The Domino's Effect
Written on the 2 March 2009
He started out as a pizza delivery boy for what was then Silvios. Domino’s Pizza enterprises CEO Don Meij talks to Christine Retschlag about making a crust in a competitive market.
DOMINO’S Pizza is set to emerge as one of the rare winners out of the current economic crisis, but the empire’s chief Don Meij warns it is not a time to become cocky or complacent.
Instead, Meij is concentrating on fine-tuning the business, including plans to make the online aspect more user-friendly where customers will be able to track the ‘life’ of their pizza from order to conception and make comments on the process.
“We are fairly resilient to be honest because pizza is so affordable. A lot of people think we are going to go absolutely berserk (in the current climate) the reality is we probably won’t, we probably will just do well,” he says.
“While a lot of people are migrating away from the café and the restaurant because they can’t afford it, they are tightening their belts and while pizza is an affordable treat, there will still be others who will probably go into cocooning and do a lot of home cooking.
“We are a consumer staple, we think we are going to prove that over this window, we will do well but I don’t think we are going to blow the doors off like some people may be expecting.”
Speaking from the modest Domino’s world headquarters in the TAB building in Albion, Meij is mindful that the company appears not to be bragging at a time when other businesses are failing.
At the time of writing, Domino’s shares were trading at $2.80, which, while down on their $3.20 high, were well above their $2.20 listing price.
“No one wants to hear a company boasting when everyone has hardship, but Domino’s has jobs available for those that are seeing unemployment changes. We’ve been about 1500 and 2000 staff short over the past couple of years,” he says.
“Something that is a little bit of a negative we can help turn into a positive because we have jobs available.
“The other thing is some of the commodity prices are starting to come off – things like wheat and cheese.
“I don’t think it will last very long. Whilst we are going to be in a window of improved commodities, if you are look at the next five to 10 years, they will probably go off again.”
Visitors to the headquarters can be forgiven for thinking they have wandered into the TAB itself, with a large electronic counter tracking the daily sales of pizzas or ‘pies’ in Australian and New Zealand stores. (For the record, at the time of interview, around 22,000 pizzas had been sold by 3pm that day).
Domino’s currently has 748 stores across Australia, New Zealand, France, Belgium and the Netherlands employing 15,000 people – 100 of them in head office.
And it appears this company, at least for the moment, is untouchable, with Meij citing the low Australian dollar as another positive.
“Things like the currency movement are actually a positive for us, because we are an Australian company that has business in Europe and business in New Zealand. We are bringing profits back,” he says.
“There’s not many Australian companies that trade overseas, and the media is used to thinking the other way around. Overall there are a lot of things that have been a little positive for us but we also want to be quite humble because I don’t think anybody wishes anything on what’s going to happen.
“Things like the banks tightening up will make it a little bit more difficult for our franchisees to grow. That will be a tightening. We are just really sensitive to look like we are not boasting.
“If you ask me I still like the idea of a boom economy versus a soft economy.”
Meij, whose Luv Lab – where new pizzas and products are tested sits on the floor below – remains focused on the future.
“We are really excited about the whole online, the whole IT world, pizza has to be made fresh to order, because of that, there’s always this eight to 10 minutes click-and-wait time,” he says.
“We want to be able to give people more ways to order their pizza ahead, and give them the benefit of doing that is quite motivating.
“Right now on Domino’s online, there’s a clock that comes up and tells you when the pizza is being made and being cooked. One of the biggest things for customers when they are waiting is the anxiety of waiting.
“We empower you. Pizza Track is huge. We are refining that where you will also be able to start giving us feedback, which is actually published live.”
The company, which started 21 years ago with five types of pizza, these days offers 18 to 20 different flavours at any one time, and Meij remains open to suggestions.
“We will continue to move with the market. We can do a lot more things if customers ask for them, but there is no use putting all these things on the menu that no one really wants to buy from us,” he says.
“If someone says to us ‘I don’t want to eat that, I want to eat this’ we’ll do that, because we can.
“We are not suggesting you should eat a pizza every day, buy a pizza once a week, buy a pizza every two weeks, as long as you live a balanced life.”
As for his competitors, Meij remains philosophical.
“We don’t try to compete with Pizza Capers. Someone who is going to spend $40 or $50 on a meal is a different customer to someone who is going to spend $18 on a meal,” he says.
“We’ve competed against Hell Pizza in New Zealand for the last five years, and we’ve competed incredibly well against that, they are different occasions. We are not trying to be artichoke hearts and capers on a pizza.
“There’s a large audience of Australians who today think that’s gross. A lot of us live close to the cities and we think that’s Australia but living close to the CBD is not Australia, Australia is the suburbs.”
And as for someone like Eagle Boys?
“We are still the market leader,” he says.
“Obviously they are very focused on us, they talk about us a lot. They are focused on where we are today, we are focused on where we are going to be tomorrow.
“We weren’t the market leader, Pizza Hut was the entrenched market leader, people want to know what Domino’s is offering.”
Meij says his target is to ‘spend another 20 years’ with the company, open the 1600th store and turn over $1.5 to $2 billion annually.
“I know the grass isn’t always greener anywhere else. I’m going to take it as big and as far as I can,” he says.
“If you are really good at something and really love doing it and have an entrepreneur flair to it you are probably going to come out the other side.
“What makes a really good entrepreneur is somebody who is prepared to take calculated risks. What happens in life is the bigger the upside it also has a bigger downside. I used to bet the house a lot when I was young. I wouldn’t talk like that now.
“A good entrepreneur leaves enough in the tank.”
Meij, who eats pizza four or five times a week (generally to taste product) and even orders pizza when he’s out, says he never tires of the taste.
Although, when quizzed on dinner that night, it’s a bit of a departure from the crusty cuisine which rules his waking hours.
“I’m having a home-cooked dinner tonight. My favourite food outside of pizza is steak. Steak and salad and vegies,” he says.
Why do business in Brisbane?
“We started here, this is our home, we’ve been here for 25 years. We started in Red Hill – the first pizza home delivery store in all of Australia opened in Red Hill, we started as Silvios. Brisbane is easy to get access in an out of. It’s the lowest cost state in which to do business. It’s attracted a lot of really talent people, it’s a good lifestyle place, and I’m a Queenslander.”
What gets him out of bed?
“Pizza is a lot fun, let’s be serious. I’m really proud of our Australian company doing really well overseas. All my life I’ve heard about every Australian company getting bought out and foreign-owned and here we are taking business overseas and we are bringing money home to Australian shareholders. I’m very proud of that.”
His best business decision?
“We rolled out a product called the classic crust in 2003. Before it was all pan or thin. The classic crust is in between. Domino’s has a slight skew but we are very aware 25 to 40 years of age are an important customer and we can do a lot more with them – things like puff pastry pizza which we just rolled out.”
His worst business decision?
“A couple of years ago we became a little complacent in becoming very repetitive in what we were doing and the customers told us. We didn’t get the new customer. Believing too much of your rhetoric and keep doing the same. You do have to keep watching the markets and watching the trends. Everything you do is about customers want. Not want the media is telling you or friends and family are telling you.”
Who does business well in Brisbane?
“I think the Brisbane Lions and I’m not an AFL person. I think Michael Bowers is a great CEO who has done a great job with the Lions. They haven’t necessarily been winning but they’re a good business, they’ve done a good job. Another company I admire is Supercheap Auto. They have got a very efficient model, that BCF thing is awesome.”
What keeps him awake?
“I think it’s really distressing what’s happening to people out there. Ultimately we are all in this together. If we are getting any benefit out of this, we’ve got to look at how much we can pass on as well. We need to feed people where we can, make sure we are offering good value, more and more jobs. We are very aware of that and thinking about that all the time.”