What Happened To Domino’s In Northern Europe?


Iceland is a notoriously tough
market for international fast food chains to break into. McDonald’s, Dunkin’ Donuts and Burger King
— they’ve all tried and failed in Iceland. But there’s one
American fast food chain that Icelanders are obsessed
with — Domino’s. Of the three big international
chains with significant presence in Iceland, the pizza chain has the biggest
market share in fast food by far. Domino’s also has a huge
footprint for the small island nation. There is a Domino’s restaurant
for every 14,000 people. Its owner says Icelandic Domino’s are
some of the best performing Domino’s around the world
by weekly sales. So Domino’s decided to try
to expand into Iceland’s neighbors. In 1997, Domino’s opened in Denmark and
then in Norway and Sweden in 2014 and 2016. But other parts of Scandinavia just
aren’t buying what Domino’s is selling. In early 2019, Domino’s Danish
business went bankrupt and in October of 2019, UK-based company
Domino’s Pizza Group, which owns stores in Sweden, Iceland and Norway,
announced it would exit those markets. Its business there
just isn’t profitable. And now the company is
looking for a buyer. And you know, I think the
sale is a preferred option. But if they don’t find a buyer,
you know, let’s not forget these are sort of sustained
loss-making businesses. They might not find a buyer for
all of the markets, in which case they simply have to
close them down. Closing those restaurants would be the
last resort for Domino’s Pizza Group, considering the chain’s track record
of success in the UK and other parts of Europe, why is it
that Domino’s failed to deliver in most of the Nordics? Two Irish-American brothers Tom and
James, Monaghan opened the first Domino’s in Michigan in 1960, and
by 1967, Domino started opening franchise locations across the U.S. By 1978, it had
grown to 200 stores. Domino’s first international store opened in
Canada in 1983, and as of 2019 there are 16,500 Domino’s
in more than 85 countries. And more than half of its sales
come from outside of the U.S. Domino’s has spread around the
world thanks to franchising. The U.S.-based Domino’s Pizza partners
with master franchisees and international markets who in
turn can subfranchise. The company looks for partners who
have knowledge of the local market. That model lowers the
risk of entering international markets for Domino’s Pizza. Domino’s presence in
the Nordic region started in Iceland in 1993 and the
brand was a hit. The local operator thought it could do
well in Denmark, too, where it arrived in 1997. Domino’s opened up shop in Norway in
2014 and expanded to Sweden in late 2016. But the brand doesn’t
have a presence in Finland. The business in Denmark went bankrupt
after a TV network exposed poor hygiene and expired food
at the restaurant. Another franchisee, Australian company
Domino’s Pizza Enterprises, paid about 2.8 million dollars to buy
stores in April 2019. The Australian company now operates
in six European locations, plus Japan, Australia and New Zealand. Of all those European markets,
Domino’s Iceland is a standout. Its owner says restaurants there
have clocked higher average weekly sales than any other
Domino’s on the planet. But Iceland can’t prop
up the entire bloc. In the first half of fiscal
year 2019, Domino’s Pizza Group’s international markets, which includes Norway,
Sweden and Iceland, had operating losses of 8.1 million dollars. In fiscal year 2018, Sweden had
the lowest average weekly sales per store for Domino’s Pizza
Group in the Nordics. Based on Domino’s success in Iceland,
the chain seemed poised to work well in other Nordic countries. The Nordic bloc is a region
of northern Europe that includes Denmark, Norway, Sweden, Finland and Iceland
and their associated territories like Greenland. They’re all independent
countries, but they share key things in common. The Nordic economic
model has strong labor unions, high taxes and provide services
like education and healthcare, making them expensive places to live. But the five Nordic
countries are also wealthy. Their GDP per capita, a metric that
breaks down the country’s GDP per person, ranks within the
top 10 in Europe. The Nordic countries take pride
in their culinary traditions. After a period of industrial
food production that brought processed food to the Nordics, in the early
2000s there is a shift toward more organic and locally produced food. Eating habits in the Nordic countries
put strong emphasis on families eating together at home. Responses to a survey conducted in 1997
and then again in 2012 showed that family meals hadn’t decreased in
Nordic homes, despite the fears that introduction of fast food in
the 1990s would drastically reduce the number of families opting
to eat at home. In the Nordic countries, health
and wellness are also important values. A survey of Nordic people
predicted that some of the biggest Nordic food trends in 2019 will
be meat free proteins, holistic diets and baking pastries with beans. So where does fast food fit in? Nordic consumers haven’t embraced global fast
food chains as fully as other countries, and when they do opt
to eat on the go, more often than not, they’re opting for local
chains rather than global fast food restaurants. Consumers tend to prefer
local chains for a couple of different reasons. Part of it has
to do with loyalty and trust. In both Sweden and Norway, global
brands have a stigma of being unethical and consumers perceive them
to be prioritizing profits above all else as
opposed to local brands. In terms of competition, these two countries are quite
interesting because they have very, very strong local brands as evidenced,
for example, by case of Sweden and the burger competition
in this country. So there is a big local
brand called Max and quite successfully manages to challenge established players
like McDonald’s due to local appeal, local expertise
in the market. Nordic consumers also take pride
in supporting local brands. Analysts say local restaurants have
more market knowledge in fast food than international chains do, and
they are faster adapting menus to local tastes. Take, for example, the meat
free trend in Norway. Swedish burger chain Max jumped
on the trend early, offering meat-free burgers. It set off
a domino effect and McDonald’s ultimately introduced a veggie McSpice
and two vegetarian wraps in 2017. In both Sweden and Norway,
the pizza market is highly fragmented, with local and independent
chains making up more than half of the market
in the two countries. The biggest pizza chain in Norway
is locally run Peppes Pizza, which has 39.1 percent of the
market as of 2018. Domino’s tried growing quickly in
Norway by buying another Norwegian chain called Dollie Dimples
in May 2017. It was a massive expansion of
Domino’s footprint, but analysts say it presented some problems, too. So I think when they acquired the
business, they thought it would be a very simple you’re buying a pizza
operator, you kind of change the logos, change the product a bit
and suddenly the store goes from being a local pizza restaurant
to a Domino’s Pizza restaurant. Instead, what they didn’t realize
was that this business wasn’t really set up in the same way
as a classic pizza takeaway company. Analysts say Dolly Dimples wasn’t
particularly efficient and Domino’s didn’t have enough demand to keep
up with its new large footprint. Converting Dolly Dimples stores into
Domino’s, increase order counts and sales for the chain,
but the stores weren’t profitable. Plus converting them took time
and money, which was especially problematic in an expensive
country like Norway. In the U.S., Domino’s won the
pizza wars with delivery, but the Nordic countries are among the
smallest markets for food delivery. That was a big part of the
problem in Norway when Dolly Dimples was taken over by Domino’s. Dolly Dimples was more about dining
in rather than taking out for delivery. Pretty much the opposite
of Domino’s typical strategy. The market for delivery
in Scandinavia is small. That’s partly due to the fact
that population density of the Nordic countries is low, so delivery
drivers have to travel further distances. It also didn’t help
that Domino’s entered Norway and Sweden just as the delivery
wars were heating up. While the market for delivery is
relatively small there, are a handful of companies compete
for the market share. If in the past, Domino’s Pizza
was unique because not many other restaurants would deliver food to
consumers, nowadays, almost every restaurant — a vast majority of
restaurants in Norway and Sweden — are working with delivery services,
which means that their competition is much wider than
it was in the past. On a call with analysts, the
CEO of the local franchise running Domino’s in Iceland, Sweden and
Norway said it was considering eliminating delivery entirely from certain
stores at lunchtime in Norway. Analysts say that this is
likely due to lack of demand. Frozen pizza is also
huge in Scandinavia. Instead of ordering delivery, some
people might choose frozen pizza instead, especially in Norway, which
has the highest spending per person on frozen pizza
of any country. Norwegians spend almost $56 dollars per
person on frozen pizza each year. One frozen pizza brand
estimates Norwegians eat approximately 47 million frozen pies every year. Living in the Nordic countries
is relatively expensive compared to the US. There’s a lot to do
with higher taxes to pay for social welfare system and higher costs
of goods and services. Domino’s Pizza Group, the franchisee
in the Nordic countries, cited high labor costs as one of
the reasons its business was unprofitable. In Iceland, Norway, Sweden and Denmark,
there is no national minimum wage, but there are
very powerful trade unions. These unions and other employee
groups negotiate fair wages by industry, experience and age. I mean, even despite the fact
that these countries don’t have a minimum wage the basically labor
laws, the bargaining power of workers is very, very strong. In Nordics, equality are quite
strongly embedded their culture so it’s quite hard to optimize
and cut down on labor costs. In the case of Norway, workers above
the age of 20 in hotel, restaurant and catering industry must be
paid at least $18 an hour. That’s almost double what minimum wage
employees in the UK are paid. Minimum wage in Britain dictates a worker
between the age of 21 and 24 years old must earn
just above $10 an hour. When part of what makes pizza
attractive to customers is its affordability, high labor costs can
drag down a business. You know this model works if
you’ve got relatively cheap labor where you can get people just to churn out
pizzas and you make then quite a nice margin on that, so they want to
sort of pitch it as a as a mid-market take away
or delivery option. But if the cost of the labor
producing that is prohibitive and your margins get squashed, that I think that
is probably one of the big contributors to the fact that it
was loss-making in recent quarters. Domino’s may feel more of a squeeze
from high labor costs as the Nordic economies slow. Global trade tensions and a variety
of domestic problems are causing a slowdown in the Nordics, according
to a 2019 Reuters poll. Particularly in Iceland, where Domino’s
has been the strongest, the chain is struggling due
to weak macroeconomic conditions. While Domino’s still makes money there,
it’s not as profitable as the market once was. In the third quarter of fiscal year
2019, same store sales in Iceland were down 8.2 percent. Company executives cited a decline in
tourism and a weak market overall. It also shut down one
of its locations that quarter. If you look at the macro data
in Iceland, it’s certainly not as good as it’s been in previous years. All of these places, as I
said, there’s high operating cost markets, those costs increase every year and
you need to be generating more sales in order to
compensate for that. Domino’s Pizza Group, the UK-based chain
that owns Domino’s in the Nordics, also has problems at home. Shares of Domino’s Pizza Group have
fallen about 25 percent from their peak in 2016. It’s fighting with sub-franchisees over how
it shares the profits and facing weak consumer confidence
as Brexit looms. Domino’s Pizza Group was unable to
comment due to the ongoing transaction, but even its management has
said they just weren’t the right ones to be running a
business in Sweden, Norway and Iceland. The CEO of Domino’s Pizza Group,
which is the master franchisee of the US Domino’s, said that his company
was not the best owners of these businesses. Now Domino’s Pizza Group
is in the midst of selling its international business. That includes Domino’s stores in Iceland,
Sweden and Norway, as well as its business in Switzerland. Analysts say that these restaurants could be
sold as a group of four or individually. In Sweden, I think there’s a
possibility of finding someone who might be willing to just buy that outright,
because while it’s making a big loss, it’s very
early stage business. It’s not got the same kind
of potential structural problems that sort of Norway and Switzerland have. Domino’s unprofitability in parts of the
Nordic bloc may make finding a buyer difficult. And flat out closing those restaurants
would be the last resort. But there is hope
for the American chain. Even Domino’s in Denmark found a
buyer after the local Domino’s franchisee went bankrupt in 2019. Domino’s has been successful
in other European markets. That shows that the Nordic countries
probably aren’t a lost cause. Analysts say acquisition
by U.S.-based Domino’s or the Australian-based Domino’s
is possible for the business in Iceland, Sweden and Norway,
or a local operator could take over. With little to no
competition from global pizza chains, Domino’s should have been in
prime position to succeed in Scandinavia. But the big question now
— will Scandinavians ever give up local pizzas in
favor of Domino’s pies?

100 thoughts on “What Happened To Domino’s In Northern Europe?

  1. Dominos tried to Set food in germany with their american style Pizza but failed so the bought the biggest Pizza delivery Service instead a couple years later.

  2. I think that its a big success in Iceland because its likely the cheapest place to eat for tourists. Iceland gets also more tourists per capita then any other nordic place

  3. FOUND OUT THEY'RE "BORN AGAIN" NUTS THE OPPOSITE OF WHAT SCANDINAVIA STANDS FOR
    You can download the file here:
    0810180120(2).mp4
    https://yadi.sk/i/IwGy1TGLwRUZAw
    You can download the file here:
    0810180120(2).mp4
    https://yadi.sk/i/IwGy1TGLwRUZAw

  4. The fact you call them pies just makes it so clear what has gone wrong. Localise the product and brand. The franchisee model results in very different levels of service even regionally also.

  5. Bullsh/t there is pizza place on every corner that is run by immigrants that sell better pizzas for 5-6€ a piece.

  6. Domino's here in Iceland is just as terrible, I don't really understand why it gets so much praise, it's greasy, not very flavorful, and incredibly boring.
    They don't even deliver where I live even though they're literally a 10 minute drive away. You can't even save it for the next day without the sauce drying up and it ends up looking like pieces of dried up cardboard left out in the sun for a few hours, and the taste is absolutely putrid, seriously. If you want actual good pizza you'd have better luck going to the few local places that make it, or go to our mall in Reykjavik which has the only Pizza Hut location left on this Island, at least they know how to make something decent, like seriously, the difference is hilarious.

    https://imgur.com/a/SVpU0uW

    It's quite depressing that Icelanders think this is remotely edible.

  7. noteworthy that this video covers Domino's stores in Europe but, all the cash used in the transactions are US$ notes.

  8. Re: Kitchen Rules/HealthCode/Cleanliness.

    Dominoes Pizza is good tasting pizza! 👍❤💙✅

    (2:22; 2:36; 2:44; 3:17; 4:54; 10:58) ~ — But Dominoes Pizza and ALL restaurants, whether Fast Food, or Five Star, should PLEASE.train your employees to 1) wash hands thoroughly; 2) then, always wear gloves in conjunction, after washing hands. 3) Also, 'money handlers' have no interaction with food, nor drinks/cups, nor pizza boxes. And when assembling the pizza, ALWAYS wear gloves, instead of assembling with their bare hands. And change out gloves frequently.

  9. American thought their culture dominate the whole world and therr arre demand for their products. They are dead wrong that they can conquer local competition by "american" taste.

  10. High labor costs… aka: Could not find people desperate enough to work for a wage that keeps them in poverty… I mean their labor costs as much as any other fast food restaurant, labor for food always happens in the local market, so that's not a real reason.

  11. Dominos is garbage. The box tastes better than the pizza. Pizza Hut is still the pick of the big ones and that’s average

  12. As an Icelander whos tried US Dominos im not surprised people dont like it there as it tastes artificial and off putting. Our Dominos uses proper cheese and tastes amazing. I encourage anyone who goes go Iceland to try our Dominos, its way better than you might think.

  13. In sweden's case it's easy. Sweden has better pizza than both New York and Italy. I dare you to come and try. You will never call Dominos and Pizza huts pizzas for pizza. The yankee pan pizza is just not good enough.

  14. I have a Dominos close to where I live. There’s like 5 toppings to choose between while the all other nearby pizzerias has at least 15. I have no clue how they could get that big in the US if that’s what they bring to the table.

  15. People just prefer better eat outs fresh not frozen food, vegan and organic, local grown it's easier to track down, healthier and good for the environment.
    Mcdonald's, BK, KFC etc. just doesn't really offer that, however their menu's consists of frozen, processed, hydrolyzed foods and when a customer has to complaint ,hen has to contact the entire pyramid of the franchise structure, that is if of good will, they might compensate you or refund the value of the menu you'd purchased.
    Since it's better for the environment and good for you, it both helps the carbon foot prints of our planet earth and in return all living organisms.

  16. You used a graph at 7:50 which shows total, not per capita. France has 66m people and 33m delivery users, Denmark has 5.6m people and what looks like 3m users. So the same size as France

  17. I'm sitting here in western Canada enjoying a very fairly priced delicious Red Swan pizza as I watch this, Dominos round here aint as good

  18. Dominos = fresh made supermarket deepfrost pizza.
    Dominos can not compare to a real pizza from one of the many many local pizza shops in Denmark.
    In Denmark dominos was something you try once and never try again.

  19. Norwegian here, Dominos is shutting down operations here after about 5-6 years of operations. Their main problem IMO has been PRICE. Their pizzas are expensive as hell compared to other similar pizza chains. A large, family sized pizza at local Norwegian pizza chains are about 18-20 USD. At dominos however, they’re about 35-37 USD, and Domino’s pizzas are smaller. I personally loved the greasy pizzas at Dominos, but it’s honestly not worth it at almost twice the price.

  20. Only tried Domino's once in Australia and it was worse than just buying a frozen pizza. You couldn't even make changes as the poor souls there were actually using frozen pizzas

  21. The reason is that in Sweden we already have good pizza restaurants that we always eat at. Arab pizza restaurants. The Syrians pretty much own the Stockholm area when it comes to pizza restaurants

  22. I would say, that’s there more to it then that, here in Denmark, you can get a frozen pizza, that tastes a lot better then dominos, and they even cost half or less, for the same “amount” of pizza, and most pizza places cost the same, and have better pizza dough, but also, most pizzerias have open to 23:00, so for most people, it just isn’t worth it going to dominos

  23. Dominos is failing in Norway atleast because they are crap compared to other huge chains like Pizzabakeren, bankers and Peppes.

  24. Worst pizza I've ever had. I tried it when it opened in Gothenburg and everything tasted like it was old, and just cheap. And despite that it's a really expensive pizza. Our normal pizza places are far superior.

  25. As a Norwegian I can say that the quality of dominoes pizza is to bad. We have way better pizza chains that are well established. The only thing that is good on domino’s menu is the cinnamon sticks. The pizzas are not the same quality as the competitors. I would rather pay twice the dominos price to eat a pizza that is good and not soaked in fat like the dominos pizza.

    Also the stigma around the fast food chains are a big thing here. In my opinion fast food is not considered a proper meal. We cook most of our meals at home and rarely eat out or get takeaway. If we opt for fast food, it is after 1am on the way home from a night out. For lunch we bring our home made sandwiches, it is really a tradition in Norway.

  26. Why do I get Dominos? Because I can order without calling someone and they deliver to my door. Is it the best food in the world? No, but sometimes I can't be bothered to go into town.

  27. dominos is such a rip off, I dont know why any one shops there, in the uk its like £20+ for a a tiny 10" pizza when i can go to local shop that sells a 14" pizza for £9 delivered! I used to go to papa jhons a lot when it was any pizza nay size collection for £9.99 and get an XXL which was like "18 but these days the XXL is the same size as the old XL and cost £12.99 collection, so I dont bother, In the uk you can get 14" pizza in asda for £4 made to your liking and you just have to cook it at home, I have had vouchers for Dominos come threw the door and look at using them, but the pizzas where like £25 and wise like WHO TF is paying £25 for a small pizza!

  28. So called smart people are incredibly stupid. The other nordic nations have much higher proportions of immigrants running pizza shops.

  29. if i or anyone i know would buy pizza then u just go to one of the local pizza places, it's not even to think about to buy from dominos or pizza hut or anything like that. legit forget those exist (im from sweden btw)

  30. did not even know dominos existed in sweden untill now, idk maybe wanna check it out now?? but i have kinda low expectaion so idk if its worth

  31. Summing up by the comments here, American fast food franchisors make assumptions that what is good for America’s is good for the rest of the world. They all see Europe as one big block and fail to make their homework on targeted countries , often relying on the enthusiasm of a proposing master franchisee.

  32. In addition to what was brought up: I believe that timing was also an issue…

    I'll try to explain: In Norway Peppes Pizza was established ca. 1970 (I guess it would have been similar i DK and SE for their local brands). And they had used a long time learn, adapt menus, locations, deliveries and even shape the pallets, taste and expectations of the customers.

    It was in a way a bit too late for Dominos to just enter the market with brute force. That could have worked if they came in 1985, but now the only way they MAY have had a chance in 2014 would be if they came in with more awareness, humility and adabtability. And if they learned from-, and adapted some of their offering from Dolly's or Peppes (in addition to what the video says about adapting to new and more healthy or even modern selections).

    It was simply a bit to clumsy 30 years too late.

  33. You do know that the rest of fast food restaurants in Norway, Sweden and Denmark have to pay the same wages as Domino and they are still afloat, don't you?

  34. To me this was completely unnecessary. American fast food businesses have plenty of business here in this country. They have no business being in other countries. I think their losses serves them right.

  35. No mention of how PizzaHut has been moderately successful in the same region? Or would that put too much blame on Dominos themselves?

  36. Im from iceland and the only reason for this is that there arent any other palces to eat exept maby one or two pizza huts trust me people here would love some mcdonalds

  37. Yeah we have 3 local pizza places in my town of 5000 people and like they offer pizza that Dominos doesnt offer at all so…

  38. It’s quite simple. Domino’s pizza is terrible. People who can afford good quality food won’t eat at Dominos, because… come on 🙂 People who are more price conscious – won’t eat at Dominos, since they can buy frozen pizza and save money while getting similar experience. Don’t need an analyst to it.

  39. Out of all the big pizza chains, Pizza Hut, Papa John's, Little Caesars, Pizza 73, Domino's is by far the worst. Their bread is undercooked and doughy, their wings are a dripping mess, and the toppings are cheap and tasteless.

  40. every country has its own pizza culture.. here people prefer italian style pizza and there are hundreds of restaurants to chose from.. fun fact I know the guy who bought and runs the domino's pizza franchise (with his father's money) in my country and I think he will fail..

  41. Its not profitable because no one wants a gross as Dominos pizza when denmark and Sweden has some of the most amazing and unique pizzas ever. Plus no one wants a think crust pizza. Ever.

  42. The pizza culture is really strong in the nordics but its nothing like chain pizza. Even if pizza franchises does exist its familj owned and like 5-10 locations based inside larger citys.

    I think the answer is so much more simple then you make it out to be. Dominos was way to late to go to Sweden in 2018 when big companys like uber eats and foodora already has an insane marketshare. The only thing dominos has that they lack is basicly campaign offers and thats not enough to try and change what kind of pizza swedes like (Swedish pizza is not as thick as regular dominos pizza and the condiments are quite different.

  43. If Dominos did a basic survey of Sweden they would notice that we already have plenty off Pizza places. And that our Pizzas are a bit different to Americans ones. I am surprised that Pizzahut has done as well as it has, but I have noticed that Pizzahut survive because we view them more as an in between fast food and regular restaurant.
    Americans should stop being surprised that their companies won't work in other parts of the world. Your ignorance is outstanding.

  44. When dominos appeared in sweden everyone was hyped, just as hyped as with KFC. When it opened we all went there mostly because of the hype but after tasting dominoes pizza it just doesnt compare to our original swedish pizzas. American pizzas tastes like our store bought freezed pizzas and we only by them on emergencys since its not very healthy or tasty. And not just that, dominoes pizzas cost almost the double of what we pay for a regular swedish pizza the same size.

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