History of Domino’s

With more than $1.4 billion of gross income, Domino’s Pizza is the world’s second largest pizza chain and the largest pizza delivery company. This is an incredible achievement for a company that began as a single store more than 50 years ago.

The Beginning

Tom Monaghan and his brother James had a tough childhood. Their father died when they were young and they spent time in an orphanage. These early experiences left Tom with a strong work ethic and a desire to succeed. He went to college with the intent of becoming an architect, but soon ran out of money. After a stint in the Marine Corps, Monaghan had saved $2,000 for tuition. However, he lost the money to a con man. Undaunted, he enrolled in the University of Michigan in 1959 and resumed his studies. In 1960, Tom and his brother put $75 down and borrowed $500 to buy a small pizza parlor on the verge of failure called DomiNick’s. The restaurant was located in Ypsilanti, Michigan, near Eastern Michigan University. Tom and James devoted themselves fully to their operation, working 100 hours or more each week. After eight months, James was worn out and traded his interest in the business to Tom for a used Volkswagen Beetle. Initially discouraged, Tom redoubled his efforts to build the business. He made important changes that would eventually ensure the company’s success. First, he eliminated sandwiches from the menu. Second, he limited pizza size choices and the choices in toppings. Third, he used top quality ingredients. Fourth, he started emphasizing pizza delivery, promising to deliver a pizza in 30 minutes or less. Pizza delivery proved to be popular with college students, particularly the fast delivery Monaghan provided. In order to keep pizzas hot in transit and to prevent the pizzas from being crushed when stacked, Monaghan developed a new corrugated pizza box. While delivering pizza to a dorm at Central Michigan in 1962, Tom met his future wife. By the end of 1965, Monaghan was enjoying moderate success and had bought two more pizza stores. He changed the name of the three stores to Domino’s Pizza.

Growth and Adversity

Monaghan continued to grow his company by opening stores near military bases and colleges. Domino’s proved to be popular in both venues. In 1967, Monaghan began franchising the business and made a $50,000 profit for the year. He decided to expand the business rapidly and set a goal of opening one store a week. By the end of 1969, Monaghan had added 32 new stores, located primarily in residential areas, instead of near colleges. The locations were poorly selected and most of the stores failed. Monaghan was about $1.5 million in debt and had to relinquish control of the company to another businessman to avoid bankruptcy. In less than a year, Monaghan paid down the debt and regained control of the business. Subsequently, Monaghan expanded more slowly and chose new locations carefully. By 1978, there were 200 stores. In 1975, the makers of Domino Sugar sued Domino’s Pizza for trademark infringement. The case was ultimately decided in Domino’s Pizza’s favor. By 1983, there were 1,000 stores, and Domino’s expanded overseas by opening stores in Canada and Australia.

Market Changes

In 1989, the pizza market began to change and Domino’s Pizza was forced to make its first menu additions since Monaghan dropped sandwiches from the menu. The company began selling deep dish pan pizzas. In 1992, the company started selling bread sticks. In 1993, extra-large pizzas were added. Since 1973, the company had guaranteed that pizzas would be delivered in 30 minutes or less or the pizza was free. By the mid-1980s this had been changed to a $3 refund. In 1993 Domino’s dropped the 30 minute guarantee as a result of lawsuits filed by survivors of people killed in accidents with Domino’s delivery personnel. Today, the company only offers a 30 minute guarantee in some international locations. During this time, Domino’s also was responsible for a number of other innovations that have become standard in the pizza industry. Domino’s developed the conveyor belt pizza oven and an electrically heated pizza transport bag to keep pizzas hot during delivery.

New Ownership

In 1998, Monaghan sold most of his interest in Domino’s to Bain Capital, a Boston investment group, for $1 billion. He retired from active management of the company to concentrate on philanthropic work, although he returned briefly in 2001 to help the company during a downturn. In 2004, the company went public and began trading on the NYSE. Domino’s was named Chain of the Year in 2003 and 2010 by “Pizza Today,” an industry magazine. The company has continued to expand its menu dramatically and offers a variety of pizza toppings and sizes, chicken wings, sandwiches, pasta, Italian entrees, chicken wings, desserts, and other products. In 2009, a consumer survey rated Domino’s pizza among the worst pizzas in taste tests. The company began an advertising campaign based on this survey and their efforts to reinvent the Domino’s pizza recipe and dramatically improve its flavor and quality. As a result, Domino’s saw a 14.3% gain in quarterly profits in 2010. Today, Domino’s is a vibrant, growing company with over 9,000 stores worldwide.