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Jakarta Post

Domino'€™s Pizza sees gold in online orders

  • Khoirul Amin

    The Jakarta Post

  /   Mon, December 1, 2014   /  10:01 am

American pizza company Domino'€™s Pizza plans massive expansion across Asia, including in one of its pivotal markets '€”Indonesia. During a recent visit to Indonesia, Domino'€™s Pizza international president Richard Allison shared with The Jakarta Post'€™s Khoirul Amin his company'€™s expansion plans in the region as well as its strategy on digital services. Below are excerpts of the interview:

Question: How does the Asia-Pacific region contribute to your company'€™s business and where exactly does Indonesia currently stand?

Answer: We operate now in 15 countries in the Asia-Pacific region. They are all contributing to our growth. So, I'€™ll highlight s couple of examples for you. In India, we have just immediately '€” a couple weeks ago '€” surpassed 800 stores, so it is terrific growth engine force. Our stores now number more than 400 in South Korea, more than 300 in Japan, more than 100 in Malaysia and more than 500 in Australia. So, we have a number of large businesses in this region that are very rapidly growing.

Compared to here in Indonesia, we opened those other markets many years earlier. So, Indonesia for Domino'€™s Pizza is only six years old and in its sixth year Indonesia is actually doing extremely well. In terms of growth, 58 stores in six years, starting from a base of zero, is actually very good.

What I see, the Asia-Pacific region is continuing to grow faster than our overall business and certainly 10 percent or greater. There is still so much untapped potential for Domino'€™s in this region. In Indonesia [for example], there are 21 quick service restaurants (QSR) for five million people, so it is incredibly underpenetrated.

In terms of our growth ['€¦], what we tell our investors is our long-term expectation are that our store sales will grow 3 to 6 percent per year outside the US. If we take a look at our store growth, we have been growing in the neighborhoods on a global basis; we grow our store base by about 6 percent. Most of that is coming from the international market.

Knowing the huge potential in the region, are you planning to add more outlets in the region? And do you have any investments currently in the pipeline to expand your business in Indonesia?

We are always working at expanding into new countries. In the coming months, we are going to open in Azerbaijan, Cambodia and in several other markets, and simultaneously we have discussions going on with potential franchisees around the world. Our strategy for growth is ['€¦] to continue to support our franchisees in our existing market, like Indonesia ['€¦], and in more than 75 other countries that we are in today and simultaneously continue to look for new markets where we do not have a presence, like Cambodia and Azerbaijan. We will start on those.

In Indonesia, we look at the minimum of 15 stores next year. I do not have the dollar figure for investments because each of the market is individual and in the franchisee you bring the capital investment to the table to build the stores in the countries that support it.

In Indonesia alone, there have been other pizza delivery companies widely known by the people. Do you have any breakthroughs to standout from them?

I think there are a couple for us. One of them is digital order. It is a huge breakthrough in our industry. You know in a relatively short period of time, digital orders surpassed 40 percent of our pizza sales and we have some countries that are doing well over 50 percent of their sales through digital. So it really is a breakthrough in the pizza business. And in particular mobile, ['€¦] you have seen incredible growth in mobile. So here in Indonesia, we launched iOS platform, we got android platform coming. It is a significant breakthrough for us.

The second thing I will tell you [that] has been a real breakthrough in our business is this new pizza theater image that you were in today. Most pizza shops that you go into will hide the pizza making behind the wall, you cannot see the kitchens in most pizza chains that you go into, but what we want to do here in Domino'€™s is bring that pizza making up in front for the consumers to see. Because we believe more and more people care about where the food comes from, they want to see that the food is fresh, they want to see that the quality is brilliant ['€¦]. That is the other breakthrough that came out over the last couple of years.

Once Domino'€™s application on Android platform has been launched, how do you see online pizza orders contributing to your company'€™s sales in Indonesia? Will it be rapidly growing?

Absolutely, and it has already in a couple of countries. In the UK, we already do more than 60 percent, in Australia very close to 60 percent, South Korea and Japan are both higher than 50 percent. Then, what is happening is very interesting. When we started off with desktop and desktop gives a certain level of penetration, and then we add the iPhone [platform]. It does not take away from desktop, it is just an application sort of layer and then [we will add the] Android application, ['€¦] so, increasingly our customers are just as excited, especially young people ['€¦].

For Indonesia, if you just look at the key number of digital users in the country, you have got 16 million people who got mobile phones with data packages. So, that alone tells you got a huge job opportunity, so we see the digital thing as a huge space for us. That is why we are creating Android apps, because we understand that [in] Indonesia, the Android phone is number one ['€¦].

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