Home Business News Bread or Pizza: Domino's is slipping and competitors are taking note

Bread or Pizza: Domino’s is slipping and competitors are taking note

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For Pizza lovers in Lagos, Nigeria, Domino’s Pizza is the number one destination to chew on the Italian delicacy that has since become a staple snack. Since it was launched in Nigeria in 2012, the American-owned brand has warmed its way into the living rooms of most Nigerians, thereby garnering market share and leaving competitors in its wake.

However, that strong hold is seeing new cracks, as new competition and lowering quality is taking its toll on the franchise’s dominance in Nigeria. Since it began operations in Nigeria, Domino’s has relied on the ubiquity of franchises, quick service delivery, and colocation to corner the Nigerian market, particularly Lagos.

By relying on a model that allows it to open new franchises in nearly every major high street in Lagos, it has been able to capture market share in nearly every major market across the state. Unfortunately, aggressive expansion often comes with lowering quality for franchise businesses. The more branches you open, the more difficult it becomes to retain taste and standards across franchise locations.

Competitor Swipe – A recent ad swipe from Domino’s’ competitor, Debonairs Pizza, read “Enjoy real pizza, not bread and stew.” Most who read this ad questioned who the intended target was and it surely was not lost on us. Is Domino’s Pizza that bad? Or is Debonairs any better?

Bread or Pizza: Domino's is slipping and competitors are taking note

Pizza lovers who have tasted Domino’s Pizza produced in the US often cite the huge difference in the taste and standard when compared to those made in Nigeria. Those in defence of Domino’s Pizza Nigeria, however, allude to the fact that they have had to adapt the pizza to the taste of Nigerians, thus the obvious difference in taste and quality.

Why is Domino’s struggling with quality?

Increasing demand: Increasing demand is great for most businesses, however it comes with a major downside. Quality and standards can be impeded in a quest to meet higher demand. The demand for Domino’s Pizza is high and the footfall for most of its outlets continues to rise. However, as it gains new taste buds, it stands the risk of losing pizza lovers who recognize quality.

Competition and price war: Increased competition in the pizza space often creates price wars among similar products. Pricing is one of the marketing strategies employed by businesses to keep their customer base, and this could lead to sacrificing quality to provide low cost pizza.

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Franchising of brand: Franchise is one of the fastest ways to grow in the quick service restaurant (QSR) market. It saves new companies cost of establishment and promotion. This is because new companies adopt existing household brands.

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Domino’s Pizza is a franchise established by Eat ‘N’ Go Limited. The problem of franchise businesses is that they often find it difficult to maintain the traditional service standards of the brand. The fall of Mr. Biggs Nigeria is another example of the negative side of franchise.

Rising competition in the Pizza Market

Nigeria is a growth market: Nigeria as a country holds a promise of growth for most industries with the right product or services. The advantage a population of nearly 200 million exposes businesses to a customer base far beyond most expectations, if goods and services are tailored to meet their tastes.

With a youth-adult population that is witnessing an increasing urban lifestyle, Nigeria is positioned to offer growth to businesses. It is therefore not surprising that competition has been out to snuff out some of Domino’s market share. In the tussle for the customer base Nigeria has to offer are Debonairs and Pizza Hut.

Pizza Hut recently entered the pizza business and as new entrants offer a different Pizza taste that still retains a strong quality. Debonairs on the other hand have had to play second fiddle for some time relying on opening smaller satellite outlets to increase its spread across Lagos. Though it has often experienced slight dip in taste, it has managed to retain the quality of its pizzas.

Interestingly, most ardent pizza lovers will prefer some of the major restaurants in Lagos for the best Pizza’s made in town. Interestingly most of the restaurants were Pizzas are best made are owned by Lebanese.

For fans of Dominos Pizza its business model has brought about growth and higher market share. However, fast food businesses hardly maintain a competitive moat for too long. Before Domino’s were the likes of Mr Biggs, Tantalizers and even Sweet Sensation. They have since been replaced by newer and more nibble quick service restaurants such as The Place, and Mega Chicken.

As competitors circle in on the growing Pizza market, innovation geared towards better quality service and standards will eventually win the Pizza war. For Domino’s, if its service is not reviewed, the kingmakers might crown another pizza venture king in the short or long term.

Bread or Pizza: Domino's is slipping and competitors are taking note

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