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OPERATOR INSIGHT: Why it’s been anything but a soft landing for Domino’s Pizza’s incoming chief executive

Domino’s

Former Costa Coffee chief Dominic Paul is the man tasked with getting disaffected Domino’s Pizza franchisees back on side and providing the stability that the business needs to grow. But first he has to steer his new employer through the coronavirus outbreak and its temporary move to contact-free delivery. FEJ reports.

Few in the industry have had to cope with having as much on their plate during the last two years as Dominic Paul. For a start, the leisure and foodservice industry expert was chief executive of Costa Coffee when it agreed a £4 billion sale to Coca-Cola in one of the largest deals the market has ever seen.

A transaction of that scale brings enormous complexities, but Paul provided the steady pair of hands required to maintain the coffee chain’s growth as the former Whitbread-owned brand prepared for its future with the carbonated drinks giant.

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During his time at Costa, Paul strengthened its position in the UK where it is a clear market leader, grew new segments such as Drive Thru and Costa Express, accelerated its digital development, and restructured and grew the international business.

Having stepped down last November, he has been relishing the prospect of starting his new assignment as CEO of Domino’s Pizza Group — but could never have envisaged that his first day on the job would arrive with the British restaurant industry in the midst of its worst ever crisis.

However, the current scenario has only heightened his determination to make a success of the project and transform an already successful outfit — sales rose 5% to £1.2 billion last year — into a formidable force.

“I am hugely excited to be joining Domino’s,” he says. “It is a much-loved brand with great people and some of the best franchisees in the world, and there is a strong foundation to build on. I am confident that we can take the business to the next stage of its development and build a long-term and profitable future for our franchisees, colleagues, customers and shareholders.”

While dealing with the coronavirus will occupy his immediate thinking, Paul’s longer term mission will be to address some major challenges that the business was facing prior to the outbreak.

That includes resolving a dispute with franchisees over profit share, dealing with labour cost inflation and finding new owners for some of its international operations.

Domino’s, which runs 1,100 stores in the UK, certainly thinks it has got the right man to take over from stalwart David Wild, who has retired from the business after seven years.

Matt Shattock, chairman of Domino’s, points to Paul’s highly relevant experience, including building high-performance teams that can collaborate with franchisees to drive high levels of customer satisfaction and achieve outstanding results for shareholders.

“He is a high energy leader with great experience of driving powerful consumer brands to new heights, and of partnering with franchisees,” he insists. “These are the skills which will be vital as we seek to take this business to the next level.”

Domino’s Pizza Group hasn’t been as badly impacted by the coronavirus shutdown as many of its counterparts in the wider casual and quick service restaurant space.

From the outset of the crisis, it laid out extensive measures to keep as many of its kitchens operational as possible, including moving to entirely contact-free delivery and stopping in-store collection to protect colleagues and customers.

It is a much-loved brand with great people and some of the best franchisees in the world, and there is a strong foundation to build on”

Collection typically accounts for around 20% of sales, however at the start of last month it said it had seen the growth in delivery more than offset the lack of collection sales.

It also rolled out a number of measures to protect its supply chain centres, distribution network and supply chain centre colleagues, and claims to have seen minimal disruption to date.

The company has worked closely with suppliers to ensure the flow of food and other goods into its kitchens has been unaffected, and additional delivery drivers have been recruited to ensure it can meet higher demand levels.

The business rates freeze and VAT payments deferral on offer to the industry will benefit franchisee partners and the company’s corporate store network, while the Domino’s board has also been assessing other economic measures to assist franchisees as required.

“We’ve been working closely with the wider industry and government, and are keen to do all we can to support our customers and communities by safely delivering hot food to help people stay at home during this difficult time,” said David Wild prior to his retirement last month.

“The safety of our colleagues and customers is always our top priority, so we’ve strengthened our already high hygiene standards, rolled out contact-free delivery and switched to delivery-only to ensure we can confidently serve the public.

“Domino’s is at its heart a delivered food business, and we’re working around the clock to keep our supply chain operational, our back-office colleagues working from home, and our stores making great-tasting pizzas for our customers.”

Had the coronavirus not struck, the new chief executive’s remit would have been crystal clear: to reinforce its core business of pizza delivery and rebuild fractured relationships with UK franchisees.

That will still form the basis of its long-term strategy, but in the meantime his immediate goal will be to navigate the company through a period that it has never encountered before and is unlikely to again.

5 things you may not know about Domino’s

1. The company opened 32 stores in the UK and Ireland last year, of which 29 were franchised, by 23 different franchisees.

2. 83% of its UK and Ireland franchisees operate 20 stores or fewer.

3. Digital continues to be a major driver of revenue growth for the business, with online transactions accounting for 91% of UK delivery sales last year.

4. Domino’s made an underlying pre-tax profit of £98.8m on a turnover of £1.21 billion in 2019.

5. Domino’s Pizza Group in the UK also holds the master franchise agreement to operate stores in Switzerland, Iceland and Liechtenstein.

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Andrew Seymour

The author Andrew Seymour

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