Business Environment

Shraddha
Ghadge
201809

1
 INTRODUCTION

Domino's Pizza, Inc. branded as Domino's, is an American pizza restaurant chain

founded in 1960. The corporation is headquartered at the Domino's Farms Office Park
in Ann Arbor, Michigan, and incorporated in Delaware. In February 2018, the chain
became the largest pizza seller worldwide in terms of sales.

 Type: Public Ltd Company.

 Size: Worldwide, 85 Countries, 15,300 stores.
 Growth Rate: $284.16
On April 23, 1963, Tom Monaghan and his brother, James, took over the operation
of Domi Nick's, an existing location of a small pizza restaurant chain that had been
owned by Dominick Di Varti, at 507 Cross Street (now 301 West Cross
Street)  in Ypsilanti, Michigan, near Eastern Michigan University. The deal was
secured by a $500 down payment, and the brothers borrowed $900 to pay for the
store. The brothers planned to split the work hours evenly, but James did not want
to quit his job as a full-time postman to keep up with the demands of the new
business. Within eight months, James traded his half of the business to Tom for
the Volkswagen Beetle they used for pizza deliveries.
By 1965, Tom Monaghan had purchased two additional pizzerias; he now had a
total of three locations in the same county. Monaghan wanted the stores to share
the same branding, but the original owner forbade him from using the Domi Nick's
name. One day, an employee, Jim Kennedy, returned from a pizza delivery and
suggested the name "Domino's". Monaghan immediately loved the idea and
officially renamed the business Domino's Pizza, Inc. in 1965. The company logo
originally had three dots, representing the three stores in 1965. Monaghan planned
to add a new dot with the addition of every new store, but this idea quickly faded,
as Domino's experienced rapid growth. Domino's Pizza opened its first franchise
location in 1967 and by 1978, the company expanded to 200 stores. In 1975,
Domino's faced a lawsuit by Amstar Corporation, the maker of Domino Sugar,
alleging trademark infringement and unfair competition. On May 2, 1980, the Fifth
Circuit Court of Appeals in New Orleans found in favor of Domino's Pizza.

2
International expansion

Domino's Pizza in the Nieuw - Vennep, The Netherlands

The store interior of a Domino's Pizza

Domino's Pizza in Tuxtla Gutiérrez, Chiapas, Mexico

3
On May 12, 1983, Domino's opened its first international store,
in Winnipeg, Manitoba, Canada. That same year, Domino's opened its 100th store,
its first in Vancouver, Washington. In 1985, the chain opened their first store in the
United Kingdom in Luton. Also, in 1985, Domino's opened their first store
in Tokyo, Japan. In 1993, they became the second American franchise to open in
the Dominican Republic and the first one to open in Haiti, under the direction of
entrepreneur Luis de Jesús Rodríguez. By 1995, Domino's had expanded to 1,000
international locations. In 1997, Domino's opened its 1,500th international
location, opening seven stores in one day across five continents. By 2014, the
company had grown to 6,000 international locations and was planning to expand to
pizza's birthplace, Italy; this was achieved on October 5, 2015, in Milan, with their
first Italian location. CEO Patrick Doyle, in May 2014, said the company would
concentrate on its delivery model there.
In February 2016, Domino's opened its 1,000th store in India.

PRODUCTS
The Domino's menu varies by region. The current Domino's menu in the United
States features a variety of Italian-American main and side dishes. Pizza is the
primary focus, with traditional, specialty, and custom pizzas available in a variety
of crust styles and toppings. In 2011, Domino's launched artisan-style pizzas.
Additional entrees include pasta, bread bowls, and oven-baked sandwiches. The
menu offers chicken and bread sides, as well as beverages and desserts.
From its founding until the early 1990s, the menu at Domino's Pizza was kept
simple relative to other fast food restaurants, to ensure efficiency of
delivery. Historically, Domino's menu consisted solely of one style of pizza crust
in two sizes (12-inch and 16-inch), 11 toppings, and Coca-Cola as the only soft
drink option.

4
SALE
In 1998, after 38 years of ownership, Domino's founder Tom Monaghan
announced his retirement, sold 93 percent of the company to Bain Capital, Inc. for
about $1 billion, and ceased being involved in day-to-day operations of the
company. A year later, the company named Dave Brandon as its CEO.
VISION AND MISSION
The Mission

 Maintaining high standards of the international chain of pizza delivery in

Mexico and provide the experience of an excellent product with excellent customer
service.
 Exceptional People serving the best pizza in the world.
 Sell more pizza.
 Have more fun.

The Vision

 To be the best operator Domino's Pizza system with the best talent.

 Number one in pizza.
 Number one in people.
     

 Values

 Treat people as you’d like to be treated.

 Produce the best for less.
 Measure, manage and share what’s important.
 Think big and grow.
 Incentives what you want to change.
 Set the bar high, train, never stop learning.
 Promote from within.
 We are not ordinary, we are exceptional.

5
 COMPETITORS

Domino’s Pizza Competitors

Domino Pizza has established 57 years ago and has its headquarters in Domino
farm located in Ann Arbor, Michigan. This store was founded by two brothers,
James and Tom Monaghan after buying a then famous pizza store known as
Dominick’s. It was later rebranded to Domino’s remained a privet owned company
until in 2004 when it went public and started trading on the New York stock
exchange.

It majorly specializes in pizza delivery and take-out making it one of the highly
ranked pizza restaurants worldwide. It has expanded its service, and it is estimated
that it currently receives approximately 21 million customers every month. Some
of the top competitors it faces in this industry include the following;

Domino’s Pizza Competitors

1) Pizza Hut

Pizza Hut is arguably one of the most significant Domino’s Pizza Competitors that
directly competes with the brand in the fast food industry. It specializes in take-out
and delivering of pizza and has established quite a considerable number of stores in
the US and other countries including Canada, Mexico, UK, Germany, Spain, and
France among others. In 2016, Pizza Hut was ranked as the leading pizza outlet in
the entire world.

6
2) McDonald’s

McDonald was founded in 1940 by two brothers after opening their first barbeque
food outlet in California, US. A quick transformation that took place in about eight
years changed the entire set up since a production system was introduced that was
able to roll out burgers in fast service style similar to what we are currently aware
of. Since then, McDonald’s has become a household name in most of the cities
across the world.

3) KFC
It refers to Kentucky Fried Chicken. As the name suggests, it was founded in
Kentucky and also majored in serving fried chicken as the main meal across all its
outlets. It is among the prominent US-based fast food outlets that record high sales
volume and comes second after McDonald’s. It continued expansion in different
parts of the world has seen it growing its revenue both brand value and operating
income in the last decade.
4) Starbucks

Starbucks is a renowned American giant quick-service chain of restaurants that

serves coffee. It has been in operation for the last 46 years carving a niche in
serving coffee in most of the major urban centers in different countries of the
world. It is regarded as the leading coffee chain industry by the total revenues that
it generates every year as well as the number of stores it has in different locations.

5) Subway

Subway is a US-based fast food restaurant chain that was established by Peter
Buck and Fed DeLuca in 1965. It is famous for its trademark six-inch foot long
submarine sandwiches which it used to serve to clients. It has worked its way to
become one of the most valuable brands in the fast food industry.

6) Burger King

Burger King is an American-based fast service food outlet chain that operates fast
food joints worldwide. It became a privately-owned company in 2010 after it was
purchased by 3G Capital, an investment firm. Burger King has also risen to
become one of the most renowned quick-service brands in the world.

7
 MARKETING STRATEGY

Supply chain – Vertical integration across the supply chain has helped the

company in aligning its resources and controlling the cost structure so as to be
competitive in the market & at the same time emerge as most preferred Pizza
provider.

Fast Delivery – Whether you have the mouth-watering Pizza at their outlets or get
it delivered at your place, one can always count on Dominos for its quick delivery
services which have helped the company in improving its value delivery process. It
even brought in packaging to prove that its pizza is delivered Hot.

Low-cost outlets – It is one of the major cost components making their business
viable as compared to the rival Yum brand’s outlets. There is no outlet of
Domino’s which is premium designed with plush interiors. Instead, the outlets
promote faster consumption so that people can order, eat and move on. Pizza is
promoted exactly for what it stands for – Fast food.

8
IMPACT OF RATE OF INTEREST ON THE FOOD DELIVERY
SECTOR

Jubilant Found Guilty Of Not Passing GST Benefit On Sale Of Domino’s Pizza

Jubilant Food Works Ltd., the operator of Domino’s Pizza chain in India, has been
found guilty of not passing on the goods and services tax cut benefit of Rs 41.42
crore on sale of some products and has been directed to deposit the illegal gains
with the government. The National Anti-Profiteering Authority passed the order on
an email complaint filed by a customer that Jubilant Food Works .

9
IMPACT OF INFLATION ON THE FOOD DELIVERY SECTOR

A fall in retail inflation is typically good news for the Indian economy, which has
seen numerous bouts of high and volatile inflation. But just as high inflation can be
worrying, so can low inflation. The former hurts consumers; the latter hurts
producers. In India, retail inflation fell to 2.33 percent in November, close to the
lower end of the inflation target of 4 percent. The current bout of low inflation is
being led by falling food prices, leading to concerns of rising distress among the
farmingcommunity.

Three Categories Lead The Decline A break-up of the inflation data shows that
three categories vegetables, pulses and sugar account for a bulk of the decline in
food prices. Of the three, the pulses category has seen negative inflation for more
than a year. Sugar, too, has shown disinflation for about a year, while the
disinflationary trend in vegetables is more recent. While these three categories are
seeing a fall in prices, most other food items in the consumer price index are also
showing low levels of inflation. For instance, the inflation rate for cereals and
products was at a mere 1.25 percent in November, while prices were rising at
under 1 percent in the ‘milk and milk products’ category. “Food inflation continues
to have an overwhelming impact on headline inflation,” wrote Shubhada Rao, chief
economist at Yes Bank. Both lower global prices in some of these categories and
the impact of the online trading platform for commodities (e-NAM) could be
10
playing a role in keeping food prices low, said Rao.

IMPACT OF MAKE IN INDIA ON FOOD DELIVERY SECTOR

OVERVIEW OF THE FOOD PROCESSING SECTOR IN INDIA

 

India has evolved from a food-scarce to a food-surplus nation during the last
decade and the ever-growing trade in the production of food commodities indicates
that the industry is on track in terms of growth and profitability. India’s USD 600
Billion food processing industry is expected to grow three-fold by 2020. India
currently ranks second in terms of global food production, next only to China.
India leads in the production of milk, bananas, mangoes, guavas, papayas, ginger
and buffalo meat. However, in order to realize the maximum potential of the
sector, a rising concern of wastage needs a dire attention. Hence, the development
of the sector in the country will further strengthen the link between agriculture and
manufacturing by using modern food processing technologies and cold storage
techniques.
GOVERNMENT SUPPORT
Under the Make in India initiative, the Government plans to stimulate growth in
the Food Processing sector through the creation of a strong infrastructure,
reduction of food wastage and promotion of Ease of Doing Business (EODB)
measures. The upcoming ‘Scheme For Agro-Marine produce Processing and
Development of Agro-clusters’ (SAMPADA) will provide a renewed thrust to the
sector with the budget allocation of USD 923 Million. The FDI in trading and e-
commerce of food products is allowed up to 100% through Government approval
route.9 Additionally, the 100% FDI policy through automatic route in the sector for
manufacturing in India has resulted in inflows of USD 1.7 Billion during April
2014 to December 2016 and USD 263.71 million from April - June [Link]
such an increased government support, food business giants such as Kellogg’s,
Ferrero and BSA International are all set to expand their footprint in India. The
Food Processing industry is critical to India’s growth and the government is

11
focused on providing adequate impetus to the sector. A well-developed Food
Processing sector will help facilitate crop diversification and generate employment
opportunities. The introduction of modern processing techniques for food will
result in improved shelf-life of the agricultural produce and ensure steady revenue
to farmers. With the correct set of policy implementations and support, the industry
can grow by leaps and bounds, taking India to a new position of strength and
prosperity in the global economy.

IMPACT ON BUDGET 2019 ON FOOD DELIVERY SECTOR

Presenting a pro-farmer budget for 2018-19 fiscal, Finance Minister Arun Jaitley
said the food processing sector is growing at an average rate of 8% per annum.
“The allocation of the ministry of food processing is being doubled from Rs715
crore for the 2017-18 to Rs1,400 crore in 2018-19. To protect the domestic
industry, the government has proposed to hike customs duty on orange fruit juices
from 30% to 35%, on other fruit juices and vegetable juices from 30% to 50%, on
cranberry juice from 10% to 50% and on miscellaneous food preparations (other
than soya protein) from 30% to 50%. To help the cashew processing industry, it
has proposed to cut customs duty on raw cashew from 5% to 2.5%. Welcoming the
announcement, food processing minister Harsimrat Kaur Badal tweeted: “Thank
you, @arunjaitley Ji, for Doubling the Budget Allocation for Ministry Of Food
Processing. This will immensely benefit farmers in availing various food
processing related schemes and increasing their income. Will also generate
millions of new jobs."
Out of the total funds allocated for the ministry for the next fiscal, Rs1,313.08
crore will be for implementing the Pradhan Mantri Kisan Sampada Yojana
(PMKSY), which is higher than Rs633.84 allocated for the current financial year.
About Rs61.20 crore has been earmarked for Indian Institute of Food Processing
Technology (IIFPT) and National Institute of Food Technology Entrepreneurship
and Management (NIFTEM) for the next fiscal. To facilitate financing for
specialised agro-processing projects, Jaitley announced setting up of ‘specialised
agro- processing financial institutions’ in this sector.

12