case study on pizza

CASE STUDY ON DOMINO PIZZA
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Service marketing is all about exceeding your customer’s expectations. Service marketing companies are trying to innovate and come up with unique solutions. We have many companies that have introduced innovative concepts. One such company is Domino Pizza.

As a service standard, that’s about as short and sweet as they come. It defines the service precisely. It defines the standard of performance against which the business promises to measure itself. And it’s probably the major reason why Thomas S. Monaghan is running a worldwide chain of more than five thousand pizza stores all over the United States and in seven foreign countries (and rooting for the Detroit Tigers, which he also owns, and for which he once dreamed of playing shortstop) instead of struggling with a handful of pizza parlors up around Ypsilanti, Michigan. That’s where DomiNick’s was operating in 1960 when he bought into the business.
Today, Domino’s is the undisputed pacesetter in the field of home delivery, the entrepreneur’s version of meals on wheels. Its food may not win too many taste tests. Its menu (just pizza and cola in most of its stores) gives new meaning to the concept of simplicity. Its legendary service standard has been revised down to three bucks off if the order arrives late (Domino’s will, however, provide a new pizza free if the customer complains within thirty minutes and returns at least half of the unsatisfactory one). And you can’t eat your pizza “there” because there’s no seating there, nor will there ever be, according to Monaghan. Doesn’t matter. Millions of hungry people clearly are willing to trade off culinary artistry and menu variety for a simple hot meal that almost always arrives at their door less than thirty minutes after they order it.
Even at three bucks’ worth of jeopardy, thirty-minute delivery is not as easy as it sounds. Simplicity of consumer choice notwithstanding, a typical Domino’s is a pretty sophisticated service operation, one that has to effectively combine choice of location, service radius (in some areas stores are less than two miles apart), order-taking, food preparation, driver training, routing directions, and cash management in the presence of the ubiquitous deadline.
In keeping with its organizational theme of simplicity, virtually all
Domino’s facilities are built from the same efficient design. All the space
is work space. internal systems are managed for simplicity, and corporate systems support them. For example, the network of twenty-seven com missaries provides all supplies, delivering three times a week to take many of the burdens of inventory management and quality control off the shoulders of store managers while reducing square footage to the bare rn in i m urn.
It’s the all-important people side of the equation that Dorninos dele gates to its store managers. Working almost always with a cadre of young. minimum-wage employees, managers (most of them in their early twen ties) have to fashion a dependable crew that can function well under pressure. Since 80 percent of all orders are placed during 20 percent of a store’s business hours, that means developing an ability to work fast without racing through quality and safety checkpoints. Crews also are extensively cross-trained so employees can do more than one of the five basic jobs—driver, order-taker, pizza-maker, oven-tender, and router (the person who figures out which pizzas go with which drivers to which addresses)—when things get hectic.
Eighty-five percent of that training is on the job, delivered directly by the store managers (albeit from programs developed by a small corporate training staff). Much of it is presented on videotape, with short messages and flashy production values designed to get through to eighteen- to twenty-one-year-old trainees. For managers in training (“MITs” in the Dominos vernacular), who tend to be in their early to mid-twenties, the pacing slows a bit, but video is still the most common and effective medium. The fifth appliance common to every Domino’s store (after the telephone. cash register. oven, and refrigerator) is a VCR.
Like most fast-food operations, Pornino’s is relatively low-pay, but there are several incentive systems in place to reward good crew perform ance, including a national competition each year to crown the fastest pizza-makers companywide. Managers in corporate stores receive 20 per cent of their stores profits as a bonus.
The latter also have a longer-term incentive: the prospect of earning the right to buy their own franchise. About 70 percent of all Domino’s stores are franchises, but with an interesting twist. In the early 1970s, Monaghan decided to offer franchises only to people who had worked for the company; as a result, 98 percent of the more than six hundred franchisees nationwide are former Domino’s employees. Because the operation’s start-up and overhead costs are so low, most can and do own a number of stores.
Many businesses use secret shoppers to audit service quality, but Domi no’s has raised the practice to a science. Its eight thousand inspectors, which it calls “mystery customers,” are assigned—two per store per month—to double-check twenty-two different aspects of food quality and store performance. There’s no warning or predictable pattern to their impromptu checkups. because they really are customers. Doininos pays them a nominal fee fof each evaluation form they submit, but the food they order they also pay for. Thus, their orders are real orders, often placed during real peak periods.
Their reports go back to store managers to he used for both product- and service-quality control, and also are entered into a systemwide database that gives headquarters and regional managers a constant readout on performance levels and norms nationwide. That’s one reason they know. for example. that in 1987 the average pizza was delivered in 23.08 minutes.
Among the variables Domino’s pulls off each computer-coded form:
the times, to the minute, when the pizza was ordered and delivered; the ingredients on the pizza; whether the order-taker used the Domino name in answering the phone; whether, and for how long, the mystery customer was put on hold; whether the delivery person was neat and clean, and wearing appropriate Domino’s attire (including a name tag); whether the pizza was hot, the cola cold, the toppings evenly distributed. the flavor of the cheese and sauce pleasing; and even whether the Domi no’s drivers seen in the neighborhood of late have been driving safely and courteously.
In addition, periodically each Domino’s store manager is expected to personally call back some of a given day’s customers and quiz them about their food and service experience with his or her store. The system not only helps evaluate how well the service standards are being met, but also provides direct (if not face-to-face) customer contact. In some regi supervisors—who typically have responsibility for six to eight stores— have bounceback cards delivered with the pizza as a less-confrontive way
— of diagnosing service problems and keeping in touch with customers’
— changing perceptions.
Still others take a more personal approach. Michael Ellis, for example,
started working for a Tulsa Domino’s as a driver in late 1985. By mid-1986,
lie was a manager, taking over Store 6480 in Muskogee, where he faced
— everything from a poor sales record and sporadic delivery problems to a generally negative perception of the Domino’s name among customers whose experience up until that time had been less than they had been led to expect.
Instead of turning up the heat on art advertising campaign, Ellis person ally went door to door to meet the customers in his service area, introduc ing himself as the new manager in their neighborhood, inquiring about past service problems, occasionally giving away a free pizza to encourage a skeptic to give the revamped operation a try. To build visibility, he got
.u. a small pickup, painted it in the appropriate Domino’s color scheme, then sent it out with free Coca-Cola on hot summer days.
Inside, he turned up the heat on operations, making sure product
quality and delivery service returned to par. In the space of a year, Store 6480’s sales jumped 80 percent in some periods, its delivery time rating (as measured by the mystery customer reports) dropped to under twenty- one minutes, and the store’s rating for total customer satisfaction jumped to 98 percent. The tactics and the results led to Ellis being named Manager of the Year for 1986, an award that carried with it a check for ten thousand dollars at Domino’s National Awards Celebration the fol lowing July. It also made Ellis—since promoted to area supervisor in northwest Arkansas—the author of page nineteen (headline: “Dedica tion’) in the companys 1987 annual report.
From top to bottom, Domino’s has survived a period of radical growth (seventy new store openings a month has been “normal”) without losing its focus on the service standard that sets it apart. That’s largely because so much of the business has been delegated to the individual store managers, the people closest to the customers. “If you don’t make it, bake it, or take it, then you’re support for those who do,” is an opera tions motto that extends outward from Tom Monaghan’s office.
As Training magazine reported in 1987, “It appears as though everyone in the corporate management structure within Domino’s Pizza, Inc.. takes this little saying to heart. They cling to the philosophy that their job is to help their subordinates succeed. CEO Monaghan serves as a role model:
Every few months he hosts a national phone-in show, inviting all employ ees, from drivers to franchisees, to call in with cluestions about sales, management, corporate goals, and the like.”