Gap model : Dominos

Measuring Perceived Service Quality of Domino’s Pizza Belgium

“In a competitive market where there’s a pizzeria on just about every corner, it takes a little something extra to keep customers coming back. That "something extra" is customer service. Get orders right. Get them out to customers on time”(Gregory, 2007).

Introduction: Pizza Industry Nowadays

The global fast food and pizza market nowadays is facing a fierce competition (see Porter’s Five Force model analysis in Appendix 1) and is rapidly growing on yearly basis. It is predicted that during the period of 2016 and 2020, the global pizza industry will grow at CAGR of 3.68 % (Business Wire, 2016). Therefore, in order to survive in the market, the companies compete for customer loyalty by using heavy price discounting, active advertising and increased investments in technology innovation that would facilitate and improve customer experience (Economy Watch, 2010). By operating in the market that consists of large number of country-specific local pizzerias and several major global players such as Pizza Hut, Papa John’s, and Little Caesars Pizza, Domino’s Pizza still managed to build a strong brand and gain a large share of global pizza market. Therefore, the aim of the study is to understand what is the services quality of Domino’s Pizza and what are the factors that contributed to Domino’s Pizza global success.

The research paper is structured in the following way: first part presents the methodology of the study; second part describes the company and its core operations; third part analyses the empirical results of Domino’s Pizza services quality assessment; the fourth part introduces possible suggestions and recommendations for the company to improve its service efficiency and quality.

1. Research Methodology

In order to evaluate Domino’s Pizza services quality, we used the following methodology. For the secondary data collection, we investigated the available online information about the company: its history, mission, vision, values, customer reviews and feedback, encountered problems, business expansion and development. The company’s website and annual reports were examined in order to understand how the company communicates with its main stakeholders (shareholders, employees, and customers) and what is the promise it makes to guarantee the excellent customer experience. In addition, the literature review of the previous researches assessing fast food restaurant service quality has been done (See Appendix). The insight of previous studies helped us to develop qualitative recommendations for the company. Furthermore, we have supported the study by extensive primary data collection. We used qualitative research design such as employee interview (See Appendix) and mystery shopping (see Appendix), in order to get an insight of the core business operations. The quantitative research design such as customer satisfaction survey (See Appendix) was created and launched in order to understand which factors the customers value the most in Domino’s services and which the least. Moreover, to describe research results, we have utilized several services marketing models and concepts such as SWOT analysis, Services Marketing Triangle, Services Blueprint, Services Quality GAP Model, Services Marketing Mix (aka 7P’s), SERVQUAL model (aka 5 dimensions of services quality)+ SERVICE PROFIT CHAIN MODEL

2. Company background and Core Operations

2.1. Domino’s Pizza: The Worldwide Leader in Pizza Delivery

According to the estimates of 2015, Domino’s Pizza is the second largest international pizza restaurant chain in the world, after Pizza Hut (Pizza Today, 2015). The company is known for its strong brand, expertise in making hot fresh pizza and convenient pizza delivery services; therefore, it is recognized as the worldwide leader particularly in pizza delivery. The company was founded in 1960 by two brothers Tom and James Monaghan in Ypsilanti, Michigan. It grew fast and by 1978 there were 200 Domino’s Pizza stores opened. The company earned millions of loyal customers and continued to expand rapidly – by 1983 there were 1,000 stores operating throughout the United States, afterwards company started to expand internationally and by 1989 there were 5,000 Domino’s Pizza restaurant chains around the world. Currently, company operates in 81 countries, having more than 13,200 locations worldwide (Domino’s, n.a.). Domino’s entered Belgium market in 2006 and as for now, there are 37 Domino’s Pizza stores in Belgium, two of them located in Liege - one on Place Saint Lambert 32-35; and the other on Rue DesGuillemins 125B.

2.2. Business Strategy and Value Proposition: Think Global and Act Local

Even though Domino’s Pizza has implemented franchising business model, the company has managed to create highly recognized brand which drives its sales growth and overall profitability. As the company claims, throughout its global network on average Domino’s sells more than 1.5 million pizzas every day (Domino’s, n.a.). The latest profitability figures of the fourth quarter of 2016 reported a net income of $62.76 million which is a 30% increase compared to the results of a year ago (Ramakrishnan, 2016). Domino’s operational strategy and promise to customers is quite straightforward – it handcrafts and serves qualitative fresh food at competitive prices, provides simple access for ordering, guarantees efficient customer service, and offers convenient and quick food delivery (Domino’s n.a.). A part of Domino’s success is achieved by its focus on local neighbourhoods. As the company states, it implements “Think global and act local” strategy. Therefore, it attempts to delight customers by offering products that corresponds to the tastes of local customers (Domino’s n.a.). As for example, Domino’s Pizza Belgium in its menu offers such products as Belgium waffle (aka gauffre) and “Jupiler” beer, which are particularly suitable to the taste of Belgium customers.

2.3. Technological Innovation: The Importance of Transparency

All Domino’s business operations are enhanced by continuous technology innovations which are used for product line expansion and improvements in operational efficiency. The company takes the advantage of rapid technology development nowadays and always tries to seek out the ways how it could facilitate customer experience. To accelerate customer order making, delivery time and enhance transparency, one way how the company tries to create the value for customers is by launching digital ordering platform which can be accessed through website or through mobile application. According to the recent study on the newest trends in restaurant service, “customers who have placed an online order visit the restaurant 67% more frequently than customers who haven’t” (Sirmon, 2016). Therefore, online ordering is considered to be one of the main profit generators in Domino’s. The company also launched “Dom” which is believed to be the first voice ordering application in restaurant industry (Domino’s, 2015). Recently Domino’s has introduced GPS Driver Tracker App that allows customers to track their deliveries on their mobile devices. The app reveals delivery drivers’ contact information, speed of their driving and their location. It also contains fun facts about the driver such as his/her hobbies and music it listens while delivering the order. Therefore, by introducing this app Domino’s has become the first pizza delivery company in the world that shows the complete transparency of its delivery service (Plaugic, 2015).

To organize Domino’s operational process flow, the company implemented Domino’s PULSE™ point-of-sale system that is installed in all Domino’s franchise stores. According to the Domino’s Pizza annual report (2010) it is a specially designed computerized information system that includes the following features:

• “touch screen ordering, which ensures accuracy and facilitates more efficient order taking;
• a delivery driver routing system, which ensures delivery efficiency;
• administrative and reporting capabilities, which enable store managers to better focus on store operations and customer satisfaction;
• state-of-the-art online ordering capability, including Pizza Tracker and Pizza Builder” (Domino’s, 2010).

Domino’s Pizza management strongly believes that their point-of-sales system provides them with a competitive advantage towards data management. The data collection capability reports a specific operational, financial and marketing data of each store, ensures efficient communication between management and store employees which leads to consistent work execution (Domino’s, 2010).

2.4. Company Mission, Vision and Values

According to Domino’s Pizza official website, company’s vision statement is to be “No. 1 in people, No.1 in pizza!” and their mission is to “Sell more pizza, have more fun!”. In other words, Domino’s states that pizza is a meal that must be shared with others, therefore they need to create fun and pleasant experience for customers. The company has also the following predefined values:

• “Treat people as you'd like to be treated” → Put customers first, ensure respectful attitude.
• “Produce the best for less” → Focus on flawless execution of processes, work efficiently.
• “Measure, manage and share what's important” → Keep high level of quality standards and share experience and knowledge with others.
• “Think big and grow” → Never stop looking for new opportunities and growth strategies.
• “Incentivise what you want to change” → Be empowered, take the initiative and reinforce others for a better change.
• “Set the bar high, train, never stop learning” → Learn from past experience, set new goals and focus on continuous improvement in work execution.
• Promote from within.
• “We are not ordinary, we are exceptional” → Delight customers and exceed their expectations by excellent customer service.

2.5. Company Culture and People

Company culture at Domino’s is compelling, innovative, competitive, results-driven, customer-centric, passionate, fun and with a “family-feel” (Domino’s, n.a.). “Domino’s Pizza staff members are an all-inclusive, fun, energetic and friendly group of people. The company strive for teams of happy, motivated and dedicated staff with a passion for providing the best possible service to company’s customers” (Domino’s, n.a.). Domino’s believes that by having an inspiring working culture, employees are motivated to continuously do better.

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