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In the Fall 2001 issue of PMQ Magazine, Steve Green visited two of the highest award winning franchises in the Domino's and Papa John's system, and amazingly enough, both were in San Diego. Domino's Pizza of San Diego was the first Domino's franchise west of the Mississippi River and was opened in 1977 by Mike Paul. In this article, we're going to revisit the Domino's San Diego Franchise of Mike Paul, Mike Brown, and Steve Leonard, who own 13 of 43 Domino's in the San Diego area. The Domino's San Diego group has often set the standard for the Domino's system, introducing such items as the 5-5-5 deal, online ordering (which the corporate stores added in 2006), and many other standards, such as the mileage scale for deliveries based on gas prices. This Franchise team were the innovators behind many of these ideas, and they have even more on the front burner.
Key Factors to Success• Management
Steve said his managers are the key to success at all of his stores because they've worked through the ranks, were built from within, and learned to love the business. "We only have one manager that didn't start for us as a driver or pizza maker," he said. Steve said they retain their good managers by offering very good pay, and plenty of rewards & recognition for above average results.
Carrie DeLaurentis, a Domino's San Diego manager, first won Regional Rookie Manager and National Rookie Manager of the year for 2001. In 2002, Carrie won Regional Manager of the year and National Manager of the year. "She was the first female to accomplish this in the Domino's system," Steve said.
As a franchise group, Mike Paul, Mike Brown, and Steve Leonard have won the Gold Franny award three times since 2002. "It's an award given to the top 1 percent of franchisees in the Domino's Pizza system," Steve said. So, if there are 1,500 franchisees, 15 people win this award. The award is based on almost everything from sales growth and profit growth, to operational performance, to community involvement.
• Setting the Standard
Domino's San Diego does a lot to help the system. "Our former marketing director, Robert Mackey, won the trailblazer award for implementing our online ordering," Steve said. He said about 10 to 15 percent of orders come from the internet, and that his Domino's group was the first to use online ordering in the nation.
Steve said Domino's San Diego was also instrumental in coming up with the mileage scale for delivery drivers. "When gas prices became volatile, we started doing a mileage scale based on the price of gas. The way it was before, it didn't matter how much gas was, we paid all our drivers a set rate," Steve said. With the new mileage scale they developed, different amounts were paid to the drivers depending on the bracket in which the current gas prices fell. "Many Domino's now use this scale."
Steve also explained the 5-5-5 promotion, which was started in San Diego as 3 Medium 1-Topping pizzas for $14.99. "We implemented that a year before Domino's put it on TV. We were extremely successful with it, our sales were going up and up, so they adopted it and took it national, calling it the 5-5-5 deal," he said. Steve admitted that the promotion brought sales up even more after national got a hold of it. "Volume really accounts for most of the money that's made from the promotion. We have a lot of side items that are added on too, and often, they will bundle onto that. It's such a value-oriented offer, and consumers want value."
• Marketing
"We're always thinking about our marketing, regardless of our competition. We're always looking for a new way to get our information to our customers because the old stuff that worked 10 years ago, or even 10 weeks ago, doesn't always work today," Steve said. Mass print, for example. "People see the same thing over and over again, and everything gets a bit diluted. Especially when you open the mass print thing and you see Pizza Hut, Papa John's, Domino's—all the prices are about the same; it's just too much," he said. "Since we can't get completely away from doing it, we overcome that by mixing it up." Domino's National provides television advertisement through the advertising fund, but Domino's San Diego has their own ways of diversifying their advertising: "We do some mass mailing and print, door hanging, schools, and fundraisers…basically, we just have to be better now than we were in the past," he said. Steve attributed the most success in marketing to door hanging. "It's had the best return, but it's very hard to get consistent door hanging accomplished. A little over 10 years ago, when I was managing a store, I had a guy that came to me and said he had another company, Piggyback, that wanted to start passing out flyers. Now he just works for me with a crew of about 20 people, and everyday they door hang for our 13 stores." Steve said they hang about 10,000 doorhangers a day, five to six days a week. With printing and distribution costs, it ends up costing between nine and 10 cents apiece, he said.
The Business of Business
Steve believes the hardest part of business is developing and keeping his great team. "We don't have a high turnover rate. We reward our employees for performing above average," he said. "We measure a lot. Measure sales, cost controls, and we have systems in place where meeting goal is the basic reward, and exceeding the goal is a lot more—whether it's more pay, or more freedom to run their store. Freedom is more important to them than pay a lot of times."
Since answering the phone is one of the main factors of working for a pizzeria, I asked Steve how he trains his employees to talk on the phone, and how he monitors their performance. "I'm not a big believer in paying them to be pushy on the phone. I want them to be genuine, not robotic," he said. "A lot of things you would think are smart to do, the crew doesn't like. And, if they don't like it, eventually they don't want to do anything you ask them to do." Steve said in order to rectify this problem; he focuses more on giving five-star phone service. "They don't have to shove anything down anyone's throat," he said. "If [the customers] say they are feeding a bunch of people, offer them some side items, but be real." Steve said in order to measure his staff that answers the phone, he pays a person to call all of his stores each week. "They fill out a phone survey on each call and turn them in to me: Were you put on hold? Were they nice? Were they patient? Were they knowledgeable? Were they Friendly?" Steve said they get rewarded accordingly, or, if they were rude on the phone, that information goes to the manager and they take care of the problem.
Steve said he's also implemented a new management project that will give him a little more flexibility and time to focus on training and working in the stores. "This is the first year that I have my managers supervising themselves in a lot of areas. I used to do a bunch of inspections in stores to measure people, store image, product quality, service, and standard operating procedures, but I was just running around too much inspecting, leaving me little time for anything else," he said. With his new system, the managers do most of the inspections in each of their stores. "I started one manager, then two or three, then the rest, and now I only have to do one inspection each month, and that's the Domino's national inspection." He said the inspections cover delivery times, product quality, managing the product: temperature, shelf life, rotation of the product, prepping of product, and safety. "The inspections also cover image standards, cleanliness, signage, grooming standards—making sure everyone looks good. It even covers the small things, like what kind of sanitizers we use, and it all adds up to a five-star rating, which would be superior."
Giving Back To The Community
Steve said Domino's San Diego takes care of a lot of people through providing food, coupon fundraising booklets, and money for certain groups, such as the Children's Hospital in San Diego. "Just last week, the Blue Angels were here practicing for their air show. About 300 Make-A-Wish kids and their families came out to watch the practice, and we fed them all with about 100 pizzas, something we do every year," he said. They used to do a fundraiser called "Quarters for Orders" where every customer had the opportunity to add a quarter to their ticket price to help fund the Children's Hospital. "We stopped doing Quarters for Orders two years ago because we did it for 15 years, so it got kind of diluted," he said. "We're trying to come up with something different that stands out."
Domino's San Diego also sponsors a group called Operation Homefront, which helps families with loved ones in Afghanistan and the Iraq war. "A lot of soldiers come from this area, so we like to help the families out that are missing that income. We donate gift certificates so the families can eat. A lot of businesses offer their services instead of giving money, which is just as beneficial," he said. Steve said that giving out product instead of money helps everyone—"Whoever is getting our services is ordering from us, and we're possibly gaining new customers by doing this."
Another good fundraiser Steve's group is involved in helps the schools. "We sell them coupon books for two dollars. They're loaded with over 100 dollars worth of pizza, and the schools sell them for 10 dollars. For them, it brings some serious money and for us, it helps gain new customers," Steve said.
The Domino Effect
Steve said product and service are all it comes down to. "You have to have a great manager that can train and motivate people to do things right everyday. In the end, customers have many choices. Eventually, they go to different pizza restaurants…I don't think anyone is loyal to just one pizza company. Our goal is to deliver the best product and service possible so we become one of their top choices for pizza and their top choice for pizza delivery. I have a great team of managers that work hard every day to try and accomplish this goal."