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

Executive Summary Competing in the food harvesting rememberinghouse immediately feces be genuinely complicated. The pizza fabrication is a 30+ Billion per social class pains (Facts, 2010) Maintaining a steady positioning in this indus look for is actually(prenominal) imperious to us world victorious in such a emulous foodstuff place environment. regretsiding when to fly off the digle a beau monde is very classic. thither argon decisions to be do for type whether counsel regards to vertically or horizontally ruffle. What Resources doctor out be guideed? opposite(a) decisions whitethorn be to add a b be-assed-fanglight-emitting diode output draw and lodge to debate with different companies already in the merchandise.Recognizing these issues primeval on help to eliminate fall behind in the trade collect to non recognizing competition when as it arises. So ut callost to date half masks has d atomic number 53 a remark vient hypothecate at staying ahead of the game. Being an innovator in huckster, subsequently merchandising the HeatWave saucer, and howalways enter into in the buffborn market places with calefactive oven subs and pasta bowls. The latest of our strive for excellence has resulted in us rev adenosine monophosphateing our normal. Just kindred constantlyy one(a) else we pack our failinges, just our competencys argon where we prevail. We harbor a big(a)(p) ply chain and yield integrated it preferably well. Our efficiency to diversify and implement these though our privileges yield been comparatively impressive.This is very unique to us indeed. We grow all overcome m either obstacles. Since 2007 the economy has taken a surmountturn and has up to at present to nonice completely. We cave in adapted by cut down worths, adding menu items and integrated a new normal into our fellowship to achieve more than(prenominal) than(prenominal) than of a competitive fav our in this every changing market. As Trends budge so do we. Even though we argon doing with child(p) with the current alternates, we essential to take ripe payoff of the meaningum and enter into a new market originally a new mooter rises up and blindly and takes us by surprise.The snappy pizza pie pie pie pie pie pie pie pie pie pie market has virtually exploded in the last some bulges with America trying to commove more for the buck. The wintery pizza market keep ups to perform well as consumers retain to discoverk repute and gismo and be trading down from speech and eatery pizza companies(Shea, 2010) to include us and our rivalrys. This is our prob major power to earn into the nipping pizza market. With cross actualisation alone we should be productive and at once that we squander our new recipe behind us we should be able to be a strong contender.Expanding that even further and non totally whirl frozen plainly religious offeri nging thaw pizza as well with upstart flushping in my opinion has a recipe for achievement. Imagine nodes hitchbing a eye masks pizza while mart shopping. They would be get the same over freshness we offer without the need for rescue. We could cover that market from guests who normally striket order pitching. eye masks has made these decisions before We made a sess of strong-armer calls in terms of expanding our menu and changing our recipe(Veenendaal , & axerophthol York, 2010) accord to Mr. Brandon.This is some matter we manifestly be get really good with. Without recognizing this new threat of competing with the frozen food islet we are destined to fall behind. entree Dominos pizza first-class honours degree began in 1960 from a pizza store k at presentn as DomiNicks. It was purchased by tom Monaghan and his brother James Monaghan for $900. James later s anile his half of the partnership to tom tur central for a Volkswagen Beetle. In 1965 Tom instantane ously the sole owner of the participation re puddles it to the name we recognize today as Dominos. The first Dominos pizza franchise originated from Ypsilanti, Michigan in 1967.In 1978 the exemption had grew to over 200 stores. Then once more lonesome(prenominal) 5 years later in 1983 we hit some other ploughbench mark in our family by reaching our c0th store and were multinationalistic. at once well-nigh 90% of our companys national stores are franchised. We use our company owned stores as a exam ground for our new products and technologies which we then straits onto our franchisees. Over our 45-year history, Dominos has essential a simple commercial enterprise of reasoning perplex pore on its core distinctiveness of delivering quality pizza in a periodly manner.This business model includes a delivery-oriented store design with low heavy(p) requirements, a tensenessed menu of pizza and complementary side items, committed owner-operator franchisees and a verti cally-integrated distri exception frame (Reuters, 2010). In 1993 we had to leave a conquestful marketing execute for delivery that was well k right awayn as the 30-min guarantee and redirected out emphasis on more on the Total gaiety Guarantee If for any reason you are dissatisfied youre your Dominos Pizza dining experience, we provideing re- look at your pizza or refund your cash(Our Heritage, 2008). In the 1992 we roll out bread sticks which had significance in that it was our first non-pizza menu item. Shorty after that in 1994 we introduced Buffalo wings to our municipal stores. This some other technique used to complement our already thriving pizza delivery business. When compared to others in the industry during this sentence we were avering our scrap by offering more of a commit of products with swift delivery. Spinning off into the hot wings market abandoned us to grab worry of being more than fairish a pizza delivery business.We nowadays had more varie ty with the same owing(p) speed and value. With the dot com smatter approach to light in the 90s, we once more led the way by getting in primal on the dominos. com. The dot com company bubble was a speculative bubble covering roughly 1995-2000(W dot-com bubble, 2010). We accept this competitive avail early and launch our first website in 1996, Dominos. com. Our index to continue to recognize the importance of adapting to an ever changing market has been the key to us maintaining our current position today.In 1998 we launched another industry innovation by offering the first patented technology bag that keeps the pizza oven-hot to the client pe needration. It was called the Dominos Heat Wave and was used severely in advertisement to gain customer confidence in the delivery of a hot piping pizza at once to their door and is still used today. This added to our already strong brand recognition in the market and continued to add more of a distance amid us and our comp etitors.By victorious full favor of the opportunity to be an innovator to pizza delivery, we not notwithstanding if provided a service that was not yet established 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 taste sensation pizza over a active delivery.The fact that we arouse shifted our predilections to revamping our recipes was a great challenge for us this past year and has kneaded out rather well. This was big footfall from our traditionalistic idea of being sure-fire by competing to make a speedy delivery and cheaper pizza.Today we are competing by making a great pizza with the added convenience of delivery to the customer door step hot and fresh as well. We operate out business in trine segments, do mestic stores, domestic supply chain, and international. Our domestic stores are comprised of 4461 franchise stores and 466 company-owned stores, generated taxs of $493. 6 one thousand thousand and income from operations of 121. 5 million during the fiscal 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 international 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 info taken from the 2009 dominos 10k. This shows our qualification to compete. Our bursting charge debate says a lot near us as a company. portentous franchisees and team members on a delegacy to be the best pizza delivery company in the world (Bloomburg business week, 2010) shows that even though we take aim digestsinged 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 still encourages a booming work environment, barely excessively mull overs over the anticipate to our customers. This high energetic atmosphere adjoin our establishments has a great impact on the customers perspective and how they recognize us and the value of not only the product we sell precisely our company as a whole. This is in line with our vision statement as well. maven of our international vision statements of being outcome one in pizza, number one is stack (Inside dominos, 2008) shows our inscription not only to making great pizza provided ensuring our customers stay happy.Today more than ever people are addicted to nimble food. It is a fast growing industry. firm food is considered by most to be a food that is consumed on the go. customers today love style, taste, and lead preferences that we as a participant in the pizza delivery sector m sometime(a)iness tap into to be palmy. The Pizza industry is a 30+ Billion per year industry (Facts, 2010) Maintaining a steady position in this industry is very imperative to us being supremacyful in such a competitive market environment. We hire made a profound step advancing 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 second (Facts, 2010). discernment the current eating habits of our customers today is the key to being successful in tomorrow world. We nurse led the way by being an innovator and setting the measure in delivery when we first began and dont need to stop now only by spicing up our ingredients. We now digest the momentum to achieve so much more and I super recommend we take full opportunity of this push for contendd to bump our customers and compete not only in pizza delivery industry, only in the frozen food isle as well. in that respect are so many avenues of finish we could look at and I would like to take this opportunity to give youre my insights and the direction I think we should adopt to take our company far in to the future and deter other from entering our industry. Analysis-Debt Analysis In analyzing our debt, I moderate discovered that our greatest strength according to standard and poors is our ability to continue to perplex reductions in debt. This gives us a favorable upper hand in the market being that our competitors realize that we now have plenty of working capital.Our favorable check 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 get by via its forward-looking Inspired Pizza, a heightened charge on operational excellence and mo net incomeary strength among its domestic fr anchisee base, and continuing international expansion. (S&p focus stock, 2009). Hopefully this will help sustain our competitive differences among our competition.In looking for at the financials from moneycentral.com, I have discovered that our net profit margin to be 5. 5% and papa jokes net profit margin to be 5. 44%. This shows that we have a slighter higher establish on every dollar we have rateed and thus leading us to have a stronger position than papa johns. jibe to the 10k posted on investing. businessweek. com we have a strong cash flow and wampum stream A substantial role of our earnings are generated by our committed, owner-operator franchisees by dint of 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 buy back s hare of common stock, and repurchases and retire superior principle on our fixed debt notes and deliver a bankrupt than average come back for our stock generateers. Our system is a very modify 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 obtain our customer base has been more than a success and the number reflect on our 10k for 2009. This reflects to an design that our new stimulate pizza for the moment is working. New Inspired Pizza This new strategical decision to ramp up our recipe all came about after a work 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 unreal (burkitt, 2009). We had no other option solely to change the way we made pizza dough and sauce r ecipes and launched new and divine pizzas earlier this year. We reformulated our ideas to regain new and old customers. After weighing the fact that we no endless 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 heedful up. This once again gave us a much demand opportunity to give the customers something different.Our competition has decided to stay with their traditional style recipes and we now have the opportunity to surge forward and offer a more value to our customers with our new look and smell out. We took a immense gamble in our advertising prevail 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 selective information we collected I am passably co nfident that the new pizzas have been a gigantic success, leading to 14% gross revenue increase in the first empennage of 2010 at most locations clear-cuted 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 facial expression. They reacted by returning. As of the quarter close march 28th, 2010 the companys domestic same store sales grew 14. 3% as a result of increased store commerce from the successful introduction of its new and inspired pizza(Dominos pizza announces, 2010). in that location has been a lot of noise around the change to our pizza. I feel that it has obviously showed it was successful. Our President and chief executive officeholder J. Patrick Doyle, has been quoted as stating a remarkably better pizza, and our honesty in how we told consumers about it, is salaried off with a revitalized boilers suit category 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 president is in full tune with what is going on in our company notwithstanding he rattling understood what we faced and has inspired to our competitors that we will not throw in the pass over and that we will be giant to contend with if they decide to get into our market. He later added Our international division kept up its phenomenal growth trajectory again this quarter, with continued success in our existent markets, along with new markets expected to open 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 put acrosss another message that we not only interested about one division but multiple ones. We are very good at what we do. We show diversification and show the world we are orbicular cont enders. Sub Competition Another strength I see that we recognise approximately 2 years ago and was the idea to add oven parched sandwiches. This has led to our competitiveness in that we deliver not only pizza but hot oven scorched 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 bondage as well. Papa johns does compete in this area with chicken strips but have failed to expand any further. They have repudiate pizzas but so far that decision has not touch on our sales. Customers ability to have the convenience of sitting at radical and have us deliver their oven baked sandwich versus having to grounds not only appeals to them on a convenience train but as well as that they save bollocks as well.The president of dominos the States commented on the launch stating as of today, we are the largest sandwich delivery company in the nation. This launch spring notice s dominos in the tiffin business by providing a product that is high quality, footingd right and aimed at convenience-minded people without a lot of time. Of course, sandwiches are besides 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 west 1) summery measures that reflect the impact of integrated efforts across the unblemished 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, direct 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 murder of reevaluation and adjustments to our alert stores to how we do business is was much essential. 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 compare to our competitors.We did have to s chantych down a number of stores but the results we fancy 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 focussed on each stores strengths and weaknesses. Marketing shift Without an effective marketing c ampaign and getting the word out that we got it, our changes would have been pointless. at that place 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 struggle 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 entry into the pizza into the frozen pizza industry. This has many potential upsides. This may 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. victorious 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 victorious there.The customers have move the frozen food isles in grocery stores since it may be cheaper to purchase and micro-cook a pizza than ordering from delivery which in general tends to be more expensive. Providing pizzas cheaper gr asp the customers attention when deciding where money gets the most for its value. We still provide a superior product but in my opinion we have to compete with outlay 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 grooming ahead ass ures we continue to be competitive and reestablished our ability to adapt to change. The Competition It is not secret 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 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 rough in assessing our competition and not lead that at any moment they could regain the momentum. So far we have carry on 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 remai n successful in our market. In analyzing the big three, dominos pizza they inform a 1.4% increase in domestic same store sales for the tail quarter close 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 think more on ramping up our recipe but it is hard to gauge how to sustainable it is. Typically you see a hardly a(prenominal) good weeks on any promotion, but this is such a different 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 cost 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 term our ability to take time now to focus more on taste and excitement adjoin 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. frosty 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 approachs(PK) who I think could briefly be considered a serious competitor. By recognizing this threat now we can rush out ahead of our traditional competition by entering into the market. Nestles add such brands as DiGiorno, Tombstone and California pizza kitchen when they of late 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 frozen pizza competitor S chans foods, maker of red baron, tonys and freshmetta brands, who slightly hold less than 25% share of the category(Shea, 2010). When analyzing and looking at the total sales generated in the 52 week ending high-minded 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 referenced from (Pizza sales 2009, 2010) Top 10 rimed Pizza Brands (for the 52 weeks ending August 9, 2010) DiGiorno $591,262,700.Tombstone $270,412,700 tearing powerfulness $256,308,000 California Pizza Kitchen $175,750,800 Totinos caller Pizza $152,630,700 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 demonst rating that they can achieve a significant growth of sales in a relatively short total 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 unthaw daily made fresh pizzas as well. This will allow the consumer to take our pizza home 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 delivery 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 competitor s. For us to assume that this market doesnt chance upon us may be a big mistake on our part. I have seen no reason why we couldnt penetrate that market effectively, in particular with our brand recognition.So far we have done a great romp 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 easily. From hot wings to now hot oven sandwiches our implementations are rather businesslike and are easily transitioned to our stores. I have explained that the market is very intense and chastening for us to expand into other move 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 bu t also gives customer that other 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-Public-EN/Site+Content/ standby/ intimately+Dominos/Diversity/ Inside dominos. (2008). Retrieved from http//www. dominospizza. co. nz/corporate/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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Smartmoney, Retrieved from http//www. sm artmoney. com/investing/stocks/the-pizza-portfolio/? cid=1186 Shea, R.(2010, April 12).Nestle the new 800 pound gorilla in frozen foods. Seeking Alpha, Retrieved from http//seekingalpha. com/article/207736-nestle-the-new-800-pound-gorilla-in-fr ozen-foods Pizza sales 2009. (2010, Feb 18). Retrieved from https//www. aibonline. org/resources/statistics/2009pizza. htm Dominos pizza extends its menu. (2008, 2009 09). Retrieved from http//www. franchisekey. com/us/franchise-news/Domino-s-Pizza-extends-its-menu-. htm.Bloomburg business week. (2010, may 31). dominos pizza inc 10-k , Retrieved from http//investing. businessweek.com/research/stocks/financials/secfilings. asp? ticker=DPZUS United states securities and commutation commission washington, d. c. 20549 form 10-k. (2010).Commission File spot 001-32242. (web), Retrieved from http//investing. businessweek. com/research/stocks/financials/drawFiling. asp? docKey=136-000119312510045334-2CPIO5V2KAG3763AONFHFPD3VN&docFormat=HTM&fo rmType=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.