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Friday 19 August 2022

Why Italians gave Domino's the boot

It was a fast food gamble that failed: spectacularly and quite predictably.

Who could possibly have predicted that pizza loving Italians would not be captivated by American-accented offerings from global chain Domino's.

Quite a few people, I suspect.

Domino’s Italian franchisee, EPizza, filed for bankruptcy last month, effectively ending the company’s bid to expand its presence in the country.

Domino's is an American multinational chain founded in 1960 with stores in over 83 countries. It once had plans to open as many as 880 stores in Italy by 2030.

But just as many Australian coffee lovers rejected Starbucks - the chain closed 75% of its stores Down Under in 2008 - Italians shunned Domino's and creations like its cheeseburger pizza.

GlobalData noted that despite a sizeable investment to localise its menu, Domino’s failed to recognise its inability to compete with smaller Mom and Pop businesses, which accounted for 72.6% of the quick-service restaurants (QSR) channel in Italy in 2021 and boast low-priced, high-quality menu items.

The data and analytics company noted that the company’s growth was slower than expected since it entered the Italian market in 2015 and peaked at over 100 branches, but by 2022 was left with only 29, partially due to the pandemic, but its long-term localisation strategy was the ultimate flaw.

Ramsey Baghdadi, Consumer Analyst at GlobalData, said: “The company’s strategy lacked affordable pricing to match the local businesses, and the ability to adapt quickly to changing consumer behaviour.

"This clearly shows a flaw in its plan to localise its menu to meet demands from Italian consumers.”

According to GlobalData’s latest survey, almost half (45%) of Italian consumers prefer local cuisine.

Therefore, consumers in Italy are more likely to try menu items that have locally sourced ingredients and local flavours, instead of American-inspired creations such as the Hawaiian.

This proves further that authenticity and connoisseurship play a big part in where Italian consumers decide to eat, GlobalData says.

Affordability was also a driving factor in consumer decision making, not just product quality. GlobalData’s survey also revealed that over half (55%) of Italian consumers are extremely or somewhat concerned about their financial situation due to Covid-19.

“Fellow international businesses originating in the US such as McDonald’s took a long time to make an impression in Italy," says Baghdadi.

"Foodservice providers that specialise in regional favourites such as Starbucks coffee have yet to make a demanding presence. It is clear that this falls down to the failure to develop a value proposition that beats local independent businesses in both quality and value.”

Basically, I think Italians probably prefer to enjoy their pizza in a friendly ambience with a glass of wine. And they've made that preference known.   

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