Domino's Pizza CEO Patrick Doyle: 'I've only been CEO during a tough economy'
Patrick Doyle, CEO of Ann Arbor Township-based Domino’s Pizza, isn’t wired for complacency.
Photo courtesy of Domino's
Doyle steered the company through the successful introduction of its new pizza recipe — a process started under Brandon’s leadership — and an aggressive marketing campaign. Those moves, along with steady international growth, positioned the company for sales increases that have consistently impressed the industry.
Doyle said Domino’s had to embrace the new recipe and innovative marketing approach to shake up the marketplace.
“The only thing I’m absolutely confident of is that if you don’t change, you’re going to die,” he said. “Your business will end if you just say, ‘The safest thing I can do is to continue to do what I have been doing.’ That leads you nowhere.”
He added: “So while there is always some element of risk in making a change to your business or your products, you have to do that. You have to be willing to change things and need to always be trying to get better.”
Sales monitoring is one of Doyle’s latest changes. He said he’s monitoring the health of the company’s store network actively — and he even has access to real-time sales data now. It was only available on a daily basis before.
It’s part of a broader trend in which Domino’s is actively examining the details of its sales performance at every store domestically and internationally to identify weak spots and market opportunities. The company now examines each franchisee’s balance sheet, debt levels and income. Previously, franchisees were submitting annual financial reports.
“We needed to see the health of the system on a more real-time basis than annually,” he said. “We’re better now at looking at that on an ongoing basis, working with franchisees to prove their profitability and their capital structure to see if it is this healthy as it should be.
Sandler Training’s Joe Marr, an occasional contributor to AnnArbor.com, recently spoke with Doyle at the company’s headquarters in the Domino’s Farms complex east of US-23. Excerpts from that conversation:
Marr: Your global retail sales were up nearly 10 percent in 2010. What was the most challenging thing about achieving that?
Doyle: We completely remade our pizza in the end of 2009, and we began marketing it in 2010. What was difficult was doing it after 49 years of believing that being fabulous at service and delivering pizza quickly was enough. That was where our focus had always been.
So we realized, probably two years before we re-launched, that we needed to make a dramatic change. We needed to do something very different with our pizza if we were going to grow at the pace that we wanted to grow. Deciding to throw out a 50-year-old recipe and start from scratch was not an easy decision.
Marr: What was your main involvement in driving it through the organization?
Doyle: Leading the change came down to building consensus, not only in this building, but, more importantly, within our system around the U.S., that this was the right thing to do.
Marr: Was it a global change or was it a U.S. change?
Doyle: It was a U.S. change but parts of the change are global as well. The new sauce is something that is rolling out throughout the world now. The cheese that we use outside of the U.S. is generally locally-produced, so it was different already.
Marr: Were you hit pretty hard like most companies in 2008?
Doyle: Yeah, we were. 2008 was a tough year domestically for us.
Marr: Can you describe the factors that you were battling in that?
Doyle: First the consumer sentiment and unwillingness to spend during that timeframe hit us like it hit everybody else. And so we certainly felt the softening economy on our top line. But add to that high commodity costs and high gasoline costs.
There was cost pressure at the same time that there was sales pressure. And it doesn’t usually happen that way. Typically if the economy is soft and your sales are soft, the only upside is that you usually see an easing on your input cost at the same time. We didn’t. Sales were soft and commodity costs were up.
Marr: Was the ad campaign on the new recipe a contributor to your rebound?
Doyle: Absolutely it was.
Marr: Is Domino’s more focused on stimulating consumer demand to drive new franchise sales or is it building the franchise network to serve consumer demand? Which is it?
Doyle: It’s actually a very important question because the answer is we’re entirely focused on selling more pizza. And there are franchisors in this world that I think have focused more on selling restaurants, and that gets you into trouble. Our view is if we focus hard on selling more pizza and driving the profits of the store level for our franchisees, the store growth is going to come naturally.
Marr: So what do you watch on your dashboard, day to day, running this global company?
Doyle: I’m looking at sales on a daily basis. In fact, I can look at it on a real-time basis now (in the U.S.).
Marr: So daily cash flow is on your dashboard?
Doyle: Daily sales at every single unit around the country. I look at the service levels that we’re giving our customers every single day. I look at the food and labor percentages of our business every single day. And I do that both domestically and internationally. We’re (also) certainly looking at the consumer on an ongoing basis and how the consumer is doing and how they are reacting to the economy. Employment is an important leading indicator for us.
Having employment levels increase is a very big positive for our business. But we’re also tracking all of our brand equity measures. We’re looking at how we’re doing on taste, how we are doing on value, on the professionalism of our employees, how they rate the cleanliness of our stores. All of those are things we’re monitoring on an ongoing basis.
Marr: Is your current strategy working to your satisfaction? Is 10% annual growth enough?
Doyle: I’ll never be satisfied. Sales have been terrific and there are certainly times when you need to congratulate the system, and they deserve it for the results that they drove in 2010.
But the job of the leadership of this organization is to continue to look for ways that we can do better. I’m a very optimistic guy and I’m very happy with the results we have been driving. My job is to continue to find opportunities for us to do better. And I still have a long list of those.
Marr: So how has your job changed for you personally as a result of the tough economy?
Doyle: Well, I’ve only been CEO during a tough economy. I don’t know which part of it is being new to this role and which part of it is the new economy. ...
I have been here almost 14 years now and most of the internal challenges of the business were things that I had already dealt with. I ran marketing here; I ran our corporate stores; I ran international. In what we do to run this business, there really wasn’t anything new for me. But being the outside face of the company (in TV advertisements) is the biggest change.
It was something that Dave did, and Dave did it incredibly well. Learning to balance working on the inside things that make the business better with communicating effectively to shareholders and to the media come with being CEO. Those are the things that were new.
Marr: Have you tapped David [Brandon] since he opened his new chapter (as U-M athletics director)?
Doyle: Oh, sure. He is still the chairman of the board. Dave was and is the most important business mentor I’ve had, and I learned a lot from him.
Marr: What advice would you give other leaders based on you experience of dealing with the last couple of years — and actually coming into the role in the midst of the downturn?
Doyle: Make sure you’ve got the right people around you. It really is all about the people. If you’ve got the right team, they’re going to be able to change and adapt to whatever circumstance you’re facing.
Marr: Perhaps the biggest lesson we can learn from this interview is that when things aren’t tracking the way we want them to in our businesses, rather than incrementally tweaking what we’re doing and staying in our comfort zone, it may be time for us to take a turn in a completely different direction, make some sweeping changes, especially if that new direction better satisfies our customers.
Joe Marr is a public speaker, sales and management consultant and trainer, and runs Sandler Training Ann Arbor at 501 Avis Drive. To reach him, call (734) 821-4830 or visit his website at www.sandlerannarbor.com.