#169 Duh-mino’s says arrivederci, Italy!
Global media had a lot of fun with what happened in the summer of 2022: The US-based pizza giant Domino’s announced that it would say arrivederci to Italy after seven years in the country. Domino’s, which has operations in approximately 90 international markets and about 12,000 stores worldwide had always had eyes on Italy. In 2015, it finally pulled the trigger and with the help of master franchisee ePizza SpA opened its first store in the Northern Italian city of Milan. They had great ambitions of opening 850 outlets by 2030 in the largest pizza market in the world (after the USA), and soon after Milan, stores in other large cities including Turin, Bologna, Parma and the capital, Rome, followed. Domino’s was well aware of the challenges it might face in Italy, but it reckoned that the Italy of today would be more receptive to a global brand whose menu included such delicacies as Hawaiian pizza, BBQ chicken pizza, or cheese-stuffed crust. It also promised “purely Italian” ingredients including 100 percent Italian tomato sauce and mozzarella, and regional products like Prosciutto di Parma or Grana Padano. And yet, things didn’t go too well. After the first five years in the market a total of only 23 stores were operated by ePizza, and six more as sub-franchises – a far cry from the numbers in Domino’s initial expansion plan. And then, in 2020 the global COVID-19 pandemic hit, and ePizza’s Italian Chief Executive left for another pizza chain. With more than EUR 10 million in debt, master franchisee ePizza filed for bankruptcy in April 2022 and stopped all operations at the end of July 2022 by closing the last of the remaining 29 stores at that time.
Bringing pizza to the land of … well, pizza … was an ambitious undertaking. Aside from the obvious differences in taste preferences and quality, pricing also was an issue in a country where a perfectly fine pizza can go for as little as 6 – 7 Euros. Duh, Duh-mino’s!
In all fairness, Domino’s never aspired to make better pizza than Italians, but they had the ambition to have the best pizza delivery service globally. But the pandemic might just have dealt Domino’s the final blow in this regard. As even small pizza restaurants adapted and started home delivery, Domino’s had lost its last competitive advantage.
March 9, 2023 @ 10:51 am
I think bringing “American” pizza to the land of pizza was super ambitious and overconfident! Remind me IKEA in my country, Indonesia. IKEA in Indonesia is targeted to high class or young couple with minimalist lifestyle. IKEA cannot bring the same target groups like in Europe, which are middle-class or young couple. In a country with a relatively “low-cost” labour, DIY (do-it-yourself) concept for furniture is not sexy! People can easily buy a way cheaper furniture that will be already assembled. And, ones can even ask to customize the design and pattern. Thus, IKEA needs to come up with new strategy to come to Indonesia. Looking that IKEA is “only” opening its branches in the capital and Bali, it strengthen my hypothesis about its target groups. IKEA may also target foreigners who live in Bali.
So, lesson learn from Domimo and IKEA, business needs to always adapt and conduct significant market research before “overly confident” entering new market!
March 18, 2023 @ 8:35 am
As I researched, Domino’s Pizza attempted to enter the Italian market in the mid-1990s, but ultimately failed. The company’s failure to gain a foothold in Italy can be attributed to several factors:
The most important, I think, are cultural differences: Italians have a strong attachment to traditional Italian cuisine, and they have a high standard for quality and taste when it comes to food and drinks, especially pizza. Domino’s pizza, which is often seen as a fast food option, may not have been able to meet those high expectations in Italy.
Another important aspect is competition: Italy is home to a large number of pizzerias, ranging from small family-owned businesses to large chains. Domino’s would have had to compete with established brands that were already well-known and loved by Italians.
Other factors are delivery logistics (in Italy, many people prefer to eat out at restaurants rather than have food delivered) and marketing topics (Domino’s may not have effectively marketed its brand to Italian consumers; the company’s advertising campaigns may not have resonated with the local population).
Overall, Domino’s failed to understand the unique challenges of the Italian market, including cultural differences and strong competition, and may not have adapted its business model and marketing strategies accordingly.
March 19, 2023 @ 8:17 pm
Italy is commonly known as the birthplace of pizza and is the second largest market for pizza makers after the U.S., despite having a much smaller population. Therefore, Domino’s efforts to enter the Italian market are, in my opinion, a plausible move to further expand internationally. I would have expected that the ongoing Americanization of lifestyles and the increasing acceptance of American products and services should have provided a solid foundation for entry into the market.
However, basing the competitive advantage of Domino’s business model solely on the ambition to have the best pizza delivery service in the world seems somewhat reckless, if not arrogant. I feel that the potential downside, not so much in financial terms, but in terms of loss of reputation and the ridiculousness of failure in the home country of pizza, has been ignored. This failure shifts my perception of Domino’s even more toward a fast food restaurant that delivers what would be considered pizza within 30 minutes, rather than a place for a culinary pizza experience.
March 20, 2023 @ 8:44 am
Domino’s decision to exit the Italian market highlights the challenges faced by companies when entering new markets with entrenched local competitors. While Domino’s may have been able to succeed in other international markets, the unique cultural and culinary significance of pizza in Italy made it a particularly difficult market to crack.
Moreover, the COVID-19 pandemic disrupted the food industry worldwide and accelerated the adoption of online food ordering and delivery services. As a result, even small pizza restaurants in Italy adapted and started offering home delivery, eroding Domino’s competitive advantage in this area.
In a global context, it is essential for companies to thoroughly research and understand the local market dynamics, consumer preferences, and cultural nuances before entering new markets. Companies should also consider partnering with local firms to navigate regulatory hurdles and gain a better understanding of the local landscape.
Domino’s experience in Italy serves as a reminder that even well-established global brands can struggle to succeed in new markets without a deep understanding of the local context and an adaptable business strategy.
March 20, 2023 @ 9:05 pm
After three years of working around Italy, I can say with certainty that no one is more passionate about food than the Italians.
All day long, people think about food. The primary topic at the morning coffee is lunch. So, bringing Hawaiian Pizza to a country that is proud of their cuisine was not thought through at all.
Leaving the emotions aside I wounder what value proposition they had in mind when starting this adventure. In most local Pizza restaurants, you can get a Margherita for 5€. Every small Pizza place delivers their pizza for close to nothing. Overall, I have a hard time identifying Dominos’s unique selling point.
I truly believe that Domino failed on several different fronts to bring Pizza to the homeland of Pizza. USP, price, innovation, product readiness as well as cultural fit.
But that’s not a general NO-GO. As demonstrated by Starbucks, a well thought through strategy can work. With their investment in a very stylish roastery in Milan they kicked off their entry in a different style and success. It took them more than 40 years, so they had time to think it through, I guess.
March 21, 2023 @ 9:51 pm
The withdrawal of Domino’s from Italy after only seven years may seem surprising at first glance – after all, Italy is known as the home of pizza. But on closer inspection, it quickly becomes clear that the attempt to conquer the Italian market was fraught with numerous challenges.
For one thing, Italians’ tastes in pizza are very sophisticated, and prices are comparatively low. This meant that Domino’s not only had to deal with a demanding target group, but also with high competitive pressure and low margins.
On the other hand, the COVID 19 pandemic hit Domino’s hard and put the company in a difficult position. Small pizzerias also switched to delivery services, causing Domino’s to lose its competitive advantage as a specialized delivery service.
Nevertheless, Domino’s had big ambitions to gain a foothold in Italy and open a total of 850 stores by 2030. But these plans were scuttled by the bankruptcy of master franchise partner ePizza, which was already hit by financial problems in 2020.
Overall, the withdrawal of Domino’s from Italy shows that even large companies cannot always be successful, even when they focus on promising markets. It takes a solid understanding of the target audience and the market to ensure long-term success – something Domino’s was unable to achieve in this case.
What are your thoughts on this? Have you had any experience with Domino’s in Italy? I look forward to your comments.
March 21, 2023 @ 9:58 pm
As a big pizza fan, I follow the development of Domino’s in Italy with interest. Although I am quite familiar with Domino’s pizza and have eaten it several times, I have to say that for me it just can’t compete with a real Neapolitan pizza. I think that many Italians feel the same way, so Domino’s withdrawal from the Italian market comes as no surprise to me.
As mentioned in the article, it was certainly difficult for Domino’s to gain a foothold in a country known for its pizza tradition and high standards of quality and taste. But even apart from these factors, for me personally there is simply nothing better than a pizza baked in a traditional stone oven and prepared with the best ingredients of the region.
Still, Domino’s has to be given credit for being successful in many other countries and establishing itself as one of the leading pizza delivery services. I think it’s important for any company to have a thorough understanding of local conditions and customer needs in order to be successful.
How do you guys see it? Have you ever tried Domino’s pizza in Italy or elsewhere? I look forward to your comments and experiences.