“We are clear who we are as a brand”

Unlike its rivals, Domino?s Pizza neither offers a fine dining ambience nor a large range of items to choose from. But this doesn?t seem to really bother the pizza retailer. It is happy focusing on the delivery format and the strategy is working very well for now. So in 2009 when globally Domino?s was facing rough weather, its India growth story was pulsating fast. Same store growth in the last five years has been a steady 18% in India, with the fiscal just ended witnessing 20% growth.

And it hasn?t been just the metros that have been driving these figures, smaller towns such as Haridwar and Thiruvananthapuram are seeing customers calling up to order their Domino?s pizzas. In the last two years, the pizza retailer has set up shop in 25 cities across India making the brand ubiquitous across much of India. ?India has been the fastest growing market for us in each of the last two years,? says the global president and CEO of Domino?s Pizza, Patrick Doyle.

Doyle, who was in India recently to inaugurate India?s 300th store or, to look at it the other way, Domino?s 9000th global store and Ajay Kaul, CEO, Domino?s Pizza India, speak to FE?s Rahul Sharma on the importance of the Indian market, its growth and their future plans. Edited excerpts:

How is Domino?s Pizza doing in India and how important is the Indian market for you?

Patrick Doyle: The business in India is doing incredibly well. We are excited about the performance of the business, particularly in the last two years. We have tripled the store count in the last 4-5 years in India. We are the biggest international chain in India now. India has been the fastest growing market for us in each of the last two years. What we have committed to the market, is that we are going to grow 200-300 stores this year globally and 65 of those will be in this market. So, almost a quarter of our growth will be coming from this market.

What is India?s contribution in Domino?s global revenues?

Doyle: We have opened the 9000 th store in the world and the 300 th in India. So 3.3% of our stores are in India today. In terms of total revenue, India contribution is a little bit less than 3.3% because when you convert back into dollar terms the average sale per store is lower. But the number of pizzas sold per store is higher.

Domino?s is branded as ?the pizza delivery experts?. Your competitor Pizza Hut gives a major thrust to dining in and has recently expanded its offerings. Do you plan to change your strategy?

Doyle: We don?t plan to change our strategy. We are bigger than them, we are faster than them. And we are clear who we are as a brand — our strategy is working very well.

What is your market share in India?

Ajay Kaul: We believe we have a total 47% share of the total pizza market. If you look at only pizza delivery, we have a 67% market share.

Apart from India, which are the fastest growing markets for you?

Doyle: It is pretty geographically spread. The fastest growing markets for us have been the UK, France, Turkey, India, Australia and Korea.

We are still coming out of a major global slowdown. To what extent did it hit Domino?s?

Patrick Doyle: Internationally, outside of the US, it did not slow down that much. The consumers dealt with it quite well. In the US, we felt it a lot. 2008 was a bad year for us, we had a negative same store sales and it grew down about 5%.

Last year we were up a little bit in the US. We are off to a much better start in 2010 in the US market. But it was very interesting. We kept waiting to see whether the international business is going to slow down for us and it really did not. And India, in particular, just powered through this recession quite nicely.

Kaul: It was a bit of a downturn in India. (But) It was an opportunity for us. There were three areas where we worked very strongly. One, real estate play was easier. So, we did not stop our expansion plans when everybody else was closing stores or slowing down.

We still opened 60 stores in that period. On the marketing side, we increased our advertising budget. So in terms of brand building in tough times, it will give us dividends in the long run. And finally, people.

In a year where people were being laid off or not given salary hikes, we gave our employees a 12% increment. It has given us extremely high dividends as we move to a non-slowdown period.

Where does the bulk of your growth come from in India?

Kaul: In terms of revenue contribution–the metros, by virtue of their size. At a country level, over the last five years our same store growth has been around 18%, this year that number will be around 20%. It?s coming from all over. The customer rebound in terms of sentiments, in terms of willingness to pay and spend on these, is coming from all strata of the society. Delhi, Mumbai, Bangalore, and Kolkata, contribute to 45% of our stores. In last two years, we have entered 25 cities, from Haridwar to Trivandrum. And we have got a tremendous response. Going forward, we will continue populating the existing cities, and extend to a handful of tier 2-3 cities.

What will be the focus globally in the next five years?

Patrick Doyle: Two things. If you just look at our overall growth till now, a little less than 5000 stores are in the US and over 4000 outside of it. Five years from now we will have more stores outside of the US than inside. We plan to have 10,000 stores in the next five years. Most of that will come from existing countries.

I think the other thing changing in our business, and that is happening in India as well, is that a lot of people calling us over the phone are rapidly moving online. The number of people ordering over the internet is growing fast. You?ll see that continue to grow. Though a majority of the people are still ordering over the phone, online booking is growing very fast.

Kaul: In India, we have started taking bookings online in Bangalore. And in Delhi and Mumbai too, as we speak, though it is at a fairly rudimentary stage. It has to go through quite a few iterations before we can shout from the roof top. Two per cent of orders come from the net, since the last few months when we launched it.

What will be your marketing budget this year globally?

Doyle: It is really done market by market. We will probably spend globally $300-350 million. TV is still the largest part of our promotional activities. In US, that?s shifting quickly towards the internet.

Have recipes developed in India been introduced elsewhere?

Doyle: Yes, the kebab line is now sold in the UK. Fifteen years ago, the ideas moved from the US to outside. Now any good idea in any market, we take it and adapt it to other markets.