Odd Lots - Domino’s: This Is How A Pizza Chain Stock Did Just As Well As Google

Episode Date: June 15, 2020

In the summer of 2004, Google went public and, as everyone knows, it’s done phenomenally well. What’s less known is that a few weeks later, Domino’s Pizza also went public. What’s crazy is that the stock has performed almost identically since then. On this episode, we speak with Jonathan Maze, the Editor-in-Chief of Restaurant Business Magazine about how they delivered this incredible performance.See omnystudio.com/listener for privacy information.

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Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, radio, and wherever you get your podcasts. Oh, and welcome to another episode of the Oddlots podcast. I'm Joe Wisenthall. And I'm Tracy Allaway. Tracy, I have a question about the lockdowns, or I guess Hong Kong never really had a lockdown, did it? Well, so we had a lot of bars and restaurants that closed just because people weren't going out. But I don't think we ever ended up having a formal lockdown exactly like they've had in the state.

which is kind of weird because if you think about it, you know, Hong Kong was early to the coronavirus and people were really worried about what would happen here. But I guess in the end, we've come out pretty good and we've had like a decent experience of the lockdown. So you, I guess you guys have missed and maybe it would be different in Hong Kong anyway, this phenomenon of like here in the U.S., like people are ordering pizza like crazy. Obviously pizza delivery is one of the big things, but I guess I don't know, like I, I guess pizza is probably not as big of a cuisine there, but without the lockdown, you guys have probably missed this whole phenomenon of people just eating tons and tons of

pizza during this whole crisis. The cultural phenomenon of people ordering lots of pizza, you're going to have to explain this to me because, yeah, I've missed this. You know what I was thinking, Tracy? I was thinking, you should just move back to the U.S. We can talk about that another time, but anyway. It's not, wait, it's not fair to try to lure me back to the U.S. using pizza. That's not fair.

Come on. All right. Well, we'll move on from that. But anyway, pizza is booming. In fact, I just last night, I was on my bike and I biked by Domino's and they had this big sign. Maybe I'll put it in the post where you post the podcast. They had this big sign that says business is booming. We are hiring. People are ordering a lot of pizza these days. One other question. Have you read the novel Snow Crash by Neil Stevenson? Snow Crash. No, I haven't. That's that, it's a sci-fi book, I want to say, right? I haven't read it.

Yeah, it's kind of like a, it's a cyberpunk novel, so to speak. There's this great line in there talking about the description of society and this future state. He says there's only four things we do better than anyone else. Music, movies, microcode by which you mean software and high speed pizza delivery. Like that is the essentially the U.S. economy of the future. And this world of music movies software and high speed pizza delivery, it's like, I've been thinking a lot about snow crash during this crisis. All right. So coronavirus is proof of America's dystopian prowess for high-speed pizza delivery. Is that what you're saying?

Yeah, because it's all about how all manufacturing has been outsourced to other countries. The U.S. doesn't build anything. There's all these divisions between states. And basically everyone is either a coder or a pizza delivery person in this book. So everyone should read it. Anyway, one other interesting fact. You know, I mentioned that Domino's was booming. And one of my favorite facts is that Domino's pizza came public in 2004 about two weeks before Google did. Did you know that? Yeah, I've seen the chart. By the way, can I just say before we go any further?

I feel like you could talk about pizza for like a good three or four hours. If we let you. Like you've already brought in like cyberpunk sci-fi fiction and now you're doing a now you're doing. now you're doing the stock market stuff. Okay, well, anyway, yes, I have seen the chart. Anyone who spent any time on Twitter has probably seen it as well. It's pretty amazing. The basic idea is that both Domino's Pizza and Google went public around the same time. I think it was 2004. And if you look at the chart, they've basically had like a pretty similar trajectory. So everyone thinks if you invested money in the early 2000s in Google, then you haven't made your, you know, this tech

genius and you've made millions of dollars. No one ever thinks, well, actually, if you put money into this simple pizza company, you would have made the same amount. Yeah. So Google went public August 19th, 2004. Dominoes went, Dominoes went public July 13th, 2004, so barely a month apart. And both of them are up about 28 and a half fold since then. Like, it's truly incredible that the lines are identical. Anyway, okay, that is a lot of setup. We're going to talk about pizza today because I want to get the story of how this one company did so well, how a pizza company performed so well on the market. And I thought, you know, with the coronavirus crisis, getting everyone to eat pizza, I thought this was a good time to sort of talk about the

incredible story of Domino's pizza. I feel like you've been waiting a long time for this. I feel like you have a lot to get off your chest here. So let's do it. It's actually not I want to get off my chest. It's just a bunch I want to know because I've always been fascinated, but I actually don't know anything about the story. Everything I've said so far is the extent of my knowledge. But we have a guest that knows a lot about the restaurant industry, knows a lot about the pizza business, there's a lot about Domino's in particular.

I want to bring in Jonathan Mays. He is the editor-in-chief at Restaurant Business Magazine. Jonathan, thank you very much for joining us. Thank you. I'm still trying to process connecting cyberpunk with pizza delivery. I'm trying to register that, so you'll have to excuse me. for a minute. But it's true, right, that people are ordering a crazy amount of pizza these days. Oh, heavens, yeah. Yeah. Yeah. And it doesn't really matter. Like all three, the, well, probably the fourth,

but the fourth one, Little Caesars isn't public. But if you look at the big pizza chains, they're all doing double-digit same store sales right now. And people are just sitting at home and they have all sorts of cash and where else are they going to spend it, and might as well order a pizza. Wait, I have a dumb question, and forgive me, but I haven't been in the States for this crisis, so indulge me. But why pizza versus other food delivery? Like, I get that pizza is delicious, but it seems like you are both talking about a genuine pizza phenomenon here. So why is it so popular this time around? Well, all delivery is doing well. So if you look at it. at whether it's a fast food chain or if it's a casual dining, if they do delivery,

you know, their delivery sales are way up. Everybody's delivery sales are way up. And the thing about pizza is that we just, we can break it out. We have the best numbers. We have comparison numbers for pizza chains. And of course, they do it better than anybody else for the most part. It's a big value. So that's kind of the story.

It's not necessarily that everyone had this crazy craving. for pizza, but if there's one food in America that long before Grubhub or long before seamless or whatever, people have always ordered delivery. It's probably Chinese food is the other one, but pizza has just always been the sort of classic delivery statement. Yeah, and they have the best, they have really good setup. They control their delivery drivers. They, you know, so, you know, and it's from a value standpoint.

point it's still you can feed your family for like 20 bucks it's it's uh you know it's it's a and it's a and it's all real easy to do and and that sort of thing and people are really just accustomed to it so so you mentioned they have a pretty good setup can you walk us through what makes the pizza delivery industry special how do the economics of that platform or the way it actually operates again, how do they differ from other food delivery services? Versus third-party delivery? Or I guess even like a Chinese food restaurant that does delivery. Like what differentiates the domino's business model from other food chains that might do delivery?

Yeah, that's a really good question. I mean, I think that there are some other issues with, you know, Chinese restaurants that have prevented that sector from being as sort of as big as pizza chains and I think a lot of it has to do with the process of cooking Chinese food and that sort of thing. Everybody eats pizza. It's a fundamental value. So you get a pizza from from dominoes and it might cost you, you know, depending on whether you use a coupon, it's going to cost you $8, $10, $10, $12 or whatever and you're going to feed a couple of people at the very least. And, you know, it's really hard to beat that value. That value is a big deal. And it's also, from a food cost standpoint, it's also fairly inexpensive.

And that enables these companies to do these price deals, which help them to do these values and that sort of thing. So it's enabled these large chains to build up and build these fairly sophisticated delivery networks all across the country, whereas they can't necessarily do it with, with Chinese food to the same degree. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right

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but it hasn't worked as well for the third-party delivery companies that still don't make money and the restaurants seem to dislike them. But before we get to that, I want to just talk about the pizza chains themselves. And so you mentioned there's three or maybe four big chains at Domino's, Pizza Hut, Papa Johns, and then Little Caesars. Tell us first, just think about the history of this. How did we sort of get this industry in which all around the country pizza became this thing that became a chain, which we don't really see the same way again with Chinese food or other cuisines, but pizza very much became chained and franchised. And there's a few dominant players.

What is like, what is the history of that? And then I want to, you know, then maybe we can get a little bit into what Domino's did in particular that histo. out it's it's actually more fragmented than say fast fast food burger is very very consolidated they're only really just a handful of chains are very I mean you just don't go and see like a drive-through burger con an independent drive-through burger concept for instance now lately that's changed because all of these burger restaurants have popped up and that sort of thing but you know piece is still a lot more fragmented but the the history goes back to well if you recall

it started out as these restaurants were dine-in concepts. So Pizza Hut, for instance, was dine-in restaurant. In the 60s, you know, Domino's emerged with this idea that you could deliver these pizzas directly to people's homes, and they would call. And then, you know, so Domino's really grew a lot in the 70s and then the 1980s. And then they had this deal where they would deliver the pizza within 30 minutes or it was free. And that enabled that company to just, you know, that enfranchising, which enables companies to grow very quick, really enabled it to grow very fast.

And then you had competitors such as Little Caesars, which is also based in Michigan, like Domino's. And then later, Papa John's sort of emerged. Pizza Hut throughout this process sort of started converting its entire business model from that waitstaff dinan. concept to a delivery model. And it's sort of became commoditized a little bit from a chain perspective. So, I mean, you know, you might have a favorite between Little Caesar's Pizza Hut and Dominoes or Poppe-John's, but, you know, on balance, they're not terribly different from one another.

So it becomes more of a price, deal, speed, convenience-type factor. So these chains have been competing. I mean, they've competed for, you know, for quality and things like that. But on balance, there really isn't a whole lot different between them. So they've competed based on price. Price competition is very fierce in that particular market. They have also been more than any other industry, they've been pioneers in adding technology to their restaurants.

So they were very early adopters of ordering on the web and then, of course, mobile ordering to eliminate the pain point of having to call your pizza delivery restaurants. and wait on hold for like 10 minutes or whatever. That pain point is something that they've been able to reduce over the years and compete then on sort of service and speed and things of that nature. That's kind of how that works. So I have to say when I was growing up,

I'm pretty sure I was a Pizza Hut devotee. I distinctly remember having birthday parties at Pizza Hut. And I remember some of the commercials as well. We're going to have to get our producer to insert some old, like, early 1990s pizza hut commercials into this for nostalgia's sake. Gonna hit Pizza Hut for a Supreme Pizza Loaded with six delicious toppings like mouthwatering pepperoni, mushrooms and green peppers. Right now get a medium supreme for $7.99 and any other medium for just four bucks more. I got to think there's almost nothing, Tracy, that makes me more

nostalgia than thinking about like going to like Pizza Hut. Look at my family and like those. I remember the, I think, you know, the tablecloths and everything. Yeah. Go on. But that is a, I think we both have a very nostalgic experience about pizza huts as a kid. For sure. Oh, gosh. I'm getting flashbacks to, didn't they have like a land before time dinosaur puppet promotion at some point?

Okay, I'm getting really specific. Jonathan, you mentioned the idea of tech fitting neatly into the pizza delivery business model. Can you explain how that worked? out for Domino's specifically. Like, what was Domino's edge? Was it the way they did business, the way they used technology, or was it, you know, God forbid, the pizza itself? Well, that's a really interesting question because, you know, the entire sector is actually fairly good at use of technology. I mean, Papa John's has had, you know, roughly the same digital ordering percentage as Domino's for years. What Domino's does differently, first off, is, and this probably does as much to explain why

they have succeeded to the extent that they have, is they, roughly around the time they went public. Domino's required their franchisees to adopt the company's own point of sale system. And it was actually a controversial step at the time because in a franchise world, the franchisees, a lot of times when it comes to a technology or some construction requirement that they have to spend, they will want the company to give them the requirements and then they go shop around for a point-of-sale system. And there was, in fact, a very large lawsuit from some franchisees against Domino's over this POS system. Domino's ultimately won. And then the franchisees started converting their POS system to Domino system.

So what that's given the company is the ability to control the entire ordering process without having to actually go to another company. So if they want to add functionality to their mobile or online ordering, they simply can simply do it and do it relatively easily or more easily than most companies. So that's enabled them to do things such as add ordering on a watch or ordering your pizza on a car, or instance, if you want to order from an Amazon Echo or something like that. So that's probably the biggest thing they did. The other thing is that they marketed it.

By adding all of these cool things, such as ordering on a car or whatever, they marketed the idea that their ordering process was easy. So one of the biggest things they probably did was convince customers that they are more tech savvy than anybody else. They were doing double-digit comps year upon year. It was kind of amazing to see for a while. So Domino's took a risk of potentially alienating or antagonizing some of its franchisees by insisting that they all get on this unified point of sale platform. When did they do this? When was that decision made?

and how strategic, like, you know, obviously at the time years ago, they may not have anticipated the existence of an Amazon Echo or ordering on an Amazon Echo. But what was their strategic thinking at the time in terms of what that would enable them to do? Well, I think they saw the, like when they did this, everybody sort of knew that the Internet was going to, we were all going to be ordering on the Internet. Now, we didn't see the idea of the Echo or anything. like that were ordering on TV or ordering on your car. But people had a pretty good idea that we were going to be doing a lot more ordering on the internet. And that's sort of where they wanted to go.

And, you know, they, you know, wanted to control that process. But it was definitely a really big risk. And it did anger a lot of franchisees at the time. When was Domino's founded? And then when did they sort of make this leap? You know, that was, I'm not sure the exact year of when they did it. It goes back many years. And it dates back before their IPO.

So this is a many year process that it took franchisees to do. Interesting. Do you, sorry, I don't know if you were covering the food industry around the time of the IPO. But do you remember what the business narrative or the investment story actually was around that time? What was Domino's telling investors was the growth story back in 2004? Well, I mean, at the time it was sort of, you know, between 2004 and roughly 2008, they were sort of this, you know, I mean, they were just this well-established franchise model. I think most of their growth was in international markets, not in the United States. It was largely considered, you know, an established legacy brand by the time they went public in 2004.

So it's not your classic. I mean, they've been around for decades by the time they went public. You know, so they were probably something more akin to a Wendy's, for instance, where, you know, Wendy's has a well-established international market, but that's where its growth is going to be in the future years. But it's in the United States, it's, you know, its growth is basically, was basically behind them. Nobody, and I would argue dominoes, nobody saw what was coming.

So that raised an interesting question. So, okay, they had made this strategic decision prior to having gone public that they were going to sort of really build in the potential for the use of tech. But at the time they went public, still they were not being thought of really like that. They were just like, you know, a sort of mature company like a Wendy, where it's like, okay, it's a business, it makes money, but it's mature and it's kind of boring. And so this sort of gets us to the crux of what we were talking about earlier, which is. is that yet despite this perception of them being boring, the stock is up about 28 fold since its IPO, and really it's almost like matched Google since then tick for tick. When did perceptions of the company start to change? When did people start to realize like, okay, they're really executing

extremely well. They're growing really well. This is an exciting company and not just an old line food chip. Yeah, the the big turning point for them from a public perception standpoint was when they advertised that their old pizza was terrible. Oh, right. I remember that. Yeah, that is, this is one of the few restaurant companies where we could really say that there was this absolute moment when everything sort of turned for them, for them in the public's, in the public's eye. And, you know, that was around the 2008, 2009 timeframe. Right. Going into that, that and I remember writing at one point wondering whether people were getting tired of pizza because all the pizza chains were sort of struggling at that.

And including Domino's, in fact, Domino's, you know, Domino's had done a securitization around the time and, you know, so they were heavily in debt around at the time of the Lehman brothers collapsed and so, you know, they were one of those companies that you actively wondered would survive over during the recession. But what they did was they decided to reformulate their pizza recipe. They then advertised that their old pizza was junk and actually had comments from customers on their advertisements that their old pizza was terrible. And then they told people that, hey, we've got this new recipe.

You should come and try it. To them, that is sort of the base of their comeback. that fixing the food and making it better and more palatable to the customer base was the first step towards their actual comeback. So that was sort of the turning point in the public's perception. When did they start doing the delivery insurance or pizza insurance? Well, I think that was they did that last year. Wait, what is that? What's pizza insurance? Well, they started, they offered, started offering last year where if they, if something happens

with your delivery order, you could get, you know, something for, you could get it for free. Got it. And then they extended it to carry out because that's where they see their growth in the future years is with carryout orders. But a lot of that is just to sort of establish their delivery bona fides. against third-party delivery. So they had that marketing campaign. And I remember that now that you mentioned,

it's like our old pizza is bad, the new pizza is good. Is it a lot better? Like, I don't, I, I ordered Domino's a couple weeks ago. I thought it was pretty good. But I remember it being bad, but I don't remember. Was there like an agreed upon, like, what did they do differently? How did they actually make the pizza better from the old recipe, the new recipe? Oh, their crust is better.

I think it's, it's, their crust is a lot more flavorful, if I recall, correct? the sauce was also changed. I don't remember exactly, but their pizza used to be just awful. I mean, without question, it was just a terrible product. It absolutely earned the cardboard reputation. And it's definitely a better product. And it's just a little bit spliced. But yeah, in 2010, I'm looking at the numbers,

and they did 14.3% comps in the first quarter of 2010. Wow. After that was introduced. So if we fast forward to now, clearly pizza delivery is enjoying a resurgence during the coronavirus shutdown, but we've also seen a surge in just food delivery in general. How does pizza compete against the third-party food delivery companies in this environment? Well, first off on price. So one of the challenges, I think, the long-term challenge, with third-party delivery is that it costs you a lot of money to get that order.

Pizza chains do that much more efficiently, and they control the process than in a third-party situation. So, for instance, if you order chicken wings, for instance, and you order through a third-party delivery app, you're probably going to pay 50, 60, 70, 80% more than if you were to go pick it up, for instance. That price is a big deal. Pizza tends to, you know, you're still paying more if you order dominoes delivered than if you order carryout, but the value is still a major, major, major selling point. It's one of the, quietly one of the biggest reasons why pizza is historically so popular is, again, it's just fundamentally cheap to feed your family with it.

So, because they control the process. Like, if you think about the delivery system in pizza restaurants or Chinese, needs for that matter, anybody that does self-delivery or like Jimmy Johns, you know, you do it from a hub and spoke model. You have your delivery drivers at the restaurant. The people order from the restaurant and then the delivery drivers go out to the homes to deliver the food. In a third-party system, it's just a lot more jumble. You're going, your people are ordering either from the restaurant or from the third-party delivery app. And then those orders go to, independent contractors that may be close to the restaurant or they may be a couple of miles away.

And then they're going, so all these points, they're going, it's just a much more jumbled mess. And it's much more difficult to do that efficiently. And that's probably as big a reason why third-party delivery doesn't make the money that say a domino's stuff. So it's really, in your view, it's about that having the people there, having them go out, The Java pizza come right back and the sort of consistency and the efficiency that you can get from having that entire infrastructure just devoted to your restaurant, to your product. And the third party entities, the delivery companies and rub hubs and door dashes and all these other ones, they just can't compete with that efficiency in your view. No.

So they really can't compete from an efficiency standpoint. And then the other thing is that you, you know, Domino's controls all of that process. So, and it's a simple explanation, if you order from Domino's and go back to that delivery insurance situation, if you order from Domino's or Pizza Hut or Papa John's for that matter and something is wrong with your pizza, you can contact Domino's or Pizza Hut or whatever and, you know, Domino's will get that pizza to you for free. You'll get your pizza. I ordered, I remember I ordered, I wanted pie delivered to my house. I was craving pie.

It was terrible. And I ordered from a family dining restaurant and we ordered dinner and a couple of pies. And we got the order and the food came. The pie wasn't there. And so I contacted the delivery provider and all I got was my money back. I didn't want the money. I wanted pie. And so, I mean, it's so.

The problem to me is that dominoes can just control that quality a lot better than third-party delivery can. And eventually, you know, right now you have a captive audience, so to speak, people are at home and they really want food. And delivery is still a fairly safe way to get your food in a pandemic. But eventually quality really will take over, and consumers aren't going to give them a break to the extent. And, you know, that's one area where third-party delivery companies have to fix is get that. that quality talent a lot better. I'm June Grosso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world.

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On the East Coast, listen as you start your day. And on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you're. at your podcast. Okay, so given that Domino's has this very competitive delivery business, where they have a lot of efficiencies built into it that allows them to compete quite effectively with third-party food delivery services, why are they looking at carry out as a potential growth area,

as you mentioned? Because a certain percentage of customers hate delivery. That's basically it. So they explain it as there is. a, you know, I mean, like, I think it's roughly two-thirds of consumers are perfectly fine having food delivered to their home. But then there's like 30 to 40-percent-ish, some substantial percentage of consumers that don't like delivered. I'm actually one of those consumers. I really don't like having food delivered to my home. I would much rather go and control the process and go pick it up.

wait is that is that is that is that just like a sense of control thing or is it you worry that the food's going to come in I'm a control freak or you're not going to get what you want or yeah I'm a control freak yeah I'm an admitted control freak I don't like um you know I can go pick it up when I know it's ready get it as hot as I can I don't have to wait for somebody who may or may not get to my house as quickly as they should. And also the fact that, like, I know I'll get, I can at least check my bag to see if my pies are there. I'm sensing pie is important to you. Well, I mean, well, when you want pie, man, you have to have pie. It's really important. And I think the Domino's has seen that, you know, they, I mean, they're very data-heavy company. They use data for

every single decision that they have. And so they know that there is this percentage of consumers that just do not like delivery. And that's the consumer that historically they've never really targeted. And in recent years, they've just really been pushing for that particular group quite a bit, which has sort of sustained. That's helped them sustain growth in the past couple of years as their delivery business has softened while all these third-party delivery companies started to work. do you see any hope for those third-party companies? Like, is there a path in your view to

sustainable profitability or is there just like, did they really need to potentially rethink things? I mean, I was on TV talking to Jim Chano's. He was very skeptical. These companies are like, look, they didn't make money during the boom times. Now business is up a lot, but they're still not making money. He was talking about Grubhub in particular. Is there a path here in your view for that third-party model to work? Well, I think people want food. I mean, a certain percentage of consumers want food delivered to their home and are willing to pay for it. Right. And as long as that market exists, they'll figure out a way to make it work. Now, how that looks remains to be seen. I know that there's still a lot of people out there looking at delivery and trying to figure out

how to make it work. Whether it's an entirely different model of some sort, whether it's a lot of consolidation and then maybe like Grubhub, they use it as a loss leader to sort of establish their overall business. To me, that's a really, really good question. To me, as long as that market exists, somebody's going to figure out how to do it. There are a lot of markets where you can actually get efficiency, you get enough efficiency in that market to where it can work. New York city is a perfect example, because everybody is packed in so tightly. That's why it works so well in China, for instance. Everybody is packed in so tightly. You can do a lot of deliveries in a short radius. I live in a suburb, and it's very difficult to do delivery efficiently there. So,

I think eventually they figure it out what remains to be seen. Could it be plausible that more companies, beyond just pizza companies, adopt our own hub and spoke model, maybe with some infrastructure help from a third-party company, but have more dedicated drivers, dedicated systems on their own? Is that a path? Or does that not work for most kinds of companies? I think that is one route they absolutely could go. And then you could see some companies that sort of help along those lines, and that may be third-party delivery players as well. I mean, I think long-term, ultimately a lot of companies bring this stuff in-house. You know, We have seen it with some chains that have in-house delivery in some form or fashion.

Again, as long as that market is there and people want it, I think that customers, you know, companies are going to figure out a way to do it, and that very well could be the restaurants themselves. I think the things that have prevented restaurants from doing it is things like insurance and labor. Labor has been a massive barrier towards companies doing their own delivery. That's one of the biggest reasons why they haven't done that more aggressively than you might have expected, given all the questions with third-party delivery and the existence of that market is like companies that have tried it like Burger King and others really struggled when they did it, though Panera Bread has their own delivery and some others. But I think ultimately because that market is the way it is, I think ultimately you're probably going to see a lot more companies doing self-delivery. So you know, when Joe and I started this episode, we mentioned the chart of Google versus Domino's and how they've both performed very similarly since they actually went public. When you look at that chart, do you think that performance is justified?

Do you think Domino's is as good a company or as much of a tech company as something like Google? Well, I don't think there's as much of a tech company as Google at all. No, I mean, they are definitely a tech company without question. They are very technology-heavy, but their main product is still that pizza. Whereas Google, their main product is search and advertising and whatever else they do that I can't think of off the top of my head. So, no, I mean, they're not as much of a tech company. But, I mean, they're, you know, that, you know, the stock movement is as justified as anything else. And it's not like Domino's is going to go away.

You know, they were doing some of the sales growth that they had in the last few years. have been really incredible. And I mean, no other company can even come close to what they've done, except maybe Chipoli. So, you know, their unit volumes are much bigger than their competitors. They rocketed past Pizza Hut to be the largest pizza chain in the country and in the world. They still have plenty of growth in international markets. They have a very high profit franchise model. I mean, yeah, I mean, there's no.

real reason why they shouldn't have been they shouldn't have gone up as much as it has. It's just been sort of incredible to watch, especially given the fact that somewhere in the 2008 timeframe, we were wondering if they were going to go bankrupt. So before we go, I mean, put on your future hat, for a second. We talked about maybe different ways that the third party delivery industry could work. But from a pizza specific standpoint, or for a domino's specific standpoint, what's the next thing we should be watching for in terms of the strategic future of a pizza itself. I mean, you know, it's hard to see, you know, what they can do from a technology standpoint. Here's the thing that's going to work is that you're no longer, when you call a pizza restaurant,

you're no longer going to talk to a human being. Got it. So that's probably the biggest change that you'll see down the line. What about driverless car delivery? Is that going to be a big thing? I mean, as soon as, I think they definitely want to do it. I mean, Domino's has been working on this for years. They still absolutely play around with it.

They have robots at their company headquarters and things like that. So, I mean, I think they're kind of like, if they're working on driverless car technology, they're kind of more like Google than you let on. Yeah, well, they work. Well, maybe they are a little bit more like Google than I really let on. I mean, they do have, but they're working now with, uh, with a robotics company on, on that. They've been testing these really more robotic driverless cars. And, um, so you could definitely

see that. But you're going to see, you know, the, you know, in the next couple of years, you know, these, uh, automated voice ordering where the digital orders are taken even from, from people who old-fashioned people who call on the phone. Right. Uh, Jonathan Mays. That was fantastic. Really. enjoyed it. I learned a ton about pizza and food and I got a bunch of answers to questions I've had for a long time. So I really appreciate you joining. All right. Thank you. Thanks, Jonathan. Tracy, I've been eating a lot of pizza like everyone else during this crisis and I think I'm going to order another pizza soon. Yeah. I'm going to order a domino's too. Nothing like talking about

the efficiencies of a business model to get the cravings going. Yes. Hub and spoke model. Nothing makes me what gets me hungrier than hearing about the hub and spoke model delivery system. But you know what I was thinking while we were talking about that? I was actually thinking what would happen if Google went into the pizza delivery business? Like what if they just said, well, we have as much data as anyone and we do tech as good as anyone else? And the pizza is kind of an afterthought in this business model it feels like. Well, except as you pointed out, that Domino's really turned it around when they made the pizza itself better. So at least Google would have to execute on the product. True. Or they came up with a very good marketing campaign that

worked for them. It's crazy, by the way, Tracy, you should come back just because like I ordered Domino's the other day and I guess I should ask Jonathan about this. But like what they do with crust, like there are like 13 different crusts not you can order. It's like Brooklyn thin crust, thin crust. There's like there's literally like 12 different crust they have. Like pizza is getting so advanced. That sounds amazing. I think the last time I ordered pizza from Domino's there still only two options, which were thin and thick crust. That was pretty much it. I miss it. You got to come back, trace it. You got to come back just for this. Yeah. Wait, do you order Dominoes when you're in New York? That's a loaded question. No, I haven't, but I'm going to, but I might start.

I feel good. When I'm in the city, I do feel bad about ordering Domino's, but maybe I'll start. It's really good. Maybe you'll be so tempted by the efficiencies of the hub and spoke model that you'll have to. Yeah. But yeah, a fascinating conversation, something that really like brings a current business trend into focus, I think. And I wasn't aware that pizza had become such a massive thing during the coronavirus shutdown. But Jonathan did a really good job of explaining why. Yeah, he was great. All right.

Should we leave it there? Yep. Let's do it. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisenth. you can follow me at the stalwart. And you should follow our guest on Twitter, Jonathan Mays. He's at

Jonathan Mays. Be sure to follow our producer, Laura Carlson, at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of the Bloomberg podcasts under the handle at podcasts. Thanks for listening. A lot of short daily news podcasts focus on just one story. But right now, you probably need more. On up for from NPR, we bring you three of the world's top headlines every day in under 15 minutes. Because no one's story can capture all that's happening in this big, crazy world of ours on any given morning. Listen now to the Up First podcast from NPR.