{"id":20747,"date":"2016-11-18T18:08:28","date_gmt":"2016-11-18T23:08:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/dominos-pizza-a-quick-service-restaurant-chain-or-a-tech-company\/"},"modified":"2016-11-18T18:46:25","modified_gmt":"2016-11-18T23:46:25","slug":"dominos-pizza-a-quick-service-restaurant-chain-or-a-tech-company","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/dominos-pizza-a-quick-service-restaurant-chain-or-a-tech-company\/","title":{"rendered":"Domino\u2019s Pizza: A Quick Service Restaurant Chain or a Tech Company?"},"content":{"rendered":"

Creating Value for the Customers: Domino\u2019s Business Model and Competitive Differentiation<\/strong><\/p>\n

Domino\u2019s Pizza was founded in 1960 and is a pioneer in the pizza delivery business. [1]<\/a> As one of the most widely recognized consumer brands in the world, Domino\u2019s competes in the large and highly fragmented global quick service restaurants (QSR) category. In the last two decades, internet technology and the growth of mobile usage have disrupted the company\u2019s traditional pizza delivery business model by enabling digital ordering. [2]<\/a>\u00a0These technological changes have pushed the company to compete in new ways. [3]<\/a> As the market leader in online delivery, Domino\u2019s now competes with both local and\u00a0large global QSR companies, such as Pizza Hut, primarily based on product, service speed and quality, technology, and price. [4]<\/a> To stay competitive, Domino\u2019s has invested in building digital capabilities, mobile technologies, and data analytics platforms to differentiate itself from competitors and to meet the evolving expectations of customers.\u00a0[5]<\/a><\/p>\n

Domino\u2019s Operating Model: How does Domino\u2019s deliver on its customer promise?<\/strong><\/p>\n

Domino\u2019s technology choices have enhanced the value that customers derive from the company\u2019s service offering. [6]<\/a> There are several key operating model choices that have enabled Domino\u2019s to deliver its customer promise of convenience, timely delivery, transparency and price. [7]<\/a><\/p>\n

In-House Digital Ordering Platform<\/u><\/p>\n

Convenience of the digital ordering process is critical to Domino\u2019s customers and is essential for the long-term success of the company. In 2015, approximately 50% of Domino\u2019s U.S. sales came from digital orders, with that number being higher in some international markets. [8]<\/a> To ensure the sustainability and continued growth of digital orders, Domino\u2019s made the strategic decision to invest in an in-house e-commerce ordering platform. The innovative platform enables customers with an online profile to re-order their favorite meals within 30 seconds, significantly improving order time and overall delivery time. The platform also enables order ETA tracking and delivery updates, which provides greater transparency.<\/p>\n

Mobile Applications<\/u><\/p>\n

Domino\u2019s launched mobile applications for smartphones and tablets to capture the growing number of mobile users placing delivery orders on their smartphones. [9]<\/a>\u00a0In 2014, the company launched Dom, a voice ordering application, and in 2015 it launched text messaging and Twitter ordering platforms using emoji, which were a hit among millennials. These new platforms enabled Domino\u2019s to capitalize on the growing personalization of services (“The Internet of Me”), which places users at the center of every digital experience. [10]<\/a> By incorporating personalization and by making pizza ordering a social experience, Domino\u2019s has been very successful in capturing a younger audience and making its product stickier by creating a network effect.\u00a0[11]<\/a><\/p>\n

Integrated Point-of-Sale Technology System and Vertically Integrated Supply Chain<\/u><\/p>\n

Finally, Domino\u2019s has invested significantly in optimizing operational efficiencies to reduce costs and to be able to offer an affordable product to its end customers. The company rolled out PULSE, an integrated POS system, to improve coordination between its franchisees and the corporate office and to reduce the number of order mistakes and improve training hours.[12]<\/sup><\/a> Additionally, Domino\u2019s has a vertically integrated dough manufacturing and supply chain systems, which enhances the quality and consistency of products, allows Domino\u2019s to leverage economies of scale and enables store managers to better focus on store operations and customer service. [13]<\/a><\/p>\n

The Future of Digital Pizza Delivery for Domino\u2019s<\/strong><\/p>\n

The food industry has attracted a lot of venture capital investments in the last decade and thus Domino\u2019s now faces increased competition not only from other QSRs but also from food delivery start-ups such as UberEATS.\u00a0To maintain its competitive advantage, Domino\u2019s needs to ensure that it has the right talent in place to drive continued innovation. Training and employee development will be key for Domino\u2019s, especially with regards to international expansion.<\/p>\n

Additionally, to continue to deliver on its customer promise, Domino\u2019s should explore alternative delivery methods to reduce costs, such as autonomous delivery vehicles. [14]<\/a> Partnerships with other delivery service providers may also provide opportunities for cost cutting, which will be very important for maintaining profitability, given the company\u2019s lower margin.<\/p>\n

Finally, growing Domino\u2019s customer base will be key in the future, especially as millennials comprise a significant portion of consumers. Domino\u2019s has a robust online platform that enables the company to collect data on consumer preferences and the company should use this data to stay ahead of trends in consumer preferences and to innovate its menu offering.<\/p>\n

Conclusion<\/strong><\/p>\n

Continued technological innovation has transformed Domino’s from a traditional fast food restaurant chain to a fast-growing technology-enabled delivery services company. However, as the company continues to face more competitive pressures in the future, will Domino\u2019s be able to continue to innovate and launch autonomous drone delivery and artificial intelligence ordering platforms\u00a0[15]<\/a> or is it doomed to go on a steady path of decline as millennials continue to become more and more health conscious?<\/p>\n

Word Count: 799<\/p>\n

[1]<\/a> Domino\u2019s website. https:\/\/www.dominos.com<\/a>. Accessed November 2016.<\/p>\n

[2]<\/a> Michael C. Ottenbacher<\/a>, Robert J. Harrington<\/a>, (2009) “The product innovation process of quick\u2010service restaurant chains”, International Journal of Contemporary Hospitality Management<\/em>, Vol. 21 Iss: 5, pp.523 \u2013 541. http:\/\/www.emeraldinsight.com\/doi\/abs\/10.1108\/09596110910967782?journalCode=ijchm<\/a>. Accessed November 2016.<\/p>\n

[3]<\/a> Marco Iansiti, Karim Lakhani, (2014). \u201cDigital Ubiquity\u201d, Harvard Business Review<\/em>, \u00a0https:\/\/hbr.org\/2014\/11\/digital-ubiquity-how-connections-sensors-and-data-arerevolutionizing-business<\/a>, Accessed November 2016.<\/p>\n

[4]<\/a> Domino\u2019s 10-K report, Industry and Competition sections.<\/p>\n

[5]<\/a> Ibid.<\/p>\n

[6]<\/a> Min Kyung Lee, Rohit Verma, Aleda Roth (2015). Understanding Customer Value in Technology-Enabled Services: A Numerical Taxonomy Based on Usage and Utility. Service Science<\/em> 7(3):227-248. http:\/\/dx.doi.org\/10.1287\/serv.2015.0105<\/a>. Accessed November 2016.<\/p>\n

[7]<\/a> Domino\u2019s 10-K report, Company Overview and Technology Innovation sections.<\/p>\n

[8]<\/a> Ibid.<\/p>\n

[9]<\/a>\u00a0Advertising Age magazine, http:\/\/adage.com\/videos\/is-dominos-pizza-the-next-tech-giant\/1145. Accessed November 2016.<\/p>\n

[10]<\/a> Bruce Weinelt et al. (2016). Digital Transformation of Industries: Digital Enterprise. World Economic Forum<\/em>. http:\/\/reports.weforum.org\/digital-transformation-of-industries\/wp-content\/blogs.dir\/94\/mp\/files\/pages\/files\/digital-enterprise-narrative-final-january-2016.pdf<\/a>. Accessed November 2016.<\/p>\n

[11]<\/a> He, W., Zha, S., & Li, L. (2013). Social media competitive analysis and text mining: A case study in the pizza industry.\u00a0International Journal of Information Management<\/em>,\u00a033(3), 464. http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/docview\/1344302274?accountid=11311<\/a>. Accessed November 2016.<\/p>\n

[12]<\/a> Domino\u2019s press releases, http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/abicomplete\/docview\/446997550\/fulltext\/545F7954BD18400DPQ\/8?accountid=11311<\/a>. Accessed November 2016.<\/p>\n

<\/a>[14]<\/a>\u00a0Advertising Age magazine, http:\/\/www.adnews.com.au\/news\/domino-s-reveals-tech-data-and-ai-plays-at-innovation-event. Accessed November 2016.<\/p>\n

[15]<\/a> Ibid.<\/p>\n","protected":false},"excerpt":{"rendered":"

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