Domino's drops promise that made it pizza leader

December 22, 1993|By New York Times News Service

For nearly a decade, Domino's Pizza has enticed customers with a sure-fire marketing gimmick, a promise to deliver pizza within 30 minutes.

But stung by a St. Louis jury verdict last week that awarded more than $78 million to a woman struck by a Domino's driver in 1989, the company announced yesterday that it would no longer promise such speedy delivery.

The decision affects not only the chain's 5,300 stores in the United States and 35 other countries, but legions of pizza eaters who counted on reliably quick service, whether the mode of delivery was bicycle, car, van or truck.

The 30-minute promise for telephone orders had been in effect since 1984, serving as the backbone of Domino's rapid growth into the nation's largest pizza-delivery company. Until 1986, a late-arriving pizza was left at no cost to the customer. Since then, customers have been given $3 off their orders.

While the pizza deliverers have been the source of the company's legal problems, Domino's executives say the key to meeting the 30-minute promise was the speed by which orders were taken, pizzas made and orders completed.

As the anchor leg of the relay team, the delivery person was never charged by the company for late deliveries, said Tim McIntyre, a spokesman for the company, based in Ann Arbor, Mich. In fact, any pizza that had not left the premises within 25 minutes of the order was automatically marked "late," he said, and the price marked down.

In the latest of a series of lawsuits against the privately owned company, Jean Kinder, 49, a St. Louis woman, suffered head and spinal injuries when a Domino's driver ran a red light and struck her car.

A Missouri circuit court jury on Friday ordered the company and the local franchise operator involved to pay her $750,000 in actual damages and $78 million in punitive damages. The company said it intended to appeal the verdict.

At a news conference yesterday in Detroit, Thomas S. Monaghan, president of Domino's Pizza Inc., called the jury award "shocking" and said it was "out of line with the factual circumstances of the case."

Nonetheless, he acknowledged that the verdict had been persuasive in moving the company to rescind the 30-minute promise, saying, "That was certainly the thing that put us over the edge."

The change in policy could have a profound impact on the way Domino's does business, and ultimately on its sales. Unlike Pizza Hut, a subsidiary of Pepsico Inc. that operates 4,443 carry-out units among its 7,800 U.S. restaurants, Domino's depends largely on delivery services. The company said it expected about $2.3 billion in sales this year.

While it periodically altered or expanded its menu, Domino's biggest selling point was speed of delivery, aided in recent years by computer listings of customers by phone numbers, to track their names, addresses and pizza preferences.

The difference between ringing the doorbell within 30 minutes -- or now, perhaps, 35 -- may sound small. Marketing experts contend, however, that canceling the guarantee may send consumers to other pizza delivery companies or to neighborhood Chinese restaurants.

"It's one of those things that is difficult to define," George Thompson, a restaurant chain analyst with Prudential Securities, said of the potential impact on Domino's sales.

"But the point is, it's not great. With a major competitor like Pizza Hut, where the quality is very good, service becomes an important factor. With Domino's, the fact they built their business by delivering in a timely fashion is also important. Now they will not be able to deliver so timely. In general, that could be a negative perception."

A negative perception might also be building as a result of the lawsuits against Domino's for accidents involving delivery people, all of whom use their personal means of conveyance for the job.

In May, the company agreed to a settlement of $2.8 million with the family of Susan Wauchop, 41, of Calumet City, Ill., who was struck and killed in her van three years earlier by a Domino's delivery driver. The plaintiffs charged that the driver was negligent in trying to arrive within the promised time.

In August, Matthew D. Jacks, 19, of Lewiston, Maine, sued Domino's, claiming he was struck by a driver in March, causing injuries to his pelvis, knee and thumb.

Other cases, including one six months ago in West Virginia, ended in Domino's favor when plaintiffs' claims against the company were rejected.

Despite scores of lawsuits against the company since the 1980s, Mr. Monaghan, the sole owner of Domino's, took issue with the notion that the accidents might reflect the possibility that the company's emphasis on safety had been relaxed.

"Domino's has always been committed to safety," he said in a statement issued by the company. "But there continues to be a (( perception -- a perception I believe is not supported by the facts -- that the guarantee is unsafe. We got that message loud and clear. So we are eliminating the element that creates that negative perception."

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