of delivering happiness is a very accommodative one. It works equally well through humour, through drama, through emotions it is only a matter of picking the script that works best.

So, how important is it for a brand as big as Dominos to make a shift from highlighting the focus on service to product strengths? Has that helped to strengthen its brand positioning? As I said earlier, the promise of 30 minutes or free has been etched in the minds of the consumer. Having established its superiority in delivery, the brand is free to delight the consumer with other offerings great tasting products, great innovative side orders, products which are easy on your pocket, etc. However, it would be incorrect to suggest that Dominos has shifted focus from on-time delivery. For, if your pizza arrives later than 30 minutes, it is still free. Try it!

They say its the people who matter at Dominos. Do you consider people to be Dominos USP? Or processes? What is the biggest risk while operating in a market like India? At the risk of making it sound like a clich I believe people who work there are the USP. They are one hell of a bunch of highly driven individuals dedicated to getting the best tasting pizzas to your doorstep before anyone else can. India is a highly fragmented market and although we have a good forecast about the growing demand for pizzas, its hard to predict in which segment/geography our product will work.

Question: 1. Discuss the strategy adopted by Dominos in India during the following stages of retail lifecycle. (10 marks) a. Entry b. Growth c. Maturity Please limit your answer to 1000 words.