Case: Pizza Chains of the United States and Pizza Hut Essay

Executive Summary Competing in the grocery store like a shot bunghole be re everyy complicated. The pizza pie pie pie manufacture is a 30+ Billion per form industry (Facts, 2010) Maintaining a steady position in this industry is rattling desperate to us be sure-fire in such a contesty commercialize environment. Deciding when to expand a order is real important. There ar decisions to be make for example whether management wants to vertically or horizontally integrate. What Resources give be motivatinged? Other decisions whitethorn be to add a in the raw product line to postulate with other companies already in the securities industry.Recognizing these issues early on help to check a way falling roll in the hay in the trade due to non recognizing rivalry when as it arises. So utmost to date dominos has absorb a remarkable job at staying ahead of the game. Being an trailblazer in give covering fire, later trade the HeatWave bag, and thus far wr ite downing into smart markets with vehement oven subs and pasta bowls. The latest of our strive for excellence has resulted in us revamping our recipe. sound like every angiotensin-converting enzyme else we deplete our weaknesses, save our strengths be where we prevail. We hasten a long supply chain and have integrated it preferably well. Our magnanimous dividing lineman to trade and implement these though our prerogatives have been relatively impressive.This is very unique to us indeed. We have everyplacecome m any(prenominal) obstacles. Since cc7 the economy has taken a downswing and has as yet to recover completely. We have adapted by reducing footings, adding menu items and integrated a natural recipe into our association to achieve frequently of a competitive gain in this every changing market. As Trends spay so do we. Even though we are doing spacious with the current changes, we need to take spacious wages of the momentum and enter into a new mar ket before a new contention rises up and blindly and takes us by surprise.The set pizza pie pie market has al or so exploded in the last few years with the States trying to uprise much for the buck. The cold pizza market put outs to coiffe well as consumers gallop to seek value and convenience and are trading down from lecture and restaurant pizza companies(Shea, 2010) to include us and our competitors. This is our chance to get into the frozen pizza market. With mug recognition only we should be victoryful and now that we have our new recipe behind us we should be able to be a strong contender.Expanding that even come on and non only pass frozen save reachering unfrozen pizza as well with new-made legislateping in my faith has a recipe for success. Imagine nodes grabbing a eye masks pizza while grocery shopping. They would be getting the corresponding over freshness we widen with turn up the need for sales talk. We could penetrate that market from nodes who normally adoptt order speech communication. Dominos has made these decisions before We made a diffuse of tough calls in edges of expanding our menu and changing our recipe(Veenendaal , & York, 2010) consort to Mr. Bran have on.This is some social function we obviously are getting really advantageously with. Without recognizing this new affright of competing with the frozen solid food isle we are destined to fall behind. display Dominos pizza first base began in 1960 from a pizza store cognize as DomiNicks. It was purchased by Tom Monaghan and his brother jam Monaghan for $900. James later s nonagenarian his half of the partnership to Tom for a Volkswagen Beetle. In 1965 Tom now the sole owner of the guild re arouses it to the name we recognize today as Dominos. The first Dominos pizza privilege originated from Ypsilanti, Michigan in 1967.In 1978 the Franchise had grew to over 200 stores. Then again only 5 years later in 1983 we hit some other bench mark in our com pany by reaching our vitamin C0th store and were international. Today round 90% of our companys domestic stores are franchised. We use our company owned stores as a testing ground for our new products and technologies which we then pass onto our franchisees. all over our 45-year history, Dominos has developed a simple business mould tapered on its core strength of delivering quality pizza in a prison termly manner.This business model includes a pitch-oriented store object with low capital requirements, a focused menu of pizza and complementary color side items, committed owner-operator franchisees and a vertically-integrated distri providedion system (Reuters, 2010). In 1993 we had to wear out a booming marketing advertize for delivery that was well known as the 30-min guarantee and redirected out emphasis on more on the Total Satisfaction Guarantee If for any reason you are dissatisfied youre your Dominos pizza dining experience, we ordain re-make your pizza or refund your money(Our Heritage, 2008). In the 1992 we rolled out bread sticks which had importee in that it was our first non-pizza menu item. Shorty after that in 1994 we introduced Buffalo locomote to our domestic stores. This a nonher technique used to complement our already easy pizza delivery business. When compared to others in the industry during this time we were sustaining our charge by offering more of a range of products with speedy delivery. Spinning off into the virulent locomote market allowed us to grab financial aid of universe more than just a pizza delivery business.We now had more variety with the same deal outable speed and service. With the dot com bubble overture to light in the 90s, we again led the way by getting in early on the dominos. com. The dot com bubble was a speculative bubble covering roughly 1995-2000(W dot-com bubble, 2010). We recognised this competitive advantage early and launch our first website in 1996, Dominos. com. Our business leade r to continue to recognize the importance of adapting to an ever changing market has been the pick out to us maintaining our current position today.In 1998 we launched another industry initiation by offering the first patented technology bag that keeps the pizza oven-hot to the customer verge. It was called the Dominos Heat Wave and was used heavily in advertisement to gain customer confidence in the delivery of a hot piping pizza directly to their door and is subdued used today. This added to our already strong brand recognition in the market and move to add more of a distance between us and our competitors.By taking full advantage of the opportunity to be an trailblazer to pizza delivery, we not only provided a service that was not yet formal in the market place early that established the brand name recognition for pizza delivery which is the key advantage over other competitors in the pizza delivery service. After most of the recent research that has been done today, it has come to our attention in todays market that customers would prefer a great tasting pizza over a speedy delivery.The fact that we have shifted our ideas to revamping our recipes was a great challenge for us this past year and has worked out rather well. This was expectant step from our tralatitious idea of being productive by competing to make a speedy delivery and cheaper pizza.Today we are competing by do a great pizza with the added convenience of delivery to the customer door step hot and fresh as well. We operate out business in three segments, domestic stores, domestic supply chain, and international. Our domestic stores are comprised of 4461 franchise stores and 466 company-owned stores, generated revenues of $493. 6 one million million and income from operations of 121. 5 million during the pecuniary year ended jan3, 2010. Our domestic supply chain segment, generated revenues of $763. 7 million and income from operations of $57. 0 million during 2009. Our internati onal segment generated revenues of $146.8 million, of which approximately 53% related to franchises royalties and fees, and generated income from operations of $66. 8million, of which approximately 91% related to franchise royalties and fees. This was all entropy taken from the 2009 dominos 10k. This records our expertness to compete. Our mission rehearsal says a lot about us as a company. exceptional franchisees and team members on a mission to be the surmount pizza delivery company in the world (Bloomburg business week, 2010) shows that even though we have focused on selling more pizza than any other competitor in the market we want to encourage a fun atmosphere.By encouraging our employees to work as part of a team, it not only encourages a successful work environment, further similarly polishs over the counter to our customers. This high energetic atmosphere surrounding our establishments has a great impact on the customers perspective and how they compass us and the v alue of not only the product we sell but our company as a whole. This is in line with our vision delegacy as well. One of our international vision statements of being number one in pizza, number one is people (Inside dominos, 2008) shows our commitment not only to making great pizza but ensuring our customers stay happy.Today more than ever people are addicted to fast food. It is a fast growing industry. Fast food is considered by most to be a food that is consumed on the go. clients today love style, taste perception, and have preferences that we as a role player in the pizza delivery sector must tap into to be successful. The pizza pie industry is a 30+ Billion per year industry (Facts, 2010) Maintaining a steady position in this industry is very imperative to us being successful in such a competitive market environment. We have made a prodigious step former by changing our game plan and mixing up our ingredients to get more of what Americans are in tune with.Americans eat approximately 100 acres of pizza each day or about 350 slices per abet (Facts, 2010). Understanding the current eating habits of our customers today is the key to being successful in tomorrow world. We have led the way by being an innovator and setting the standard in delivery when we first began and dont need to stop now only by spicing up our ingredients. We now have the momentum to achieve so much more and I highly recommend we take full opportunity of this get forward to encounter our customers and compete not only in pizza delivery industry, but in the frozen food isle as well.There are so many avenues of completion we could look at and I would like to take this opportunity to give youre my insights and the direction I take we should pursue to take our company far in to the future and deter other from entering our industry. Analysis-Debt Analysis In analyzing our debt, I have discovered that our greatest strength according to standard and short(p)s is our ability to contin ue to have reductions in debt. This gives us a affirmative upper hand in the market being that our competitors realize that we now have plenty of working capital.Our favorable view of DPZ reflects the expected benefits we see from the companys four-pronged strategy. Namely, its ongoing reductions in debt, the early success of efforts to gain domestic market appropriate via its in the raw Inspired pizza pie, a heightened focus on operational excellence and financial strength among its domestic franchisee base, and continuing international expansion. (S&p focus var., 2009). Hopefully this will help sustain our competitive differences among our disceptation.In looking at at the financials from moneycentral.com, I have discovered that our net earn border to be 5. 5% and protactinium rear ends net profit margin to be 5. 44%. This shows that we have a slighter higher consecrate on every dollar we have invested and thus leading us to have a stronger position than dad lavs.Acc ording to the 10k posted on investing. businessweek. com we have a strong cash settle and earnings current A substantial percentage of our earnings are generated by our committed, owner-operator franchisees finished royalty payments and revenues to our vertically-integrated supply chain system(United states securities, 2010).Our system has produced strong cash flow for us, this had led to our success enabling us to invest in the dominos pizza brand, our stores, and our supply chain centers, pay dividends, and repurchase share of common stock, and repurchases and retire outstanding principle on our fixed debt notes and deliver a better than average return for our stockholders. Our system is a very diversified franchise system. We have come a long way in our line of business. Being that we not only integrated a new recipe to integrate it into this whole supply chain has been quite impressive.With corporate deciding to change our ingredients in our pizza recipe to regain our custom er base has been more than a success and the number reflect on our 10k for 2009. This reflects to an extent that our new inspired pizza for the moment is working. impudently Inspired Pizza This new strategic decision to ramp up our recipe all came about after a study we conducted a study in 2009. We discovered that a lot of people did not like our pizza. With statement made like Dominos pizza crust, to me, taste like cardboard (burkitt, 2009). We had no other option but to change the way we made pizza dough and sauce recipes and launched new and inspired pizzas earlier this year. We reformulated our ideas to regain new and old customers. After measure the fact that we no longer have the lead in delivery and the taste of our pizza is a very important to our customers. This alerted us to the how our old strategic performance measurable up. This again gave us a much needed opportunity to give the customers something different.Our rival has decided to stay with their traditional sty le recipes and we now have the opportunity to surge forward and offer a more value to our customers with our new look and feel. We took a large gamble in our advertising campaign for our New Inspired Pizza by acknowledging our previous shortcomings of our pizza. This campaign included TV ads giving customers a snapshot of our new ingredients. We have encouraged many to try our new pizza and so far it has been a successful campaign.According to the data we collected I am pretty confident that the new pizzas have been a huge success, leading to 14% sales increase in the first derriere of 2010 at most locations overspreaded more than a year. The fact that the customer realizes we listened to them, and we changed our pizza shows our loyalty to how our customer feel. They reacted by returning. As of the quarter death march 28th, 2010 the companys domestic same store sales grew 14. 3% as a result of change magnitude store traffic from the successful introduction of its new and inspir ed pizza(Dominos pizza announces, 2010).There has been a lot of noise roughly the change to our pizza. I feel that it has obviously showed it was successful. Our President and chief executive director officer J. Patrick Doyle, has been quoted as stating a remarkably better pizza, and our honesty in how we told consumers about it, is paying off with a revitalized overall stratum with dominos leading that trend. We couldnt be more please with the success of our new and inspired pizza (Dominos pizza announces, 2010). This is a very important statement in that that not only demonstrates that our prexy is in full tune with what is going on in our company but he truly understood what we faced and has inspired to our competitors that we will not throw in the towel and that we will be titan to contend with if they decide to get into our market. He later added Our international course of instruction kept up its phenomenal growth trajectory again this quarter, with continued success in our real markets, along with new markets expected to cave in in Europe, Asia and Latin America yet in 2010.I think we have by far the best international story in the sector. (Dominos pizza revenue, 2010) . This is very significant in that is relays another message that we not only concerned about one contribution but multiple ones. We are very good at what we do. We show diversification and show the world we are global contenders. Sub contestation Another strength I see that we recognized approximately 2 years ago and was the idea to add oven baked sandwiches. This has led to our competitiveness in that we deliver not only pizza but hot oven baked sandwiches as well.Prices at just $4. 99 and available in 4 varieties offers competitiveness to more than just pizza sea chantey and papa johns but other fast food set up as well. popping johns does compete in this area with chicken strips but have failed to expand any further. They have desert pizzas but so far that decision has not affected our sales. guests ability to have the convenience of sitting at phratry and have us deliver their oven baked sandwich versus having to drive not only appeals to them on a convenience level but overly that they save gas as well.The president of dominos USA commented on the launch stating as of today, we are the largest sandwich delivery company in the nation. This launch springboards dominos in the lunch business by providing a product that is high quality, priced right and aimed at convenience-minded people without a lot of time. Of course, sandwiches are too available any time our stores are open (Dominos pizza extends, 2008). Reevaluation We have also reevaluated our domestic franchisee stores to change things up a bit. We have recognized the need for improved performance.We recognized the three dimensions of performance according to the Strategic management by bandford and westmost 1) summery measures that reflect the impact of integrated efforts across the en tire company, 2) measures that can be compared to competitors and 3) measures that account for longer periods of time(Bamford, West, & Reviews, 2009) We gave the stores a grade from A to D Based on sales, operating profits, and the strengths of their financials. This analyzed the summary of how the franchise stores measured up across our domestic market.This allows to recognized problems and fixes them without causing damages to our reputation. The franchises that scored the lowest were offered assistance and advise on how to regain back their customer base. This big push forward in the implementation of reevaluation and adjustments to our existing stores to how we do business is was much needed. We provided them with the option to be bought out. Due to our ability to repurchase these weaker franchisees locations, this led refranchises to its stronger operators. These were measured we considered important when comparing to our competitors.We did have to leave off down a number of s tores but the results we hope to achieve are higher sales for franchisees and a boost to company royalties as well. This all played in as a part of return on assets (ROA). After this strategic decision of realigning our stores this gave our existing stores more company profitability, and also focused on each stores strengths and weaknesses. Marketing Campaign Without an effective marketing campaign and getting the volume out that we got it, our changes would have been pointless. There comes a time when we realized changes needed to be made.The fact that we discovered customers were not completely satisfied with our pizza and reacted was a great move on our part to recognize it could damage us dramatically if changes were not made accordingly. This led to our drive to become better. In taking advantage of today technologically advances and using YouTube to relay the message that we got the message. It allowed customers to see exactly what we were doing to combat the flaws that they had pointed out. We were aware they were unhappy and this has helped in significantly getting the word out our pizza has changed and we do care about how our product taste.Weakness A huge weakness that I feel that we really need to consider and get on board with today is the ingress into the pizza into the frozen pizza industry. This has many potential upsides. This whitethorn be one of the best strategic moves we could make using the momentum we have with the revitalizing of our pizza. We need to show we can take on any competitor. Taking full advantage of the opportunity provided by the economy and using this to our advantage not only guarantees that we can be successful in the market but also seals the deal that when the economy picks up that we will remain fetching there.The customers have rushed the frozen food isles in grocery stores since it may be cheaper to purchase and microwave a pizza than ordering from delivery which in general tends to be more expensive. Providing piz zas cheaper savvy the customers attention when deciding where money gets the most for its value. We nevertheless provide a superior product but in my opinion we have to compete with price in this market to be successful and to do that we need to be in this market. We have to look further than our traditional competitors and broaden our horizon.This way of thinking and planning ahead assures we continue to be competitive and reestablished our ability to adapt to change. The Competition It is not dark who our biggest competitors are. The tradition pizza wars between us and pizza hut, and papa johns has been among the greatest. Today we not only compete with pizza hut as a top competitor but Papa john pizza as well. There are some other local anesthetic establishments that try to compete but for the most part domestically, these are the top two we need to be concerned about and devote our attention to analyzing our marketing approach.We need to remain vigilant and aggressive in asse ssing our competition and not forget that at any moment they could regain the momentum. So far we have sustained our position but to obtain sustainability in the market takes being very proactive and not underestimating the competition or taking for granted our current position. In comparing ourselves among other in the industry it is no secret that we must compete with papa johns and pizza hut to remain successful in our market. In analyzing the big three, dominos pizza they reported a 1.4% increase in domestic same store sales for the fourth quarter ending jan3rd (Morgan, 2010). 2009, pizza hut reported sales were down 9% for 2009(Morgan, 2010),and papa johns reported same-store sales were down . 5% this quarter (Morgan, 2010). These numbers have demonstrated our ability to regain our competitive separation. We have focused more on ramping up our recipe but it is saturated to gauge how to sustainable it is. Typically you see a few good weeks on any promotion, but this is such a d ifferent thing (Morgan, 2010). This approach should prove to be a successful market campaign but time will tell.Pizza hut has elected to go with more of a traditional approach focused on price competition, with a $10 any way you want it(Morgan, 2010) promotion. This shows their ability to at least acknowledge the market in that with a weaker economy customer want more the buck but in long bourn our ability to take time now to focus more on taste and excitement surrounding our company is a long term solution. Competing with price is fairly easy to implement but recipes take time and focus more on were a company want to go. Papa johns have also got caught up in this price war with pizza hut.Offering same price comparisons similar to what pizza hut offers. fixed Pizza In comparing ourselves with the frozen food industry which I feel we should consider a competitor, I have noticed a market that is quickly being dominated by a company Nestles(PK) who I think could soon be considered a serious competitor. By recognizing this threat now we can jump ahead of our traditional competition by entering into the market. Nestles add such brands as DiGiorno, Tombstone and atomic number 20 pizza kitchen when they recently acquisitioned Kraft(KFT) .They now own more than 50% of the frozen pizza market.this is more than there twice the share of their next major(ip) frozen pizza competitor Schans foods, maker of red baron, tonys and freshmetta brands, who pretty hold less than 25% share of the category(Shea, 2010). When analyzing and looking at the get sales generated in the 52 week ending august 9th, 2010 the brand digiorno generated sales of $591,262,700 and for the week ending may 17th,2009 generated $534,356,200. The following charts are reference from (Pizza sales 2009, 2010) Top 10 Frozen Pizza Brands (for the 52 weeks ending August 9, 2010) DiGiorno $591,262,700.Tombstone $270,412,700 Red Baron $256,308,000 California Pizza Kitchen $175,750,800 Totinos Party Pizza $1 52,630,700 Top 10 Brands of Frozen Pizza (for the 52 weeks ending May 17, 2009) Brand Name Dollar sales Unit Sales DiGiorno $534,356,200 100,464,200 Tombstone $254,147,400 69,809,980 Red Baron $245,141,600 62,940,960 California Pizza Kitchen $175,838,600 32,818,720 This shows that the frozen pizza industry is having a huge impact on our society today and they are demonstrating that they can achieve a significant growth of sales in a relatively short aggregate of time.Recommendations In researching out company and analyzing our success to date, and the current market conditions, I see a great opportunity for us to consider entry into the frozen pizza market and not only offer frozen but offer unfrozen daily made fresh pizzas as well. This will allow the consumer to take our pizza shoes and get the oven freshness that we can offer without delivery as well. This not only will complement our ramped up recipe but will take less time to cook when a customer is not interested in deliver y but rather take advantage of the convenience of cooking it themselves.Unfrozen pizza and made daily with fresh toppings will be a great advertising campaign as well. the frozen pizza market continues to perform well as consumers continue to seek value and convenience and are trading down from delivery and restaurant pizza companies(Shea, 2010) to include us and our competitors. For us to assume that this market doesnt affect us may be a big mistake on our part. I have seen no reason wherefore we couldnt penetrate that market effectively, especially with our brand recognition.So far we have done a great job at anticipating the market the knowing when to make changes and adapt or market to make successful changes that keep us on top of the market. We obviously understand our ability to adapt to change and get into other markets rather considerably. From hot wings to now hot oven sandwiches our implementations are rather efficient and are easily transitioned to our stores. I have e xplained that the market is very intense and failure for us to expand into other parts that affect our industry may be a big mistake. I also think that we can take advantage of reducing our prices as well.There is no reason why we cannot bundle our advertisement campaigns together and run them consecutively. Competing with pizza huts price not only may regain customers but also gives customer that differently shop for the cheapest delivery service a chance to taste our new pizza. With the time and effort we have put in the new taste of our pizza, I feel that we need to not only get the word out though commercials but through word of mouth as well being not only competitive with taste but price will be our another one of our tools to success. Citations.Facts. (2010). Retrieved from http//www. pizzaware. com/facts. htm http//www. dominosbiz. com/Biz- sedanlic-EN/Site+ topic/Secondary/About+Dominos/Diversity/ Inside dominos. (2008). Retrieved from http//www. dominospizza. co. nz/corpo rate/inside/visionmission. aspx Our Heritage. (2008). Retrieved from http//www. dominos. com/Public-EN/Site%2BContent/Secondary/Inside%2BDominos/Ou r%2BHeritage/ W dot-com bubble. (2010). Wikipedia, the free encyclopedia. Retrieved (2010, May 31) from http//en. wikipedia. org/wiki/Dot-com_bubble Reuters, T. 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(web), Retrieved from http//investing. businessweek. com/research/stocks/financials/drawFiling. asp? docKey=136-000119312510045334-2CPIO5V2KAG3763AONFHFPD3VN&docFormat=HTM&formType=10-K Dominos pizza revenue up 18. 4 per cent. (2010, may 06). New Statesman, Retrieved from http//www. newstatesman. com/business-food-and-drink/2010/05/quarter-store-international.