The pizza industry has come a long way from its bread-and-butter, cheese-and-pepperoni beginnings, with brands using tech and data collection in ways their founders could have only dreamed of. We tracked down some of the oldheads of the industry to ask about how technology shaped their work. The more we talked, the more we realized tech was baked in from the very beginning. Let’s review.
Phones and that all-important number
In the days before the pizza tracker and the app-frenzy of the digital age, pizza shops were among the early quick-service businesses to realize the benefit of that most analog of technologies: the telephone. Getting dinner was a matter of picking up a rotary or touch-tone phone and dialing. Dave Brandon, executive chair of Domino’s and one of the company’s former CEOs, knows this business by heart.
Prior to joining Domino’s, Brandon was a leader at Valassis, the Livonia-based company that pioneered coupon inserts in newspapers, and mailed direct to homes. At Valassis, and later at Domino’s, his goal was to make the phone connection as convenient as possible.
“We'd give you a magnet that would go in your refrigerator with that phone number. We would send that out and all of our print ads. Our job was to get that phone number in your head and get it next to your phone,” Brandon said.
Putting data to work
In the mid 1980s, while pizza chains were busy utilizing the power of the landline, a marketing manager named Steve Green was waking up to what all those customer phone numbers might do.
These days Green publishes the industry magazine PMQ, but decades ago, he worked at Domino’s as their marketing director. He says the company developed an early form of database called DAOT. Domino’s used it to send mailings out to all the customers in their database.
“I realized that I wanted it to do a lot of other things,” Green said.
Armed with the knowledge of who ordered pizza, and the dates and times of their orders, Green saw ways to boost sales, to goose receipts with special deals on slow days. He called his creation Green Mail.
“I really was sort of an evangelist for it. I was really trying to get Domino's to buy into my system. And eventually they went into competition with me.”
A computer takeover
As pizza entrepreneurs sought ways to spark their businesses with data insights, a new invention was about to douse the playing field with a volatile accelerant: computers.
Many companies experimented with digital ordering systems, as an alternative to handwritten, error-prone paper records.
And most of them shared the experiences of Hungry Howie’s, another Michigan-born pizza chain that now has more than 535 stores in 21 states. Steve Jackson, the CEO of Hungry Howie’s, was there when the early terminals arrived in the mid 1990s.
“You’ve got a hot, floury, dusty environment and you're taking this special piece of equipment, a computer, and putting it in a store. So that was an interesting transition for those developers to to get it to the point that it would survive the battlefield,” Jackson said.
But Jackson saw the same benefits of computers — and computerized databases — that other pizza chains had witnessed. With customers’ names and phone numbers, a new world of possibilities opened up.
It wasn’t long before customers got computers of their own.
Back at Domino’s, engineers were busy trying to hatch an online ordering system. Dave Brandon recounted flying to the company’s test market, Las Vegas, and checking into a hotel to test the system.
“I started going through screens and filling out this and filling out that … 13 minutes later, I pressed the button that said, ‘Order, please.’ And the pizza arrived.”
The pizza arrived, but Brandon, and his successors, knew the process needed to move faster.
After much trial and error, Domino’s now makes 80% of its sales from online orders.
Pizza and the CIA: industry intelligence
The convergence of data and digital hardware put Michigan’s pizza brands in an unprecedented position. The career of one Stuart deGeus, recently retired from Little Caesars, shows just how much has changed. A veteran of marketing at Wendy’s, McDonalds, and other quick-service giants, deGeus went to work for Domino’s in 1990, during a period of rapid international growth. Shortly after founder Tom Monaghan sold the company, deGeus signed on with Mike and Marian Ilitch’s rival brand Little Caesars, rising to an intriguingly-named position: vice president of concept and industry intelligence. After an eye-opening week of training with ex-CIA and FBI analysts, deGeus dug in to deepen the company’s grasp of trends at other pizza chains, compared with what Little Caesars was doing.
“It wasn't just collect[ing] the data,” deGeus said. “That was part of it, of course. But how do you analyze it? What does it really mean? ... Should we be in the delivery business? Should we have a deep-dish product? What about gluten free crust?”
DeGeus’ mastery of pizza-industry cross-currents was part of what propelled Little Caesars within striking distance of rival brands. Moreover, it shows what was possible once the arsenal of big data was put to work.
Steve Green, of the pizza news journal PMQ, said analysis of pizza data has changed the industry so much that it’s actually easier for brands to make money in the modern pizza market.
“Many of the pizza chains … invested heavily in tech and delivery technology over the last five years,” Green noted. “They also taught our whole industry how to do it. More importantly, they created an army of technology service providers. … There’s just so many more tools available for selling pizza and making pizza better.”
Ushering in Uber and DoorDash
We can’t talk about pizza’s tech revolution without the seismic changes brought on by third-party delivery companies like Uber Eats, GrubHub, and DoorDash. The industry is evolving again.
With blinding speed, the third-party apps have taken the place of company-employed drivers at brands like Hungry Howie’s and Domino’s, confounding long-standing truths about the economics of the pizza business.
Hungry Howie’s CEO Steve Jackson noted the pizza business has “always been a coupon driven discount business.” Menu prices tend to be higher than what you see listed on deep-discount coupon specials. Brands can increase their margins with special toppings, side dishes, drinks, and other extras ordered at scale.
“When these third-parties came in and wanted to start charging 30% of the order, I said ‘It'll never work,’” Jackson recalled.
But then, something astonishing happened: Consumers got used to the convenience of third-party apps, and were even willing to pay menu prices.
“In the last 24 months, we developed a relationship with DoorDash. … They're handling about 6% of our business, which is baffling to me,” Jackson said.
Effect on indie pizza shops
There’s no question smaller shops have struggled to keep up with the tech innovations that are de rigueur for the larger brands. One restaurant industry analyst figures we’re losing independent pizzerias at a rate of hundreds, and often thousands, per year — stores who have fallen behind the ever-changing goal post set by large chains’ investments in tech.
However, innovation happens for small pizza makers, too. Apps like Slice, launched in 2010, offer portals and other services for indie pizza shops who can’t afford to build and maintain their own interface for customers.
The math suggests uncertainty, even for some of our favorite Michigan pie makers. But pizza finds a way, every time, in spite of tech, or — more often — because of it.
