Microeconomic study about Dominos and pizza hut

1. A Study By Group – 09
MBA (12-15) Section –A
Roll Nos – 28,41,43,45,46

2.  The Indian fast food market is
growing at an annual rate of 25-30
percent, Foreign fast food chains are
aggressively increasing their
presence in the country.
 The market is dominated by global
brands like McDonalds, KFC and
Dominos specially in the organized
fast food segment.
 Growing trend of consumption of
new cuisines and increasing brand
awareness has led to the increase of
global players. The new age Indian Source - D‟Essence Hospitality report
consumers have also played a
significant role.

4.  Hard to believe, but the answer is YES !!!
 Let the numbers do the talking……
 Currently, about 250,000 pizzas are being delivered every
day in India and this is expected to double in the next three
to four years.
 There were 271 pizza outlets in 2004, and today there are
95o of them - a 300 per cent growth in just eight years.
 Out of the total organised Quick Service Restaurant
industry pegged at about Rs 3,000 crores, the pizza
industry alone is estimated at Rs 1,300-1,400 crores
QSR Market
Pizaa
Others Industry
Source - D‟Essence Hospitality report 2011
54% 46%

6. Others Market Share
 Dominos : 70 % 3%
 Pizza Hut : 27 %
 Others : 3 % Pizza
Hut
27%
Dominos
70%
Source – Jubliant Foodworks Annual Report 2011

7.  Jubilant Food Works Limited & its subsidiary
operates Domino's Pizza brand with the
exclusive rights for India, Nepal, Bangladesh
and Sri Lanka, The Company is India's largest
and fastest growing food service company, with
a network of 500+ Domino's Pizza stores (as of
31st March, 2012)
 Over the period since 1996, Domino’s Pizza
India has remained focused on delivering great
tasting Pizzas and sides, superior quality,
exceptional customer service and value for
money offerings.
 They have endeavored to establish a reputation
for being a home delivery specialist capable of
delivering pizzas within 30 minutes or else
FREE to a community of loyal consumers from
all our stores around the country.

8.  Pizza Hut is an American restaurant
chain and international franchise that
offers different styles of pizza along
with side dishes
 Pizza Hut is a subsidiary of Yum! Brands,
Inc. the world's largest restaurant
company.
 Today, their India business consists of
more than 200 KFCs and nearly 170 Pizza
Hut restaurants with strong unit growth.

9.  Franchisee rights
 Operates through at least
 Jubilant has exclusive eight franchisees in India
rights for the whole including Devyani and
country. Dodsal.
 Marketing strategy
 Yum! provides significant
 Jubilant decides and gets support and Devyani
it approved by executes it.
Domino’s International

10.  Interactions with
Franchisor
 Yum! Brands has a separate
 Dominos International team
office in India to manage
visits once every 3-6 months
marketing, real estate and other
to evaluate business
operational parts of the business
performance and strategy.
in India.
 Vendor selection
 Jubilant decides and gets it  Yum! decides and Devyani
approved by executes it.
Domino’s International

11.  Dough preparations
 Prepared dough distributed from  Pizza Hut Dough is prepared fresh
commissaries to stores in the store kitchens
under controlled temperatures –
third party network of cold storage
vehicles are used
Beverages
 Domino’s International has signed
renewable agreements with Coca  Yum! Brands business was owned
Cola for most countries around the by Pepsi Co until 1997 and now has
world. a lifetime contract with Pepsi Co

12.  Real estate support for
store openings
 Yum! Brands’ real estate
 Jubilant’s in-house team team carries out the
manages and executes process on behalf of their
the entire process. franchisees

14.  Dominos by far has the highest penetration in the
Indian market.
 Pizza Hut is currently limited to Metro & Tier I cities,
but slowly targeting the Tier II cities
Source - D‟Essence Hospitality report

15.  We believe the JFW to command pricing strength (i.e.
is a price leader) due to:
 Association with well-known international brand:
Domino’s Pizza Inc has been operational from last 60
years with total 9400 operational stores (as of 31st Sept
11) worldwide and has a presence in more than 70
international market.
 Thus, Domino’s is a well-recognised international
brand and this helps JFW to command premium and
thereby pricing strength over other players in this
segment.

16.  Delivered in 30 minutes: JFW is the market leader in
organized pizza home delivery segment in India with
over 70% market share.
 The service proposition created by Dominos is very
difficult to replicate by the small, unorganised players
as well as the organised players.
 We believe the market leadership along with the quick
service proposition enables the company to be a price
leader.

17.  Deep pockets for advertising and promotion: The
well-established brand Domino’s will always have a high
recall factor as compared to other small players due to
ability of the company to spend heavily on advertising
and promotion expense.
 Having invested into the brand over the last few years,
and delivered on the product quality and the timelines,
it has build the right perception of khusyion ki home
delivery;

18.  Business model similar to FMCG player…
 Introduced products in all the price range starting from
Rs 39 to Rs 455 on the upper side, so as to cater to all
strata
 Has introduced add-ons like to Pastas, Nutty Choco-
lava cake and Butterscotch Mousse so as to increase the
product range, to counter competition
 Has recently introduced 3-Cheese Pizza and Cheese
Burst Pizza to cater to high end taste conscious
consumers

19.  The most recent offering by Pizza Hut is an extended
menu of 15 localised pizzas derived from regional tastes
like Sev puri, Chettinadu paneer, Chicken achari,
Nimbu mirchi, to name a few……
 The new offerings, marketed heavily through a 360
degree campaign celebrates the Kansas based chain’s 15
year anniversary in India. It also reflects the brand’s
aggression in a market where several new brands have
entered the fray.

20.  Pizza Hut wants to focus on more than just pizzas. It
has offerings like pasta, appetisers and a larger
collection of beverages. This is part of its strategy to
make the transition from a quick service restaurant
(QSR) to a casual dining.
 In terms of reach, Pizza Hut is targeting a store count of
250 (existing 171) by 2015
 As Pizza Hut expands, a key part of its strategy will be
to maintain the in-store dining experience

21.  Domino’s is the market  Pizza Hut is playing
leader in Home Delivery catch up in the Home
of Pizzas Delivery game through
its Pizza Hut Delivery
 Domino’s stores have Stores (PHD)
very limited/cramped
seating  Pizza Hut specializes in
 No possibility of fine dinning restaurants ,
parties/events at outlet with good ambience,
waiter services

24.  Significant scope of expansion in new cities and within
the existing cities…
 JFW may consider cities with population of at least 3 lakhs
and above, so that the city has immediate capacity for 1 store
and will have further potential of 1-2 stores over the next 2-4
yrs. This logic is keeping in mind the economic viability,
scale and cost of logistic infrastructure to service the store
from the nearest commissary
 Number of cities with population of 3 lakhs and above
is 147, indicating that in short to medium term the
company can target additional 47 (potential 147 –
existing 100) new cities for opening of Dominos stores.

25. Source – Jubliant Foodworks Annual Report 2011

26.  Pizza Hut plans to open 25 more outlets that serve wine
and beer along with pizzas.
 The company currently operates 10 such stores in Delhi
and Bengaluru.
 Pizza Hut has seen a growth of nearly 20 to 25 per cent
in this format.
 The expansion will also help the brand in diversifying
their offering and adding more value-added services.

27.  The company, also plans
to take its casual dining
restaurant presence to
250 stores by
2015. Currently, the
pizza chain has 131
stores spread in 34
cities.
 The expansion plans is
part of the global
expansion strategy of
Yum! Brands

29. Age Group
Above 40
Gender Analysis years
1
Between
8 Female 14 26-40
21 Male 14 Between
16-26
years
Consumer work class Frequency of visit
segmentation
3
1 Business
4 3 1
Housewife 12 Monthly
Others Occasionally
Weekly
Service 14
20
Student

30. 25
20
15
10
5 Dominos
0 Pizza hut

31. Dine In preference
9
dominos
pizza hut
20
Overall
rating for
3.31 Pizza Hut
3.79 Overall
rating for
Domios

32. The study displays a very good example of Dominos on Pizza hut on
monopolistic competition. increase of
price for Pizza
increase of
price for
hut Dominos
The study also shows that the Indian customers are Mean Of
Responses
6.03 6.45
not price sensitive when they get good product,
quality and services
Dominos and Pizza Hut offer pizza but they are differentiated on the basis of
ingredients, recipes and taste.
Companies within the industry can gain monopoly over their competitors by
offering superior products or better service.
The differentiated nature of these firms products permits them to charge
prices above marginal cost.

33. Monopolistic competition is a market structure characterized by a
large number of firms selling products that are close, but not
perfect, substitutes. Products across firms are different enough that
each firm's demand curve slopes downward.
The pizza market seems to fit this description, with a few large firms
but tens of thousands of Mom-and-Pop operations. One way that
monopolistic competitors try to differentiate their products is based
on physical differences.

34. But, Please Watch your Calories !!!