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The Dough Starts Flying: Domino’s Takes Off

Article Overview: “We had no idea what we were doing” recalls Monaghan of his and his brother’s first venture into the pizza business. “We opened up without an attorney. I didn’t even collect sales tax – didn’t know I had to.” Initially, the plan was for the brothers to each work half nights. However, when Monaghan’s brother refused to give up his job as a full-time mailman, Monaghan traded his Volkswagen for his brother’s half of the business.

The Dough Starts Flying: Domino’s Takes Off

“We had no idea what we were doing” recalls Monaghan of his and his brother’s first venture into the pizza business. “We opened up without an attorney. I didn’t even collect sales tax – didn’t know I had to.” Initially, the plan was for the brothers to each work half nights. However, when Monaghan’s brother refused to give up his job as a full-time mailman, Monaghan traded his Volkswagen for his brother’s half of the business.

Now, Monaghan was in it on his own. When the store closed at night, Monaghan would have to not only pay the bills, but also make the dough, shred the cheese, and prepare everything for the following day. “That’s how I became the fastest pizza maker in the world,” he jokes. In his first year in business, Monaghan might have been extremely busy, but he wasn’t making any money to show for his hard work. “I couldn’t pay the bills,” he recalls. “My life was going down the tubes. I had all this debt.”

One particular night would forever turn things around for Monaghan and his struggling pizza operation. It was a busy Sunday evening – their busiest night of the week since the university dorms nearby didn’t serve meals on Sundays – and most of Monaghan’s recently hired employees had not shown up for work. Monaghan was trying to decide whether or not to open when one of the staff suggested eliminating the six-inch pizzas; it took the same amount of time to make and deliver as the larger pizzas, but cost less. At the time, DomiNick’s had five sizes of pizza, but the six-inch was the most popular.

“I decided we would try that, and if we got behind, we’d pull the phones,” says Monaghan. “We never got busy, and yet we made 50 percent more money that night than we ever had. All of a sudden I was making money, just like that.” Monaghan finally began making a profit, which allowed him to expand his business. He bought an additional two outlets, and changed the name of the company to Domino’s – an equally Italian sounding name – since his friend Dominick wouldn’t let him keep the use of DomiNick’s. Appropriately, Monaghan also decided on using a domino for his company logo. “I decided we’d put three dots on the domino because we had three stores, and every time we added one, we’d add a dot,” he recalls. “You can see I wasn’t thinking of a national chain back then.”

After meeting McDonald’s founder Ray Kroc and John Brown of KFC at a franchise seminar at Boston College in the late 1960s, Monaghan got inspired and decided to expand further. He met with a broker who advised him to “get more professional” – hire people with business degrees, computerize his accounting system and grow. Monaghan followed the broker’s advice and in just ten months, had gone from 12 stores to 44.

The company continued to struggle over the next decade, with many Domino’s franchises experiencing trouble turning a profit. For a time, he lost 51 percent of the business to a bank, and was faced with a lawsuit from many of the franchisees. Eventually, Monaghan regained control of Domino’s and one by one, began winning back his franchisees. By focusing on speedy home delivery, the Domino’s chain rose to become an industry leader.

In 1989, Monaghan had a religious awakening and took time off from Domino’s, during which time the company revisited its unprofitable ways. After two years, Monaghan returned to Domino’s and brought the company back to life. He sold the company to a Boston-based investment firm in 1998 for $1 billion, and now spends his time devoted to philanthropic activities.

It was Monaghan’s single-handed efforts that grew the Domino’s chain from a small, struggling shop into a global pizza empire.

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Article Tags: amount of time, brother, cheese, dominicks, dominos, first venture, full time, inch pizzas, job, mailman, making money, pizza business, pizza maker, sales tax, sunday evening, tubes, volkswagen



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