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Fast Food isn't all bad - you can learn things too! 

By Andy Brown

 

Changing consumer trends have favoured premium and healthy food produce in recent years, to the detriment of traditional fast food outlets.

This trend has played out in the pizza restaurant and takeaway industry, as Pizza Hut has struggled to maintain growth as smaller pizza store operators have increasingly offered premium produce.

However, Domino’s Pizza has bucked this trend by making use of its extensive store network to focus on convenience. McDonald’s, KFC and Hungry Jacks have all underperformed the overall fast food services industry in the past five years.

These operators have attempted to adjust their images and reputations by offering more premium and healthy menu items. However, this tactic has had limited success. Conversely, revenue for Domino’s Pizza has grown strongly over the past five years!

Domino’s success has emerged from a strategy that has differed to other traditional fast food outlets. Instead of attempting to compete with premium pizza stores or add healthy options to its menu, the company has expanded its store network (which has grown by over 100 stores in the past five years) and focused on technology-related convenience. For example, Domino’s implemented an SMS ordering system and a 20-minute delivery guarantee in 2015, and trialled a 10-minute delivery guarantee in New Farm, Brisbane, in the same year.

So what does this mean?

Generally there are 3 things a business can offer, BUT you can only have 2 of them!

  • Price
  • Service
  • Quality

So Dominos has focussed on Service as this is what people in this sector want.

This convenience-focused strategy has encouraged time-poor customers to make use of Domino’s Pizza as a quick and reliable meal option.

In contrast, Pizza Hut has only managed to grow marginally over the same period. While Pizza Hut has reduced prices, cutting into its profit margins, it has struggled to compete with Domino’s more convenient delivery options.  So you can see here, PRICE appears to not be a major driver in this industry.

So Domino’s gives the customer quick, reliable Service and consistent Quality – and customers are prepared to pay for it.

Food for thought.



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