From its first store in 1967 to its current 18,000+ branches worldwide, who would have thought that Domino’s had once faced a crisis on a medium that was still unfamiliar to many – the social media. Let’s take a look back on one of the first YouTube scandals in 2009 and the success of Domino’s response in restoring their reputation to regain their consumers’ trust.
The Video Prank Scandal
Back in April 2009, two Domino’s Pizza employees, Michael Setzer and Kristy Hammonds, shot and uploaded a video prank on YouTube that clearly violated public health-code standards. Hammonds took the video of Setzer putting cheese in his nose, blowing mucous on a sandwich, and placing a dishwashing sponge between his buttocks (video 1). You would hear Hammonds in the background saying “in about five minutes it’ll be sent out on delivery where somebody will be eating these…”
Within a few days, the video taken in a North Carolina branch, was viewed more than a million times. This was followed by viral spread through chatter on Twitter, as well as five references on page one of Google search. Although the employees told the executives that they had never delivered the contaminated food, the two were fired and faced felony charges. With the reach and speed of transmission on social media, the small incident had badly damaged the reputation of Domino’s Pizza. According to the research firm YouGov, Domino’s public perception turned negative from positive since the video was posted.
The pizza company was alerted to the video on the night it was uploaded. Instead of releasing an official press announcement to mainstream news outlets, the company’s approach in handling the crisis was to directly respond to bloggers who spread the video. They believed that targeting bloggers would help disseminate their response, contrary to tapping mainstream press which they feared would only encourage more people to watch the bad prank. However, as the video spread widely, Domino’s recognized that they failed to anticipate the “perpetual mushroom effect of viral sensations” and wished they had moved faster than they did. Two days later, Hammonds asked YouTube to take down the prank video claiming copyright, and on that night, Domino’s released a YouTube video with Patrick Doyle, then-president of the pizza brand, apologizing for the incident and thanking the online community for alerting them (Video 2). On the same day, as well, the brand created a Twitter account to address the comments in the twitter space.
After almost a year, Hammonds and Setzer were charged with felony adulteration of food. Hammonds pleaded guilty to a lesser charge and received a 45-day suspended sentence and 18-month probation. While Setzer, taking an Alford plea (“An Alford plea is a type of plea agreement where a criminal defendant pleads guilty to an offense but at the same maintains his or her innocence.” From www.hg.org), was given six-month suspended sentence, 24-month supervised probation, and was ordered to have no contact with Hammonds or Domino’s. Unfortunately, the North Carolina franchise went out of business and closed its doors in September 2009.
Slicing the (pizza) pie
More than ten years ago, crises involving social media were not as common as they are today, more so utilizing social media in crisis communications. Through the years, social media have proven that they are no longer an option for businesses but an essential tool to reach customers, gain insights, and grow brands. The Domino’s Pizza’s incident has brought several lessons for companies to learn about social media crisis that are still relevant to present times.
- Release response in a timely manner
Although Domino’s claimed that they had taken action by the time they were alerted to the video, they failed to show the public that they were on top of the situation. It took them 48 hours to release a statement that had led to additional outbursts from terrified customers and increased number of the prank video views.
- Steer clear of using traditional communication strategy in social media
Domino’s first response was to implement traditional strategy by trying to minimize the public attention on the issue. However, basing on the number of video views and comments on social media, they realized that the strategy failed. Taking in consideration the millions of views of the prank video, they decided to use the same channel where the incident broke out on. Posting an effective official statement on YouTube and creating an account on Twitter to engage with public became successful.
- Deliver effective PR statements
Press releases are crucial part of crisis management, and many believe that Domino’s did a great job with their official statement to the video prank scandal. Some of the good points of the video are:
1) it showed true sincerity that humanized the brand and the situation,
2) clearly explained the measures they were taking,
3) assured the public that the situation would not happen again, and
4) had the president, Patrick Doyle, appear in the response video.
- Build a loyal following on social media
Tim McIntyre, then Domino’s spokesperson, revealed that they had assembled their social media team a month before the incident. He added that they were still working on a strategy for their social media launch when the prank video came out. In spite of that, they were fortunate to be quickly notified by their staunch fans about the crisis. Otherwise, they might be too late to respond to the incident.
- A robust social media plan is a key part of crisis communication strategy
With 4.55 billion active users reach on social media globally, it is undoubted that social media are widely used for marketing by businesses. Hence, organizations must ensure to integrate their marketing efforts with their online crisis response plans, especially before the crisis hits.
- Convert the crisis into an opportunity
As others say, positive thinking is one great strategy to become successful in business. Domino’s did not just follow that but coupled it with some creativity and actions. In the same year as the incident happened, they launched a campaign ad that leveraged on the incident and utilized social media to collect feedback about their product. In addition, from an interview with Domino’s spokesperson, it was shared that they planned to implement their social media program which they had been preparing amidst the unfortunate incident. He said that they would use social media to talk about new products, address future issues, invite customers to check out their online ordering, among others. They also hired social media specialists to be the eyes and ears of Domino’s in social media space.
What went wrong?
What went right?
Domino’s Pizza turnaround
When the scandal broke out, the pizza industry was not doing well in the food business landscape. It only recorded a 2.5% increase in sales from 2002 to 2007 while overall US fast food businesses in the same period had grown 6.4%. In fact, Domino’s same-store sales fell from 1% to -0.7% in the second quarter of 2009, and a flat (0%) growth in the following quarter.
In addition, the company discovered from their Brand Tracking Study that “speed” and “best in delivery” were not the top drivers for pizza buying behavior of consumers anymore. It must be noted the company had been in the forefront of efficient and smooth delivery process during this time. In fact, in 2008, they launched Domino’s Tracker that allows customers to see the progress of their order online in real time, which today’s delivery startups have since copied.
They discovered that “taste” is the top customers’ consideration in food purchase, and Domino’s ranked last among the big three pizza chains in the US during that time. This was validated by their subsequent studies that revealed that consumers leave their brand because they “felt Domino’s pizza tasted more like the box than pizza”.
Pivoting from these reputational drawbacks, Domino’s knew that they had to innovate and remade their core product from the bottom up. They did not ignore the negative feedback but faced them head on. They came up with new recipes for crust, sauce, and cheese, and ran a research-driven marketing campaign called Pizza Turnaround, launched in December 2009.
To humanize the brand and show strong commitment to improve their product, they conducted a series of research methods and documented the process. They hired a documentary film crew that shot the focus group discussion participants while they gave negative commentaries about the brand and replayed the footage for the management and staff to capture their reactions. Employees were also asked to read online complaints about their products and highlighted their expressions as they did so. Instead of hiring a celebrity to narrate their story, the CEO was tasked to share how they changed their pizza. This conveyed a message that they know how to listen to their customers and that they acknowledged the need to change (Video 3). In addition, the chefs visited the focus group discussion participants who shared negative comments about their food and have them tried their new and improved pizza (Video 4).
In 2010, Domino’s succeeded and had surpassed their goal of 2% increase in same-store sales with 14.3% rise, the largest quarterly same-store sales growth in Fast Food history. Its stock rose 44% in the month after the launch, and the end-of-quarter share price showed 75% increase from the previous year. Their sales growth was also three times higher than Papa John’s and Pizza Hut’s during that period (Ibid).
From pizza shop to tech innovator
Following through with their overall goal of transparency and efficiency, Domino’s heavily invested in their IT infrastructure. After introducing the mobile ordering and pizza tracker in 2007 to 2008, they optimized customers’ ordering experience by launching Artificial Intelligence bot, named Dom. They have also tied up with Xevo, the leader of in-vehicle commerce and services for automakers, to deliver a pre-loaded in-car ordering system where customers can order their pizza with a few taps on the vehicle’s touchscreen in 2019. And as DoorDash and UberEats were coming for Domino’s delivery model, the company got even more creative to stay ahead of the game and pushed for e-bikes for shorter delivery time. They also began rolling out GPS delivery tracking technology in stores to ensure smoother process as store managers can visualize where the delivery drivers are.
Investing in technology in the past decade has benefitted Domino’s, especially during the pandemic. Their foresight to enhance their delivery, placing branches in route-optimized locations, and building digital brand and app have paid off. In the four-week period (March 23 to April 19) at the wake of the pandemic, Domino’s recorded 7.1% increase in same-store sales with 80% of it came from digital orders.
Food for thought
Domino’s, through the years, has demonstrated the importance of putting customer satisfaction first and foremost in business resilience and success. Clearly, the video prank scandal is a great tipping point for the company to innovate even further. They have shown us that it is not enough just to go back to pre-crisis condition but to yearn for something even better that helped them rebuild their customers’ trust and loyalty. All these have been made possible by listening to their consumers and committing to honesty and transparency.
Context is also one critical aspect of their business strategy. Domino’s did not stagnate but has always been progressive in aligning their strategy with the tides of time. Recognizing the impacts of technology and embracing its use in their food business processes have made them pandemic resistant. And just to show how much leap the brand has made in the past decade, a 1,000 USD investment in August 2011 would be worth 21,136.53 USD ten years later. A 2,013.65% gain.
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