Pizza, like other fast food, proliferated in the US because it was cheap and convenient. Above all else, most Americans expect pizza to cost very little, which can be a recipe for all sorts of culinary shenanigans. While it was beloved for decades — even in the highly industrialized form most of us know today — the big chains lost their way somewhere down the line, in pursuit, perhaps, of efficiency and profit. But what other choice did a pizza enthusiast have? ... At some point, enough people decided they were no longer content to just passively gorge on whatever pizza they were offered. ... The recent explosion of so-called fast-casual chains like Chipotle and Shake Shack — which lie a notch above fast food while avoiding table service and tipping — got many to expect fresh, high-quality, non-GMO, grass-fed, and otherwise ambitious-sounding ingredients, even when they were grabbing a quick bite. It was only a matter of time before customers demanded the same of their pizza. What’s happening in pizza now is all very reminiscent of the chains that have boomed in the last decade by selling tuned-up versions of old-school junk food. ... Each of the three new-school pizza chains have roughly 100 locations, with commitments from franchisees to build hundreds more. There are well over 30 fast-casual pizza concepts — some of which have been around for much longer than these three — testing the market across the country.
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I could go on about the innovations at Domino’s, but Doyle’s most important lessons are about the mindset required for organizations to do big things in tough fields. Two of the great ills of executive life are what he calls, borrowing from behavioral economics, “omission bias” and “loss aversion.” Omission bias is the tendency to worry more about doing something than not doing something, because everyone sees the results of a move gone bad, and few see the costs of moves not made. Loss aversion describes the tendency to play not to lose rather than play to win. “The pain of loss is double the pleasure of winning,” he argues, so the natural inclination is to be cautious, even in situations that demand creativity. ... Leaders who want to shake things up have to be comfortable with the idea that “failure is an option,” Doyle concludes. In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all. That’s a recipe for reinvention that makes for good pizza and big change.
Domino’s Pizza Inc. has decided that modern works better than authentic, and fun is best of all. For the past five years, the company has been emphasizing all the ways you can order pizza with minimal human and maximal digital contact. ... Since the end of 2008, when Domino’s was threatened by declining sales and distressed franchisees, its share price has increased 60-fold. The company is now worth $9 billion. The second-biggest U.S. chain has also been stealing customers from rivals, notably from the biggest, Pizza Hut Inc. Domino’s went from having a 9 percent share of the pizza restaurant market in 2009 to 15 percent in 2016 ... Given how the company’s technological prowess and financial fortunes have improved in step, you could be fooled into believing the former is entirely responsible for the latter. But the truth is, most customers don’t use a voice-activated app or emojis to order pizza, and most pizza is still delivered by humans in cars or on scooters or bikes. And although Domino’s offers 27 toppings and sauces, most people still order just pepperoni. As much as tech, what buoyed Domino’s was a once-in-an-industry strategy: In 2009 it admitted that its foundational product was … bad.
His laser focus on large pizza chains has allowed him to control as much as 85% of the market for pizza cheese and somehow sell simultaneously to a set of customers — Pizza Hut, Domino's, Papa John's and Little Caesars — that try to cut each others' throat in every way that doesn't involve where they buy their milk products. Dominating the market has its advantages: He's able to invest in technology that no run-of-the-mill dairy farmer ever could, resulting in more than 50 patents —and an estimated 7% net margin, which dwarfs the dairy-industry average. ... Quality is listed first intentionally. It's easy to mock his product (Frankencheese, anyone?), but Leprino Foods is one of the few dairy giants that have never had a recall. Every Monday at 11:30 a.m., Leprino walks down to the test kitchen along with two dozen of his most trusted executives for the weekly Monday Melts meeting like the one I attended. The executives test samples of the cheese produced for some 300 clients in 40 countries and check every complaint received the week before. ... Price has long been Leprino's biggest advantage, and a large one since cheese accounts for about 40% of a pizza's cost. Leprino's scale begat better prices, which begat more scale. And that scale also led to cost-saving breakthroughs that Leprino's fragmented competitors could neither catch up with technologically nor fight in patent court.