How Dominos conquered a large pizza market in India.
The operating model of Domino’s in India
Domino’s Pizza is an international pizza restaurant chain and the largest one globally based on retail sales. The company operates 16,528 stores globally as of the third quarter of fiscal 2019. Domino’s has expanded fast internationally. It is a US-based pizza brand whose second-largest market is in India. In the Indian subcontinent, Jubilant Foodworks Limited operates the Domino’s franchise. As of quarter 3, 2019, the number of Domino’s Pizza stores in India was 1,259. Unlike its core market, the United States, its 30 minutes guarantee has remained operational in India. This guarantee was not just a promotional gimmick but a basic proposition around which the entire operational model of Domino’s pizza in India is built. The enormous growth that Domino’s is enjoying in India was based on its 30 minutes or free guarantee.
Initially, this guarantee was also operational in the other markets, but in India Domino’s entire business was built off this premise. Jubilant introduced Domino’s in India in 1996 when the country had started opening itself to the outside world. Not many people were familiar with pizza and most believed it was just a snack. There were several challenges to introducing pizza in such a country and finding success. The CEO of Jubilant Foodworks limited also attributed the resounding success of Domino’s Pizza in India to some cultural factors. At the time, the company introduced pizza, the market was not as ready and success was not really guaranteed. The concept of food delivery was not mainstream either at that time and in this way Domino’s literally ended up creating an entire food delivery market. Due to the low disposable income, the Indian consumers were both highly demanding and price-conscious. When Jubilant introduced the thirty minutes or free promise, it seemed a risky proposition because the infrastructure and the traffic conditions would have made the company go bankrupt. Jubilant introduced it in 2004 and Domino’s had already abandoned the promise in the US. However, Jubilant’s gamble was a success which turned Domino’s into India’s largest Pizza player. According to the then CEO of Jubilant, people loved freebies in India and the kind of noise the 30 minutes or free guarantee created in India would not have been possible in any other culture. The promise helped Jubilant achieve two things:
- It encouraged the Indian consumers to try ordering food. Food delivery was not still a mainstream idea in India. Since there was the thirty minutes or free guarantee, Indians were assured that the food was going to be delivered really quickly.
- If food delivery was delayed for any reason, the Indian consumers were more than forgiving since they were getting the food for free.
The thirty minutes guarantee really did wonders for Domino’s and quickly India rose to become the restaurant chain’s second-largest market.
Domino’s Business Model in India:
Domino’s Pizza India catered to the needs of the Indian consumers for quality and reliable food delivered to their homes quickly. Compared to the other Pizza brands in India, Domino’s charges a premium price. Apart from good quality food, the company also promises in time delivery for a premium price. This is something no other brand was able to achieve before Domino’s. Domino’s also offers premium dine-in services at domino’s outlets. However, their business is built mainly around the home delivery model. Home delivery also constitutes the larger part of Domino’s revenue from the Indian market.
Operating Model of Domino’s Pizza in India:
The entire operating model of Domino’s Pizza in India was designed around the promise of 30 minutes delivery. However, despite a lack of infrastructure and serious traffic issues in India, the way they were able to pull it off was no less than surprising. How they achieved it was through process standardization and by designing a system that made quick delivery possible at key locations in the leading cities of India. Apart from selecting the right locations for outlets, the company also designed its operations inside the stores in a manner that Pizza could be prepared and delivered within 20 to 30 minutes to the customers’ address.
Once an order is placed, it flashes on the screen and the team gets into action. It takes around 15 minutes to get the pizza ready and packed inside boxes. That leaves an estimated 15 minutes for delivery. However, due to the location of outlets, delivery can mostly be completed within 8 minutes of packing and it leaves 7 minutes extra for unexpected traffic congestions. Domino's has still ensured that more than 99% of the pizza orders are delivered on time.
Locations of Domino’s Store Outlets:
The selection of Domino’s Pizza outlets was an important choice that was going to affect the outcome of the campaign. Domino’s (Jubilant Foodworks in India) had to find locations from where it could reach maximum buildings or cover maximum area for delivery within 10 minutes. Unless it had the location advantage, making the campaign a success would not be difficult but impossible. It was necessary to ensure that bike riding delivery boys could reach all the buildings in the selected range from the location in 10 minutes. Conducting mock runs on bikes during peak hours also helped the company make the right choices for outlet locations. Location is an important choice for any fast-food chain. However, in the case of Domino’s, the success of the entire operating model depended on the choice of the restaurant location. It was not just about attracting visitors but about covering the maximum area within the least time.
Human Resources and Facilities:
The company hires delivery boys on both full time and part-time basis. The part-time staff handles the additional demand during the peak season. Since traffic congestion can make delivery difficult, Domino’s India uses bikes for delivery. These bikes are well maintained and kept in good condition to ensure safe and timely delivery. Bikes navigate faster than cars on the Indian roads during peak traffic hours.
Jubilant Foodworks hires delivery boys locally who know the routes and tracks very well. Indian cities are densely populated and so the bike riders must know each street, turning point and checkpoints well to navigate through and deliver on time. The manager with the delivery man plots out the route for each delivery. While maps are now available in each major city, earlier Domino’s also used hand-drawn maps to make delivery routes clear.
Technology has also remained a key driver of Domino’s growth in India. Apart from online ordering and mobile app, Domino’s has also been quick to adopt other technologies that enable improved supply chain management in India and improved delivery. The share of online ordering in Domino’s delivery sales in India has grown impressively. According to a report, online orders constituted around 68% of the total delivery sales of Domino’s pizza during the second quarter of fiscal 2019. Moreover, a very large part of the total online orders of Domino’s India is placed through the mobile app. According to the report, 85% of the orders placed online were placed through the mobile app during the second quarter of fiscal 2019. The use of other advanced technologies like Zippr and GPS also helped Domino’s Pizza with logistics management as well as business growth.
Domino’s has limited the number of pizzas on the menu in the Indian market. This has helped reduce the variability in design as well as the time taken to produce each item. In this way, the company has been able to manage pizza delivery more efficiently since this reduces the time taken to prepare and pack a pizza for delivery. Moreover, the product development team at Domino’s India undertakes detailed research regarding consumers’ preferences before introducing a new menu item. While on the one hand, this ensures that the new product will be successful, on the other, it also helps manage wastage of time and other resources which would otherwise be wasted if the new product did not suit people’s choice. Apart from that, the company also examines the products that have been underperforming for improvement or to eliminate them from the menu.
Safety & Contingency:
The company has capped the peak driving speed for the delivery-boys at 40-45kmph. This ensures the safety of the delivery personnel as well as the timely delivery of the products they are carrying. Domino’s delivery boys in India are called SDP’s or safe delivery persons. Moreover, there are certain terms and conditions related to the thirty minutes or free promise. Orders of four or more pizzas qualify as bulk orders and do not qualify for the thirty minutes or free offer. Domino’s liability is also that of maximum INR 300 which means it will compensate for late delivery with an order worth INR 300 maximum. At times when operating conditions are not suitable, Domino’s India will let the customer know before placing the order that the order does not qualify for the thirty minutes or free guarantee. Apart from these things, the guarantee is also not applicable on certain dates and holidays. However, more than 99% of Pizzas are delivered on time. That's a high success rate.
While Domino's enormous success in India has made it the undisputable pizza leader in the Indian market, the same cannot be said about the other markets or cultures. In other markets and cultures, this operating model and strategy may not guarantee the same level of success.
|APA||Pratap, A. (2020, February 7). How Dominos conquered a large pizza market in India. . Retrieved from https://notesmatic.com/2020/02/how-dominos-conquered-a-large-pizza-market-in-india/|
|MLA||Pratap, Abhijeet. “How Dominos Conquered a Large Pizza Market in India. .” Notesmatic, 7 Feb. 2020, notesmatic.com/2020/02/how-dominos-conquered-a-large-pizza-market-in-india/.|