Domino's Pizza - Strategies to Tackle Global Economic Slowdown
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Case Code: BSTR334 Case Length: 17 Pages Period: 2007-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Domino's Pizza Inc. Industry: Food and Beverages Countries: US Themes: Business Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Ultimately, this franchise-only business model is what helps Domino's rake in the cash even in a downturn. Restaurant chain Pizza Hut may have a strong brand, but it is weighed down by its portfolio of managed restaurants; Domino's has none. It also means Domino's has its strategy laid out not just for the next year, not even for the next five years, but until 2017. The company wants to open hundreds of new stores until then, at a rate of around 50 per year, before taking a breather."
- Lionel Laurent, Markets Reporter for Forbes.com, London, in January 2009.
"Domino's Pizza's same-store sales should still relatively outperform those of other quoted restaurant companies because they will, amongst other reasons, benefit from people tightening their belts rather than eating out at restaurants."
- John Beaumont, Analyst with Singer Capital Markets Limited, in January 2009.
Introduction
As of mid-2009, US-based Domino's Pizza Inc. (Domino's), was one of the world's largest pizza chains. In fiscal 2008, the company reported global retail sales of US$ 5.5 billion which included retail sales of both company-owned and franchise stores. The company reported revenues of US$ 1.425 billion and net income of US$ 54 million for the fiscal year 2008. As of December 2008, Domino's operated 8,773 stores across 60 countries and had approximately 170,000 employees worldwide (Refer to Exhibit I for number of stores and their classification according to domestic and international, company-owned and franchises)...
Domino's reported improved fourth quarter results for its international business. This marked the 60th consecutive quarter of growth in international same store sales. However, it announced a decline in domestic growth for the last quarter of 2008 (Refer to Exhibit II for Domino's Same Store Sales Growth and Retail Sales Growth in domestic and international markets for 2008 and to Exhibit III for Selected Financial Data of Domino's).
Commenting on the fiscal 2008 financial results, David A. Brandon (Brandon), Chairman and CEO, Domino's, said, "Throughout 2008, we battled many external challenges while laying the groundwork for better future results.
I have mixed feelings about our overall results. I am disappointed with our domestic sales performance and the pressure this created on our short-term profits. However, I am excited about the aggressive steps we have taken to improve our franchise system, expand our menu and lunch day-part, and strengthen our marketing. And, our International business continues to expand and grow. The current economic crisis has been challenging and at times, painful. However, I am convinced we will come out of this a stronger brand, stronger system of stores, and a stronger company."...
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