Domino’s is about to grow;Pizza chain plans 400-store expansion in coming year. go to site dominos coupon codes

Crain’s Detroit Business December 6, 1999 | KOSDROSKY, TERRY The corporate reshuffling last week at Domino’s Pizza Inc. that led to about 100 administrative layoffs is the precursor to a 400-store growth plan in 2000, double its current growth rate.

Domino’s also plans to invest more in franchise development, marketing and in-store computers.

The goal is to increase systemwide sales by 5 percent next year, said Tim McIntyre, vice president of communications for Domino’s. The Ann Arbor Township-based company typically has opened between 150 and 200 stores a year since 1995. Domino’s reported systemwide sales of $3.2 billion in 1998. There are about 6,400 worldwide stores, with 4,563 in the United States.

Though the No. 2 pizza company reported same-store sales growth in its last 25 quarters, its domestic market share declined slightly between 1997 and 1998, from 11.7 percent to 11.3 percent, according to Technomic Inc., a Chicago-based restaurant industry research and consulting firm.

The pizza industry has been slow-growing for the past several years. Last year’s top three companies, Pizza Hut Inc., Domino’s and Detroit-based Little Caesar Enterprises Inc., all lost market share in 1998, according to Technomic. But Domino’s wants to make a move, McIntyre said.

To achieve its projections, Domino’s last week overhauled its franchise-service and franchise-marketing operations. The company used to have 55 franchise consultants who worked with franchisees on business plans, new products, operations and marketing. Now Domino’s will use 51 franchise consultants to work on stores with sagging sales and small markets, while 19 operations consultants will work with franchisees on operations and new products.

Marketing development managers will work with franchisees on promotions and advertising targeted at more specific markets. this web site dominos coupon codes

As a result, Domino’s needs fewer administrators and more marketing and brand-management specialists, McIntyre said. That’s why about 100 corporate employees, including about 40 in its Ann Arbor Township headquarters, were laid off. Domino’s has about 3,000 salaried employees.

One franchisee said he thinks the decision to market promotions in smaller areas is a good idea and can increase unit sales.

“Before, they would make a decision for a six- or seven-state area. Now they’re targeting it for specific states and county areas, and we think that’s better,” said Joe Manuszak, who owns seven Domino’s stores in western Michigan. “The old way would be like me trying to develop a marketing plan for Indianapolis, which I know nothing about. The differences in each area are huge. In some markets, they don’t care about price, and in others, it’s more competitive.” Manuszak said franchisees are getting a different tone from the company.

“The regional offices are saying, `What can you do?’ instead of saying, `This is what you can’t do,’ ” he said.

But the transition won’t happen without some rough spots, Manuszak said.

“I think it’s positive, but there is a sense of loss and regret for the people that have gone. Some good people have gone, and some relationships with the parent company are lost,” he said. “It may cause some problems with contracts that are in the midst of completion, but life doesn’t come to an end.” An independent franchise analyst said the changes should benefit franchisees, who make up the bulk of Domino’s system.

“You should have consultants by function, but you also need someone in marketing on the local level who really understands the region,” said Geoffrey Stebbins, president of Southfield-based World Franchise Consultants Inc. “You really need a two-pronged answer, and Domino’s is large enough to afford that.” Stebbins said Domino’s growth projections are realistic but that the company should focus more on increasing same-store sales in order to attract more franchisees. But he said that because Domino’s carries a lot of debt because of its recapitalization by Bain Capital Inc., Brandon has pressure to expand the system.

Domino’s reported total long-term liabilities of $745 million for the third quarter, which ended Sept. 12. Boston-based Bain, which purchased Domino’s in December 1998 in a $1.05 billion deal, funded the recapitalization with $425 million in loans and $275 million in public security bonds.

Terry Kosdrosky covers the food industry, transportation, steel, international and Downriver. He can be reached at (313) 446-1626 or at TKosdros@crain.com.

KOSDROSKY, TERRY