"Cardboard." That word, a description of a Domino's pizza product, written by an unhappy consumer, flashed across the screen. Another called it "mass produced, boring, bland." Yet another added this dagger: "Microwave pizza is far superior."
These words did not appear on a message board manned by angry Domino's consumers, as you might expect. No, the company shared these less-than-flattering reactions to its pizza in its own advertising.
In December 2009, Domino's, the ubiquitous delivery chain with some 5,000 outlets in the U.S. and over 4,000 more internationally, launched an ad campaign, both on television and across the Web, that basically bashed the company. "It doesn't feel like there's much love in Domino's pizza," one consumer said in a focus group during one commercial.
These spots, which were tied to a debut of a new pizza recipe that rolled out in late 2009 and early 2010, sent a simple message. We admit we screwed up. We're trying to improve. Give our pizza another chance.
Marketing 101 does not call for self-flagellation. "I'd be lying if I told you I didn't have a knot in my stomach the day that advertising launched," says Domino's CEO Patrick Doyle.
But it turns out that honesty sells. Domino's, which took in over $1.5 billion in revenue last year, has engineered one of the more impressive turnarounds in the restaurant industry. In 2010, U.S. same-store sales rose 9.9%, and domestic store growth was positive for the first time since 2007. On May 5, Domino's announced that for the first quarter of 2011, the company's net income rose 10.6%, to $27.1 million. In a March research report, Barclays Capital analyst Jeffrey Bernstein credited Domino's for turning in a "banner year" in pizza delivery, a "mature concept" in a "mature U.S. market" in which 1%-to-3% growth is the norm. The industry's leading trade publication, Pizza Today, just named Domino's the pizza chain of the year for the second straight year.
John Glass, an equity analyst at Morgan Stanley, credits the up-front advertising, more than the tastier crust, for sparking the impressive results for the 51-year-old pizza chain. "The spots inspired many people to retry the brand," says Glass. "It's one thing to say, 'We have a new and improved product' customers hear that all the time. But if a company admits there are problems, customers figure that the new product has to be better. People are so used to not being told the truth in advertising. The candor worked."