Domino’s Pizza uses hotspots to “fortress” against unnecessary innovation
Domino’s Pizza, the world’s leading pizza delivery service and a stalwart champion of the fast-food industry, is often regarded as an exemplary innovator. But new CEO Richard Allison recently said something that many people might find surprising: he’s using the company’s “hotspots” to help curb innovation! Despite what it might sound like, this is yet another example of Domino’s taking a sensible approach: innovation should be efficient: if it’s needless, then it’s just showing off – and, ultimately, a poor way to spend cash.
Domino’s share price is up by 53% so far this year
Source: Yahoo Finance
Domino’s hotspots lets customers order food at places without “traditional” addresses. Since the initiative was debuted earlier in the year, franchisees have defined some 200,000 hotspots in their communities. According to the company’s CEO, Richard Allison, this frees Domino’s up from spending on “innovations” like Zume Inc.’s ovens on wheels.
Allison told CNBC’s Jim Cramer: "Through this fortressing process, we’re bringing these delivery areas tighter and closer together. What that’s doing is getting us closer to the customer, so as soon as that pizza comes out of the oven, we want it in a car, with a driver and on its way to the customer. "Our franchisees have really embraced this, Jim. It’s been a lot of fun. And customers have really embraced this. We’ve gotten a lot of excitement around it."
Allison replaced Patrick Doyle earlier this year, and August marked his first-ever quarterly earnings results. Those results saw a slight miss, but the Domino’s story is continuing apace nonetheless. Allison said: "There’s some noise going on in the industry, but we’re really focused on our customers and our franchisees. And I think if we can continue to deliver great value, great food, to our customers and can continue to support great cash-on-cash returns with our franchisees, I think we can continue to gain market share and we’re fairly agnostic as to where that comes from."
Dominion holds Domino’s Pizza in its Global Trends Managed Fund.
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