How Domino’s is dominating fast food

JUNE 21, 2015

Domino’s boss Don Meij is taking on KFC and McDonald’s. Source: News Limited
DOMINO’S chief executive Don Meij is on a mission to take down McDonald’s and KFC. He wants to shake up the traditional drive-through, while at the same time cutting delivery times down close to 20 minutes.
The Brisbane-based pizza chain has gone from strength to strength over the past five years, with its stock price soaring as its share of Australia’s lucrative fast-food market grows.
Domino’s will open its 1500th store this year. It has more than doubled its earnings in the space of two years, in part because of its expansion overseas in Japan and Europe.
In February, the company posted record first-half profits of $29.1 million, a 44.2 per cent increase on the prior corresponding period.
Ever since launching its mobile app in 2009, Domino’s has placed technology at the forefront of its transformation. The popular Pizza Mogul crowdsourcing scheme is just one example of digital initiatives which have driven sales.

Pizza mogul
Nearly 60 per cent of its total sales in Australia are online, and Mr Meij wants to expand that to 80 per cent in the next two-and-a-half years.
Last month, the pizza franchise announced it was going on its biggest hiring spree ever with the addition of 3000 new drivers in Australia and New Zealand off the back of its Uber-style GPS Driver Tracker.
At the time, Mr Meij said it was about improving efficiency and convenience, but most importantly safety — he wasn’t lying. Speaking to news.com.au, Mr Meij revealed that 30 delivery drivers have been given the sack for unsafe driving since the introduction of the system.
“We’re tracking all our drivers now and they’ll be terminated if they speed,” he said. “In the first 50 test stores we had to let go 30 drivers. They didn’t learn, unfortunately. Those stores probably employ 1000 drivers — it was a small number who weren’t smart enough to change their behaviour.”
On average, delivery times have increased by 20 per cent, and they’re pushing down to the 20-minute mark, he says. “This was a business that was at 30 minutes five years ago. Many of our competitors deliver in 40 to 50 minutes,” he said.
While Europe has the potential to become the largest market for Domino’s, Mr Meij refuses to put a timeline on when that might happen. “To answer that would be to give up on Australia, New Zealand and Japan, which have no intention of not growing,” he said.
He predicts another five years of strong growth in Australia through improved product and technology. “We’re improving the quality of our ingredients, bringing the kitchen to the front of the store, and creating more tech at a faster rate.
“Our destiny is continuing to grow the pizza category and grow out share, and that means going after fried chicken and hamburgers.”
Mr Meij, who started as pizza delivery boy 28 years ago, thinks the resurgence of pizza is symptomatic of generational change. The “category-killing fast-food mega-sites” home to your McDonald’s and KFCs, are a relic from the ‘80s and ‘90s.
“The big global guys flew into Australia and built these big mega-sites, big drive-through systems. You used to be able to open a pizza shop for $30,000. When you invest $1.5-$2 million on a freestanding category killer, it wiped out the little guys.
“In the old world, that whole homogenised, dehumanised model was appealing. Now with technology, those big legacy sites have become the Achilles heel for those businesses.”
Baby boomers and gen X were okay with “homogenised, plasticised environments”, but Millennials have grown up in a world of “real”, he argues.
“If you look around the world, the trend is more lifestyle kitchens. Food trucks are fashionable, high-quality street food. People love that dynamicsim.”
Domino’s itself is slowly phasing out its processed ingredients, and Mr Meij says there will soon come a time when there are no frozen bags of ingredients pulled from the freezer each morning.
“You’d be surprised but we actually save money by making fresher product. The whole food chain process of packing, freezing, there’s a lot of double and triple-handling.”
The big question: will Domino’s go paleo? “We will monitor those sorts of things,” he said. “But paleo’s just another version of Atkins. There needs to be a market for it.”