CHICAGO (AdAge.com) -- Last year, Domino's told customers that its pizza had been bad -- really bad. And the company went to great lengths to show the great lengths it had gone to make it better. Today, the company reaped the benefits of the massive ad blitz, reporting historic same-store-sales gains, up 14.3%.
"Our new and inspired pizza has been a home run for us," said Domino's President-CEO Patrick Doyle. "We responded to consumers who asked that we make our pizza better, we listened to our harshest critics, took their criticism to heart and we produced a pizza that they and our loyal customers could all love."
Mr. Doyle said the company had gone back to find a major quick-service chain that had posted same-store sales gains of that size. He noted that in 2004, McDonald's posted a 14.2% same-store sales increase for the first quarter of 2004, "at what was the beginning of a remarkable strengthening of their brand and business." That kind of turnaround is "something we hope to emulate," he said.
Ads for the chain's new pizza -- launched mid-December –- have been hard to miss. Measured-media spending increased 9% for Domino's during the first two months of 2010 compared with last year. According to Kantar Media, Domino's spent $38 million during the first two months of the year, compared with $35 million during the same period a year ago. Mr. Doyle added that the first quarter didn't get additional dollars. Ad spending will remain at constant levels throughout the year, he said.
News of the chain's pizza launch may have become unavoidable because of massive pickup in print media and taste tests on morning news shows and blogs. Domino's didn't always win the tests; some bloggers said they couldn't discern much difference, and some consumers have said they preferred the original. Consumer Reports taste-tested the new pies and reported: "Today's cheese pies have improved, albeit slightly."
But Domino's has certainly accomplished a few key objectives: generating massive trial and awareness.
Of course, it's normal for a new product to get a strong reception, particularly if it's backed by a lot of advertising. KFC, for instance, posted solid numbers for its first quarter following the grilled chicken launch last year, only to see them taper off again. But Mr. Doyle maintains that Domino's numbers for first-quarter 2010 are too high to reflect a honeymoon period. And he said the numbers also reflect repeat business.
"We've kept our core consumers and brought in many new Domino's Pizza lovers, who, according to early results, are now repeat customers," he said. "Not only have we seen consumer trial at levels beyond what one might expect for our core product makeover, we're also pleased to see new consumers, who we haven't seen in the past are coming to the brand."
That's right. Domino's, known as the cheap, late-night emergency snack for dorm dwellers, has been attracting "more suburban and high-end income customers."
Mr. Doyle also underscored the chain's rapid growth international markets, though it was dwarfed by the success at home. He said Domino's online business continues to grow as well, now close to 25% of sales. That segment is critical for pizza chains, not only because the average ticket is higher when consumers order online, but they have a higher rate of accuracy, which makes customer satisfaction scores higher.
Domino's creative agency is Crispin Porter & Bogusky.