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Comment by nostromo | Hacker News Reader

It seems like when your company's revenue has been flat for over a decade, you should focus on improving your core offering of, you know, food quality, and not find new ways to annoy customers with data mining and extreme personalization.

In 2009 Dominos realized their food sucked, committed to improving it, and have since been doing very well. (Their stock has more than quadrupled.) At some point McDonalds will need to do the same.

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As another commenter pointed out, Dominos is kinda the poster child for fast food companies driving growth by embracing technology. They started investing in online ordering back in 2007, and their stock has gone up more than 20x since then.

And if you look at how Dominos describes itself, they're clearly focused on technology (or at least want you to think they are). For example, half of their standard investor blurb is about technology:

> Emphasis on technology innovation helped Domino's achieve more than half of all global retail sales in 2017 from digital channels, primarily online ordering and mobile applications. In the U.S., Domino's generates over 60% of sales via digital channels and has produced several innovative ordering platforms, including Google Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and text message using a pizza emoji. In late 2017, Domino's began an industry-first test of self-driving vehicle delivery with Ford Motor Company – and in April 2018, launched Domino's HotSpots™, featuring over 200,000 non-traditional delivery locations including parks, beaches, local landmarks and other unique gathering spots.

https://www.prnewswire.com/news-releases/dominos-pizza-annou...

> Domino's generates over 60% of sales via digital channels

This blows my mind. I remember when the online pizza tracker first came out, and I was blown away. I couldn't imagine the logistical nightmare they must have solved to get this installed in 5,000+ stores in the U.S. It really was ahead of it's time, and I can't think of any other online food ordering platform that gets this close.

It was a nightmare. We all had a deadline to book these installers for the Cisco VPNs and VM servers. IIRC IBM wrote the code, but Domino's retained the rights.

It was a great time for the company. Total 180 on quality, investing heavily in the right tech. 3 years after we installed the server & thin clients all around, 33% of orders and 50% of revenue aas online.

Online sales drove order frequency, ticket price and customer satisfaction while lowering costs. It was such a genius move.

Source: I was a Domino's GM and franchise for 17 years and saw this transition.

It's kind of interesting how Little Caesars found success with the opposite strategy. Instead of "our food sucks, lets make it better and improve the ordering experience too", they said "I bet people won't mind if their pizza tastes like cardboard as long as it only costs $5, they don't have to order it, and can pick it up on the way home".

Little Caesars has an app! Never tried it myself but they have a little cage where you scan your phone (or whatever) and the door opens to get your pizza.

I usually just call ahead instead of having to sit around 10-15 minutes or ask what's ready if I don't want something specific.

Disclaimer: I eat Little Caesars probably way too much.

> Total 180 on quality

Is this alluding to "30 minutes or less"?

Nothing to do with the service guarentee^H^H^H^H^H^H^H^H^H "commitment".

It was a redesign from the ground up of the pizza. New dough & sauce formula. A butter/garlic/seasoning added to the crust.

Also Quantity of cheese on a plain pie increased by 50%. A 14" pie went from 7oz to 10oz. Owners lost their shit over this mandated cost increase. Everyone shut up about 4 months later once sales were up 50%.

And a very, very nice advertising campaign. The CEO got on TV and said "Our pizza sucks. Sorry. We know, we listened, we fixed it. Buy three of them for $15 and if you don't like it, we will refund your money no questions asked".

The new customer satisfaction rules were another source of contention. The 100% satisfaction guarentee made franchisees, especially those in.... "urban" environments very nervous. They thought there would be a line out the door of people scamming. My store in such a "low-income, high-population density" environment.

Corporate came down hard on them. Owners, even huge multi-store franchises with 10s of millions in sales were told where the door was if they didn't like it. I was very proud of the central office. They took what could be an excuse to make two rules - One for Flatbush Avenue and another for Newport Beach - and applied it across the company. It really endeared higher management to the workers, many of which lived in just such areas.

I was never worried, and it turned out to not be a problem. The number people who asked for a refund for questionable reasons were very very small and an easily absorbed cost of business.

Amazing insights, thank you for sharing! It seems to have been a smart investment.

How many sales are through there own digital channels these days? Around me they've had to go on uber eats, menulog and sites like that to stop hemorrhaging customers to stores with no online presence that they didn't have to compete with a few years ago and they're no longer cheaper compared to much better stores.

What are you talking about? McDonald's has been.

They revamped their quarter pounders a ~year ago to be much fresher, tastier, juicier burgers. They serve more gourmet-style toppings now and a variety of cheeses. They're experimenting with new items like the morning "donut sticks" which are surprisingly good. The buttermilk chicken tenders are worlds beyond the old nuggets. And you can get breakfast all day, with eggs that are now fresh-cracked.

They still sell all their old stuff because people still love it. But if you think their menu hasn't been increasing in quality for those who want it, you haven't been paying attention. Some people prefer not to believe it.

But it's still McDonald's. People want and like McDonald's. They're not looking for fine dining.

McDonalds as a company has fine food quality based on the fresh hot and delicious McDonalds I got in Japan. I believe McDonalds US has a store management and personnel problem, i.e. that no one gives a shit. Even after the “fresher” Quarter Pounders the meat was warmer but I sometimes got buns so dry and stale they were falling apart in the box. Sure theres lots of timers and tech to make sure workers can’t burn the fries but it appears to me no one in charge of overall quality or consistency.

That's what happens when you have a culture that so heavily looks down on people who work these kinds of jobs. Failures who couldn't make it in school work at Mcdonalds they say, and failures they'll get, making their burgers.

Yeah, the attitude of Japan towards these workers is vastly different.

Dominos has been huge on technology for years:

https://www.forbes.com/sites/aliciakelso/2018/04/30/delivery...

They were the first delivery place with an API as far as I know.

I remember the World of Warcraft add-on that made news headlines because it allowed you to order a pizza in-game, during a time when we were seeing constant stories about someone dying (or causing others to die) thanks to gaming addiction and forgetting to sleep/eat/feed children.

IIRC it was Everquest that had /pizza and it brought you to the Pizza Hut website.

Yup, I remembered correctly! https://boingboing.net/2005/02/18/everquest-now-with-p.html

And they were the first pizza app to feature Hatsune Miku!

It hasn't quite been 10 years. They had significant revenue growth after 2009 [0] And annual gross profit is the highest it's been since 2013. [1]

In the last 2 years they have seen significant revenue decrease, but primarily because they sold off a significant number of stores to franchisees, which transfers that revenue off their books [2]

That said your underlying point, that they face "headwinds" in the market right now, is correct. Competition from "fast casual" dining has eroded growth that might otherwise have gone to "quick service" outlets like McDonalds, and growth in the industry continues to strongest in the fast casual segment [3]

[0]https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/reve...

[1] https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/gros...

[2] https://www.marketwatch.com/story/mcdonalds-revenue-hit-by-f...

[3] https://www.restaurantbusinessonline.com/financing/technomic...

Machine learning is used for improving food quality though. E.g. most wine today is made using machine learning. Here is a video showing how it works:

https://www.youtube.com/watch?v=aY4KPMYd4xw

from what I can see the video showed that machine separates ripe grapes in good color and shape from the rest of the mix. did you see the machine taste wine and go back to tune up its sorting algorithm?:)

Consistency is a big part of making high quality wine...

I'm no domain expert but there's graphs for all sorts of things when it comes to food (usually used for quality control). You can probably just run computer vision over said graphs and get somewhere reasonable.

>E.g. most wine today is made using machine learning.

Where are you pulling this number from?

I actually haven't seen any statistics on this, but based on knowing how the industry works in the U.S. it seems like if it's not already the majority it's going to be the majority very soon.

Basically there are thousands of vineyard owners and thousands of wineries, but most of the vineyard owners take their grapes to the same handful of places to process them in between when they're picked and when they're sent off to the wineries. And these machines can process enormous volume, and there is tons of risk around labor.

And especially given that the majority of wine is made by the same handful of companies and sells for less than $10, I can't see any way that the majority of grapes aren't passing through these things at this point even if it's not really talked about.

Color sorting of fruits and food grains is definitely a pre-machine learning problem. On the other hand, there are very problems which cannot be improved using machine learning. Incidentally, my father ran a startup building color sorting machines for coffee beans with analog electronics ~25 years ago.

McDonald's is a massive bottom-line franchise, so enforcing new standards that cut into margin and getting paying franchisees to put their stores on board is a recipe for disaster. I wish McDonald's would improve their quality too but that is just not what McDonald's is.

Dominos has been doing well thanks to early adoption of tech and using it to integrate with customers in new ways that the competition hasn't. They proved the success in fast-food franchises with this, and now McDonald's is trying to differentiate with tech too with this acquisition.

What quality improvement do you think McDonald's needs? They have already gone to excessive lengths to appeal to parents and advocacy groups by adding healthy meal options (apple slices, milk, salads) and reducing portion sizes (which helps them more in the profit department, than it helps the overweight consumers) and clearly showing the breakdown of each item on a large prominent poster near the register. They're a fast food restaurant who has already gone above and beyond all of their closest competitors IMO.

Offering packaged apple slices and milk is going to excessive lengths? Really? That seems closer to the bare minimum than “above and beyond” but maybe you have difference standards than me.

Excessive lengths would be McDonalds installing cold-pressed juice bars. An above and beyond McDonalds would just be your average In-N-Out.

In-N-Out isn't a franchise, so they are able to do things like this.

That’s just a choice though. In-N-Out is cheap but the food is high quality. McDonalds would rather use marketing to compensate for quality. It comes down to priorities.

In-N-Out isn't a franchise. It's a private, family owned business that operates each individual store, so they have the control to enforce quality and employment standards while maintaining margins.

> It seems like when your company's revenue has been flat for over a decade, you should focus on improving your core offering of, you know, food quality

Quality is subjective, and analytics is a tool for hitting the target the market is looking for.

Has Dominos pizza actually improved?

I never thought it was all that good, and haven’t eaten it in a decade.

They just went bankrupt because of outdated ingredients.

https://www.insidescandinavianbusiness.com/article.php?id=34...

> It seems like when your company's revenue has been flat for over a decade, you should focus on improving your core offering of, you know, food quality, and not find new ways to annoy customers with data mining and extreme personalization.

That's wrong. McDonalds is real estate holding company that happened to sell fast food.

https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chai...

And why do you think that real estate is so valuable? Why do they insist on blanketing all their great real estate with McDonald's restaurants? Perhaps because it's a great place to sell McDonald's food?

Because those typically are newer buildings accessible to cars with drive ins. Those buildings are very valuable.

Contrary to strange beliefs of HN, most of business is really simple: make a little money every day over a long period of time. Invest in real estate. 50 years later it would be a very good very viable business.

Same goes for lawyer offices ( not law firms ). The "rich" lawyers do very well by having a small practice and buying a building that they use for law offices. Upon retirement most of their money comes not from selling the book of business to a different attorney but from selling a building that they have paid off.

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