© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalists are subject to a self-regulation regime under the FT Editorial Code of Practice.
January 17, 2013 3:41 pm
Darya Ganj is one of Delhi’s oldest neighbourhoods, a warren of narrow lanes with dilapidated colonial-era mansions, ageing apartments and warehouses used by north India’s book trade. Maps of the Indian capital only depict its bare outlines – the main thoroughfares – with few details of the maze inside.
But with Domino’s Pizza soon to open its first outlet in the historic neighbourhood, Vinod Kumar, a district manager, and a team of new store employees have been scouting the streets, painstakingly creating hand-drawn maps, to prepare for deliveries in the area. Equipped with clipboards, paper and pencils, the men sketched the lanes, noted landmarks such as fire stations and temples, and marked the address of every building. “Look at these addresses,” Mr Kumar says, pointing to a building labelled 425/2 Ansari Road next door to 2/10 Ansari Road. “This is what we are up against.”
For Domino’s deliverymen – or “safe delivery people” in the company’s jargon – navigating India’s labyrinthine cities, with their ever-worsening traffic, is essential. India might be notorious for inefficiency but it is one of the few markets in the world where Domino’s promises to deliver its pizzas within 30 minutes – or give them away free.
With preparation, baking and boxing of pizzas taking 12-13 minutes, Indian deliverymen have 8-10 minutes to ferry their piping hot cargo to its destination – leaving a margin of just a few minutes. Riders cannot race to their destinations either: their motorbikes are modified to restrict their maximum speed to 45kph. That means riders must know every street, pothole, traffic light, choke point, construction site and police roadblock in their sectors of fast-changing, densely populated cities.
“Our machine is so well oiled,” says Ajay Kaul, chief executive of Jubilant Foodworks, the New Delhi company listed on the Bombay Stock Exchange that holds Domino’s franchise in India. “You have to drive it with a militarylike precision.”
About 55 per cent of all pizza sold in India comes from Domino’s, according to the research group Euromonitor. The company also claims a formidable 70 per cent share of the home-delivery pizza market. India is now the third-largest overseas market for Domino’s, after the UK and Mexico, and its fastest-growing. Jubilant, which also holds the India franchise for Dunkin’ Donuts, has about 550 Domino’s outlets in 110 Indian cities, with two new stores opening each week. Annual same-store sales growth has been about 23 per cent.
Jubilant first promised “30 minutes or your pizza free” – an offer Domino’s had long since abandoned in the US – in 2004 to raise the brand’s profile among Indian consumers. It seemed a risky proposition. “Given the infrastructure, given the traffic conditions, we could have gone bankrupt,” says Mr Kaul.
But the gamble was a hit among freebie-loving Indians and has helped make Domino’s the undisputed heavyweight in India’s $400m pizza market. “It created that buzz – that excitement inside the family that we may actually get something free,” Mr Kaul says. “In India, we like something free. In that half-hour, the family is coming together and somebody is constantly looking at the watch and thinking ‘maybe he will come late’.”
The company also trains its store teams – especially its delivery people – to make them realise they need not feel upset if a pizza is late, not least because it helps the company plan its expansion. “We have to make them understand, ‘Don’t feel guilty that you are giving a free pizza – it’s a company strategy’,” Mr Kaul says.
Of all Domino’s deliveries in India, less than 0.5 per cent take more than 30 minutes to reach the consumer. Top managers monitor every store’s late rate closely. Rising pizza giveaways are seen as an indicator that a store is being overwhelmed by rapidly growing business – and that the area may be ripe for an additional outlet – or that local congestion is worsening considerably. “We watch that number like hawks,” Mr Kaul says.
Customers are also reassured that workers do not pay for late pizzas out of their own pocket, with all staff wearing badges on their uniforms declaring “I am not punished for late deliveries”.
Success was certainly not guaranteed when Jubilant introduced Domino’s in India in 1996 as the country began to open its markets to the outside world. “People didn’t know what a pizza was,” says Mr Kaul. “They thought it was a snack.”
A slick 2001 television advertising campaign, called “Are you hungry?”, introduced Indians to the idea of a pizza dinner but trouble followed as staff in the expanding store network struggled to make consistently good pizzas. “We thought once demand was created, and there were queues of customers standing in front of the stores – which did happen – then the product will on its own fall into place,” Mr Kaul says. “Little did we realise the amount of time we had to spend on training, on backroom operations, on the supply chain.”
Over the next few years Jubilant focused on strengthening its back end operations, including improving staff training. The company also altered its menu to cater to Indians’ taste for spices, with offerings such as pizza keema do pyaaza, peppy paneer and five peppers.
By 2004 the company was ready for its next leap. “The question was how to impregnate ourselves in the minds of consumers as the undisputed leaders in delivery,” Mr Kaul says.
In the US, Domino’s operated the “30 minutes or pizza free” promotion from the mid-1980s until 1993 but abandoned it amid criticism that it encouraged negligent driving. In other markets the brand had offered other, smaller concessions if pizzas were late.
Jubilant decided that in India the “30 minutes or pizza free” promise would cause a huge splash in a society notorious for its lack of punctuality. “If you went halfhearted – 20 rupees off in the next order, 30 per cent off in the next order, garlic bread free in the next order – it would create an impact but it would not create that resounding impact,” Mr Kaul says.
It took Jubilant about a year to prepare to make the offer publicly. Every store’s geographical delivery area was first carefully analysed and customers more than a reliable 10-minute ride away in peak traffic were informed they would no longer receive deliveries but receive discount coupons for in-store use instead.
Implementing the guarantee influences Domino’s entire operation, starting with site selection for new outlets. In neighbourhoods where it is setting up shop, the company looks for locations with easy access to the greatest number of buildings within 10 minutes. “We do sorties,” Mr Kaul says. “We get on a motorbike and we do runs at 40-45kph at some of the toughest times of the day.”
Every year or so, each outlet’s geographical service area is reassessed and reduced if fast-growing business or worsening traffic makes it too hard to reach customers on time. “In which other business do you say no to business, to a genuine customer who wants your product?” Mr Kaul asks. “But that is what we do.”
Domino’s success in India is being studied in some of the brand’s other international markets, though few have decided to make the 30 minutes pledge. But Mr Kaul says that in most markets the risk-reward calculation would be very different. “This proposition did wonders for us because of the stark contrast with the way things are here,” he says. “In any other culture, it may not have created as much noise.”
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.