For the longest time, Domino’s Pizza didn’t really sell pizza. They sold bread with sauce and some cheese on it, along with a bunch of foul-tasting toppings and random breadstick options. As a lifelong New Yorker with a rather elitist view on pizza, watching someone eat a slice from Domino’s was like watching someone go to town on a hot-open garbage sandwich.
In 2009, however, Domino’s did something crazy by corporate standards: they admitted that their product was terrible.
The company took out lengthy TV ads, billboards, and even plastered their stores with admissions of making subpar, pizza-like abominations. They revealed video footage from focus testers who compared their product to cardboard. Domino’s not only wanted everyone to know that they were a restaurant, but they were a bad one up until that point.
That’s when the company changed their recipe. Their pizza became more like, well, pizza. They started offering other foods, like sandwiches, salads, and pasta dishes. The company even embraced technology, becoming one of the first companies to let you order via app, track the progress of your order, and customize your foods to your specific taste.
Not only did Domino’s turnaround plan worked, it turned them into one of the fastest-growing companies on the stock market.
Domino’s was popular from the ’70s to the ’90s for semi-appetizing pizza delivered in 30 minutes or less.
At one point, the company had a guarantee that drivers would arrive to your house with your order in 30 minutes or less. If they did not arrive, their order would be free. This guarantee pretty much stopped after a Domino’s driver struck and killed a woman in 1992.
Vehicular manslaughter aside, the company was popular all over America and in international territories like the Dominican Republic and Japan. They weren’t McDonald’s-level popular, but they pulled in hundreds of millions in revenue from people who wanted a quick pizza without leaving home.
The Domino’s brand started becoming synonymous with “cardboard pizza” during the new millennium.
The company changed ownership in the late ’90s and became publicly traded in the early ’00s. While it’s not certain, it is rumored that the desire to decrease the cost of making a pizza but keeping the price consistent degraded the quality of Domino’s pizza around this time. This would make sense, as keeping sales steady but decreasing costs would appease new shareholders. Domino’s also started focusing on adding more products, including “traditional” style pizzas that were supposed to look and taste more like traditional New York pizza (but totally missed the mark, in this writer’s opinion).
In 2009, a brand survey’s results showed that consumers thought Domino’s made the worst pizza out of all existing pizza chains. (They were tied with Chuck E Cheese.) As the company’s stock reached new lows, Domino’s decided to add new, better-tasting pizza and toppings options to their menu. They completely rebuilt their standard pizza options in 2010, offering a more pizza-like (and admittedly tasty) pizza than ever before.
Since the company improved their pizza and shed the image of selling “edible cardboard,” their stock started breaking records.
Domino’s stock ($DPZ) increased in value by over 2,200% since December 2009, or when they started running these now-famous ads. The company’s revenue is now in the multi-billions, they have more customers than before, and aren’t associated with “garbage pizza.” Thanks to their revamped pizzas, expanded menu options, and other diversified product offerings, you can now order anything from chicken wings to vegetable-filled, cheese-free pies, giving options for any kind of customer.
Domino’s is doing well these days because consumer habits are changing.
Fewer Americans are eating out at casual dining chains (TGI Friday’s, Applebee’s), opting to stay at home and either cook or order something cheap. While groceries are lower in cost than they were a few years ago, Domino’s is only slightly pricier but more convenient. This makes them a more attractive option than going to a pizzeria or an Italian restaurant to eat “authentic” pizza.
Americans are also spending more time at home, thanks to the multitude of options on TV. Since Domino’s makes a sizable percentage of their revenue from delivery, they’re in a great position to benefit from couch-bound Americans who want to binge watch Netflix shows and avoid cooking.
Should you invest in Domino’s? Make no mistake: Domino’s is greatly benefitting from the Netflix generation. While the American box office breaks records year after year, Americans are less incentivized to go out and see a movie or even shop when they can do all of that from the comfort of their home. Now, movie companies are seriously exploring bringing first-run films to home video faster, and Domino’s will likely see more sales when that eventually happens.
If you think more people will continue to order Domino’s in the future, be sure to do your research before you invest in their stock. If you think consumer habits will change again and the company’s growth will hit a wall, you might want to invest in grocery stores and other roadblocks for the company instead.