American lifestyle is based on a certain set of stereotypes that include American dream, fast-food, cars, movies, and, obviously, pizza. Even though it is a traditional Italian dish, it has become an integral part of the Americans’ food preferences. Thus, the main aim of this paper is to explore general conditions of the industry, the business performance of one of its main representatives called Domino’s, and conduct an internal environment analysis.
The history of the pizza industry began in the USA when Italian immigrants started to move to New York, Chicago, and other American cities in the 1990-s. However, the main increase in demand for pizza was created by military forces returning to the USA from Europe after the World War II. Starting from 1945, it was the beginning of a massive raise of the amount of pizzerias appearing throughout the country.
Overall, the current pizza market in the USA is represented by approximately 68,000 pizza stores with total sales of $37 billion. Pizzerias take 11.7% of all the restaurants presented in the food industry of the USA while the segment of producing and supplying pizzas accounts 10% of all sales in foodservice. Nowadays, the industry is represented by independently-owned pizzerias that control 51% of pizza sales and chains (or franchises) that hold the rest 41% of the market. The current state of the pizza industry in the USA is affected by cheese and wheat prices rise during the recession. Moreover, the segment is impacted by the strong competition in the fast-food segment from the burger suppliers that are capable of offering food at lower prices than pizza purveyors. However, the pizza industry partly regained the market share in the fast-food industry in 2010, due to heavy advertising. Another trend that appeared during the recession was a trend of eating-in that increased delivery and take-out sales.
Domino’s Pizza is one of the market leaders in the pizza industry. It was created by brothers Tom and James Monaghan in Michigan, in 1960. It started as a single store, although the first franchise of the chain was opened in 1967 and increased to 200 stored by 1978. Starting from 1983, Domino’s expanded its activity to the international market, creating the first stores in Canada and Australia. Domino’s was recognised as the fastest growing American pizza company in 1985. The same year was significant for the company since it spread its business activity to England and Japan (Domino’s Pizza, 2013). Domino’s is now an owner of more than 5,000 units in the USA and about 9,000 units in over 50 countries worldwide (Franchise Direct, 2010).
The financial outcomes of Domino’s demonstrate a high success of its business operations in the USA and abroad. Hence, sales in the first quarter of 2010 increased by 18.4% comparatively to the previous year amounting at $381.1 million in the USA. Same-store sales, that measure the difference in revenues at existing stores for two different periods of time, rose by 14.3% in the American market in 2010. It shows a progress in comparison to 2009 that had a 1% gain only. International operations were also profitable for the company rising by 4.2% in sales in 2010. Total sales of Domino’s Pizza in 2011 were $6.9 billion with $3.4 billion sales in the USA and $3.5 billion worldwide.
Domino’s seriously cares about its corporate social responsibility (CSR) by launching charitable programs such as “Help fight childhood cancer” and raising funds for non-profit organizations, such as the Partners Foundation, political action committees, etc. Moreover, Domino’s supports students through the Domino’s Support Schools Program that includes holding education seminars, raising funds for financially underprivileged students within “Help-the-needy-programme”, and fundraising incentive scheme.
Internal Environment Analysis
Key success factors of Domino’s Pizza include a large variety of items in the menu and constantly introducing new items and developing new recipes (85% of Domino’s items have been new since 2008). Moreover, Domino’s owes the majority of its success to the distributed system of its franchise-owned stores that form 95% of all company’s divisions.
The micro environment is based on assessing the competition in the market. Domino’s is the second largest pizzeria chain in the USA after Pizza Hut, which was one of the pioneers of creating chains of pizzerias. It was developed from a little store in Kansas in 1958 to over 7,500 units in the US. It was followed by Michigan-based Little Caesars created in 1959 that counts more than 2,500 units these days and Domino’s in 1960. After more than 50 years in business, currently, Domino’s owns more than 5,000 units in the country. Papa John’s was the latest from the biggest pizzeria chains that has started in 1989 and now owns 3,000 units.
Other elements of the internal environment include a developed system of suppliers and a highly organizes scheme of pizza delivery to the end consumers. Moreover, Domino’s offers support and assistance to its employees through specially created programs. Another competitive advantage of the company is that it is implementing technological approaches into business practice. For instance, its ordering application can be approached from iPhone, Android, and orders can be made on the Internet, and Domino’s is one of top companies in terms of online transactions.
Thus, Domino’s Pizza is one of the most popular and recognized consumer brands around the world. Strong brand image and a large scale of operations result in the company being one of the leaders in the pizza industry of the USA. Domino’s Pizza keeps introducing new products and supporting customers’ loyalty over years.