Dominos Porter’s 5 Five Forces: 2022 Detailed Overview

Written by portersfiveforcesteam in Porter's Five Forces Analysis

Porter’s Five Forces Analysis of Domino’s Pizza

 

 

Key Facts

 

Name Domino’s Pizza Inc
Industry Pizzeria, Restaurants, Retail Food Industry, Food Services
Founded December 09, 1960
Headquarters Ann Arbor, Michigan,US
CEOs Russell J.Weiner (from March 1,2022)
Revenues 2021 US $ 4.35billion,2021
Profit 2021 US$ 0.51 billion,2021
Competitors Pizza Hut, Papa John’s ,Little Caesar Pizza (Annual Report)

 

Company Overview

 

Domino’s Pizza Inc was founded in 1960 in Michigan, USA, from a small shop and with the journey of 60 years it is operating in more than 90 countries and ranked 662th by Fortune 500 in Year 2021. Domino’s Pizza generated a recovery revenue of US$ 4.35billion with a net profit of US$ 0.51 billion and net asset value US$ 1.671 Billion in FY 2021.While the Domino’s Pizza generated a revenue of US $ 4.11billion with a net profit of US$ 0.49 billion and net asset value of US$ 1.56 billion in FY 2020.

 

Porter’s Five Forces Analysis

 

Porter’s Five Forces Analysis is used to determine the company’s competitive position reference to its Industry for better strategizing the companies’ operations for making higher profits and less exposure to competition, defined by Professor Micheal E. Porter in 1979,at Harvard Business School.

 

Domino’s Rivalry among Existing Competitors

 

  • Global Pizza Industry Market Value: The global pizza industry is projected to have a market value of US$ 56.5 billion in North America, US$ 49.3 billion in Europe, US$ 12.7 billion Asia Pacific, US$ 11.9 billion in Latin America, US$ 4.6 in Eastern Europe, US$ 4.4 billion in Middle East & Africa and US$ 2.1 billion in Australia in FY 2021,declared by Statista.
  • Domino’s Pizza Business: Domino’s Pizza experienced a growth in Store counts number from 17,644 to 18,848,which is an increase of 1264 stores which is 6.38% respectively. Domino’s Pizza also experienced a growth in Franchise Operations despite of COVID-19 which is due to Pizza popularity or delivery options from 624 units in FY 2020 to 1204 in FY 2021, comparatively Franchise Units were 1106 in FY 2019.
  • Domino’s Pizza Revenue Segmentation and Revenues FY 2021 – FY 2020: Domino’s Pizza is reporting it’s revenues in the following different models including:
  • Domino’s Pizza Revenue Segmentation – Franchise Royalties and Fees which contributed US$0.53 billion in FY 2021 compared to US$0.485 billion FY 2020.
  • Domino’s Pizza Revenue Segmentation – U.S. Company-owned which contributed US$0.479 billion in FY 2021 compared to US$0.485 billion FY 2020.
  • Domino’s Pizza Revenue Segmentation –U.S Franchise Advertising which contributed US$0.479 billion in FY 2021 compared to US$0.462 billion FY 2020.
  • Domino’s Pizza Revenue Segmentation –Supply Chain which contributed US$2.56 billion in FY 2021 compared to US$2.41 billion FY 2020.
  • Domino’s Pizza Revenue Segmentation – International Franchise Royalties and Fees which contributed US$0.298 billion in FY 2021 compared to US$0.249 billion FY 2020.
  • Battle of the Brands Pizza Hut (Yum Brands!) Pizza Hut is a brand of Yum Brands! The company gave a record revenue US$ 6.58 billion with the net profit of US$ 1.57 billion in FY 2021.The Pizza Hut Segment gave a record sales of US$ 1.02 billion with a net profit of $ US 0.387 billion. Pizza Hut also grew in number of restaurants in FY 2021 from 17,639 to 18,381 restaurants, compared to previous year, which is a growth of 4.2% respectively.
  • Battle of the Brands – Papa John’s gave a record sales of U.S.$ 2.07 billion revenue with a net profit of US$ 0.12 billion and US$ 885.7 billion of net assets in 2021.
  • Battle of the Brands Little Caesar Pizza: The famous pizza brand Little Caesars in the United States from 2008 to 2021 (in billion U.S. dollars) gave a record revenue of US$ 4.23 billion in the U.S. in Year 2021.

 

Domino’s Threat of New Entrants

 

  • Established Brand: Domino’s Pizza is a highly established brand with a track record of 60 years of customer experience competing with such a brand with having highest customer satisfaction and brand loyalty for a new entrant is very challenging..Domino’s Pizza has a brand value of over US$12.4 billion in FY 2021.
  • Established Supply Chain and Economies of Scale-Competitive Pricing: Moreover these global Pizza chains already operating on marginal profits and sales pricing with the efficient – extensive supply chain so price competitive they are already and due to giant in size their purchasing budgets help them reach economies of scale.

 

Domino’s Bargaining Power of Suppliers

 

  • Responsible Sourcing –Industry Influencer: The Domino’s Pizza is delivering more than 240 products throughout stores in U.S. and Canada including fresh doughs. Domino’s continuously working on Food Safety Certifications.
  • Basic Raw Material Identical Products: Also working with Domino’s suppliers need to follow Supplier Code of Conduct. As Domino’s is continuously updating itself and Industry leader so it educating and influencing it’s suppliers so in this scenario suppliers has less bargain power.Quality Standards are monitored and audited by third parties on continuous basis.
  • Technological Advancement: Domino’s is continuously working to adopt technological advancement for sustainable packaging,reducing carbon footprint reduction by 42% by 2031.

 

Domino’s Bargaining Power of Buyers

 

  • Domino’s Digital Sales: Domino’s reported a hike in it’s digital’s sale up to 75% even phone ordering is completely replaced by digital ordering, mentioned by the Domino’s CEO Ritch Allison. Domino’s is proving success in best customer needs understanding and fulfilling them. So in such scenario when customers satisfaction is highest they have more brand loyalty and less bargain power to exercise.
  • Customer Satisfaction and Customer Experience(Domino’s, Pizza Hut and Papa John’s): Customer Experience is one of the key driving force for building a larger customer base in restaurant industry. Reference to the surveys conducted for calculating American Customer Satisfaction Index (ACSI) , Domino’s is leading by scoring 78/100 in Year 2022, compared to previous year it was 80/100. Compared to Pizza Hut scored 77/100 in Year 2022, compared to previous year 78/100.The other leading brand of Papa John’s scored 76/100 in Year 2022.

 

Domino’s Threat of Substitute Products or Services

 

  • Healthy Alternatives: Obesity which is directly related with the consumption of fast food is a high concerned for governments and public policy makers. WHO estimated that 39% of the adults age 18+ are obese (39% men and 40% women) in Year 2016.WHO recommending many actions for a less obese world including the “Global action plan on physical activity 2018-2030: more active people for a healthier world”.
  • Bio Vegan Trending: Any raise of such activities or trends will definitely decrease the sales of Domino’s Pizza or any new trend in this regard may catch public’s attention and divert the consumption pattern.

 

 

References

 

  1. Dominos, Company History .Available at Dominos
  2. Forbes, Dominos
  3. Domino’s around the world. Available at Domino’s
  4. Fortune 500, Domino’s Pizza. Available at Fortune 500
  5. Statista,(January 28,2022) Market value of the pizza industry worldwide in 2021,by region (in billion U.S. dollars).Available at Statista
  6. Statista,(April 25,2022) Projected growth rate of the pizza industry worldwide in between 2021 and 2022,by region .Available at Statista
  7. Statista (July 27,2022) American Customer Satisfaction Index scores of Pizza Hut restaurants in the United States from 2000 to 2022 .Available at .Statista.
  8. Statista (April 19,2022) Revenue of Domino’s Pizza worldwide from 2006 to 2021 (in billion U.S. dollars) .Available at Statista
  9. Domino, Domino’s Annual Report
  10. Statista (July 27,2022) American Customer Satisfaction Index scores of Pizza Hut restaurants in the United States from 2000 to 2022 .Available at .Statista.
  11. Statista (July 27,2022) American Customer Satisfaction Index scores of Domino’s Pizza restaurants in the United States from 2000 to 2022.Available at Statista
  12. Statista (July 27,2022) American Customer Satisfaction Index scores of Papa John’s restaurants in the United States from 2000 to 2022.Available atStatista
  13. Statista (March, 22 2022).Revenue of Yum! brands 2014-2021, by brand | Statista. [online] .AvailableStatista.
  14. Forbes, Pizza Hut
  15. Forbes, (May 12, 2022) The World’s Largest Hotel, Restaurant And Leisure Companies in 2022, Available at Forbes
  16. WHO , (9th June 2021)     Obesity. Available at WHO
  17. Statista (January 26,2022) Change in pizza restaurant sales during the coronavirus pandemic in the United States as of May 2020.Available at Statista
  18. Statista (July 27,2022) American Customer Satisfaction Index scores of Pizza Hut restaurants in the United States from 2000 to 2022 .Available at .Statista.
  19. Statista (April 19,2022) Revenue of Domino’s Pizza worldwide from 2006 to 2021 (in billion U.S. dollars)
  20. CNBC, (April 29,2021) Domino’s Pizza CEO says phone ordering is near obsolete as digital sale continue to climb. Available at CNBC
  21. Domino’s ,Domino’s Responsible Sourcing. Available at Domino’s
  22. Edie,Domino’s Pizza        Group sets science-based emissions targets on path to net-zero by 2050.Available at Edie

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