Domino’s CEO has suggested the business may look to acquire a second brand to enable growth and make better use of its existing capabilities.
Andrew Rennie, who took over as chief executive of Domino’s Pizza Group in August this year, said a primary reason for this move is that many of its 35,000 franchisees have started investing in other brands as they are looking for growth that Domino’s is currently unable to provide. Having another brand as part of the group might help keep these franchisees within the company.
“If I could somehow bring them back into the fold, into one group and get more synergies from being together as one then I should consider it,” Rennie said, speaking to investors yesterday (11 December).
Bringing franchisees that want to invest more widely back “in-house” with another brand would ensure that the money Domino’s invests in training is well spent and not working to the advantage of another business, he added.
Rennie outlined that the company also has a great deal of knowledge of consumers across the UK, strong marketing capabilities, digital infrastructure and supply chain, meaning it would be well-positioned to grow through another brand.
He emphasised that the group isn’t going to “rush out” and buy another brand for the sake of it though and that there are significant “guardrails” in place of what that brand would need to look like.
The company would look for a profitable brand that isn’t a startup, but one that has “a significant growth runway”. It would also look for a business with “brand and product synergies”.
“I’m patient, I’m not in a hurry,” Rennie said. “We don’t need to do it and we’ve got plenty of growth. But if the right thing comes along and I think it fits all those categories, we will seriously consider it.”
Leveraging digital investment
Domino’s has “invested heavily” in a new digital platform that will enable features that the business didn’t have access to before. Rennie gave the example of customer segmentation as one feature that can be enabled through the new IT system.
Enhancing the digital experience for consumers is a priority, with the company planning to implement initiatives to do this in quarters one and two next year.
Rennie said he didn’t want “to give a head’s up” to the company’s competition on these initiatives and so details were scarce. He also did not detail what the company’s incoming loyalty scheme (also enabled by its new IT capabilities) will look like.
He did, however, say the scheme will be rolled-out in a “staged” way. Stage one will begin in the first quarter.
“We’ve got a system, that’s actually very little roll-out in terms of time and cost,” he said. “That will give us some knowledge to get to stage two.”
Stage two is set to take place in quarter three and will cost the business a little more, before stage three, which will likely be in the first quarter of 2025 and will cost the most.
Domino’s in the UK and Ireland has learned from the success and failures of the brand in other countries in launching its loyalty scheme.
“We’ve studied the US system very closely,” Rennie said. “We’ve studied what they’re going to do very closely. We’ve studied their mistakes. We’ve done consumer research to see what they prefer here in the UK, because we can’t always assume what works in one country works in another.”