Fedor Ovchinnikov may have a name that’s hard to pronounce, but it’s one worth remembering. As founder of a fast-growing Russian chain called Dodo Pizza (dodopizza.ru), the 33-year-old entrepreneur has reinvented the pizza business in his native land. Using cloud-based computer technology, webcams, guerrilla marketing techniques and a highly influential blog, Ovchinnikov is building an empire worthy of the old czars, attracting ambitious franchisees and, better yet, money men willing to fund his dream of global expansion.
“We want to create an international chain, and we know how to accomplish that,” Ovchinnikov says, with breezy self-assurance. “We can create a more efficient business model of a pizza store with the help of the Internet and a more efficient chain operation based on key franchising principles. Our small size today is our advantage. It’s difficult for Domino’s and Papa John’s to change because they are hostages to their size.”
Ovchinnikov’s company is, indeed, relatively small, but it’s expanding rapidly. It currently has 43 franchise and five corporate-owned locations in Russia, Romania and Kazakhstan. By the end of 2015, he estimates a total of 75 stores will be in operation, while the company’s first American shop could open within the next year in Oxford, Mississippi (PMQ’s hometown). Growth like that suggests Dodo Pizza, despite its famously doomed namesake and mascot, is in no danger of going extinct. And with his willingness to foster innovative technologies and push the boundaries of existing corporate paradigms, the company’s canny and visionary founder just may prove to be—as one PMQ staffer called him—“the Steve Jobs of pizza.”
(Clockwise from top left) With live-streaming webcams in every Dodo Pizza kitchen, customers can place an order and watch online as their pizzas get made; a pizza maker preps a pie at a Dodo Pizza Express shop located in a shopping mall; Kids get VIP treatment with pizza making classes and other activities.
Blogging for Dollars
At first glance, Dodo Pizza may look like your standard pizza franchise operation. Various locations offer varying levels of service, from delivery and carryout only to dine-in, with menus offering up to 18 kinds of pizza as well as the popular Dodster, a baked chicken and mozzarella wrap that accounts for 10% of the company’s sales. Dine-in stores peddle American and Russian beers and an assortment of juices, and every shop serves muffins and cookies. Many stores teach pizza making workshops for kids, while some host balloon artists on Sundays.
But the mastermind behind Dodo Pizza also brings fresh thinking and an outsider’s perspective to the pizza franchise business. With his sunny smile, hipster specs and swirly-tipped coif, Ovchinnikov puts the lie to Cold War stereotypes of stolid, scowling Russians in fur hats. He speaks only haltingly in English, but he’s working on learning the language. He’s quick to laugh and crack jokes through his translator, Emiliano Ananyin. And, like Jobs, he’s a shrewd innovator with a knack for pulling talented people into his orbit—and motivating them to rewrite the rules.
A former bookstore chain magnate, Ovchinnikov found himself out of work in 2010, thanks to an overly aggressive development strategy and the global recession. But he wasn’t out of ideas. All the while, he’d been chronicling his business adventures in a well-read blog that has made him one of his country’s best-known entrepreneurs. (He was even featured in a Russian best seller called Nerds Do Business, Too.) “I quit the book business with no capital and started looking for a business that I could devote most of my life to,” he recalls. “I chose pizza because it can be scaled all over the world.”
After learning the ins and outs at a Papa John’s in St. Petersburg, Ovchinnikov opened his first Dodo Pizza shop in the city of Syktyvkar in early 2011. Tucked away in a cramped basement, the store offered delivery only. “During the first months, I took orders over the phone and prepared and delivered the pizzas personally,” he says. “And I wrote about everything in my blog.”
Dodo Pizza emphasizes speed and efficiency, with a “60 minutes or it’s free” delivery rule borrowed from Domino’s.
That blog proved to be a powerful PR and recruiting tool. Fellow business-minded Russians followed it religiously, and many flocked to Syktyvkar to work with its author. Soon, Ovchinnikov had put together both a franchise operations team and a crew of programmers to build a state-of-the-art IT system that would tie it all together. Things began to move quickly.
“We started receiving a lot of requests for franchises,” Ovchinnikov says. “In 2012, we launched five franchised stores as a test—three of them were already in business but switched over to our brand. In the spring of 2013, we’d created our training center and our system of standards and launched regular franchising. Within three years of opening that first location in 2011, we’d opened four corporate-owned stores in Syktyvkar and now have five. Last year, the company generated overall sales of $11 million.”
|KIDDING AROUND WITH KRUSCHEV|
|Renowned for its guerilla marketing techniques, Dodo Pizza, headquartered in Syktyvkar, Russia, made international headlines last year for the country’s first drone delivery. A video released on Youtube and other video sites depicted a city park filled with young Russians staring in wonder at the sky as a drone flew down with a stack of pizza boxes. “We already sold six pizzas in 1 ½ half hours using a drone—it’s a real business model,” a Dodo Pizza manager told the press at the time.
Dodo Pizza founder Fedor Ovchinnikov even pokes fun at once-sacred Soviet Union institutions. One campaign featured Nikita Kruschev, the Cold War leader who tried to introduce corn to the U.S.S.R. “This was a promotion for our new product, corn on the cob, that we presented last year,” Ovchinnikov says. “We used a popular image of Kruschev, who was a real fan of corn. In our poster, he says, ‘Let’s make corn for free!’” Kruschev’s corn initiative famously bombed, but maybe he was just ahead of his time: Corn on the cob has become a popular side item at Dodo Pizza.
A Philosophy of Openness
That’s the thing about Ovchinnikov. Unlike many business owners, he’ll tell you anything you want to know about his company, from annual sales figures to labor costs, food costs and total sales. He even publishes a monthly P&L report on the Dodo Pizza website. In a country notorious for harboring dark secrets, Ovchinnikov believes transparency helps build a corporate brand that people trust. From the start, he has shared everything on his blog for anyone, including competitors, to read. “This openness attracts partners, investors and suppliers,” Ovchinnikov says. “They can see my goals, values and ideals.”
But that’s just for starters. Ovchinnikov doesn’t simply tell you that Dodo’s kitchens are clean and his workers practice good hygiene. He lets you see it for yourself. Thanks to live-streaming webcams in every store’s kitchen, customers can place their orders online and then watch their pizzas being made in real time. That means Dodo pizza makers can’t hide behind closed doors while topping dough skins and peeling pies out of the ovens. Their work life is a nonstop reality TV show playing on customers’ PCs, tablets and smartphones. Pick your nose, and the whole country can see you do it.
But the webcams aren’t there to spy on kitchen workers. “It’s all part of our philosophy of openness,” Ovchinnikov says. “We show our customers that we have nothing to hide from them, and we show our employees that we don’t hide anything from our customers. We wanted to create a tool that wouldn’t allow us to do inferior work. It’s a very powerful psychological tool—we make commitments that force us to work flawlessly. And this uncompromising attitude attracts customers—they are sure of our quality. They trust us.”
(Left to right) PMQ publisher Steve Green visited Dodo Pizza with founder Fedor Ovchinnikov during a trip to Russia last year. Even VIPs like Green (shown here with Ovchinnikov and Emiliano Ananyin) have to don hygienic scrubs to enter Dodo Pizza’s kitchens.
Pizza Making as a Video Game
Attracting customers is only part of the equation. Ovchinnikov wanted to surround himself with the best and the brightest people Russia had to offer. From the beginning, he knew that information technology would be crucial to Dodo’s growth—not just as a tool for running numbers and managing schedules, but as an integral component and marketable feature of the franchise system itself. Rather than taking a chance on buying a POS system and waiting for new apps to be developed, Ovchinnikov aimed to build his own customized—and highly adaptable—system. And as word of his plans spread through Russia’s IT community, programmers from all over approached him for jobs, giving him the pick of the litter. “I received a lot of letters,” he recounts. “These people believed we could change the industry to create something new.
“We didn’t just invent another system for pizza store management,” Ovchinnikov adds. “Dodo Pizza can be considered a cyborg company because we are both an IT company and a pizza company. Our main product is franchises, the core of which is our IT system in SaaS.”
SaaS, or Software as a Service, is a cloud-based method of providing access to software and its functions from anywhere and at any time. From kitchens to corporate offices, from one franchise location to another, everything at Dodo Pizza is connected through this complex IT system. Ovchinnikov developed—and continues to fine-tune—the system by putting his programmers to work in Dodo’s pizza kitchens. “They don’t just observe—they make pizzas themselves,” he notes. “At the same time, they’re inventing ways to make our processes more efficient, more convenient and more transparent.”
Although Ovchinnikov isn’t a programmer himself, the system is his baby, and he’s clearly proud of it. “It coalesces tablets in the kitchens, our computers, our customers’ and delivery drivers’ mobile devices, our website and our call center, all into one network,” he says. “It’s pretty darn interesting to create such things!”
And Ovchinnikov is just getting warmed up. He has also tasked his IT crew to develop a program that will incentivize pizza makers to work faster and more efficiently in the kitchen. He wants his kitchen crew to “work like the pit stop team at a Formula 1 race,” he says.
Most pizzeria employees know they’ll make the same money whether they work quickly or slowly. Managers try to rally their young line workers to move faster and more efficiently, but with varying degrees of success. So how do you motivate the Xbox generation? “Our idea is to make a game out of pizza preparation,” Ovchinnikov says. Although still in the experimental stage, Ovchinnikov wants to place tablet computers with flashing game icons in every kitchen. “The red icon means it took too long to prepare the pizza—this is bad. A gray icon means the pizza was prepared within the normal time range. A green icon signifies that the pizza was prepared quickly—this is good. When the pizza is prepared quickly, there is a stimulating ‘victory’ sound. If it takes a long time for the pizza to be prepared, you hear a disapproving sound. It’s like a computer game!”
Many employees, oddly enough, aren’t motivated by the prospect of getting a raise later if they work faster now, Ovchinnikov says. But immediate positive reinforcement—and making their job more challenging and fun—may do the trick. “We want to arrange the whole system in this game format,” he adds. “These are young people, students. Work in the kitchen can be a fascinating game for them. We need to make it so that it is interesting for the pizza makers to collect green smiles. There could be variations—for example, if they collected five smiles in a row, then bingo! The bonus doubles, and trumpets play!”
Changing the World
The video game system is still in the works, but even without it, Dodo Pizza thrives on technology. Every location offers online ordering, and a national call center fields all phone orders. In the kitchen, visual guides on the walls help pizza makers learn the correct portioning and placement of ingredients for every pizza type. For each delivery order, a computer provides the driver with a printed map to the customer’s house, the customer’s name and a brief prepared speech to deliver at the doorstep. The company even employs a secret shopper’s service to make sure drivers address customers by name and follow the script.
“Every franchisee has to spend a month at a store and go through our training program,” Ovchinnikov says. “He has to start from the very bottom, cleaning the floors and being a busboy. This is a field test—not many entrepreneurs are eager to come in and mop the floor. Our franchisees are not just investors who easily invest money and wait for ROI. They have to share our values and our business approach. We’re looking for partners. It’s a win-win situation for everyone.”
Still relatively new to capitalism, many Russian companies lag behind their Western counterparts in terms of solid business practices. Ovchinnikov wants to show them a better way, stressing consistency of quality, strict standards, efficiency and integrity across the board. And he may end up teaching American operators a thing or two as well. “We could have settled for less and gotten away with it—our level of service is exceptional compared to competitors in Russia,” he says. “But we want to make the world better, and we believe we can change the world through entrepreneurship. That’s why we set such high standards, and others try to follow our example. When others follow our standards, we’re making the world a better place.”
|Coming to America|
|Dodo Pizza founder Fedor Ovchinnikov wants to conquer the world—in the entrepreneurial sense, that is. He plans to open his first American store in Oxford, Mississippi, a college town known for its thriving restaurant scene, within the next year. “To have an outstanding product, we need to get experience in the most competitive market, which is the United States,” Ovchinnikov says. “Many companies try to go where the competition is weak. We welcome strong competition—this is how we can gain knowledge, toughen up and fine-tune our business model.”
Ovchinnikov will stick with his model of transparency, sharing the new store’s sales figures, expenses, profits and losses on the Internet. “If we can succeed in this market, I’m sure we can draw the attention of American entrepreneurs to our franchise,” he says.