Consumers drool over the Domino effect

Aabhas Sharma

TBR News Bureau

NEW DELHI

Domino's India is on an overdrive. For one, the 44-year-old Ann Arbor, Michigan-headquartered pizza chain is in the process of short-listing a younger celebrity to endorse the brand in India (it has used older character artistes Paresh Rawal and Anupam Kher in its earlier advertising). For another, the company – which had more than $4.6 billion in global retail sales in 2004, including corporate and franchise outlets – has an eye on expansion by adding new stores in untapped markets. The chain has about 98 stores across the country and plans to open at least 20 more by the end of this year.

The route: sub-franchising, which, in simpler terms, means that master franchisee Domino's Pizza India (promoted by Shyam and Hari Bhartia of the Jubilant Organosys) will now appoint new franchisees to spearhead the expansion. It's also striving to build sales by increasingly nudging customers to add something extra, such as chicken wings or Coke, to their orders. The company will spend around Rs 3 crore on the marketing efforts this summer – for the sole purpose of making its phones ring more often.

This is as good a time as any for expansion, says Domino's India. The company – which closed its books in 2004 with a turnover of close to Rs 120 crore – believes things have changed beyond recognition since the time it set foot in he country with its first outlet in Mumbai in 1997. “Before Domino's came to India, Indian customers were a bit hesitant to order food and eat at their homes. But with Domino's delivering at your doorstep, it changed the whole outlook of the consumers,” adds Hargave.

Today, with a dominant 60 per cent share of the pizza delivery market (the total pizza market stands at Rs 300 crore with the delivery segment pegged at Rs 180 crore), Domino's clearly knows what it ought not to do – offer consumers more of the same. The economy, says the company, in general, looks good. But consumers are looking for value – and something new. “Continuous innovation is one of the main driver of growth in the market,” Hargave says. To that end it has introduced new flavous from time to time – the Double Cheez Crunch pizza being the latest in line. Regular promotional offers have also kept the brand top-of-mind and competition at arm's length.

Though Domino's admits that delivery has been its forte (60 per cent of its sales come from delivery and the balance from dine-in), it has laid equal emphasis on dine-in restaurants. Leaving aside its outlets in Mumbai city, it has dining space at almost all it outlets. With the real estate prices sky high in India's commercial capital, this seems like a judicious decision. However, in the Mumbai suburbs, such as Borivili and Kandivili, Domino's outlets do have a proper dine-in facility.

Domino's, however, needs to watch over its shoulders. Competition has intensified. Apart from the local dhabawallahs, Domino's faces heat from the likes of McDonald's (which entered home delivery in 2004) and Pizza Hut, besides the many hole-in-the-wall restaurants in every locality. Is it bothered?

To find out, read the cover story of the latest issue of The Brand Reporter, June 1-15. © 2005 agencyfaqs!