India's largest company and the country's only Fortune 500 Company, Indian Oil Corporation Limited (IOCL) has entered into a revenue sharing-cum-lease agreement with Domino's Pizza India Ltd (DPIL). The agreement is to set up Domino's pizza outlets at IOCL petrol stations across the country.
Domino's, the country's largest and fastest growing food chain, plans to open a 100 outlets in the country every year. The MoU allows Domino's to open its outlets at select IOCL outlets. Domino's will thus leverage the network of IOCL outlets to increase its market presence. Currently, IOCL has 7,500 outlets in urban and rural areas and, in an ambitious programme to revamp its retailing network, is investing Rs 300 crore to upgrade at least one IOCL outlet in each state capital.
Says Pavan Bhatia, CEO, DPIL, "Our aim is to make Domino's a national brand. Even though we are at 74 locations in 26 cities today, there are still large pockets that remain untapped. This tie-up will help us increase our reach and make Domino's available to more and more people." Of the 100 outlets each year, 67 will be set up on the national highways and the state highways and will be called 'Jubilee'. Domino's has set aside Rs 40 crore to set up these 100 outlets in the financial year 2001-2002.
The central idea is to provide a one-stop shop for customers. IOCL, excited because of its experiment in Mumbai, where at several petrol stations it has introduced services such as 'Convenio' stores, auto car washes, cyber cafes, ATMs etc under the brand "Top Gear", is positive that the tie-up with Domino's would provide value added services to motorists.
IOCL had its own logic to seek such a tie-up. The tie-up with Domino's would attract motorists. The petroleum sector, hitherto a government monopoly, will be deregulated in April 2002. Many MNCs and big indigenous companies are gearing for a dip in petroleum. This is bound to translate into huge competition. "IOCL has been in the forefront of the oil industry for close to four decades, and provides value added services to its customers at its retail outlets," says B K Das, executive director (sales), IOCL, explaining its motives.
CB Richard Ellis, the world's leading real estate services company, played a major role in the deal. It is doing this project on turnkey basis. Richard Ellis has undertaken the task of evaluating the IOCL stations to help strategically position Domino's and generate maximum returns for the food chain. Handling everything from city level market research to project management, when Richard Ellis hands over the keys, Domino's can start serving pizzas immediately.
This is Domino's second strategic alliance with a government organization the first was with MTNL. The company set up a "hunger helpline" with MTNL to guarantee delivery of order in 30 minutes. This helped increase business to a considerable extent, says a top company executive.
The Domino's tagline, "Hungry kya?" best describes its appetite for growth.
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