Domino’s New Recipe: (Brutal) Truth in Advertising

“Cardboard.” That word, a description of a Domino’s pizza product, written by an unhappy consumer, flashed across the screen. Another called it “mass produced, boring, bland.” Yet another added this dagger: “Microwave pizza is far superior.”

These words did not appear on a message board manned by angry Domino’s consumers, as you might expect. No, the company shared these less-than-flattering reactions to its pizza in its own advertising.

(See TIME’s video “Huge Fast Food: Taste the Madness.”)

In December 2009, Domino’s, the ubiquitous delivery chain with some 5,000 outlets in the U.S. and over 4,000 more internationally, launched an ad campaign, both on television and across the Web, that basically bashed the company. “It doesn’t feel like there’s much love in Domino’s pizza,” one consumer said in a focus group during one commercial.

These spots, which were tied to a debut of a new pizza recipe that rolled out in late 2009 and early 2010, sent a simple message. We admit we screwed up. We’re trying to improve. Give our pizza another chance.

Marketing 101 does not call for self-flagellation. “I’d be lying if I told you I didn’t have a knot in my stomach the day that advertising launched,” says Domino’s CEO Patrick Doyle.

See “Taste of America: Domino’s Mea Culpa and America’s Pizza Passions.”

But it turns out that honesty sells. Domino’s, which took in over $1.5 billion in revenue last year, has engineered one of the more impressive turnarounds in the restaurant industry. In 2010, U.S. same-store sales rose 9.9%, and domestic store growth was positive for the first time since 2007. On May 5, Domino’s announced that for the first quarter of 2011, the company’s net income rose 10.6%, to $27.1 million. In a March research report, Barclays Capital analyst Jeffrey Bernstein credited Domino’s for turning in a “banner year” in pizza delivery, a “mature concept” in a “mature U.S. market” in which 1%-to-3% growth is the norm. The industry’s leading trade publication, Pizza Today, just named Domino’s the pizza chain of the year for the second straight year.

(See pictures of what makes you eat more food.)

John Glass, an equity analyst at Morgan Stanley, credits the up-front advertising, more than the tastier crust, for sparking the impressive results for the 51-year-old pizza chain. “The spots inspired many people to retry the brand,” says Glass. “It’s one thing to say, ‘We have a new and improved product’ — customers hear that all the time. But if a company admits there are problems, customers figure that the new product has to be better. People are so used to not being told the truth in advertising. The candor worked.”

The Domino’s example offers lessons for marketers everywhere. “People are tired of companies talking at them instead of with them,” says Doyle, the Domino’s CEO. “I think customers are, frankly, just tuning companies out. Great brands in the future are going to be built by engaging customers in a dramatically new way.” Domino’s actively solicited feedback on its Facebook page and posted all Twitter comments — good and bad — about the new pizza on the company website. Social media, Doyle says, have empowered consumers.

(See “What the World Eats, Part I.”)

You can no longer just pound misleading messages into their heads. “The old rule of thumb for companies used to be that for every complaint you hear, people are telling 10 other people,” says Doyle. “Well, those were the days when people were having one-on-one communications or talking through one-on-one phone calls. Brands, because of their big marketing budgets, could overwhelm consumers with the volume of their message. Now, if a customer has a bad experience, it’s immediately on Facebook or Twitter. Hundreds or thousands of people hear about it. You’ve got to adapt and understand that’s the dynamic out there. It’s pretty powerful.”

With a strong message in place, the new pizza recipe still had to deliver. It did. The sauce has more kick, the crust is richer, and the new mozzarella cheese stretches when you pick up a slice. But what took Domino’s so long to tweak the pizza? Since the chain exploded onto the scene in the 1980s with its eccentric “Avoid the Noid” ad campaign and promise of a 30-minute-or-less delivery, Domino’s carried the “cardboard” reputation. If you wanted a quality product, you called the local pizzeria, not the Domino’s delivery guy. To have finally gotten around to improving the product doesn’t seem all that innovative.

“The Marketing 101 lesson is always focus on what you’re good at,” Doyle explains. “Define your point of differentiation. And for 49 years, our point of differentiation was, ‘We’ll deliver our pizza to you very quickly and reliably. We’ll give you good value, and the pizza will be O.K.’ As long as we’re given credit for delivering, we should focus solely on that. We knew there were people out there who didn’t like our pizza, but as long as we delivered it quickly, that was good enough. We realized that there was simply no conflict between not only delivering quickly but in making a better pizza. So we took our time and made sure we had it right. And it clearly worked.”

(See “What the World Eats, Part II.”)

Though it’s surprising that it took some 50 years for a company to realize consumers appreciate both speed and quality, give credit to Domino’s for finally figuring it out. Now the company is also promoting a new boneless-chicken product. But will anyone buy chicken…from Domino’s? In fact, the company has been selling chicken for almost 20 years. “Chicken has been our next-best seller after pizza,” says Doyle. “And talking about how the change in our pizza continued to drive sales, our goal is now to make sure everything we sell can be as good as it can possibly be. Chicken was next up.”

While the company will have to cope with cheese-price volatility for the rest of the year, Domino’s got lucky with chicken. “I wish I can tell you there was this brilliant bit of foresight on the part of management,” says Doyle, “but chicken is the only major commodity that’s down right now.”

(See TIME’s video “The Organic Taste Test.”)

New commercials that have been in heavy rotation since the NCAA basketball tournament encourage viewers to tell the company what they think of the new chicken. They feature chicken chef Tate Dillow, a soft-spoken Kentucky native who seems mortified that customers are allowed to rip apart his product. Dillow is not too comfortable with his newfound notoriety. A stranger even followed him in a car. “When I got home, he actually pulled into the driveway and said, ‘Hey, aren’t you the guy in the Domino’s commercial?” says Dillow. “That was a really weird one.”

(See “What the World Eats, Part III.”)

But being the chicken guy at a pizza place does have its benefits. “If you were to go up and down the street and poll people, most probably didn’t even know that we had chicken,” says Dillow. “So I had a lot more freedom to change it.” For Dominos and its customers, the changes are spicing things up — for the better.