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Why the dairy checkoff partnered with Domino’s

Published on 06 May 2016
Domino's pizza

Pizza cheese – once a decades-long staple for dairy farmers’ bottom line – was showing signs of trouble in the mid-2000s after several years of continual decline.

Companies were putting less cheese on their pizzas and more emphasis on non-pizza items like chicken wings and salads.

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The dairy checkoff committed to address this situation and for good reason; about 25 percent of all U.S. cheese ends up on pizza. So the checkoff sought a strong partner who believed that, together, we could revitalize the entire category. That partner was Domino’s, and in 2008, we started down the path to grow cheese and pizza sales.

It was a natural fit. Just nine months into the partnership, there were signs of encouragement following the launch of the American Legends line of pizza that use up to 40 percent more cheese than a traditional one-topping pizza.

Since then, the partnership continues to evolve and benefit dairy farmers. In 2015, more than 3.5 billion pounds of additional milk was sold domestically in the form of cheese thanks in part to the checkoff’s partnerships with Domino’s and Pizza Hut, along with quick-serve restaurants like McDonald’s and Taco Bell.

And the good news for dairy farmers is: Domino’s financial contributions to the partnership outpace the checkoff’s by a 20-to-1 ratio.

Beyond the numbers, the partnership works because it’s not strictly a contractual arrangement – it’s a true relationship built on mutual goals and respect.

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This was first demonstrated back in 2009 when farmers were facing some hard times. That’s when checkoff leaders met with Domino’s executives who, after learning about economic challenges facing dairy farmers, asked what they could do to help.

Domino's pizza

Dairy Management Inc. CEO Tom Gallagher recalls a conversation with Domino’s CEO Patrick Doyle coming back within a few days with three promotion-driven ideas to spur pizza – and cheese – sales. All the ideas were winners, Gallagher remembers, and “When I asked how much this would cost the checkoff, I was told ‘nothing.’” Rather, “Patrick told me, ‘You’re a partner, and farmers are facing some tough times. This is what we do.’”

The strength of this relationship was further demonstrated last fall when Gallagher and Doyle were at a meeting and talked about the evolving economic dynamics facing dairy farmers due to global market conditions, increasing powder inventories and other factors.

That conversation resulted in Domino’s creating a “Black Friday” online special that extended a previous promotion from seven to 10 days. Local checkoff organizations supported the effort, which used 12 million additional pounds of milk versus the 2014 promotion. It resulted in two of the biggest sales days of all time for Domino’s. At its peak, the chain was processing more than 2,000 orders per minute.

This promotion helped Domino’s sell more than 230 million additional pounds of milk in 2015 versus 2014.

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“The Black Friday promotion wasn’t part of a contract,” Gallagher says. “Domino’s did this because it was the right thing to do to help a partner in need. That’s the power of a true partner.”

This promotion is just part of the overall success story. Consider:

  • The average Domino’s store is now selling 43 percent more cheese than when the checkoff partnership began.

  • Domino’s experienced 12 percent sales growth in 2015 from 2014.

  • It is the only restaurant chain with more than 2,000 stores to have seven consecutive years of growth – and this includes other pizza, burger, sandwich and coffee chains.

Another success has come from the creation of the Domino’s Pizza Smart Slice Program that continues to play a crucial role to mitigate the often negative perception students have of school pizza. This kid-approved pizza uses a pound of cheese on each large pie.

Domino’s Smart Slice meets school nutrition standards and is now available in 47 states and more than 6,000 schools and growing, thanks to support from local checkoff organizations that work with Domino’s to have it implemented in schools. These new sales are equal to opening 30-plus new Domino’s stores.

Leading the way in digital innovation

Domino’s has not just been a trendsetter in pizza innovation; it’s also a proven leader in the digital world. And while this may not appear to have an initial benefit to farmers, online ordering is big business for Domino’s as about half of the chain’s orders come through its digital channels.

The chain states it is a “recognized world leader in pizza delivery and digital ordering platforms,” and for good reason. Domino’s is the only U.S. restaurant company that gives customers the ability to order via emoji, Twitter, text, smart TV, Apple Watch and Amazon Echo.

A recent survey identified Domino’s as the leading smartphone “app” across all industries, ranking ahead of major online retailers, department and specialty stores. A JP Morgan analyst is so impressed he termed Domino’s, “A technology company disguised as a marketing company disguised as a pizza company.”

“Through digital orders, Domino’s has been upselling cheese, and it’s been a huge success,” Gallagher says. “It’s an incredible story. Their biggest innovation the last three years has been in technology.”

The partnership will continue to explore new possibilities that are good for Domino’s and good for dairy farmers. The partnership works because dairy farmers have much in common with Domino’s franchisee owners. Both have an entrepreneurial spirit and manage family-owned businesses.

They are highly involved in their communities and have an impact on their local economies. They know the value of hard work and putting in long days, including holidays and weekends.

And – very important to the equation – they both love cheese.  PD

Your Dairy Checkoff in Action – The following update is provided by Dairy Management Inc. (DMI), which manages the national dairy checkoff program on behalf of America’s dairy producers and dairy importers. DMI is the domestic and international planning and management organization responsible for increasing sales of and demand for dairy products and ingredients.

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