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00:00Domino's is quite possibly the world's most beloved pizza chain. Let me know which one is
00:12your favorite, but a couple years ago, when I asked that question on this channel's community
00:15tab, over 100,000 people voted on it, with Domino's emerging as the clear winner. Over the
00:21past 15 years or so, it has been a tremendous investment. Their stock price has risen from
00:27$3 to $400, meaning if you had bought in at the perfect time, right at their low point in 2008,
00:33you would have turned $1 into over $100. As of right now, they are the undisputed largest pizza
00:40chain in the world, surpassing Pizza Hut in terms of sales in 2018, and then surpassing them in
00:45number of locations in 2021. There are currently over 20,000 Domino's restaurants in 90 markets
00:53around the world, that combine to serve over a million customers per day. That is insane,
00:58in just about any way you look at it, Domino's has been a remarkable success story, which I think is
01:04even more impressive when you consider how much they have struggled to get to this point. My goodness,
01:09they have had some major setbacks, so in this video, I am excited to talk about some major
01:14rises and falls that they have experienced over the years. There have been a lot of them, so I'm
01:18going to get right to it by starting with their first rise and introducing their founder and
01:23longtime CEO, Tom Monaghan, who I think has an inspirational story. After his father passed away
01:30when he was 4 years old, his mother sent him to an orphanage, and he ultimately grew up in various
01:35foster homes. From there, he joined the Marines for a few years, returned home with aspirations of going
01:40to college, but was unable to afford it. In 1960, when he was 23 years old, his brother convinced him
01:46to take out a $900 loan and use the money to become 50-50 partners in buying a small local
01:52pizza shop near Eastern Michigan University called Dominic's. Yeah, it was Dominic's, and I have to
01:58emphasize that this was a small business operated by two young men who didn't really know what they
02:04were doing. In fact, after less than a year, his brother wanted out of the partnership so he could
02:09pursue his career as a mailman, and all it took to buy him out of his half was an old Volkswagen Beetle
02:15that they were using for deliveries. That's funny to think about. At one point, someone sold 50% of
02:21this multi-billion dollar company for the price of a used car. As the full owner of Dominic's,
02:27Monaghan opened two more restaurants over the next few years. In 1965, a delivery driver suggested that
02:33they change the name to Domino's, and a big reason Monaghan was so receptive to it is because he liked
02:38the idea of using a domino in their logo. He put three dots on that domino to represent the three
02:43restaurants that he had at the time, and then his plan was to add another dot every time he
02:47opened a new one. Obviously, he wasn't trying to become a national brand at that point, but two
02:52years later, he did start franchising, and by the end of the decade, may have been going a little
02:57crazy with it, and that leads me to their first fall. In less than one year, Monaghan opened 32 new
03:04restaurants, which was insanity. Domino's almost quadrupled in size to 44 locations. Unlike most of his
03:11original restaurants, these were mostly franchised and located far away from universities. They weren't
03:17getting any customers, but he kept them running by going deeper into debt to a point where he was
03:21unable to make his payments, and the bank took majority ownership of the company. The bank's
03:26recovery plan involved finding cheaper ingredients that clearly didn't attract more customers. It
03:31really just aggravated the franchisees to a point where they were filing lawsuits against the
03:36company, and the whole thing was a disaster. Monaghan was able to regain full ownership from the bank
03:41simply because it was pretty much worthless at that point, and amazingly, he stuck with it and was
03:45able to maneuver his way through the situation and get Domino's back on track. So, the start of their
03:51next rise was mostly behind the scenes on the business end, working out deals in court to slowly
03:56pay off creditors, making various efforts to repair relationships with franchisees involving new
04:01restructured agreements or having them separate from the system. After a year or so, Domino's was in a
04:06much more stable condition and ready to start growing again, though I do want to mention that
04:11in the 1970s, the company that made Domino's Sugar did file a lawsuit against them claiming
04:16trademark infringement for using the Domino name, but after five years, the courts ruled that there
04:21was no issue and they can continue using it. The 1980s is when Domino's really started expanding
04:28like crazy. They became the fastest growing pizza chain and one of the fastest growing restaurant
04:33chains overall. Well under 1,000 locations entering into the decade was over 5,000 by the end of it.
04:40Simply put, this is when most people try Domino's Pizza for the first time, and without a doubt,
04:46the single biggest reason behind their breakout success is delivery. I know, that sounds ridiculous
04:51today considering how often we all get food delivered, but Domino's was arguably a big part in
04:57popularizing it. Going back to that original location, they would deliver the pizzas around the
05:02college campus, partially because the building was too small for people to eat inside of it.
05:06According to Tom Monaghan, delivery at the time was pretty minimal, so I decided to focus on that,
05:12and it was the best thing I've done. In the 1980s, they started offering a famous guarantee that said
05:18your pizza would be delivered in 30 minutes or less, and to help promote it, they introduced one of the
05:23most annoying mascots in television history called the Noid. The idea here was that the Noid would ruin
05:29pizzas. He would crush them, or delay the drivers, or make them cold. If you ever had a problem with
05:34the way you received your pizza, well, that was the Noid messing with it, but his efforts would
05:38never work on a Domino's Pizza. To be clear, I do think that this was a great campaign. It really got
05:44people talking about Domino's. There were video games with the Noid and action figures. Sure, he was
05:49annoying, but that was kind of the point. To summarize here, Domino's was on top of the world in the 1980s,
05:55but sadly could not maintain that same momentum going into the next decade. By the 1990s,
06:01they were losing money and things were really starting to slow down. See, a big part of it was
06:05competition from other restaurants that were taking Domino's lead and offering their own delivery
06:10service, most notably their biggest competitor, Pizza Hut. They started offering delivery on a large
06:16scale in 1986, invested heavily into advertising it, and it sparked a bit of a delivery war between them.
06:23By the 1990s, Pizza Hut was responsible for about a quarter of all pizza deliveries, and honestly,
06:29the fact that Pizza Hut took so long to start doing it in the first place is likely a big reason
06:35that Domino's was able to become so significant during that time. To complicate things, their 30
06:40minutes or less promise had become surprisingly controversial. There were multiple accidents
06:45involving Domino's drivers, some of them deadly, so the perception was that these drivers were being
06:51reckless in order to get those pizzas delivered on time. One particular accident in 1989 involved a
06:57Domino's delivery driver running a red light and hitting a woman who suffered injuries to her head
07:02and her spine. Four years later, the court awarded her 78 million dollars, and that was the final straw
07:09that motivated Domino's to discontinue their 30 minutes or less guarantee. On top of that, there was a
07:15completely separate, frightening incident involving their famous mascot. Yeah, that sounds absurd, but it
07:21was serious. In early 1989, a man named Kenneth Lamar Noyd had mental health issues where he believed
07:28that the whole Noyd campaign was created to make fun of him. He thought that Domino's based the character
07:34on him and that the commercials were essentially telling people to avoid him. Again, he was mentally
07:39unhealthy, so he went into one of the restaurants with a revolver and took two employees hostage for
07:45five hours. It was a scary situation that thankfully ended safely. He was sent to a mental health
07:50institute for a few months before taking his own life in 1995. The mascot had this negative energy
07:57attached to it after that initial incident, and then they stopped using it altogether after what
08:01happened in 1995. As if all that wasn't enough, yet another contributor to Domino's struggles during this
08:07time would be the partial exit of Tom Monaghan. He had led the company since the beginning,
08:13but after having so much success throughout the 1980s, it seems like he was ready to cash out,
08:18leave the company, and move on to other things. He had bought the baseball team the Detroit Tigers
08:23and devoted a lot of time to charitable causes involving the Catholic Church. He is an extremely
08:28religious person, so I don't know, it's speculation, but I get the impression that he sort of had one foot
08:34out the door and wasn't devoting the same time or passion to the Domino's company that he had been
08:39in the past. In 1989, while maintaining complete ownership, he named a new president that took over
08:45the management of day-to-day activities. He says that he was actively looking for someone to buy
08:50the company, and naming a new president was his plan to show potential buyers that Domino's could
08:55function without him. Well, the plan backfired because the company wasn't functioning the same
09:00without him, and he was unable to find an attractive buyer. You have to admit that Domino's had a lot
09:05of factors piling against them, but were able to make a respectable comeback. I wouldn't say it was
09:10anything extravagant, but as time passed, their reputation recovered. Monaghan returned to manage
09:16the company through most of the decade where he helped improve efficiency before finally selling
09:20it all together in 1998 in favor of devoting time to his religion. They started offering menu items
09:25that weren't pizza for the first time ever when they introduced breadsticks in 1992 and then chicken
09:30wings two years later. They had other successful advertising campaigns and slogans like their famous
09:35get the door it's Domino's in the early 2000s, again emphasizing the delivery of the pizzas.
09:41Everything was back on the rise again, but it didn't last for long. Their next fall occurred toward
09:46the second half of the 2000s. Overall sales were down in the US, but I think that the most telling
09:52figure here is their change in same store sales. You never want to see a negative number here. It
09:57basically means that fewer people were eating at Domino's, considering each comparable restaurant
10:02was selling less food than the year before. Obviously the recession was a factor, fewer people were
10:07spending money and eating at restaurants, but there was a lot more going on here. Part of this decline
10:12was due to a crazy video that went viral. I don't even want to show most of it, but there were these
10:17two Domino's employees doing gross things to the food and seemingly sending it out to the customers.
10:23They later said that it was all a big joke and they weren't sending it to the customers,
10:27but my god, this made people apprehensive about going to Domino's and I can't blame them. It's
10:32not a pleasant video to watch. But probably, the biggest reason behind this fall, ironically,
10:37is their emphasis on delivery. I know, it keeps going back to that. 20 or 30 years earlier,
10:42it was great for them, because that was the thing that made Domino's different. But by 2009,
10:47it wasn't all that hard to get pizza delivered, no matter where you called. Instead of focusing on
10:52fast pizza, they should have been focusing on tasty pizza, because now, there were multiple
10:57national chains for customers to choose from, all of which had their own unique flavors. The main
11:02criticism of Domino's was that their crust tasted like cardboard. Now, you cannot run a successful
11:09pizza restaurant if your crust tastes like cardboard, that's practically common sense.
11:13So, for the next and final rise, they switched things up when they completely changed the recipe
11:18by launching their new and inspired pizza. I am talking about new crust, new cheese,
11:23new sauce, it tasted completely different from what they had been serving before.
11:27That is a risky move, but they put a lot of time and effort into creating that new recipe,
11:32and the consensus seems to be that it was a positive change. Please tell me what you think of it,
11:37but most signs indicate that it was a major improvement. I remember the commercials around
11:41this time, they stood out to me because they were essentially owning up to their mistakes,
11:46openly saying that their pizza was not very good before and that they've changed it. It was strange
11:50to see a company putting themselves down in a commercial, but it's a modest quality that people
11:55can connect with and it was really impactful. Their CEO said he believed customers had a closer
12:00connection with the brand, and that connection was helped by social media campaigns. Oddly enough,
12:05that gross viral video proved to be a small blessing for Domino's because they created a
12:10Twitter account and posted a video in response to the situation, and that helped them get on the
12:15track of utilizing social media. For example, their Show Us Your Pizza campaign that asked people to
12:20take photos of their pizza for a chance to win money. And social media is not the only technology
12:25that played a big part in their comeback. Domino's has been pioneering with ordering from your phone
12:30and their pizza tracker, both introduced before the new and inspired pizza, but became much more
12:35popular after it. Starting in 2012, they phased in a remodeled pizza theater store design where you
12:41could see the pizzas being made and a new logo. I like it, it reminds you of the old one, but a cooler,
12:46simplified version of it. Their domestic sales quickly started growing to record heights, more than
12:51doubling from that point, but maybe most importantly, their same store sales did a complete reversal
12:58into the positive, meaning more people started eating pizza from Domino's. It helped catapult
13:03them into the number one spot as the world's biggest pizza chain, making this one of the most
13:08dramatic comebacks in restaurant history. Let me know in the comments, what do you think about
13:13Domino's? How do they compare to Pizza Hut and all the other major chains, and has your opinion of them
13:19changed over the years? Also, how do you feel about all of these rises and falls over the years? To me,
13:25a lot of these struggles were understandable, or even mostly out of their hands, but even when that
13:30was the case, they've always been able to get back up, push forward, and figure out something new.
13:35Maybe it sounds funny to say this, but there is a lot to respect about Domino's, so any other
13:40thoughts you have about the company or the pizza, leave them in the comments. I'd like to hear what you
13:46have to say, Domino's Pizza delivers! Call now!
13:50Call now!
13:51Thank you for watching!
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