The era of traditional pizza seems to be numbered, at least from the point of view of statistical hegemony. The American chain Domino’s Pizza is ready to increase its presence on the national territory with almost 900 points of sale. Objective for the goal: 2030.
But let’s take a step back: Domino’s pizza is currently present in 85 countries around the world with more than 16 thousand restaurants. Its presence in Italy, however, is much more limited: currently only 28 pizzerias in the entire country.
The area chosen so far is Northern Italy: Emilia-Romagna, Lombardy and Piedmont. The expansion project will actually follow the same geographical line, focusing on the “upper” part of the country, but will also touch Rome with openings in many central areas, ideally north of the capital. This is a purely strategic choice, the company’s top management believes Southern Italy is an area that is more difficult to attack, since it is more closely linked to the traditional, and therefore territorial, concept of pizza.
The target is to reach a market share of 2% compared to the global scenario of Italian pizzerias. An easily achievable goal and above all undoubtedly interesting, since the pizza market – increasingly flourishing – boasts a turnover of approximately 24 billion euros in 2018 alone, an incremental figure compared to the previous year.
Domino’s Pizza’s Expansion Strategy
The Domino’s pizza strategy will include a mixed system of openings: approximately 50% will be made up of points of sale managed directly by the chain, while the remaining 50% will form the “team” of franchising. It is no coincidence that the decision to expand the brand in Italy was the natural continuation of numerous meetings and agreements between Alessandro Lazzaroni – CEO of Domino’s Italy – and numerous entrepreneurs actively interested in investing in new franchising openings.
From an economic point of view, the estimated investment is about 250 thousand euros for each new pizzeria. Not a small amount, considering the standards for the so-called startups of the public-facing trade. It is therefore not surprising that each point of sale seems to foresee at least fourteen employees each.
The couriers will play a central role – at least six per store – a natural factor since Domino’s strong point is precisely home delivery.
There are many unknowns, however. Rowing against the expansion project, at least at the starting blocks, are the physiological doubts linked to a product so rooted in Italian gastronomic culture.
The question is, more than “when”, to understand “if” the American giant will be able to carve out a space for itself within a country so fond of the traditional pizza recipe, the value of the quality of the raw materials, the expertise of the pizza chefs etc.
In this regard, CEO Lazzaroni seems to have no doubts: “Italians love to eat well, but they are not tied to tradition. Rather, they are curious to try new things”. Words that undoubtedly please investors, but which nevertheless do not resolve the legitimate doubt about the ability of consumers to welcome this type of novelty, at least from the point of view of numbers, which to justify investments – we can bet – must not be small.
In this regard, Domino’s Pizza demonstrates that it applies a rather classic strategy in terms of opening-closing management, a strategy that shows how the company’s reference markets do not always live up to expectations: in 2019 alone, Domino’s was forced to close over one hundred stores in Europe, including Switzerland, Norway, Sweden and Ireland.
Confidence in the Italian project is confirmed by a company spokesperson who, interviewed by Fox News, declared: “Domino’s is loved in countries all over the world, from Japan to Italy to Brazil, and we are proud of the growth potential that our franchisee in Italy is anticipating”.
But what are the strengths of the American chain, with which it could presumably conquer a market share that satisfies the medium-term expectations of investors?
As mentioned, home delivery is the distinctive feature of Domino’s. It is not difficult to imagine that, in an economic phase in which delivery seems to grow day by day in terms of numbers, even American pizzerias will benefit from what seems to be their strong point. Domino’s guarantees deliveries in a few minutes and, at the same time, a perfect industrial production of the product. An element that seems to be appreciated by a public willing to give up something in terms of tradition.
The comparison will clearly be immediate, as a reference, to the various GloVoo, DeliverOO, Just Eat and so on. An agreement with some of these home delivery giants cannot be ruled out, a path already taken by some Fast Food chains such as McDonald’s.
Certainly the concept of pizza availability will change: just think that only a few years ago not many did home deliveries, sometimes it was the individual pizzerias that organized themselves in an “artisanal” way, while today the takeaway offer has grown exponentially and will allow Domino’s to take advantage of an already well-established scenario.
Not to mention that, in line with the latest services made available by technology, deliveries can now be tracked, monitored and followed through apps (which, as is known, now allow any payment method in complete safety).
To weaken the aforementioned doubts about the success of the initiative there is also a recent precedent, that of Starbucks. Its arrival in Italy (in Milan it is present in two locations, at the moment) was accompanied by a substantial skepticism motivated by the difficulty of inserting an Anglo-Saxon system in a context like ours, radically accustomed to the vision of the “bar” as a meeting place that is all Italian.
It is needless to point out that the arrival of the American breakfast brand has been a great success since its opening, managing to combine Italian taste with the original approach, without distorting it.
Whether Domino’s will suffer the same fate, we’ll soon find out.
