Don Meij, CEO of Domino's
Pizza Australia (right), interviewed by PMQ Editor -in-Chief Tom Boyles.
The chain currently has 250 stores across Australia and five in New
Zealand.
The independent pizza store operator has
almost always
dominated Australia
and New Zealand.
Several pizza chains have been able to capture market share, such as
Pizza
Haven and Eagle Boy’s. Even Pizza Hut is giving it a shot, but hasn’t
been able
to enjoy the success they’ve had in the U.S. and other countries.
Some
Aussies have started to notice the aggressive marketing of Domino’s
Pizza
recently and think they are newcomers, but they have been in Oz for
quite some
time. In a land with so many food choices and great independent pizza
shops,
how and why are Domino’s starting to make an impact?
Steve
Green, PMQ Publisher, Stephen Millar, PMQ AustralAsia Publisher, and I
recently
spent two weeks in Australia
and New Zealand
traveling around the area getting to know the Australian pizza market
better
and learning more about how certain owners find success where others
are just
merely carving out a decent living. I had heard that Domino’s was
starting to
do well Down Under, so I made a few calls and met up with several key
members
of the Domino’s Pizza Australia
team to talk about their company, marketing strategies and future
plans. It may
be time to take notice, because these guys have a plan and they know
what they
are doing.
Profile
for Domino’s Australia
Domino’s
Pizza Australia
is a 100 percent Australian-owned private company, which owns the
master
franchise to the international brand. They operate more than 250 stores
across Australia
and currently have five in New Zealand.
They sell 40 million pizzas a year, making it Australia’s
second largest pizza
industry player. According to Don Meij, CEO and managing director for
Domino’s
Pizza Australia,
they are looking to grow the Australasian segment to 500 over the next
five years.
Growth Strategy
Currently,
Domino’s has 61 stores in Sydney.
“Sydney
is the
hardest market from a chain’s perspective,” Don says. “The property
costs and
logistics are difficult. Victoria
is the second largest state and we have no stores there now, but have
the first
opening for them targeted for Christmas. When moving into a new market,
you
have to educate customers about your business. We do this through TV
mostly,
but also use mail. In Victoria,
it will be a matter of taking stores from the competition. From a
chain’s
perspective, Queensland
is more developed. To us, Western
Australia is more of a mums and dads store
region.
“Another
market we are wanting to develop is New Zealand where we want
to grow
to at least 65 stores,” Don goes on to say. “By the end of the fiscal
year
2003/04, the company expects to have at least 20 stores in New Zealand.
Pizzas and our approach will be much different there. For example,
chicken is
much more popular there than in Australia.”
The key
strategies Domino’s will use in their growth strategy in the next few
years
involves maximizing the trading performance of existing stores and
expansion
into new markets throughout Australia and New Zealand. To get more out
of each
store, they are working to maintain standards in staff training,
providing
support to stores so they can focus on serving customers, push for new
products
and toppings and innovative marketing and public relations efforts to
keep
Domino’s in the public’s eye and ear. Expansion is evident in their
2003/04
growth in store counts, which was up 22.5 percent. Development of new
areas,
not only Australia
and New Zealand,
is
also a target. In July 2003, Domino’s opened four stores in Wellington in
one month. They also have nine
stores in Tasmania.
Marketing
Television
plays a key role in Domino’s marketing strategy.
“Eighteen-to-25-year-olds are
a key demographic to us,” Don says. “We are the largest television
advertiser
in the Australian pizza industry and we keep young people in our ads
and use
hip music in order to attract this market to our brand. We do not put a
price
on our pizzas in television advertising. It is all aimed at branding.
We have
national advertising, but we like our local printed advertising to be
handled
by the owners because they know their markets best. We also try to be
involved
with schools in many ways. We sponsor local teams and school lunch
orders are
huge, but like all other things, this varies by region.
“We have
discovered that selling pizza by the topping does not work because the
costs
are too high,” Don says. “We have 14 specialty pizzas on the menu and
rotate
three new ones on and three old ones off three times a year. We have a
product
development and also offer $1,000 to the store with the best recipe
idea.
Before a new pizza gets on the menu, it must pass through our sensory
group.
This is a group of people who are sensitive to tastes and combinations.
Each
person is isolated when tasting a new pizza so they aren’t influenced
by
others.”
Wayne
Mann,
operations manager for the Sydney
area, says they use three primary tools for local marketing. “Direct
mail works
the best, but is also the most expensive,” Wayne says. “Personalized letters get
the
best results. For mailing, all of our Domino’s locations are networked
with our
central office. They randomly select addresses for a store from the
collective
database. UDS, or Unaddressed Delivery Service, is the second best tool
and PMP
is third. With PMP, which is a leaflet distributor, we hire people to
walk
areas and drop printed materials in letterboxes; it is the least
effective, but
the cheapest. Individual stores can do what they want with box toppers.”
“We do a
postal drop once a week,” says Ben Adams, regional director at the Hurlstone Park
location in Sydney.
“We send to about 7,000 addresses, which are retrieved from the central
office’s database each week. The offers change about ever three to four
weeks.
We also use the direct mail pieces that look like letters that are sent
directly to a specific address. Those work well, but are expensive.”
Delivery
One of the things
that is fueling Domino’s success in Australasia
is delivery. Don says about 92 percent of all orders are delivered in
22
minutes. Wayne
says that a huge success is delivering singles (one-run deliveries).
“When we
started running singles, sales jumped. We are running about 60 percent
singles
now and are shooting for 70 percent. Doing delivery this way gets the
pizzas
there in about 20 minutes. You have to have more drivers, but it is
worth it.
Base pay for drivers is $9.95 with $1.55 per delivery incentives.
“We wanted
a reputation as a 20-minute delivery company. Drivers have to check the
order,
address, sign out the order and get to the car and this consumes a lot
of time
for multiple orders slowing delivery down for all of them. Rather than
take
longer with less drivers, I would rather see two drivers work the order
faster.
On weekdays, a small store (earning $12K a week) uses four to five
drivers and
large stores (earning $23K-$27K a week) use five to 10 drivers. For
weekends,
small stores staff six to seven drivers and large stores can have as
many as 20
working.”
Because
delivery speeds are important to the success strategy of Domino’s in Australia,
a
simple two or three station POS system would not be able to handle the
volume.
Most locations have at least four stations in the front of the store
and three
in the back, but many of the high volume areas can have as many as 10
to 12
stations in the front alone.
Lighted car
top signs, which have been used for several years in the U.S., are starting to become a standard
tool for
Domino’s in Australia.
They were tested in one location that has 12 or 13 cars running around
delivering pizzas. “Customers started calling and saying they saw the
car and
ordered a pizza,” Wayne
says. “We tried this earlier, but are just starting to do it again
after more
testing in selected areas. We get the signs from a company in the U.S.”
|
|
In Australia,
people have the choice of many different types of food. Pizza can
become a
little mundane in the presence of the many other exotic looks and
flavors so
pizza stores have to find ways to put their name out there and make
people
remember who they are. In an area of the world where other chains have
hit and
missed with success, it appears Domino’s has found a way to capture
market
share. They know their target audience (18-25-year-olds). They know
their
products and how they want them marketed. They are focusing on their
niche
(delivery) and have a solid training and incentive program in place for
employees and franchisees.
We’ll be
keeping an eye on them to watch their success and see how well they do
in the
new markets they are targeting for the next year or two.
–
PMQ –
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