When Dominic Paul became chief executive of Domino’s Pizza in April last year, he soon had more on his plate than he had bargained for. The Covid-19 pandemic may have been just the ticket for the home delivery market but the lockdown was far from great for collections.
Despite the pandemic, Paul had already outlined a number of ambitions and targets. They included taking a pizza cutter to the boardroom and “building a world-class board” with the female representation it sorely lacked. Also on the menu was completing the company’s exit from its ill-fated Scandinavian and Icelandic forays.
But the biggest challenge he set himself was defusing the increasingly explosive relationship between the company and its biggest franchisees and constructing a new, harmonious and mutually beneficial partnership. When he said it was going to take “some time” most people thought he was exaggerating for effect and would be pushing at an open door following the departure of his predecessor, David Wild – the man regarded as enemy no.1 by the franchisees.
This was far from the case. Paul said all the right things, assuring his franchise partners that he planned to communicate with them in “very open, honest and transparent way”. The message was clear: the former Costa Coffee managing director would treat Domino’s franchisees in a much more open-handed fashion that was designed to redress the balance and ensure that the huge wealth created by Domino’s Pizza in the UK was more evenly disseminated across the company, its shareholders and its franchisees.
When he said sorting out this mess would take time, he wasn’t joking. Just because he was the new kid on the block did not mean he was going to get an easy ride from his new franchise partners.
The problem with revolting franchisees is that they are not motivated to put their backs into opening new stores. Suddenly, from having opened 95 new stores in 2017 and 58 in 2018, Domino’s found itself in the embarrassing position of having little or no idea how many it would be opening. ‘The truth is we don’t know,” declared a humbled David Wild.
It is the best part of four years since the feud broke out into the open, as franchisees complained at the financial pain caused by rising food and business costs, although Wild initially did his best to play down the significance of the breakdown in relations. In January 2019, he dismissed talk of a feud with franchisees as “nonsense”, insisting that “a degree of tension” was normal. To be fair to Wild, he’s not wrong. Legal action by franchisees against their brand owners is pretty much par for the course in the US and makes what’s happening here look mild by comparison.
Although progress has been painfully slow, under Paul there has at least been some progress. The group has opened 18 new stores this year to date and says it is on target to open as many as 30 for the full year. The warring factions are also working hard together to ensure Domino’s does not fall behind the aggregators like Just Eat and Deliveroo.
Perhaps, with hindsight, we were being too optimistic to expect Paul to waltz into Domino’s offices, wave a magic wand and create a new era of peace and harmony. Like Sir Dave Brailsford’s approach to improving British cycling, perhaps the key to resolving the feud with franchisees is a game of marginal gains.
Several plates spinning for Cook
Another man with ambition is Robert Cook, the chief executive of Hostmore, the owner of Fridays. The former hotelier is busy turning what was a tired brand with lacklustre food into the exciting cocktail-based concept it once was. In the early days, its Covent Garden outlet was THE place to go – not just for customers seeking an exciting night out, but for bar staff wanting to learn how to do the whole Tom Cruise thing. It became like a university for mixologists and for a while it was the busiest Fridays in the world.
According to its website, the Covent Garden Fridays – or TGI Fridays, as it used to be – is temporarily closed, but close scrutiny of the Hostmore prospectus, issued ahead of its demerger from Electra Private Equity early next month, shows that, in fact, the iconic (apologies to The Times style guide for using a banned word) bar and restaurant has just closed ahead of the expiry of its lease. Cook insists it has been “on a downward spiral for many years”, suggesting that the Leicester Square Fridays is the new flagship for the brand.
As well as sorting out the core Fridays brand, Cook has been developing a smaller-scale, more wet-led sub-brand called 63rd + 1st after the address of the first Fridays in Manhattan. He has taken advantage of what is a buyer’s market for restaurant sites to crack on with reaching his target of ten venues for 63rd + 1st, with three open and three in the pipeline.
With the name Hostmore, you would expect the company to stretch what it does further and that is exactly what Cook is doing. Firstly, he is talking to the US owner of Fridays about taking on the German franchise for the brand as the country currently does not have a Fridays. Secondly, he is in talks to acquire a “small disruptor brand” with four units with the aim of rolling it out to 25-30 sites before cashing in its chips and selling up.
There is an argument that Hostmore should concentrate on doing one thing well, but Cook is the sort of bloke who will be convinced he can keep several plates spinning at the same time.
