Developing a Franchise Pizzeria: The Cases of Domino’s and Alice.

Eight million pizzas consumed every day in Italy, with a turnover of 15 billion euros per year (excluding certain sectors such as large-scale retail and frozen products), according to data from the Cna Studies Center. In Italy, pizza is a golden opportunity for franchised chains from all over the world.

But more than the classic pizzeria, Domino’s and Alice represent two examples of a trend that, thanks to the pandemic, can no longer be labeled as “new”: it’s food delivery, especially of pizza, that represents the core business of these two activities. In 2021, the food delivery market is expected to reach 1.4 billion euros, a 56% increase compared to the previous year, marked by the spring lockdown, according to data from the Netcomm B2c eCommerce Observatory – School of Management of Politecnico di Milano. Let’s analyze their success.

Domino’s and Alice: Two Dominant Chains (Each in Its Own Way)

The first, probably the most famous pizza chain in the world. The second, much less known globally but a well-established reality in Italy, with many outlets and whose control has been in the hands of IDeA Taste of Italy for two years, the fund specializing in agri-food managed by DeA Capital Alternative Funds SGR.

Domino’s was born in the United States in 1960 when brothers Tom and James Monaghan bought an old pizzeria in Michigan, naming it DomiNick’s and later transforming the sign into Domino’s five years later when the “chain” had three stores (hence the three dots in the logo). Franchising started in 1967, and a decade later, there were already 200 stores across the United States, with international expansion beginning in 1983, in Canada.

Today the company is owned by Bain Capital, Inc., after founder Tom Monaghan sold it in 1998 for $1 billion. Just last year, Domino’s generated revenue of $4.12 billion, with 17,600 stores worldwide. In Italy, the chain opened its first store in 2015 and now has over thirty, with plans to expand to more than 800 within a decade.

Founded in 1990 by Domenico Giovannini, Alice Pizza is a much smaller company but not in Italy, where it already achieves much more significant numbers than Domino’s: it is, in fact, the leading takeaway pizza chain in our country, with a turnover in 2019 exceeding 76 million euros. There are 180 Alice pizzerias, most of them in Italy, but with significant exceptions abroad such as Malta, Spain, France, and the United States. 148 are franchised outlets, a development that Alice started in 2012. The chain employs a total of 253 people in direct operations and 417 in franchising (the majority of whom are women, 216).

The Product: “American” Pizza vs. Quality Roman Pizza

The two chains primarily distinguish themselves by the type of product offered. Domino’s offers the typically American format of the pizza pie, round but thicker than the classic Neapolitan pizza we know in Italy. Alice, on the other hand, stands out for its proposal of rectangular “by the slice” pizzas: following the Roman tradition, the product is offered in the sizes requested by the customer, not in uniform slices, and is priced by weight rather than by piece.

But Alice has always tried to distinguish itself for the quality of its ingredients and the excellence of its craftsmanship, still considered “artisanal” despite the success of the format. On this aspect, the chain has invested heavily through its “Pizza Academy,” with locations in Rome and Milan, with “the aim of sharing the same ‘artisanal knowledge’ that has been passed down for 30 years: a heritage of over 60 recipes for a unique pizza with unmistakable characteristics,” explained CEO Claudio Baitelli.

Domino’s started with decidedly different premises. For thirty years, the American chain offered only two pizza formats, with 11 ingredients and only one drink (cola). The quality was so poor that many consumers, in the early 2000s, when providing feedback, explained that the pizza “tastes like cardboard.” Acknowledging the problem, Domino’s executives began to work on both product and image, promising better ingredient quality and thus regaining the public’s favour. However, where Domino’s has always excelled is in service quality. In 2008, it introduced online orders, and two years later, it launched mobile apps, continuing to evolve over the years. In 2015, it launched orders via tweet, and the following year, it tested drone delivery with an autopilot vehicle and launched the “zero-click” app for ordering without clicking. Today, consumers can order with voice commands, via Google Home and Alexa, and track their order through a dedicated tracking number.

The Location: Classic Pizzeria or Dark Kitchen?

Domino’s has always been dedicated to home delivery and take-out. Even the first pizzeria did not have enough space for tables, so Tom Monaghan decided to hire several delivery drivers to deliver to various points in the city. In this sense, it functions almost like a dark kitchen, i.e., a kitchen that does not offer table service but only take-out and delivery. However, this is not entirely accurate because some outlets also have a few seats. The same applies to Alice Pizza, which does not always have tables, and when they do, they are few.

What is more interesting is the different choice of location, at least in Italy.

Alice aims for nationwide coverage, not just cities. Indeed, the chain’s philosophy has always been to choose even peripheral areas, residential neighborhoods typically inhabited by families.

At the moment, Domino’s is mainly present between Rome, Milan, and Turin, as well as in some medium-sized cities such as Vicenza, Piacenza, Parma, Modena, and Bologna. However, it’s a safe bet that this is only a market entry strategy, and with the promised opening of more than 800 pizzerias, Domino’s also aims to occupy the market extensively. The choice of location is crucial: increasingly, consumers choose, in addition to the product, the convenience of reaching a nearby outlet or having their lunch delivered directly to their home. This is why, for a franchised chain, this choice becomes fundamental. To delve deeper into the location theme, read my book “Let’s Franchise – 69 Secrets to Create a Successful Franchise Network,” to which I have dedicated the entire First Chapter.