Domino's Pizza - Strategies to Tackle Global Economic Slowdown

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Case Details:

Case Code : BSTR334
Case Length : 17 Pages
Period : 2007-09
Pub Date : 2009
Teaching Note :Not Available
Organization : Domino's Pizza Inc.
Industry : Food and Beverages
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"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."¹

- 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."²

- John Beaumont, Analyst with Singer Capital Markets Limited³, 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 2008⁴, the company reported global retail sales of US$ 5.5 billion⁵ 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).

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1] Lionel Laurent, "Want a Slice of Domino's? It'll Cost You," www.forbes.com, January 08, 2009.
2] Lionel Laurent, "Dominos Brings in the Dough," www.forbes.com, January 07, 2009.
3] Singer Capital Markets Limited is a UK based stock broking company that provides sales, broking, corporate finance advisory, analysis and research on small and mid cap sector in the UK.
4] "Dominos Q4 2008 Financial Results," www.dominosbiz.com, February 24, 2009.
5] 1 US$ ≈ 1.23 A$ (Australian Dollar) ≈ 47.61 Indian Rupee as of June 11, 2009.

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