How to Fix a Broken Pizza?
The answer is “tomato paste.”
Just kidding, needed a title for today’s post.
Some of you probably think I’m a Pizzaholic. Nope. It’s other things that make me look this way. Could be genes, could be food, but it’s not Pizza. Maybe I’ll order some pizza six or eight times a year. But I’m still a snob about my “favorite” way pizza should taste.
I do have favorite local pizza. I love the New York pizzas and in my estimation only one place in this town makes New York tasting pizza. That is Cataldo’s. Many locations but most importantly, one near me. A plain cheese pie–well done, thank you.
However if you happen to be serving most other brands I will be happy. There are only two pizza’s that I have this “thing” about. I won’t eat them. That is Little Caesars and Domino’s.
Scratch off Domino’s. Pretty good pizza now. What happened?
I don’t chase the stock market anymore. I used to have some fun with options. But, I still watch prices and trends.
Suddenly I see incredible break-out number with Domino’s.
I decide to investigate.
First I eat one. You can’t have higher and higher stock market numbers if you don’t have a good product. Now they do. Those commercials, embarrassing but honest, really worked. That was half the battle.
I remember the CEO appearing in every commercial. The customers would say things like: “The sauce tastes like ketchup” “The crust tastes like cardboard” “The worst pizza I ever had.” Then the CEO, Patrick Doyle, would promise to fix each of those problems. Doyle was hired as CEO in 2010. The stock was selling for $8.76 per share…and falling.
A personal note: I can’t think of a tougher business to turn around then the pizza business. Once a reputation is out there what can a company do to turn around a giant chain with bad pizza and falling stock prices?
Well he first fixed the pizza. Researched every pizza in the world and made changes from top to bottom.
The CEO, Doyle, stated that two principles of marketing had to be used to make this giant turnaround.
NUMBER ONE. “Loss Aversion” is a typical thought pattern in big business. The pain of loss is double the pleasure of winning. That makes changes extra tough. Play not to lose, rather than playing to win. I can only imagine the competition in the pizza racket. From Pizza Hut, Papa John, CPK, and Little Caesars, and dozens of favorite local joints, playing it safe is the easy thing to do.
But he didn’t. Doyle stated that a leader must accept the fact that “failure is an option.”
Yet playing it safe is the riskiest course of all.
The second business principal is “Omission Bias.” Most business leaders play to not lose instead of playing to win. Everyone sees the cost of a move gone badly.
Few see the costs of a move not made.
Can you imagine opening a pizza chain in Italy? Not even Starbucks have tried that. Domino’s have done exceptionally well in Italy. They are extremely popular in Japan.
Here is the new delivery by Reindeer bikes this Christmas in Japan.
Of the 800 people who work at the home office in Detroit, over 400 of them are in software and analytics. A large part of the delivery system is the ordering system. There is no cooler phone app for delivery of anything than the Domino’s app. They have won the “app” crowd.
Pizza Hut is number one in total sales, but Domino’s is climbing up their back as #2.
Oh, and that $8 stock in 2010. Wish I would have bought it.
It’s $168.28 today.