Business Model Pivots!
Domino's: Not Just Pizza, But Tech-Fueled Delivery
For decades, #Dominos has been synonymous with fast pizza. However, a closer look reveals a company increasingly driven by a hidden core—not pizza dough, but #DeliveryInnovation #DigitalTransformation.
The Shift: Domino's investments in digital ordering platforms, GPS tracking, and even self-driving delivery vehicles was their strategic transformation. Their business model uses digital technologies to streamline operations, enhance customer experiences, and create innovative products or services. This results in a stronger value proposition for the organization.
The Pivot - This technology-first approach positions Domino's to capitalize on the growing demand for convenience in food delivery. They may not make the world's absolute best pizza, but they could become the fastest, most accessible option, a powerful recipe for success
#McDonalds- A Real estate company!
Ray Croc was taking over McDonald's from the McDonald brothers he spoke to Sonneborn (the to be president & CEO of McDonald's), he told Ray Croc:
"You don't seem to realize what business you're in; You're not in the burger business. You're in the real estate business."
The view that McDonald's is more a real estate giant than a fast-food chain stems from its #franchising model. While it franchises most of its restaurants, maintaining some for product innovation, the twist lies in its property strategy. McDonald's often owns or leases the land and buildings for its sites, renting them out to franchisees. This approach significantly boosts its revenue through #realestate, aligning its operations as much with property management as with serving food.
In the US - McDonald's controls the real estate aspect by securing the land or rental contracts, effectively tying franchisees into its growth strategy, even as they operate as "independent restaurateurs." This also ensures that the franchisee is aligned with the product's standards.
As McDonalds highlights, its expensive To open a McDonald's franchise in the United States, individuals need to meet certain financial requirements. The initial investment for a McDonald's franchise ranges from $1,008,000 to $2,214,080, which includes a $45,000 franchise fee. Additionally, franchisees are required to have at least $500,000 of non-borrowed personal resources available for investment into the business
ALSO - Franchisees are unable to independently open a McDonald's. The land lease agreements must be facilitated through McDonald's itself, maintaining a clear distinction between land acquisition and franchisee management. The company employs a dedicated real estate division for land selection and development, separate from its franchisee selection and operational processes.
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Asset light
By 2023, McDonald's had 39,680 franchised restaurants vs. 2,142 owned and operated ones. With franchised restaurants contributing to most revenues.
Financial Outcome
#Subway - Franchise first mentality
Like McD - Absolutely! Here's a breakdown of how we can tell the story of Subway's unconventional business model, inspired by the McDonald's example:
Popular Belief: Subway is a fast-food sandwich chain whose 'Hidden' Core is also aggressively selling franchises for a recurring income stream.
Thank you for your time!
These case studies aims to highlight a blue-ocean shift that's possible via innovation and strategic models. Domino's illustrates the impact of digital transformation on delivery, McDonald's showcases a strategic pivot to real estate for growth and revenue, while Subway's franchise-first approach emphasizes scalability and accessibility. I hope you enjoyed the read!
#Innovation #Strategy #BusinessEvolution