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. 9:40 Iceland does have a national minimum wage for a full-time job which is around 310k króna (2800 dollars) per month. Most people however earn more than that due to powerful unions

  2. Here in Norway, Domino's had nothing over the competition other than maybe price. The pizzas were smaller, thinner and overall worse quality dough and topping.

  3. Icelander here: Had a Domino's pizza yesterday. They make some decent quality pizzas here in my honest opinion. My personal take on their success here is how much they want to do for the customer, any mistake and they'll bend over backwards to correct it.
    Wrong topping on a medium sized pizza you got for half off and picked up? Let us deliver to you a new one, you keep the old one and add a free soda to it.
    Most local pizza chains can't compare in that way,

  4. They failed because the quality was really bad and prices too high – simple as that. Make a good product at the correct price and people will buy it – Dominos did not do this.

  5. The domino restaurants in Norway just did not have good tasting Pizza's, compared to chains like Peppe's pizza and Dolly Dimple. I visited Dominos one time, never again. In Norway quality and taste is more important than price.

  6. I'm Norwegian and think you're absolutely wrong in your analyses. Funny you don't even interview any Norwegian analysts, only some dude with a funny sounding accent. It's not about us "preferring local brands", it's about preferring the authentic Italian style pizza over industrially mass produced pizza with pepperonis perfectly lined up. In other words, people prefer authentic quality food and it's only slightly more expensive than Dominos. People here are also care about health and fitness and people easily see that the huge load of cheese on top of a Domino's pizza that has double the crust thickness has twice the calories. It's simple maths.

  7. Who in the world would call their restaurant a one or two on the dice, when 6 is normally considered best number, had to loose 😂🤣😄

  8. the only pizza shop i ever seen in my entire life in the north that wasnt local was a domonis… i mean there literaly arent any chains. maybe a few in copenhagen but actually i do not think that there is

  9. At my local Domino's(Norway), the pizza are more expensive, lesser in size and generally lower in quality than the local brand's i.e Peppe's pizza.

  10. Make the Nordic countries a testbed for food delivery drones. That's literally all that's required. Dominos should team up with Amazon. Eliminate the delivery driver; they usually just reek of weed and apathy anyway.

  11. But…The Omg fact is that…In the Southeast Asian region they r just like giant-food chain guru…everyone show food addiction to their delicious recipe🍕🍟🍕

  12. I live in Stockholm, Sweden and have never herd of a dominos here. That’s probably one of the reasons why they are struggling here

  13. I've bought a few pizzas from Domino's here in Norway. But usually just like once a month, and only their cheap deals.

  14. Its just that the amarican standard for good food is too poor compared to the standard people in the nordics have

    When they want frozen pizza over your fresh baked ones just that says enough

  15. Living in Denmark, it is my experience that local pizza is run and operated by immigrants at a lower cost in facilities and salary and without the influence of union.

    When eating Dominos pizza in Denmark(and Iceland), the cheese was often referred to as “plastic” due to the tendency become hard when cold, that in combination, with the bread resembling toast bread, that is maybe why it is often referred to as American style pizza. In contrast, the local pizza often resembles Italian style pizza which associated with quality.

    All in all, I love our local pizza. The guys that run our local place “Milado Pizza” are from Turkey, and they are very good and I like the service 👍🏻 🍕🇹🇷👍🏻

  16. 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.

  17. 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

  18. 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

  19. 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.

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

  21. 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.

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

  23. 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.

  24. 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.

  25. 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.

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

  27. 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.

  28. 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.

  29. 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.

  30. 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.

  31. 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

  32. 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

  33. 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.

  34. 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.

  35. 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

  36. 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

  37. 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

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

  39. 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.

  40. 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.

  41. 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.

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