Understanding The Demise Of Dominos From Italy

When we think of Pizza, the first name that pops up is Domino’s Pizza. With decades of experience and expertise, dominos have become synonymous with pizzas. 

Domino’s Pizza, the largest pizza company in the world, has failed to conquer the Italian market, where pizza was born. Italy never found authentic pizza taste in this American pizza franchise. So after eight years of trying to win over customers with its fast and convenient delivery service and unconventional toppings, Domino’s has retreated from Italy, leaving behind a trail of debt and disappointment.

So, through this case study, we will analyze the factors that led to the demise of Domino’s from Italy and how Domino’s can recover from the losses. 

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Company profile:

Domino’s is the largest pizza company in the world, with more than 19,800 stores in over 90 countries.

Domino’s is globally known for its delivery service, which guarantees that customers will receive their pizzas within 30 minutes, or they will offer free orders.

History:

It was founded in 1960 by Tom Monaghan and his brother James, who bought a small pizza shop in Ypsilanti, Michigan, called DomiNick’s. The name was changed to Domino’s in 1965, and the company expanded through franchising. 

Domino’s has a history of developing innovations that have impacted the pizza and delivery industries, such as the heatwave bag, the pizza tracker, and the pizza car. Domino’s also offers a variety of products, such as pasta, sandwiches, chicken wings, salads, desserts, and more. 

Vision and mission of the company:

Domino’s has a vision of being the best pizza delivery company in the world and a mission of delivering great-tasting pizza to customers’ doors.

However, its vision could not come to life in Italy, the home of Pizza. 

Domino’s Pizza in Italy:

Domino’s entered the Italian market in 2015 through a franchise agreement with a local company, ePizza. The company had ambitious plans to open 880 outlets across the country by 2030, hoping to capture a slice of the second-largest pizza market in the world after the United States. 

However, home-cooked pizza and local businesses dominated the domino’s market in the homeland of pizza.

Domino’s faced stiff competition from traditional Italian pizzerias, which offer a variety of styles and flavours of pizza, as well as low prices and high quality. Domino’s also faced resistance from some Italians who considered its pizza an Americanized version of their national dish.

Hence, the exceptional plan to capture a 2% Italian market share by 2030 was shattered. The company filed for bankruptcy last summer. And the shocking part is that out of the ambitious plan to open 880 stores, the company only managed to open 29 stores in the past eight years of trying. 

This February, the franchise partner of Domino’s in Italy, ePizza, was crushed under debt. Hence, it was up for liquidation, Bloomberg reported. 

Filing for bankruptcy:

In April 2021, ePizza filed for bankruptcy protection, citing cash flow problems and debt obligations. The company had 10.6 million euros ($10.8 million) of debt at the end of 2020. The company also blamed Domino’s for insufficient support and guidance during the crisis. In July 2021, a Milan-based judge opened liquidation proceedings for ePizza, effectively ending Domino’s presence in Italy.

Factors leading to the demise of Domino’s: Was Domino’s approach at fault?

Domino’s Americanized Pizza:

In newer markets such as India, Domino’s profit grew leaps and bounds because the concept of Pizza was new and exciting for Indians. However, in traditional markets, such as Italy, where Pizza is the authentic food, Domino’s pizza was nothing more than an Americanized version of Pizza. In Italy, dominos shredded the authenticity of Pizza to its bones. 

Italians did not approve of the innovation and preferred the national dish. 

Some users on Twitter even compared selling foreign pizza in Italy to selling snow at the North Pole. 

Focusing on the wrong:

To keep up with the competition, Domino’s tried to differentiate itself by offering innovative products, such as cheeseburger pizza, BBQ chicken pizza, and pineapple pizza. Instead of adapting to the Italian taste and flavours, Domino’s enforced its revolutionary fusions to its Italian customers.

However, a company needs to mend its ways to lure customers. To establish in a new market, brands must be flexible and adaptive. 

Hefty expenditure:

Dominos's other thing that went wrong was its hefty expenditure on tech. The company invested in technology, such as the pizza tracker and the pizza car, to enhance its delivery service and customer experience. However, these strategies did not appeal enough to Italian consumers, who preferred more authentic and artisanal pizza.

The pandemic played a part:

Domino’s also suffered from the impact of the coronavirus pandemic, which forced it to close its outlets during lockdowns and reduced its sales during social distancing measures. The pandemic also prompted many traditional Italian pizzerias to adopt their delivery services, further eroding Domino’s competitive advantage.

What Domino’s could have done right? 

When in Rome, doing as Romans do is something Domino’s should have learnt from. 

The Franchise chain of Domino's, ePizza, could have done better. As per the report od Dominos. But instead, the company's demise was blamed on the stiff competition in the market. Domino’s tried to differentiate itself from the local pizzerias for all those years, setting itself apart in variety and tech. However, what Domino’s could have tried was blending in. 

For instance, to establish a business in India's largest vegetarian country, the American food brand KFC introduced a vegetarian menu. And not only KFC, other food brands, such as MacDonald's, are too aligned with the trend.

Similarly, Italy is globally famous for Pizza. Italians love pizza. If the brand had tried to incorporate authentic taste and local flavours in its delicacies, Domino’s stood a chance against stiff Italian competition.

Conclusion:

Domino’s exit from Italy marks a rare setback for the global pizza giant, which has over 19,800 stores in over 90 countries. However, it also shows the challenges of entering a market where pizza is not only a food but also a culture and a tradition. 

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