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Zing Talk Interview: Domino's CEO Patrick Doyle Doesn't Accept Government Cheese

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Today our guest is the CEO of Domino's Pizza Inc. (NYSE: DPZ), Patrick Doyle.

Patrick, welcome to Zing Talk.

Patrick Doyle: Thanks! I appreciate the invitation.

Domino's celebrated its 50th birthday recently, and you got to ring the closing bell on the floor of the New York Stock Exchange. What was that like?

Patrick Doyle: It's very cool. It's a real honor. I couldn't have been happier to do that. But I have to say that the bigger honor is getting to lead this organization. There have only been three CEOs in the 50-year history of Domino's, and I'm the third. So I'm honored that I've been entrusted with this brand that's become such a great part of the U.S. and increasingly around the world.

You started back in March 2010 and really got the ball rolling all the way back in January 2010 with the pizza turnaround campaign.

Patrick Doyle: It's really interesting, because if you look back over the 50-year history of Domino's, we've always been known for service and good value, and people generally haven't given us credit for selling a great pizza. We thought it was pretty good, but we didn't get credit from consumers for that.

A couple years ago we launched You Got 30 [Minutes], and it was kind of taking us back to our roots. We remind people of fast delivery and good value. And, honestly, America yawned. They just didn't care. They said, ‘Yeah, we already knew that. We already knew that you guys are the service brand. Tell us something new.'

We decided at that point we needed to do something. We needed to re-launch with a pizza that was gonna open us up to consumers who were looking for a great pizza. We spent 18-24 months looking at every component of our pizza – the dough, the sauce, the cheese. [We] ultimately changed everything, re-launched, and got people's attention.

How much longer can investors expect Domino's to continue on like this?

Patrick Doyle: [Laughs] We don't give near-term guidance on that. What I'll tell you is we're a new Domino's. We've got people coming into this brand who haven't been here before. As we've been saying all year long [in 2010], consumers love this pizza.

This isn't a promotion like we've done in the past. This is a re-launch of the brand and the business. We're changing people's minds and it's our job here in Ann Arbor to see how we can keep the momentum going in the next few years.

Domino's broke into Germany, Romania, Ukraine, and most recently Vietnam this year. Where else will we see Domino's stores popping up in the future?

Patrick Doyle: I think the next country is Poland, and that will probably happen in the first quarter of 2011.

What can investors look forward to on the next call?

Patrick Doyle: We'll see. We don't talk about near-term results. But we're very proud of what we've done this year. We continue to generate a lot of cash. The international business is best-in-class. And we've clearly broken through in the U.S. So the economy still isn't good, consumers are still relatively tight, but it's our job to continue to connect with them and figure out a way to keep some momentum going.

Do you think you're positioned well in the restaurant/pizza space to weather the difficulty we're seeing in the economy?

Patrick Doyle: I really believe we are. I think one of the important changes we made was to recognize that pizza has lost some of the value perception that it had with consumers. I think the industry has been a little too aggressive about moving up prices in the last few years. Frankly, we've got a great price point out there. I think some of our competitors have responded and have tightened up on price points.

Hopefully it's going to drive success for Domino's and hopefully more success for us than for any of our competitors, but hopefully it's going to get the category growing again, which we haven't really seen yet.

There was an article in the New York Times last [November] that reported on a finding that the USDA had helped Domino's incorporate 40% more cheese into its pizzas as a part of its turnaround campaign. I know this has a lot of anti-obesity advocates concerned about the levels of saturated fat being incorporated into American diets. What is your response to this?

Patrick Doyle: Yeah, well, never let the facts get in the way of a good story. The fact is, what was characterized as being a USDA program is not. It's actually the farmers who effectively have a co-op. They have a board and the USDA's involvement has simply been in helping them to collect money from the farmers. But the farmers fund their own promotional efforts, so we've been working with the farmers. The farmers put in money, we put in money, to help re-launch the pizza. And we did add some cheese to the cheese-only pies when we did the reformulation.

So the story, the headline on the New York Times should have been, “Farmers Use Farmers' Money To Promote The Farmers' Products.” If somebody wants to come out against the farmers, I guess that's their business. But we think the farmers deciding they want to help promote their own product, with their own funding, is pretty normal and should be expected.

What is your perfect pizza pie?

Patrick Doyle: I love the Pacific Coast Veggie. That has become my favorite pizza. So I love that. But you know what, I'm always happy with a good-ol' pepperoni as well. But if you haven't tried Pacific Coast Veggie, it's a winner.

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