*Elements of the video have been paraphrased for readability.
Charles, LIDD Founder & President:
Hi David. How are you?
David, LIDD Founder & Senior Partner:
Good. It’s the end of the week!
Charles:
Yes it is. And this is one of our exciting behind the headlines episodes.
David:
Yes. We are going to talk about Domino Pizza
Charles:
Domino’s Pizza. It’s the French. Anyways, everybody knows Domino’s, but maybe some people don’t appreciate Domino’s. The world’s biggest pizza chain. Actually an interesting fact, which is probably not true anymore, but I remember I went to a Domino’s presentation around 2015, and they were the third largest online retailer in the world. Of all the people selling things online in 2015, Domino’s was number three.
David:
Yeah.
Charles:
So that’s kind of cool. But why are we talking about them this week? What’s the headline about them?
David:
Well, there are a couple headlines. It starts with the fact that some of their sales are going down. They needed to make some adjustments, one of which was to do something that they previously had said they would never do, which is to participate in platforms such as Uber Eats, and I forget the other one with whom they’ve done,
Charles:
Postmates.
David:
Postmates. There you go.
Charles:
They have traditionally been very much against it. They wanted to control every aspect of a customer’s journey and not allow people to order Domino’s through a third party app like Uber Eats. And so with their lagging sales, they decided they had to make that change. Does that make sense to you?
David:
It does make sense when not necessarily everyone wants to eat the same thing. What these platforms have enabled for consumers is for a group of people to be able to order from different places whatever they want.
Charles:
I’ve ever even thought of that part. I know as a consumer to me here in Quebec, we of course have the famous St. Hubert Chicken. I don’t know if it’s outside of Quebec, but some people don’t understand that our rotisserie chicken is the finest chicken in the world. It’s great. And St. Hubert is of course the fast food version of that, the mega chain of it. But there was a time I had a folder on my phone with four or five different restaurant apps, including Domino’s, because my children, one in particular whose name rhymes with baggy, she would insist we would east Domino’s Pizza. If you got really normal, good quality pizza from your local pizzeria, she would be livid. What you needed is Domino’s pizza. And so you’d have all these apps to order the food. And now of course, I would never go outside of Skip the Dishes or Uber Eats to order food. It’s just too convenient. Everything’s set up there no matter what I’m ordering. So it seems like an inevitable collapse of Domino’s position that they’d have to allow it.
David:
And they’re allowing it. But from what I read, and I know you didn’t seem sure about it, so maybe I’m not sure about it, but the delivery part remains.
Charles:
Domino’s drivers are going to keep the delivery.
David:
So you’re kind of really only taking one part of the benefit right?
Charles:
Well, so the tradition has been, of course, Domino’s famous promise of 30 minutes or less, or it’s free.
David:
Nicola had a good idea. We should have ordered one as this podcast started and see if whoever would arrive by the end.
Charles:
Well, that would be torture for the audience. So anyway, very interesting that they’ve retained delivery and we’ll see how long that lasts.
David:
You know, we serve a lot of food service clients and one thing I’ve learned is that the delivery driver is basically the primary contact between a customer and a distributor.
Charles:
Your client relationship goes through the driver. Absolutely.
David:
So as a distributor, you want your drivers to be presentable, courteous, etc. and what Domino’s has done is ensure they maintain control over that.
Charles:
That’s very true. And it’s funny, we talk about food service. One of the reasons why we thought Domino’s would be a great topic today is that next in two weeks, we have the annual IFDA, International Food Service Distributors Association show. One of the bedrock industries that we serve, and one of the bedrock shows that we’ll attend where all the distributors from across North America and beyond we’ll gather. And we’re going to talk about lots of the exciting things that are happening in the restaurant world and how that affects their supply chains. But one thing that’s really interesting, of course with Domino’s, we have some insight on Domino’s technology and its supply chain.
And I think a lot of people who may take things a little cynically, I remember this is related, but I remember finding out through a project that the Kraft dinner mix was real cheese. I thought it was some brew of something that Walter White would create and put on his macaroni. But no. If you think about it, of course it’s desiccated cheese. It’s the cheapest thing to do for them. Why would they go off and start adding things – it lasts forever!
David:
Yeah. Well, they needed to increase capacity, but they also had to improve the efficiency of it. You can mix the dough, but when that is done it needs to be cut into balls and processed through the facility. Having those steps be done manually, you basically have people working in unpleasant environments where they just manipulate balls of dough to fill in the trays. So they were able to eliminate quite a lot of these steps or positions as many other companies have done which has been an industry-wide trend to reduce labor shortages.
It’s pretty impressive when you see it because again, the ball of dough, when they manipulate it, it’s not frozen. It’s actually fresh. So it’s pretty impressive and extremely fast. Anyway, with the labor scarcity, well, you can imagine that there’s the job desirability that is something where it’s kind of okay, where you say, we don’t have enough labor. Well, the jobs that people don’t really want to do are the ones that you should be replacing.
Charles:
Yeah, it is two sides of the same coin. We say, hey, we have a labor scarcity issue. We have a labor shortage issue. And is that because there’s absolutely no one to do the job? Or is that because there is such a sufficient quantity of more pleasant jobs that people are not willing to do these unpleasant jobs?
David:
Yeah, absolutely. So the video is worth looking at. I always like looking at machines, doing that kind of stuff. It’s the pace at which it can work. The video doesn’t talk about necessarily the financial justification of it or if other plans will be converted to it. But yeah, it’s pretty impressive.
Charles:
Yes it is. So that’s it! Domino’s caves to Uber Eats and Postmates. But at the other end of the supply chain, well I guess on both ends of it, they are barreling into the future and embracing automation. I think we’re done!
David:
Have a great week.