Pizza War

Pizza Wars

“We are not really competing with Domino’s – we’re not in the same category. Domino’s is more delivery and take-aways, while we offer a complete dining experience in addition to delivery and take-away options.” Pankaj Batra, Marketing Director, Tricon Restaurants, India.

“One has to take risks to reach economies of scale. Domino’s also shook up competition when it reached atarget of 100 outlets.” Hari Bhartia, Co-Chairman, Domino’s Pizza India.



INTRODUCTION

Until 1996, Pizza in India was synonymous only a bready dough base slathered with some ketchup. Since 1996, there was a proliferation of ‘high-priced branded’ pizzas in the market, with the entry of international pizza chains. Domino’s and Pizza Hut , the two big US fast food chains entered India in1996. Each claimed it had the original recipe as the Italians first wrote it and was trying desperately to create brand loyalty.

Domino’s and Pizza Hut – tried to grab as large a slice of the pizza pie as possible. (Refer Table I and II for market shares). While Pizza Hut relied on its USP of “dining experience”, Domino’s USP was a 30-minute delivery frame. To penetrate the market, both theplayers redefined their recipes to suit the Indian tastes. Domino’s went a step ahead by differentiating regions and applying the taste-factor accordingly.



Domino’s also made ordering simpler through a single toll-free number through out the country. Domino’s and Pizza Hut expanded their market ever since they entered India. Domino’s had grown from one outlet in 1996, to 101 outlets in April2001. Pizza Hut too, which began with just a single outlet in 1996 had 19 outlets in 2001



TABLE I - MARKET SHARES: 1999

PIZZA CHAIN MARKET SHARE (%)

Pizza Hut 46.42

Domino’s 21.67

Others 31.91

Source: Financial Express



TABLE II - MARKET SHARES: 2000

Pizza Chain 2000 Market Share (%)

Pizza Hut 18

Domino’s 70*

Others 12

Source: BusinessStandard, *As claimed by the company



BACKGROUND

Domino’s entered India in 1996 through a franchise agreement with Vam Bhartia Corp. The first outlet was opened in Delhi. With the overwhelming success of the first outlet, the company opened another outlet in Delhi. By 2000, Domino’s had a presence in all the major cities and towns in India. Pizza Hut entered India in June 1996 with itsfirst outlet in Delhi. Initially, the company operated company-owned outlets.

However, keeping in line with its worldwide policy where Pizza Hut was gradually making a shift from company-owned restaurants to franchisee owned restaurants, Pizza Hut made the shift in India too. Pizza Hut had four company-owned franchisees – Universal Restaurants Pvt. Ltd. (Delhi, Uttar Pradesh and Rajasthan),Specialty Restaurants Pvt. Ltd. (Punjab), Dolsel Corporation (Gujarat, Karnataka and Andhra Pradesh), Pizzeria Fast Food Pvt. Ltd. (Pune and Tamilnadu) and Wybridge Holdings (Mumbai).



POSITIONING WARS

When Domino’s entered the Indian market, the concept of home delivery was still in its nascent stages. It existed only in some major cities and was restricted to delivery by the friendlyneighborhood fast food outlets. Eating out at ‘branded’ restaurants was more prevalent. To penetrate the Indian market, Domino’s introduced an integrated home delivery system from a network of company outlets within 30 minutes of the order being placed.

However, Domino’s was not the trendsetter so far as home delivery was concerned. Delhi based fast food chain, Nirula’s was the first to start freehome delivery in 1994. But where Domino’s stole the market was its efficient delivery record. Goutham Advani (Advani), Chief of Marketing, Domino’s Pizza India, said, “What really worked its way into the Indian mind set was the promised thirty minute delivery.” Domino’s also offered compensation: Rs.30/- off the price tag, if there was a delay in delivery. For the first 4 years in India, Domino’s...