Domino's new pizza yielding extra-large returns

New Domino's pizzaA recent study found that 93% of Americans eat pizza at least once a month, so the decision by Domino's to publicly denigrate its old product while rolling out an entirely re-engineered pizza was a big risk. Well, that risk seems to have been rewarded, based on new sales figures, and my highly subjective taste test.

I hadn't had one of Domino's new pizzas, so in the spirit of scientific inquiry, I picked one up for lunch. Now understand, I have never been a fan of Domino's pizzas; the old style had so few toppings the pie resembled a few pieces of laundry blown across a 20-acre field. I was, therefore, very pleasantly surprised.

The price was right, under $8 for a large pepperoni, hand-tossed. My pie had a chewy, but not too chewy, crust that was baked all the way through (I hate under-baked crusts). The topping were in proper proportion to the crust, with (by my count) 62 slices of pepperoni. The cheese tasted like real cheese, rather than caulk, and the plentiful sauce was nicely spiced with oregano and red peppers. My only quibble was the saltiness, but overall, this is a pizza I'd eat again. And I'm picky about pizza.

Apparently I'm not the only one who finds this a change for the better; Darren Tristano of the restaurant research company Technomic told me by phone that the overall pizza-away-from-home market in the U.S. declined by 3% last year. This makes Domino's first quarter 14.3% increase in U.S. same-store sales over the same period last year all the more surprising.

And while increased advertising can be credited with part of this bump, Tristano also pointed to the increased quality of the product as a business driver. The question remaining, he said, is can the firm retain these new customers?

According to Tristano, Domino's is the second largest player in this market segment, with annual sales of over $3 billion, trailing only Pizza Hut, at $5 billion. Behind these two come Papa John's, Little Ceasars and Papa Murphy's. Look for these firms to crank up the advertising and special offers even more if this trend continues.

We've seen many a campaign from companies purporting that they want change, but I'm not aware of other examples where the company so clearly dissed its own products, then came out with markedly better ones. For once, the marketers and the product people must have attended the same meetings.

Perhaps the success (at least, to date) of this change will inspire other companies to take a "Yeah, we used to suck, but we're doing better now" approach. I could name a few candidates; K-Mart? UAL? Goldman Sachs? AIG?

Of course, the key to a makeover isn't in announcing the intention; it's carrying through -- as Domino's has done.
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