In the business world, new entrants often find themselves struggling and lagging behind market starters, because a larger portion of the market share is often held by the first mover of a market. However, the story is different in Nigeria’s pizza market.
Within the past seven years of its operation in Nigeria, Domino’s Pizza’s achievements have managed to change the business rule book. This is all thanks to the consumers.
Nairametrics learnt all these and more during an interview with Domino’s Nigeria’s CEO, Patrick McMichael, and Amalia Sebrakunzi, the company’s Marketing Director.
As you may well know, Domino’s Pizza is not the first pizza company to make its way into the Nigerian market in effort to take advantage of the growing urban lifestyle in the country. The American QSR (quick service restaurant) company was beaten to the market by Debonairs with just a few years. However, Domino’s success story has proven that being consumer-centric can erode the advantages of being the first mover.
Domino’s rise to the top: The Nigerian pizza market is run by three players —Domino’s Pizza, Debonairs and Pizza Hut. It is, however, dominated by Domino’s Pizza. Within the space of barely six years, the company has recorded significant growth beyond the grasp of Debonairs, with repeat purchases and referrals leading to increase in sales and profits.
Domino’s numbers say it all: The company recorded a total 265,000 pizza orders in the month of March 2019. This is a significant boost when compared to 162,000 orders in March 2018. Consequently, the company’s customer base grew by 28% within a year, even as its store count increased to 90 across Nigeria.
“Debonairs and Domino’s came into the market with the same opportunity in the same marketplace to grow their businesses. One (Debonairs) chose to go the franchising route; another (Domino’s) chose to go the company store route.
“One chose to market the business in one particular way, the other chose marketing in different way, and the customers decided the rest. If the customers come to you, you grow, if the customers don’t come to you, you don’t grow.
“Domino’s is growing because customers are coming in, driving sales up and giving the company growth opportunities.” –McMichael
Categories of Domino’s outlets include the following-
- Single branded: Only Domino’s or Coldstone store
- Double branded: Domino’s and Coldstone store
- Triad: Domino’s, Coldstone and Pinkberry store.
Why consumers switched loyalty: It is possible that the blend of international and local flavours helped to increase the demand for Domino’s pizza. The company localised its pizza menu by 30%, while international flavours account for 70% of its pizza offerings. The inclusion of domestic flavours saw the listing of chicken-suya and beef-suya. Customers are, of course, the drivers of this decision.
The Price factor: Another driver of Domino’s customer base is its pricing. While also offering premium prices like other pizza makers, the company deepened its penetration among the Nigerian population by further slashing its pizza prices by 10% and introducing the masses pizza ‘Smallie pizza’ which goes for N550; making it the cheapest pizza in Nigeria.
Maintaining quality after crashing pizza price: Due to its steady growth since inception, negotiation with suppliers has become easier compared to when the company first started. The suppliers are aware that it’s a win-win relationship—the bigger Domino’s grows, the more successful they become as well. This is enough incentive for the company’s business partners to offer products or raw materials at affordable prices.
Incentives for staff: Asides training the staff, Domino’s also offers them monetary incentives to encourage the maintenance of quality across all stores. Teams whose stores pass the internal self-audit quality check get to share N300,000 monthly. It has also introduced mystery checks from third party agents to ensure consistency in quality.
How Domino’s handle complaints: The company tracks customers’ complaints and work on their feedback by reaching out to unsatisfied customers. While the company said the volume of complaints are dwindling, it is not resting on its oars; the company reworked its pizza menu, and introduced the ‘new extra menu’ last month, after receiving ‘dry pizza’ complaints.
“Regarding the complaints, we are very serious about it; that’s actually an integral Domino’s culture worldwide. We are always very open to criticism, and we believe our worst enemy could be only ourselves.
“My worries are my products, my campaigns, and my quality. Am I able to keep my quality to the standard that I want it to be? So we have a very open channel. If somebody contacts us, we respond to them.
“We have something we call ‘wow’, so if somebody complains of something, we would reach out to them, understand what happened, and give them a little extra.” -Sebrakunzi
The company also organises focus groups and researches to really understand the customers.
Challenges in the Nigerian business environment: McMichael admitted that the business terrain in Nigeria is difficult. He, however, added that in his 29 years in the business, he has learned the necessity of understanding the market which a business operates in and the need to prepare well prior to participating in the market.
He further asserted that the benefit of doing business in Nigeria is that the demand is strong, though the supply chain and fluctuation in the economy poses a problem to businesses.
“The other part that scares us is the supply chain and the fluctuation in the economy. So you have to build a Nigerian supply chain. You can’t be exposed too heavily to a national fluctuation or investing fluctuation because that put pressure on your business. You have to build your supply chain locally; that is where majority of the people fall apart.” -McMichael
Investing its growth into Nigerian kids: Domino’s Pizza has enrolled 246 kids in school so far. The target is award 1000 full-year scholarship per year. In the meantime, the company is working with Slum2School to deliver on this initiative.
Note that for every Cinnastix that is purchased, N100 is given back. For every corn waffle that is purchased in Coldstone and Pinkberry, the money is given to Eat ‘n’ Go foundation.
Ripple effect of Domino’s across Nigerian economy: According to McMichael, since Domino’s entrance into the Nigerian market, the company has invested over N10 billion. It has hired over 2100 staff to run its operations across Nigeria, and still plans to grow the workforce number to 3000 by Q4 of 2019.
Asides Domino’s internal workforce, the company also works with local suppliers that go beyond raw material in Nigeria. The increasing demand for Domino’s products has also seen the company partnering with local suppliers. 65% of the Domino’s raw materials are sourced locally, with the company looking to fully localise the sweet cream base for Coldstone this year.
Domino’s growth and innovation plans: There is a five-year plan which will see the company’s stores reach 300; more stores are already under construction. Also, its workforce will be strengthened within this duration, increasing it to 8000.
Last year, the company launched a new website and apps on Android and the Apple platforms. It also introduced a new menu. There are plans for new pizza flavours and digital initiatives. It also intends to have a call centre by Q4 2018, which will cater to different languages across Nigeria.