The INSANE Story of Domino's Pizza

imagine you suddenly lose your father and then your mother abandons you imagine you then spend your childhood in and out of foster homes and orphanages working on farms for almost no money that was the brutal reality for the founder of Domino's Pizza and the story of how he turned his life around and built a billion dollar Empire is incredible however this is not a straightforward success story Domino's has faced multiple scandals including million dollar lawsuits over their deadly drivers a disgusting viral video that threatened their entire reputation a little hostage situation because of their bizarre mascots and at that time where Domino's basically admitted their pizzas were terrible at times the Domino story is a tragedy and yet at other times it's an incredible tale of innovation and perseverance it's filled with lessons controversy and multiple twists honestly I don't think the full Domino story has ever been told quite like this until now so sit back and relax as we're going on a journey into the insane history of dominant knows [Music] [Music] Thomas Monahan was born on the 25th of March 1937 in Ann Arbor Michigan his father was a truck driver and his mother was trying to finish nursing school whilst the family weren't well off they got by just fine and it was a happy start to life for Tom and his little brother Jim but it didn't last long Tom's father soon developed an infection in his abdomen due to severe ulcers and on Christmas Eve 1941 when Tom was just four years old his father passed away from that moment on Tom's happy childhood descended into a nightmare the first few weeks after his father's death were a blur but Tom vividly remembered visiting the funeral home and seeing his father lying in the casket and screaming at his father to wake up meanwhile without the income from Tom's father Tom's mother abandoned her nursing plans and got a job at The Argus camera company making 27.50 a week unfortunately it quickly became clear she couldn't afford to raise two kids by herself unless she she put Tom and his brother Jem into a foster home her plan was to go back to nursing school and get a higher paying job then come back to look after the kids herself when she could afford to but in reality it would be seven years before that happened and the brothers would be in and out of various foster homes and orphanages in that time the brothers understandably struggled with this and it didn't help that Tom's first foster parents were very strict and argued constantly then after two years the foster parents decided they no longer wanted to look after Tom and Jim so the brothers were sent off to a Catholic boarding school instead Saint Joseph's Home For Boys which was both a school and an orphanage run by nuns Tom later described his time there as intensely unhappy on his first day at the school he ended up getting into a fight with another kid in fact Thomas fairly small and got picked on quite a bit but he had a fierce temper and would fight back often getting into scrapes with the other children and even the teachers were brutal you were whipped if you put a foot wrong whilst at that boarding school Tom would often dream of a very different future for himself he one day told the class that when he was older he wanted to be a priest an architect and a shortstop for the Detroit Tigers the kids laughed at him telling him he couldn't do all that but Tom had a lot of ambition despite how challenging life was Tom regularly told people that one day he was going to be rich and famous and the boarding school didn't sell Tom with a strong work ethic and a mindset that no matter how tough things get you don't give up by 1949 Tom's mother finally returned she was now a qualified nurse and so the boys went to live with her again as she felt she could finally afford to raise her kids she was wrong their financial roles were far from over and Tom had to take on odd jobs himself to help support the family he found a job selling newspapers a job picking cherries in the Summers and when he had time he would go sell fresh produce from door to door in all of these jobs he would often try to think of ways the process could be more efficient so he could make more money and this was Tom's first brush with sales and Entrepreneurship which he really seemed to enjoy but his life at home was not so great him and his mother were in constant arguments and their relationship became more and more strained and to eventually Tom's mother put him and his brother back into foster care they'd only been living with her for just over a year but one day Tom's mother broke down and said she couldn't handle being booked that mother and father so once again the two boys were in and out of different homes although at one point Tom's brother went back to live with their mother whilst Tom got shipped out to live on a farm where he worked extremely long hours but it was on that farm whilst working one day that Tom was struck with an epiphany he later said standing up to my ankles in muck I saw that I had been wallowing in crass worldly thoughts but I should have been concentrating on my spiritual Quest I decided then and there I would become a priest his time with the nuns had clearly influenced him and so he applied to Saint Joseph's seminary in Michigan and was thrilled when he got accepted in 1952 and Tom felt at home here he thought he'd finally found his true calling in life but less than a year later he got kicked out Tom later reflected that he was a little mischievous breaking minor rules talking when he shouldn't being a little Rowdy but nothing serious Tom believes the real reason he was kicked out was because of a letter from his mother where she asked why he never wrote home much all the other kids wrote to their parents at least once a week but since Tom obviously had a difficult relationship with his mum he wrote his aunt more instead but the Seminary had strict family values and Tom was told to pack his bags he broke down crying his dream of becoming a priest was shattered and he later said never before or since have I felt so crushed to make matters worse Tom had no other option but to move back in with his manic depressive mother his mum wasn't happy either to find Tom back on her doorstep and almost immediately they began their usual arguments now to be fair they were both as bad as each other his mum was known for throwing temper tantrums and having mood swings but Tom himself could be extremely argumentative and grow aggressive it was a bad combination they were also still low on cash Tom's clothes had holes in and so did his shoes so he was constantly embarrassed at school the one thing they did have though was an old car which one day Tom borrowed without telling his mum where he was going she got so worked up that she called the police on him Tom was so angry she'd done that he decided to spend the night in jail rather than go home and apologize to his mum but he thought that was the end of it just another one of their fights but it wasn't several days later when Thomas working home A car pulled over and a county sheriff told him his mother had signed papers putting him in a juvenile detention home until he was 18. so just to recap since his dad had died he'd been in foster homes than the boarding school with the nuns then when he came back home his mum sent him off to the farm and now he was being sent to a juvenile detention home Thomas Furious in his eyes his mum had ruined his chance of becoming a priest and now even though he'd not committed any crime he was essentially being locked up and described as a delinquent he couldn't understand why he was being treated like a criminal Tom stayed in the detention home through his junior year of high school and these were some of the darkest times of his life but luckily Tom finally got some good news when his Aunt Peg found out where he was she petitioned the courts to get custody of him his aunt and uncle were kind to him and for the first time in a long while Tom's life felt more stable and normal Tom continued to do odd jobs to earn money he worked in a bowling alley he was a busboy and countless others but between work and getting distracted by girls Tom didn't do so well at school he just didn't care about it that much and at one point it didn't even look like he'd graduate high school it was only when he saw his aunts making preparations for his graduation that he realized he didn't want to let her down so Tom pleaded with his teachers not to hold him back a year and he did just enough to graduate last in his class but he did graduate his yearbook quote under his photo was the harder I tried to be good the worse I get but I may do something Sensational yet shortly after Tom enrolled in Ferris State college and this time he worked hard he improved his grades and then got accepted at the University of Michigan however he couldn't afford to pay the tuition fees but that's when he heard that his college would be paid for if he joined the army so Tom spent the next few days getting physicals taking tests and signing forms intending to join the Army except just as he almost finished with the registration process he noticed one of the forms said Marine Corps Tom said wait is this the Marine Corps or the Army the guy looked back at him incredulously and said it's the Marine Zoo dummy but at this point Tom decided to go with it anyway and used his time in the Marines to work on both his physical and mental health which to be fair he did was there he also read a lot of self-improvement books and in later life he reflected I knew if I could survive the Marines I could handle anything during his time in the Marines though Tom would constantly daydream about his future Empire he would think about all the cars homes and planes that he was gonna buy and so in 1959 when Tom received an honorable discharge from the Marines he set out to begin building his dream by this point he'd saved about two thousand dollars to pay for his college tuition unfortunately once again Tom's lives did not go to plan before he could enroll in college Tom fell for a get rich quick scheme and lost every penny he had it all began when Tom met a charismatic man who said his name was John Ryan and that he worked in the oil business he enthralled Tom with stories of the big deals he'd made and told Tom of a new project he had his eyes on that he just needed investors for through an elaborate story The scammer managed to convince Tom to invest his money for part ownership in an oil well which the guy claimed it was guaranteed to make a profit within just a few weeks but of course it never did Tom's tuition fee money was gone and Tom was left with just 15 on top of everything else Tom started getting severe headaches and earaches and at times the pain was so bad he couldn't concentrate on anything else he would only later find out he had a ruptured and infected eardrum but once again despite the difficult circumstances Tom worked hard and tried to save every cent he could and eventually managed to enroll in college except this time he had to defer because he had no money to pay for the books and was working so much he didn't have time for his classes so he vowed he'd continue to save money even longer and try again next semester as you can see Tom's early life was really just a string of Unfortunate Events and it getting repeatedly kicked just when he thought he was making progress something new would go wrong sure some of it was self-inflicted like his argumentative nature or the naivety to fall for the oil scammer but there was no doubt Tom had been unlucky with his Stars so faced with this new setback Tom began thinking of ways to earn more money and he soon got a job at a newspaper distributor and started selling newspaper subscriptions and he quickly managed to gain a lot of customers by offering to deliver the papers to their doorstep this was Tom's first brush with the delivery business little did he know that in just a few years he was gonna revolutionize the industry by delivering pizzas to people's doorsteps but this experience at the newspaper was crucial though not just because he earned money but because of the skills he learned once Tom proved his value the owner began teaching him more about the business side of things like bookkeeping and dealing with suppliers at one point the owner even had to explain to Tom what a memo was but it was here that Tom learned the basics of running a business and he found that he not only enjoyed it but seemed to be good at it and that's when out of the blue an even bigger business opportunity presented itself one day Tom's brother Jim came to him with an idea an idea that would change everything [Music] foreign [Music] Tom's younger brother Jim was a full-time mailman but in order to make extra money he was also working at a restaurant owned by a man named Dominic devati whilst working there Jim overheard Dominic saying that he owned another restaurant in Michigan that had been shuttered for months and he was trying to sell it the restaurant was named after him simply called Dominic's and it was a small hole in the wall Pizzeria that also sold sandwiches but Dominic said he hadn't had any success with it and he wanted to sell it as soon as possible he was asking for only 500 for the store but that also came with over two thousand dollars worth of debt which the buyer would have to take on still it was a relatively cheap price and when Jim overheard this it filled him with excitement he approached his brother Tom and asked him if he wanted to go in on the store together since Jim didn't think he could do it by himself but figured they could manage it between them the store only opened seven hours a day from 5 PM until midnight so they could split shifts between them so Jim could continue his other steady job as a mailman and Tom would have enough time to study and fulfill his dream of going to college it seemed to win win and sure enough Tom was on neither Brother had much money but they took their little savings they had and also took out a 900 loan from the post office Credit Union which was enough to buy the store off the vati and cover their initial startup costs Dominic devati let the brothers keep using his name for the business so it would still be called Dominic's and devati also shared with them his Source recipe and quickly showed them how to actually make a pizza since neither Tom or Jim had done it before the brothers then hired two later Factory workers to do deliveries who agreed to work solely on commission the brothers then officially opened Dominic's for business on December 9th 1960. their total sales that first week amounted to just 99 and to be honest it was surprising they even made that much if they didn't even have a phone for the first week so we're relying on customers walking through the door but once they got everything up and running things did begin to pick up and sales were at 750 a week by late April and I'd like to tell you this is a heartwarming story of two brothers who had a rough start in life teaming up together and having amazing success but I can't tell you that turns out most of their sales were to a nearby college and so when the semester ended and the students left campus sales fell to just 200 a week before long Jim began working on the store much less which inevitably led to several long arguments between the brothers including one where they began throwing plates at each other and within just eight months of opening the store Jim quit completely despite the fact it was his idea originally but Jim just felt the store demanded far more work and time than he'd anticipated and since the business was not very profitable at this point Jim didn't want to leave his steady full-time job to fully commit to the business he wanted out so Tom agreed to give Jim the Volkswagen Beetle they used for delivering the pizzas in exchange for his half of the business given that this business would go on to be worth billions of dollars trading 50 ownership for an old car has got to be one of the worst business deals imaginable especially since Jim would go on to be a security guard and then an electrician and would never have much financial success but at the time back in the early 60s it seemed like Jim had got the better deal Tom was left all on his own with a 100 ownership of a struggling business unless Tom had no choice but to step up his involvement in Dominic's after Jim's departure this meant once again his college dream was shattered as he had to go all in on the business now he didn't have Jim to help but like always Tom got to work he said in that instant I made the decision to commit myself heart and soul to being a pizza man Tom knew it was going to be tough though at one point he was so low on money he ended up living in the store for a little while sleeping there at night he certainly couldn't afford a decent meal and would only eat his own pizzas if they were burnt or a customer didn't pick it up and it was going to be thrown away Tom was working 100 hour weeks but slowly but surely he was making progress he was eventually able to hire two more employees to help make pizzas while still netting 400 a week in profit and when he wasn't working at the store he was doing market research he sampled nearly every pizza store in the nearby area taking note of what each one did well and what it didn't during his research Tom was lucky enough to strike up a conversation with the owner of a local old Italian restaurant who had the best pizza sauce he'd ever tasted and luckily he volunteered to show Tom exactly how he made his Source Tom then implemented this for himself at Dominic's and his pizzas immediately started tasting better which meant sales increased further with things picking up with this first Dominic store Tom began to think he could do the same thing in other college towns in fact someone even told him about Mount Pleasant the home of Central Michigan University and its 5 000 students which Tom became convinced would be a perfect spot to open a second Pizzeria to expand his business of course with his brother Jim having left the business Tom would need someone else he could trust to run the original Dominic's store if he was going to open another store 100 miles away and the good news was he was about to meet his future partner the bad news is this partner would destroy everything Tom had worked so hard for [Music] thank you a man named Jim Gilmore stopped by the store one day and Tom recognized him immediately Gilmore had previously founded one of the city's best-known pizzerias and so the two men got chatting about the pizza business Tom was immediately impressed by this older guy's knowledge and experience in the industry Gilmore did eventually admit that he'd gone bankrupt twice because of a drinking problem but he said he'd overcome that and now wanted to get back in the game Tom took the bait and asked Gilmore if he wanted to team up and Tom explained his idea of opening a second store but needing someone to run this first store little did Tom know this is exactly what Gilmore had been hoping Tom was going to suggest when he came into the store that day Gilmore said he'd accept Tom's proposal on the condition they would be equal Partners in the business Tom knew he needed help so he agreed and the deal was Gilmore would put in 500 for 50 ownership of the business although Gilmore said he didn't have the cash right now Tom was so desperate for help though he said Gilmore could pay him later thus essentially trading half his company for no down payment and he would never get that money now this deal with Gilmore wasn't an outright scam like the oil man scheme that Tom fell for in the past but bill with Gilmore would later be described as the most one-sided partnership in history you see Gilmore had his attorney draw up an agreement for the partnership but it put all present and future debts as Tom's responsibility Gilmore also said he'd be keeping his day job as a dormkirk but since Dominic's was only open in the evenings he told Tom he'd have plenty of time to run the store meaning Tom could open a second Pizzeria in Mount Pleasant like he wanted in theory it all sounded good in reality it was a disaster with Gilmore in charge of the first Dominic store it became much less profitable sales were down the third and Gilmore began asking Tom to send more money to help cover bills Tom was so busy with the second store that he only later realized what a terrible job Gilmore had done of running the first store the pizza quality had dropped massively and money had been wasted on things like adding a pinball machine Tom even suspected Gilmore may have been taking money out of the tail although he couldn't prove that now to be fair Gilmore had given Tom a lot of advice so it's not like he'd completely done nothing but it just didn't seem like Gilmore had the drive to do much work himself Tom was working non-stop most of his waking hours seven days a week meanwhile Gilmore just seemed to work whenever he felt like it in other words Gilmore was taking advantage of Tom eventually though Gilmore's Health deteriorated further and the two men talked about splitting up the partnership Gilmore once again proposed an offer that was ridiculously one-sided where he would get way more money than he deserved but thankfully this time Tom had the sense to hire his own attorney and eventually their lawyers reached an agreement and Tom finally got out of this disastrous partnership with Gilmore of course that certainly didn't mean Tom's problems were over he was now back on his own and actually left in debt because of this previous Arrangement at one point his lawyer advised him he might be better off filing for bankruptcy but Tom vowed he'd instead work his way out of it and indeed Tom continued to work almost all hours of the day often returning home about 4 30 am having said that Tom did find a lot of fulfillment in the work and the job was finally about to lead him to some good news One Night in February 1962 Tom left a trainee behind the counter as he decided to go deliver a pizza order for himself and it was on that delivery he met a girl named Margie now even though Tom was often shy around girls and hadn't been on a date in at least a year because of how busy he'd been with the store he was so drawn to Margie that he eventually struck up the courage to ask her out shortly after it was Valentine's Day and he sent her a heart-shaped Pizza by their third date he knew she was the one he wanted to marry and a year later they were at this point Tom was 25 years old but Tom told Margie he would be a millionaire by the time he was 30. she laughed but he was serious he was not going to stop working until he hit his goals unfortunately Tom's work did sometimes cause problems for them one night Tom had got so stressed out by work he drunk extremely heavily and he could be a mean drunk he ended up yelling at Margie then when she got scared it only made Tom even angrier so much so he accidentally knocked over the Christmas tree the following morning he vowed he would never drink like that again Tom always had had a temper and lack of self-control and drinking exacerbated it Tom kept his word about the drinking but he was soon find himself in another argument this time with Dominic devati the man who had sold Tom and his brother their first pizza store originally it was because of Dominic devati that Tom store was called Dominic's and that was the problem foreign [Music] called Tom and told him he had to stop using the name Dominics as the vati was still using the name himself for his other restaurant and his customers were apparently getting confused thinking Tom's store was part of the same chain now whilst it's true they shared the same name they were in different towns serving different customers so Tom felt it was unlikely it was that much of an issue Tom felt the bigger issue was that devati was jealous Tom was starting to have more success with his stores than novarti was having perhaps davati was a little bitter he'd given the store away at a relatively cheap price whatever the real reason devati demanded Tom stop using the name Dominics now as we know Tom had always had a bit of a Timber and when Tom heard this he flipped it out Tom had an outburst where he accused the vati of being jealous and telling him his pizza sauce was terrible in comparison to his basically it all got pretty ugly and whereas they could have perhaps resolved things fairly amicably Tom's Outburst meant the party got his lawyer to contact Tom and officially inform him he had to change names the reason Tom was so reluctant to change names was because he'd been building Dominics into a well-known brand in the area switching names at this point could definitely hurt his business so Tom went to an advertising agency to seek advice the obvious First Choice was to Simply rename it after Tom perhaps use his surname and call it Monahan's pizza but it didn't really have the same ring to it so the Ad Agency advised Tom to use something similar to Dominic's since that's what everyone was used to plus this was back in the days of people looking up places in a phone book and so if Tom used a name that was very similar to Dominic's people would still find his business if they looked up Dominics in the phone book so Tom tasked his employees with coming up with similar sounding names and they went through at least 100 different versions but none of them felt right until one day one of Tom's delivery drivers burst through the door and said Tom I've got the new name Domino's something about it just clicked and Tom excitedly shouted that's it that's it he danced around the store and from that point on they wouldn't be Dominic's they'd be dominoes this of course meant they also needed a new logo unless they picked a literal Domino and chose bright colors that would stand out since Tom had three stores at the time they put three dots on the Domino and Tom suggested every time they add a new store they could add a new DOT to the logo the fact Tom thought that just shows even Tom himself had no idea how crazy things were about to get and just how many stores he would soon be managing thank you [Music] before we get to the next part of the Domino story let's talk about you the fact you're watching magnates media probably means you're interested in business and hearing all of these stories of entrepreneurs you may be wanting to start a business of your own but where do you even begin well that's where today's video sponsor Shopify comes in Shopify makes it easier than ever for entrepreneurs to start and grow their company Shopify gives you all the tools to create a professional website begin selling your product or service receive payments and accept orders from anywhere in the world now a big part of dominoes success in recent years has come from their focus on selling online and Via Mobile and this is something Shopify makes extremely easy you can literally have a mobile-friendly site set up in minutes that's customized however you want I love how straightforward Shopify makes everything as no technical experience is required and the great news is if you use the link in the description below you can get a free trial of Shopify to test it out yourself risk-free just click the link below now to see how Shopify can help make your idea a reality [Music] thank you Tom was now running the business himself which was now called Domino's and thanks to his work ethic the improved source and their locations near college campuses the business was doing reasonably well but of course it was still a very small operation overall at this point with just a couple of stores however one evening half of Tom's staff didn't show up and so Tom decided to limit the menu for the night to make it easier to deal with orders interestingly though this led to a crucial Discovery as this turned out to be one of their most profitable nights so far Tom realized that maybe having a simpler menu made sense even when they had their full staff back the next day Tom looked at the data and realized that over 80 percent of the orders from the dorms were for 12 inch pizzas so Tom decided from now on that would be the only size they sold for the people who wanted smaller pizzas they'd probably just buy the 12 inch instead anyway unless pay more and for people who wanted more than a 12-inch Pizza they could just buy multiple pizzas offering one size instead of five would make it possible to provide better and faster pizzas as well as saving money by only having one side delivery box Tom did later end up adding a 16-inch feature as well but for a long time Domino's just had those two sizes small and large likewise for a while Tom only sold one drink Coca-Cola since it was the most popular choice Tom also began offering just one type of crust he cut the amount of topping choices to just six and he removed any non-pizza Mains from the menu like Submarine sandwiches so from then on Domino's offered a much simpler menu and by removing the less profitable items Domino saw an immediate boost in profitability despite having less Choice people didn't order less food they just ordered more of the more profitable items instead and suddenly Domino's got so much faster and more efficient at making food now that they had this simpler menu and therefore that night where Tom was forced to cut back the menu because of a staff shortage was actually a blessing in disguise from that moment on Tom would always remember that lesson of aiming for Simplicity wherever possible Domino's limited menu existed for decades with just a few offerings allowing them to become great at those specific things rather than just average at all lot of different things the simple menu also allowed them to deliver faster which leads us to another unusual but very successful decision Tom Mage focusing on free delivery Tom distributed thousands of leaflets nearby advertising fast free pizza delivery now of course some other places did delivery too but and nobody thought you could make much money on just delivery most places normally just offered it to get some initial customers before they could afford to cut out the delivery service but Tom was convinced he could make delivery a key part of their business and so Tom made the Bold decision to not even provide sit-down dining in any of his stores and instead became one of the first pizzerias to focused almost entirely on delivery whilst delivery obviously had costs by removing sit-down dining like most restaurants had Domino's could keep their stores much smaller and that's cheaper to run it also meant they didn't need waiters either like other pizza places had and Tom correctly believed that because the delivery business was quite tough it would be a barrier to entry for competitors and he was right that delivery became their differentiator Pizza Hut was known for its sit-down dining in its restaurants Little Caesar's dominated carryout orders and dominoes focused on delivery meaning the three chains all offered their own unique selling points however was Tom's focus on deliveries did bring in a lot of new orders it also created a whole new set of problems like the fact it was difficult to keep the pizza warm and crisp when delivering further away so Tom started to think of a way to solve the problem he has several manufacturers to create a box made out of corrugated cardboard with holes in that would be more durable and insulated he basically wanted a box that could retain heat for a longer period but it also had to support the weight of other boxes on top of it without the lid sagging as otherwise the pizza would stick to the top or bottom of the box but Tom's new cardboard design could potentially solve that thanks to its thickness as corrugated cardboard could absorb more oil than a single layer of paper and thus protect the layer of cheese from being squashed a first though manufacturers told him it wouldn't be possible to mass produce his design to which Tom replied American Technology is putting space satellites in orbit these days and you're telling me you can't punch a clean hole in a piece of cardboard he insisted they find a way to make his idea work and eventually they did and it was a game changer unless dominoes is actually credited with the first use of corrugated cardboard for pizza boxes rather than the typical coated paper box that had been used for years Tom had now created an ideal cheap pizza box that could be mass produced and this encouraged Tom to keep innovating new ideas to try and improve other areas of the business like Domino's is also credited as being the first chain to use insulated delivery pouches to keep the food hot for longer Trump also introduced revolving ovens to the store which could accommodate more pizzas in less space than conventional ovens and thus produce more pizzas faster in other words Domino's was becoming increasingly efficient and with things now really picking up for dominoes Tom started thinking about franchising even though at this point he had three stores and was doing fine financially Tom didn't want to just get by he wanted to build an Empire and he'd already started to see the success several other fast food chains had had with franchising in fact Pizza Hut had already franchised 145 stores by 1966 and so in 1967 Tom began looking for other entrepreneurs who wanted to open their own Domino's Pizza Store and one of the main reasons Tom ended up having a lot of success with franchising is that he focused on placing stores near colleges and military bases both places with lots of cost customers in a small area who were looking for a cheap convenient meal very quickly Tom got a good understanding of college student demographics and where their demand was and soon Domino's was opening more and more stores near college campuses he also learned it was better to be at the back of a campus where the dorms usually were not the front where most of the retail shops were colleges were also extra appealing because it was pretty cheap to advertise there when they opened a new store Tom could run some cheap ads in the college newspapers rather than having to pay mainstream ad raids however whilst Tom thought he'd figured out a winning system that was all about to come Crashing Down [Music] with things seemingly going well and this new franchise model in place Tom wanted to open a new store every week and by 1969 he'd almost succeeded Domino's opened 32 new stores unfortunately it soon became clear most of them were failing and quite quickly the company found itself in 1.5 million dollars of debt from all these new unprofitable stores Tom had seemingly over expanded too quickly and to avoid bankruptcy Tom had to relinquish control to the bank whose solution was to raise prices and cut costs by lowering quality unfortunately this actually just made the situation worse and caused several franchisees to file lawsuits the company was unable to pay its creditors for months they started filing lawsuits against the company as well the bank's attempts to steady things had failed horribly and Tom took back control and decided to change their business model from now on instead of charging franchisees a big one-time fee to open a Domino's store they changed it so there was no fee but you had to successfully manage a Domino's store for a year first this unconventional approach actually worked really well it made sure franchise owners knew exactly what they were getting into first and that they had both the experience and capital to make their store a success another major Improvement was that Tom set up a big central location where all ingredients and suppliers would be prepared and then delivered to all other Domino stores this firstly meant Tom could buy the raw ingredients in much larger volumes and thus get a discount but it also meant that rather than each individual store having to buy and prepare their own ingredients on site they were prepared at this Central Hub and then supplied to the different Domino stores thus ensuring everything was consistent and quality was maintained across all Domino's franchises this system worked extremely well because it meant each Domino's Pizza Store could be much smaller as they no longer needed a large store room to prepare all the ingredients on site as a result they could buy cheaper real estate for the stores and they were also cheaper to run since Tom had this Central hub for preparing everything and then all the stores had to do was assemble bake and deliver which in turn made it easier for them to handle large amounts of orders Tom's Innovations like this cut costs and increase the deficiency and to be fair even as the business grew Tom continually did ongoing market research to try and improve efficiency even further he would literally visit other pizzerias all over the country to analyze if there was anything he could learn from them or better operational techniques he could apply ultimately though after that brief scare where they'd taken on too much debt Tom had now managed to clear the company's debts and sort things out with his creditors and franchise owners the future was now looking bright again for both Tom and Domino's they had a better system for vetting franchisees their stores were more efficiently run and that they had a centralized prep system that guaranteed quality by the end of 1969 Tom had 42 Domino's pizza stores spread across Michigan Vermont and Ohio by 1978 Domino's had 200 outlets and things were about to get a lot crazier [Music] oh [Music] delivery had long been dominoes main differentiating factor but by the 80s their Rivals had now invested heavily in deliveries as well Pizza Huts backed by its massive parent company PepsiCo converted thousands of its sit-down restaurants to delivery stores instead this meant they were in very direct competition and the pizza wars were well and truly on but Tom had an idea to stand out from the competition and in 1984 dominoes began guaranteeing pizza delivery within 30 minutes or else the pizza was free this immediately boosted sales as it was a win-win for customers who either got fast delivery or free pizza this big campaign helped dominoes ramp up their expansion even faster in the 1980s dominoes Grew From 300 to 5 000 stores and they became the fastest growing restaurant chain Domino's also went Global and opened their first store outside the US firstly in Canada but then many other countries all over the world they also finally began to expand their menu further offering more sides and non-pizza items like chicken wings as well as an extra large 30 sliced pizza called the Dominator this success enabled Tom to fulfill another childhood dream of his well sort of remember as a kid he'd wanted to play for the Detroit Tigers well in 1983 he bought the team and A year later they won the World Series unless things were looking great for both Tom and Domino's the guarantee of delivery in 30 minutes or getting a free pizza continued to work great for a while sales increased and dominoes gained a reputation for its fast delivery but by 1989 things took a dark turn and the campaign began to create a major problem for dominoes it began when a 17 year old delivery driver lost control of his pickup truck skidded off the road and died in a car crash his Town's paper ran the story and some questioned if the reason for the crash was because delivery drivers had to get the pizza to customers in under 30 minutes meaning some drivers were speeding in order to get there on time and then some bigger papers picked up the story and soon National magazines even ran it claiming that Domino's Pizza had a deadly delivery problem problem a report was soon released showing that more than 20 deaths had occurred involving Domino's drivers another story soon came out involving a collision with a Domino's delivery driver and a couple the wife died and the husband was left with brain damage the family's attorney blamed Domino's strict delivery time policies and the wage the driver was on claiming the driver was forced to rush to get to his destination which is what caused the tragic crash the courts agreed dominoes ended up paying 32 million dollars another high-profile lawsuit in 1993 involved a Domino's driver who ran a red light hitting another driver and causing her spinal cord injuries Domino's ended up paying 79 million dollars in Damages clearly public outcry was mounting and consumer groups even banded together to form people against dangerous delivery which was a group designed to Lobby against Domino's practices Domino's realized that what had once been extremely positive marketing for them was now turning into a very costly PR nightmare where people thought their drivers were speeding or unsafe because of the delivery guarantee from that point on Domino's decided to change their policy and instead offered a satisfaction guarantee instead of delivery in 30 minutes of course for those who had already been injured or lost their lives it seemed too little too late foreign [Music] right around the time Domino's dropped the 30 minutes or free guarantee Domino's launched a new mascot named noid a strange troll type creature with rabbit-like creatures it's since been described as one of the most obnoxious mascots of all time because rather than a typical lovable mascot noid was intended to be the opposite a character designed to cause problems and be the villain here's how fast company described it the Noid was a gibbering pot-bellied bucktooth pervert squeezed into a skin-tight rabbit costume a hamburglar-like character wholly devoted to delaying pizza deliveries throughout the late 80s noid featured in a range of Domino's ads where they told customers to avoid the Noid and promised that their pizzas were noid proof and yet despite its crazy appearance bizarrely the Noid was a big hit with many consumers it was just the right amount of weird and unique to catch on and they even ended up making a line of toys video games and merchandise featuring The Noid but then quite suddenly everything changed on January 30th 1989 an armed man named Kenneth entered a Domino's restaurant in Georgia and held two Domino's employees hostage for over five hours Kenneth noid was mentally ill and believed that they avoid the Noid campaign was personally directed towards him and designed to antagonize him Kenneth noid ranted about how Tom had stolen his name and he demanded payment but then whilst holding the Domino's employees hostage he got hungry and ordered one of them to make him a pizza whilst he was eating it the hostages thankfully escaped even though the employees weren't harmed immediately after this Domino's pulled noid from its ads the damage had been done it was hard not to associate the Noid with this horrific events Domino's denied that the incident was the reason they pulled noid but given that noid was popular before this hostage situation it seems fairly likely this was the reason however that wasn't the end for this strange mascot as the Noid returned to Domino's TV ads in 2021 hey guys before we get to the next part of the story I know a lot of you have been asking how I make these videos so in the description under this video I've put a link to the editing software I use and a link to where I get music and sound effects from but if you really want to see step by step how these videos get made and the full behind the scenes process I have been working on a course that will show everything from start to finish it's not for sale yet but if that's something you're interested in you can join the wait list using the other Link in the description below as I'll be sending out some invites fairly soon so yeah check out the links below then let's get back to the story foreign with dominoes continuing to open new franchise locations all over the world Tom was now a very wealthy man and he decided to use some of that money to support Charities that reflected his strong Catholic faith the thing is he did so under something called the Domino's foundation and this would end up causing a lot of controversy it started when Tom donated a hundred and ten thousand dollars to the committee to end state-funded abortions he even pledged money live on TV to fight against State funding of abortions Tom then also canceled a fundraiser hosted by the National Organization for Women that was due to take place on land owned by dominoes as he found out that the money would help pro-choice charities in response to all this the organization called for a nationwide boycott of dominoes in 1989. the boycotters claimed that Tom was basically funneling his pizza profits into limiting women's Reproductive Rights and promoting his own political aims when a Domino's spokesperson was later asked about Tom he admitted you couldn't keep him quiet he was talking about abortion and he was really pissing people off the problem was that Tom was very publicly the lead leader and owner of dominoes and so him very publicly taking strong political stances was always going to be divisive but nearly a year after the boycott begun Tom made the surprising announcement that he was planning to sell dominoes at the time he denied it was anything to do with the backlash he'd got but many years later he admitted it was he later said I felt a boycott like they had started could have an impact on a lot of people whose livelihood depended on dominoes I didn't want to put our franchisees and employees in Jeopardy because of positions I wanted to take I didn't want to make a Target out of the company Tom also said his decision to sell was because he wanted more time to fully devote to his charitable efforts and couldn't do that whilst also running a giant pizza chain the sale did take much longer than Tom had planned though largely because Domino's sale started to drop a bit and Tom decided he couldn't leave the company while it was in a downturn but eventually by 1998 when Domino's had thousands of stores Tom sold the company to Bain Capital Mitt Romney's private Equity Firm for 1.1 billion dollars not bad for a boy who'd been abandoned by his mother and started with practically nothing thing however for dominoes whilst you'd think Tom stepping back as CEO would get rid of any controversy for the company actually there was plenty of new controversy still to come foreign [Music] it was Easter Sunday 2009 and true bored Domino's employees decided it would be funny to film themselves doing gross things to Pizza ingredients but supposedly would then be given to customers in a series of five videos called disgusting dominoes people the two Domino's employees violated pretty much all the health codes you can think of like sneezing on a sandwich another gross unsanitary stuff and then uploaded the videos as soon as Domino's found out they contacted YouTube asking them to remove the video but YouTube said they needed the copyright holder's permission which was the two employees who'd made it so Domino's rigs to identify who the employees were since the employees were dumb enough to literally show their faces in the videos it didn't take long to track them down with the help of people on YouTube within three hours Domino's figured out who'd made the video and thankfully dominoes were able to confirm that no orders were placed by customers during the time frame the videos had been made it had just been a prank rather than actually serving the contaminated food to customers Domino's fired the two employees and hoped that would be the end of it it wasn't by Tuesday the video had reached 250 000 views by Wednesday it was at 1 million and it would eventually rise to over 2 million views before getting removed Twitter was talking about it news sites picked it up and if you type dominoes into Google search five of the results on the first page referenced the gross video it was a terrible look for dominoes and they realized they had to address air thus the Domino's president recorded a video apologizing to customers and assuring them the store had been completely sanitized and that going forward they'd be reviewing their hiring practices but of course far more people saw the original video than the Domino's explanation video and to be fair to Domino's there probably wasn't much else they could have really done but that didn't change the fact that the image was in people's minds and reputational damage to the brand had been done in fact a national study conducted by hcd research found 65 percent of respondents who had previously visit or ordered Domino's Pizza were less likely to do so after viewing the video and this wasn't the only time social media caused Domino's problems dominoes also came under Fire after photo and viral of Domino's employees buying bags of extremely cheap potato wedges from a supermarket which they then sold in stores with a ridiculously high markup claiming to be their normal wedges but to be honest Domino's biggest problem wasn't social media Domino's biggest problem was itself [Music] thank you when the financial crisis hit in 2008 Domino's stock price fell sharply dropping below three dollars per share now of course many companies went through a big slump in their share price at the time as the whole global economy suffered but whereas most companies then began to bounce back Dominus didn't many felt that after Tom had left the company the quality of Domino's Pizzas had fallen a lot reviews seemed to be getting worse and worse part of the problem was that the cost of Domino's ingredients had gone up significantly over 40 in some cases and so Domino's had tried to cut costs now in small amounts that wasn't too significant like they cheapened The Source slightly or bought cheaper dough or cheese but all of these little changes combined added up to a much worse product and so with a reputation for poor quality pizza sales slowing down costs increasing and an Ever falling stock price the situation for dominoes looked Bleak heading into the 2010s and yet what if I told you that Domino's Pizza was one of the best performing stocks of the last decade and I don't just mean in terms of food businesses I mean literally in terms of all companies Domino's was one of the best possible Investments you could have made in the last decade Domino's stock price were just under 4 000 growth so how did they do this well after two of the company's Worst Years Patrick Doyle became CEO and he immediately conducted market research to find out how customers really felt about Domino's and the feedback was brutal focus groups strongly criticized their pizza for lacking flavor and sunset the crust tasted like cardboard but this brutal feedback forced dominoes to honestly re-evaluate their product and they took the decision to essentially start over they would reformulate their entire pizza recipe developing a new pizza with a new taste texture and appearance they rebuilt their supply chain introduced new ingredients and made a lot of fundamental changes basically creating a new Original Pizza from the crust up everything from the dough to the cheese to the source was redone and new varieties added but the real stroke of Genius was that Domino's then ran a massive ad campaign where they took full responsibility for the recent poor quality and apologized to customers they basically admitted that they knew their products quality kind of suck now they even showed actual footage from focus groups where people had said the crust was like cardboard but then Domino's announced they'd completely overhauled their pizzas and were making massive changes they even documented their process of the head chefs making improvements to the recipe at the end of the ad campaign the head chefs personally delivered the new pizzas to some of dominoes critics and they admitted this new version of the pizza was much better this relaunch was a risky gamble for such a well-established chain they were changing everything about their products and publicly admitting the old product wasn't that good and they had no real backup plan but this bod move absolutely worked people respected the honesty and it convinced them to give the new recipe a try which was indeed better by confronting the criticism head-on and being transparent dominoes began to win customers back over the campaign got over a billion media Impressions and Domino's sales increased rapidly so did Domino's stock price far outpacing the S P 500 and many big tech companies from Trading below three dollars in 2008 Domino's share price later crossed over 400 a share Patrick also streamlined convenience and speed like instead of making dough at each location he set up several doe factories across the US which would Supply ready-made dough to the stores but by far one of the most crucial reasons for Domino's turnaround and shoot success in the past decade is technology in fact as weird as this might sound Patrick has said Domino's is a tech company that just happens to sell pizza what he meant by that is that for a long while dominoes have tried to focus on being innovators for example they were the first pizza chain to launch mobile ordering back in 2007 and they actually experimented with a website all the way back in 1996. they consistently tried to make it easier for customers to order and the vast majority of their sales do now come online they also found that when customers have the full menu in front of them online people ordered more food than they did in store anyway now obviously other companies caught up quickly with apps and websites But Domino's was definitely one of the Pioneers in online ordering and have continued to invest in Tech that makes things more efficient for both customers and employees for example Domino's launched the Pizza Tracker so people could track their order right from the moment of purchase all the way through to being delivered to the door and they've even experimented with self-driving cars and pizzas delivered by drones there's no doubt their investments in Tech have paid off massively however despite being founded in 1960 it took until 2019 that Domino's finally claimed the number one spot in the pizza wars when they eventually surpassed Pizza Hut's sales numbers after 60 years in business Domino's had become the largest pizza operation in the world but of all the pizza chains I think the story of Papa John's is probably even crazier so go check that out next by clicking this video right here thank you for watching magnate's media and I'll see you in the next video in just a second [Music]

Channel: MagnatesMedia

Views: 269,386

Keywords: The story of Domino's, Domino's story, Domino's history, story of dominos, dominos pizza history, history of dominos pizza, Story of Dominos pizza, dominos business, dominos pizza business, dominos company, business documentary, business story, company documentary, company story, dominos pizza, domino's pizza, Dominick's dominos, business, entrepreneurship, rags to riches, wealth, magnate, magnatesmedia, magnetsmedia, magnates

Id: QJh1LkOM4KY

Length: 48min 47sec (2927 seconds)

Published: Sun Jun 04 2023