One of the following is an environment analysis of “largest Pizza chains” in the US and International. In the following sections, we will assess the environment analysis on “consumer satisfaction” and its re-formulated pizza recipe. Within the re-formulating and the expansion of its menu, we will see how they have been able to recapture some of the market with existing and new customers, with customer satisfaction and excellent delivery. Domino’s Pizza, for example, they have re-formulated their ingredients and added new items to their menu, but like Pizza Hut, Papa John’s, and Little Caesar, we will discuss their strength’s and weakness to be able to survive in the Pizza Industry. Within this report, I will cover the existing/future components of the general environment such as demographics, economics, political/legal, sociocultural, technological culture, and their efforts to remain a competitor in the industry.
From a legal standpoint the in the Food Service Industry, there are certain laws and regulations to be met prior to entering. For example, Domino’s has to meet strict health and insurance requirement’s, such as Business Property, Business Liability, Business Crime, and Worker’s Compensation Insurance to Operate a business. They’re other competitors such as Pizza Hut and Papa John’s that have to purchase these insurance to protect their business. Some of the protection covered by these Insurances are property damage, in case of a fire; Business liability, that protects them from any accident that may occur at the restaurant, or illnesses that the food may cause; Business Crime, covers theft and robbery, and Workman’s Compensation, that represents the interest of injured workers in the workplace. Their main use is actually to protect the business from an economic downturn.
Within a business, the expansion of their products or service is solely meant to increase revenue. The biggest challenge they face, like any food industry, is to determine whom to expand, and whom to offer to while making a successful business. From a global perspective, the industry had a strategic planning as far as researching which countries can they introduce a new product and service. Whether its pizza, wings, sandwiches, and pastry, the goal was to bring awareness that other products and services are available. In 2009, there were sales of 11.22 million dollars between the top 4 competitors; Domino’s alone had sales of 3.03 million dollars and in 2010, they had 2.95 million in international sales only. US pizza sales were dominantly shared between these pizzerias, Pizza Hut, Domino’s, Papa John’s and Little Caesar’s, combined owned more than 30.91 % and in 2010, it has decreased to 27.48% due to new products and alternatives. Another technological trend that was introduces for convenience purpose was on-line ordering. Many people love this new trend because, they are able to view the entire menu and choose exactly what they want on their pizza without being rushed, and they are able to look at the final price, not getting to the register and have a surprise waiting for them.
Domino’s has taken the initiative the re-design their recipe, and offer new products and better service. Currently they offer services in US, Canada, UK, Africa, South America, and other parts of Europe. Domino’s networks 4,422 international franchise stores located around the world, their ingredients changes to meet each regions taste. Their competitors such as Pizza hut also offer their services in the same areas; they offer their services in 95 countries. Domino’s has also introduces social media, such as twitter, these types of applications provide users with the ability to share information. Other benefits from twitter are that people can virtually access them from any device and follow updates, events, and other information from computers, mobile devices (iPhone, androids, and tablets) as they please.
People in general are always seeking for new menu items such as options that can create the ultimate pizza, or looking for an alternative, such as healthy eating. Pizzas being a popular product appealing to wide demographics in the US, restaurants are part of American culture. The pizza industry account for 11.7% of the food industry, which recorded 37 billion dollars in sales alone between 2008 and 2009. According to the text, 45% of adults say that restaurants are part of their lifestyles, which keeps them going to their favorite restaurants. Also, in the text 40% of adults claim they eat pizza at least once a month according to the pole, which ages ranged from 30-49 years of age. Another interesting statement in the book was that married couples or parents are more likely to take out than dine in due to their children. The main goal of their target audience is the general public; after all most working families are looking for convenience and a simple meal.
Barriers to Entry (Low-Moderate)
The Pizza industry is one of the lowest barriers to enter, according to one-article it states that all you need is a storefront, oven, and the ingredient’s to make a pizza. This means that it is not too hard to replicate the characteristics Domino’s or any other pizza chains has to offer. Some characteristics are, keeping the cost low, distribution, and creating a brand that is appealing. As stated in the book under pizza sales exhibit 5 and 6 on page 105, the number of independent owned controlled 51.66% of sales in 2009, and increased to 58% in 2010. Also, Domino’s core strategy of carry and delivery makes it easy to replicate, especially when looking at what demographic one wants to enter, rather its carryout, delivery, or dinning in.
Fortunately Domino’s pizza suppliers have real low bargaining power; this is due to the number of suppliers that can sell to Domino’s. The product that are needed to make a pizza is high in volume and do not differentiate from Pizzerias. This makes it easy for Domino’s to switch from one supplier to another, or the supplier dropping a customer due to negotiation issues.
One of the key factors that consumers are looking for is price, when choosing a restaurant. The consumer is always looking for value such as price; there are many competitors that offer the same product at a lower price. For example, Little Creaser’s offer their hot and ready for under 6 dollars, Pizza Patron offers the same prices as Little Caesar’s but to a wide range of demographics (Hispanics, African American, or Asian culture). At this point, the consumer has alternatives as to whom they want to purchase from and how much they are willing to spend.
At this moment, there are many numbers of companies that offer the same product and services. Most of the competition has to do with pricing and options that are offered to the consumer. Now that more options are available such as wings, desserts, salads, and even sandwiches, the consumer can choose which Pizzeria they want to go with. Pizzerias are competing for market share, by offering promotions to lure the consumer with exclusive items, customer appreciation day or by promotional coupons.
There are plenty of substitutes out in the market, for example, H-E-B, Wal-Mart/Sam’s, and convenience stores offer frozen pizza or similar items such as hot-pockets as a substitute. The introduction of premium frozen or refrigerated pizza such as Di Giornos, Tony’s, Totino’s, and many other had an impact on Domino’s Pizza. The other alternative of frozen pizza manufacturers is that they offer healthier pizza; their calorie counts are lower, since obesity awareness has increased in the past years, these alternatives drove down the market price for many pizza chains. For example, if I’m around a Sam’s club and feel like eating a slice of pizza, I would rather stop at Sam’s and purchase a slice, you cant beat their price, a slice of pizza and a drink for under 2 dollars.
The biggest competitor to Domino’s is Pizza Hut and Papa John’s. Domino’s strategic approach is in the carryout and delivery market, which has made them successful. They have been able to provide low price pizza to lower-income neighborhoods and college students and still offer a quality product. According to the text, Dominos have been able to keep overhead cost down and sales using their delivery and carryout strategic approach. One key phrase “oh yes we did” was another strategic move, they re-engineered what ingredient’s they used to make a better tasting pizza. Another key phrase was “30 minutes or its free” which they are known for their delivery. While these Pizza Giants offer similar products and services, Pizza Hut is one of their biggest rivals offering value food in multiple restaurant formats. They offer the original families dine-in, delivery and carryout, and a hybrid, which is composed of all three combined. One of the advantages of Pizza hit is that they offer a more elegant dining experience, which is called a Pizza Hut Italian Bistro. So if a family wants to sit down and have a good dinner they can, or if they decide to carry out, they can. The only problem with these types of Bistros is that the price of dinning in is much pricier than carrying out at a local Domino’s or Little Caesar’s. On the other hand, Papa John’s offers the same type of service such as carryout or delivery, but are more expensive. Papa John’s claim’s they use better ingredients making them one of the fastest growing pizza chains, surpassing Little Caesar’s. The one thing Papa John’s has been doing great is their advertising, according to the text; they are official sponsors of the NFL, which most families in America watch and play football.
Domino’s have been able to capture some of their market share due to the strategic leadership of David Bowman CEO from 1999-2008. They introduced new products, re-engineered their pizza recipe, and empowered managers to create new ideas or listen to their employees as new ideas might be of interest. The one interesting program that their CEO had was employee lunch in, 12 employees were picked randomly to have lunch with him, which gave him an idea as to what was happening within the organization. The information provided to him was then analyzed as to how they can improve product or service, or how they can improve employee morale. Another was their “Competing for Advantages is the ability to manage the firms operation and employees effectively in order to sustain high performance” pg.111.
Overall every company want to achieve the ultimate goal, they want to position themselves as the fastest pizza provider, rather it’s from carryout or having the fastest delivery. A key point mentioned in the book is that communities are becoming aware of obesity, so in order to provide the consumer with alternative products they have to be able to shift with the trend in order to keep up. So Domino’s will have to offer healthier alternatives, what products to offer and how fast will they be able and adapt to these changes.
Over the past years, pizza lovers have been looking for alternative since obesity is the highest in the US, and are becoming aware of it, something has to be done. According to World Health Organization, the US leads obesity at 30.6% and Japan at 3.2% that’s a difference of 27.4% that means there is something wrong with our eating habits. As by state Texas is ranked at number 9, this means that by Domino’s taking the initiative and offers healthier choices and using more alternative ingredients to make a pizza, would increase sales by those that are aware that changes need to happen
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