Timely & Timeless

Domino’s needed a spark. Same-store sales dropped in 2007 and 2008. In 2009, they were essentially flat. Then, Domino’s did what all chains do when sales are sluggish: they publicly admitted that their food was bad.

It’s now an infamous campaign, at least among those in the restaurant industry. Domino’s president Patrick Doyle got in front of the camera to acknowledge complaints about the chain’s pizza. Other members of the company, from marketing to culinary to innovation, joined him. They quoted their own critics, admitting that they often heard comparisons between their crust and cardboard. But Domino’s told viewers that they changed their recipe, and they wanted another chance.

Same-store sales took off in 2010. Customers returned and, more importantly, enjoyed the upgraded pizza. Domino’s became a high-flying stock on Wall Street, frequently reporting double-digit increases in same-store sales. Unit volumes increased so much that Domino’s eventually surpassed Pizza Hut as the country’s largest pizza chain in terms of sales, despite having fewer locations.

But as monumental as this marketing campaign was, it sometimes gets lost in the haze because, during this run, Domino’s started to take its technology to another level. The brand was routinely introducing new, innovative ways to order a pizza, whether that be via Twitter or Facebook, a Google Home or Alexa device, a Smart TV or a Smart Watch, or even a car. Customers could also get pizzas delivered to public places.

 

Domino’s became a trend-setter, and its investments in technology surely impacted sales by making the brand more convenient and driving conversation around its advancements. The emphasis on technology made the legacy pizza brand appear modern and trendy, just like a tech company. Same-store sales stayed positive through the decade and then some.

 

But it’s important to remember that technology didn’t start this turnaround, the menu upgrades did. And because Domino’s was able to fix customers’ primary complaint, they could then focus on other factors, such as their technology. If Domino’s never upgraded its menu, it’s hard to imagine that their technology would’ve had the same impact.

A few years into Domino’s run, it was Pizza Hut’s turn to revitalize sales. Same-store sales were consistently negative, and the pizza category was significantly evolving. In addition to Domino’s new-found growth, there was the emerging fast-casual pizza segment, which was revolutionizing pizza by adapting it to the customizable, build-your-own service model. These chains seemingly popped out of every direction, with MOD Pizza, Blaze Pizza, Uncle Julio’s, PizzaRev, Your Pie, Pie Five, Pieology Pizzeria, &Pizza and others emerging at around the same time in the late 2000s, early 2010s. Pizzas from these fast casuals featured trendier ingredients, and some varieties were positioned as a healthier, guilt-free version of pizza.

So, in November 2014, Pizza Hut debuted what it called the company’s “biggest brand evolution ever.” This included a new, highly customizable menu, dubbed the Flavor of Now, featuring new crust flavors, a variety of sauces and drizzles, new ingredients and a handful of specialty recipes. Also added to their mix were Skinny Slices- a healthful, lower calorie choice. In addition, Pizza Hut updated its logo, delivery boxes and employee uniforms, and also launched an enhanced digital ordering experience.

Thinking back to what was happening in the pizza category, Pizza Hut’s changes make sense. The upgrades to online ordering were likely in response to Domino’s digital innovation. And the new menu items, such as honey sriracha drizzle, Peruvian cherry peppers and Skinny Slices, oozed fast-casual influences. The new logo and boxes were flashy, providing the brand with a more modern feel.

But it didn’t resonate. Come 2017, Pizza Hut went back to the drawing board and, following a 7% drop in quarterly same-store sales, announced a $130 million investment plan to revitalize the pizza chain.

 

So, what went wrong? Pizza Hut had identified the trends disrupting the pizza landscape and implemented changes in response- this is what most concepts strive to do. But in our opinion, the moves focused too much on trends, and not enough on the core issues behind the concept’s struggles. The customization, the new ingredients, the digital ordering upgrades - all of these represented timely, contemporary trends in the pizza space. However, was the issue at hand Pizza Hut’s trendiness? Or, were there issues, perhaps around key factors like quality or value, that weren’t properly addressed by the Flavor of Now campaign?

Decades before Domino’s and Pizza Hut’s differing turnaround strategies, Chuck E. Cheese performed a turnaround of its own, something we discussed in detail with Richard Frank on our episode Keep the Party Going and again with Mike Speck on our episode Timely & Timeless. According to Speck, the turnaround was a lesson in Restaurants 101, with the brand’s new direction being as simple as embracing the basics of food quality, service, cleanliness and value. Chuck E. Cheese wasn’t looking to latch onto any industry trends that could fuel a quick turnaround – instead, they were looking to improve their execution of basic, timeless elements of a restaurant.

“(Richard Frank) applied some of the basics which was he cleaned them up, he improved the quality of the food, the taste of the food, put windows in some because they were dark and dingy and abused. And what happened was people responded to that very quickly. It was the old thing we were all schooled on - quality, service and cleanliness, in no specific order.”

-Mike Speck, Timely & Timeless

The irony, of course, is that once Chuck E. Cheese fixed these basics and brought back customers, it became a trendy chain. Then, many operators felt it would be timely to enter the world of eatertainment, with the 1990s seeing a plethora of new food-and-entertainment brands. But few of these brands proved to be timeless, as execution of those basic tenants of quality, service and cleanliness were missing.

To hear Mike Speck’s take on what it means to be timely and timeless and how his experience at Chuck E. Cheese impacted his career, check out our newest podcast episode.

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