Domino's Pizza: key risks and challenges

 Domino’s is the largest pizza brand based on retail sales. The company has achieved faster growth in recent years driven by growth in popularity and focus on technological innovation. Its app has become the leading sales channel for the brand. The company achieved more than 50% of its sales through digital channels in 2020.

Domino’s has continued to improve its business model to make it more efficient and agile. It has invested in technology, expanded its product line, and improved its supply chain capabilities. However, on the one hand, while it has achieved faster growth, it is also dealing with several risks and challenges.

Some of the leading risks Domino’s pizza faces include:

• Heavy competition from other pizza brands like Pizza hut, Little caesar’s, and Papa John’s as well as several food-delivery tech startups.
• Changing consumer preferences and access to diverse QSR brands and their offerings.
• Franchising-related challenges - Domino’s is managed and run mainly by franchisees that operate more than 95% of Domino’s stores worldwide.
• Technology-related challenges like consumer data and protecting credit card data.
• Other challenges (economic and financial in nature).

However, Domino’s has maintained a strong competitive edge and can deal with most of these challenges successfully. In the past few years, it has taken several strategically important steps that have proved great for its future including investing in technology where it matters most. In this regard, it is ahead of most of its rivals. Its competitive edge was evident in its performance during the pandemic. Its revenue in 2020 grew to $4.1 billion or around half a billion higher than the previous year.

The company can achieve faster growth in the future with just some higher focus on innovation (to beat the competitive pressure from the tech startups) and improving its supply chain capabilities. Apart from the competition, most other challenges before Domino’s are easily manageable. Risks related to the global economy and other challenges like currency fluctuations are also a threat for its rivals. Domino’s growth in the future will depend mainly on its ability to innovate, which will help it remain ahead of the curve. Customer data and analytics and how well the company uses them to form strategies and respond to changing market dynamics are also important.

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