Agency's work has 'leveled off'
"We've been working with JWT creatively for about five and a half years, which is a long time in the agency world," the spokesman said. "They've done some great work for us, but in the last year and a half or so, it has leveled off and hasn't been as productive for us as we would like. We've decided together to part company, as both of us could do better focusing on something else." He said the fact that the marketer is retaining JWT and MindShare on its roster "is a clear indication things are very amicable."
Insiders at JWT confirmed the split was amicable and said they were proud to have helped build the business twofold in the time the agency has worked for the pizza chain. However, the insiders also said the two companies no longer see eye to eye about what is best creatively for the Domino's brand.
The marketer hasn't finalized plans for how it will conduct the review or which agencies will be invited to participate.
Struggling to retain share
Domino's has struggled to retain share in a hyper-competitive pizza market that is facing even more competition from supermarkets and other restaurant categories that have added takeout service in recent years. The marketer posted a 2.9% domestic same-store sales dip in the first quarter, largely on weak franchised stores, after dropping 4.1% in 2006. Sales are stronger outside the U.S. In the $28.5 billion industry, Domino's sales in 2006 were $3.2 billion, with 11% market share, down from 12% the year before.
Meanwhile, sales at category leader Yum Brands' Pizza Hut have improved, as have those of No. 3 Papa John's, and growth has surged among the smaller players such as Little Caesar's and Cici's Pizza.
With Papa John's positioned among the big three as more "gourmet," while Pizza Hut and Domino's compete on value, Domino's is losing in basic blocking and tackling against Pizza Hut and independents.
Recently, Domino's began offering choices of toppings, crusts and sauces, a variety already offered by other players.
Popularity of pizza
"Pizza really does have stiff competition from independents who do a good job locally and in the neighborhoods," said Darren Tristano, exec VP, Technomic, noting that the category grew only 2.9% in 2006 on growth of 1.7% in 2005. "A big part of that is pricing. It's definitely become a tug of war for traffic."
"Pizza has been traditionally the delivered product, and with all major chains going to takeout, there's a lot more variety in what you can order to bring home and consume," he said. "It's not really to-go -- it's food purchased at restaurants and consumed at home, when pizza really owned that space years ago. Now were seeing everybody get into it."