How Domino's Went
from $14 to Billions!
In 1960, when Domino's Pizza first opened, the entire day's sales amounted to just fourteen dollars. But who could have imagined that a boy who sold newspapers, who neither had his father's support nor his mother's love, would one day own more than eighteen thousand pizza outlets? However, this victory against the odds was far from straightforward. The pizza store, started with borrowed money, faced countless challenges on its journey to success. There were times when his brother left, all his savings were lost to fraud, or a partner betrayed him. Moreover, the name under which the store was opened didn't even belong to him. There were lawsuits costing millions of dollars, and a damaging viral video that tainted the reputation the owner of Domino's had built over the years. This is the story of Thomas Monaghan, who, despite all these hardships, built a billion-dollar empire from scratch.
Thomas Monaghan was born on March 25, 1937, into a middle-class family in Michigan. His father struggled to support the family as a truck driver, and his mother worked as a nurse. When he was just four years old, his father passed away, and his mother, unable to support the children, placed Tom and his brother Jim in government care for seven years. Tom's childhood was filled with hardships; he neither experienced a father's support nor a mother's love but only the harshness of foster care and boarding school. He barely passed high school and struggled to get into Michigan University, but even then, he couldn't afford the tuition fees. Life kept throwing challenges at him. Eventually, he started delivering newspapers door-to-door. It was here that he began learning the basics of business and never missed an opportunity to save money. Just when things seemed to be settling down, his small savings were lost to fraud.
This was the turning point when, in 1959, Tom's brother Jim came to him with an idea that would change their lives. Jim worked as a mailman at the post office but also took up a part-time job at a restaurant owned by a man named Dominic DeVarti to make ends meet. Dominic had a restaurant in Michigan that had closed down, and he was eager to sell it off at a throwaway price. At that time, he was asking for five hundred dollars for the restaurant, but the catch was that there was also a two-thousand-dollar debt on the restaurant that the buyer would have to pay. When Jim brought this news to Tom, they both decided to buy the restaurant and work together. They took out a nine hundred dollar loan from the post office and bought the restaurant from Dominic but didn't change its name. In return, Dominic gave them some recipes and taught them how to make sauce. They decided to open the restaurant from 5 PM to midnight so that Jim's post office job wouldn't be disturbed, and Tom could continue his studies at university in the morning.
They officially opened the restaurant on December 9, 1960, and made fourteen dollars in sales on the first day. In the first week, they didn't even have a phone, meaning all customers had to come to the restaurant themselves. They then started a delivery service, hiring two factory workers on commission. After four months, their daily sales reached 107 dollars.
However, most of these sales were coming from the nearby college. When the college semester ended, the sales dropped to 28 dollars. Jim, due to his job at the post office, hardly spent any time at the restaurant and didn't contribute much. As the sales dropped, arguments started between the two brothers, and at one point, things got so heated that it almost led to a physical altercation. Eight months after the restaurant opened, Jim decided to leave the business, even though the idea was originally his. In exchange for his 50% share, Tom gave him the Volkswagen they had bought for pizza delivery. Jim happily took the car and left, without realizing how much he was actually losing out on.
Now, Tom became the sole owner of the restaurant, but this also meant he had to work full-time, which dashed his dreams of going to university once again. He spent many days living in the restaurant, surviving on burnt pizzas at night. Gradually, the restaurant's sales began to increase again. He hired two helpers, and now the daily profit reached up to 57 dollars. In his free time, he would visit other pizza stores and conduct market research. During this period, he befriended the owner of an Italian restaurant who shared his famous sauce recipe with Tom. When Tom applied this recipe at Dominick's, customers loved the sauce, and sales began to rise again.
Someone then suggested to Tom that he should open another branch of his restaurant, but for this, he needed a partner to manage the original restaurant, especially since his brother was no longer with him. Eventually, Tom found a partner, but this partner was about to ruin all of Tom's hard work. One day, a man named Jim Gilmore came to Dominick's, and Tom recognized him immediately. He was a well-known restaurateur in the city.
The two began discussing the restaurant business, and during this time, Tom shared his plans with Gilmore about opening a new branch. Since Gilmore had experience running a restaurant, the two struck a deal. The agreement was that Gilmore would invest $500 and receive a 50% share in the business, and he would manage the first Dominick's restaurant. However, Gilmore mentioned that he didn't have the $500 at the moment and would pay it later. Because Tom urgently needed a partner, he agreed. Gilmore became a 50% partner in Dominick's without making any down payment, and he never paid the money to Tom later either.
Tom went ahead and opened his second branch, leaving the first one in Gilmore's hands. This was the point where Tom realized his mistake. He had given away 50% of his business to a stranger without proper due diligence. Soon, the sales and pizza quality at the first branch began to decline, and Tom suspected that Gilmore was secretly stealing cash from the drawer. Jim Gilmore, who was running two restaurants in the city, had a drinking problem, which had led him to bankruptcy twice before. Tom had assumed that Gilmore had changed, but that wasn't the case. Additionally, Gilmore had cleverly included conditions in their agreement that made him a 50% partner only in profits, while any losses were solely Tom's responsibility.
As a result, Tom ended up spending time at both branches while Gilmore worked whenever he felt like it. Essentially, Gilmore was taking unfair advantage of Tom. Tom tried several times to end the agreement, but legal issues prevented him from getting rid of Gilmore. Eventually, the matter went to court, and only then was the partnership between Tom and Gilmore dissolved, but of course, Tom had to bear all the losses incurred.
However, this didn't mean Tom's problems were over. The next conflict arose with the person whose name Tom was using to run his business—Dominick DeVarti. When Dominick saw that Tom was running two restaurants under his name and making good sales, he became professionally jealous. After all, Dominick was running his own restaurant in the city under the same name, which was causing confusion among customers. So, he called Tom and demanded that he stop using his name.
This news hit Tom like a lightning bolt because he had poured his heart and soul into promoting that name. Changing the name suddenly would mean all his hard work would go to waste. Someone suggested to Tom that he should choose a name similar to Dominick's, so that when people searched for a number in the phone book, his restaurant's name would appear on the same page as Dominick's. For several days, Tom and his team brainstormed names similar to Dominick's, but none of them seemed right. Finally, a pizza delivery driver suggested the name "Domino's." Tom liked the name very much, and from that day on, they started operating under the name Domino's instead of Dominick's.
Changing the name also meant they had to change the logo. So, they simply started using a domino game tile as their logo. Since they had three stores at the time, they added three dots on the tile. Next time, you can tell anyone that the three dots in Domino's logo represent their original three stores. Thomas Monaghan's pizza business now had a new name. He worked hard to improve the recipe and make the business profitable, but the real growth of Domino's began with a strange incident.
One day, a significant portion of the restaurant's staff took the day off. In response, Tom removed extra items from the menu and served only pizza. That day, Domino's made the most profit. Tom realized that a large menu only increased the workload, while a smaller menu generated more profit. From that day onward, extra items were removed from Domino's menu, and the focus was solely on pizza. Even within the pizza category, they offered only two sizes: 8 inches and 12 inches. Additionally, Tom noticed that offering a dine-in facility required extra staff, which increased work and reduced profit.
Tom revolutionized the delivery business by using cardboard boxes to keep the pizza warm. Not only that, but he also improved the service by introducing delivery pouches, which were used to keep the pizza hot. It's important to note that delivery pouches, which keep pizza warm, were first introduced by Domino's. Due to these new innovations in delivery, Domino's outpaced its competitors. Competitors like Pizza Hut used most of their space for dine-in facilities, while Domino's maintained the same prices and had higher profit margins since they didn't have to spend on dine-in facilities.
By now, Tom had been in the business for seven years, and Domino's was rapidly growing compared to its competitors. In 1967, they decided to start franchising. New stores were opened, primarily located near colleges and military bases, where pizza demand was typically higher. Instead of wasting money on mainstream media advertising, they placed ads in college newspapers, which were cheaper and more effective. Within the next two years, 32 Domino's franchises were opened. Initially, there were some quality issues, but they were resolved later. By the end of 1969, a total of 42 stores were opened in Michigan, Vermont, and Ohio. By 1978, more than 200 Domino's outlets had been opened across the United States.
It seemed difficult to stop Domino's success, but then an incident occurred that caused significant damage to the company. By 1980, everyone was crazy about Domino's delivery service. Seeing this, Pizza Hut and other competitors also started focusing on delivery, meaning Pizza Hut was now directly competing with Domino's. In 1984, Domino's began marketing a campaign that promised if pizza delivery took longer than 30 minutes, the customer wouldn’t have to pay for it. This move skyrocketed Domino's sales. For customers, this deal was beneficial in every way—either they would get their pizza quickly, or it would be free. This campaign further boosted Domino's growth.
It's evident that when a business becomes famous, it also becomes controversial. First, there were the drivers' accidents, followed by the Domino's Foundation. Amidst all this, in 1998, Thomas Monaghan sold Domino's for $1.1 billion. However, the controversies didn’t end there. In 2009, a YouTube video went viral showing two Domino's workers preparing pizza in a highly unhygienic manner. They were seen sneezing on the pizza before putting it in the oven and kneading the pizza dough with hands they had just used to pick their noses. A total of five such videos were uploaded on YouTube, significantly damaging Domino's reputation among pizza lovers. Domino's contacted YouTube, requesting the videos be taken down, but YouTube refused.
Eventually, the workers responsible were found, which wasn’t too difficult since their faces were visible in the video. They explained that they were actually making a prank video and that no such pizza was ever sent to any customer. However, due to this small prank by the workers, Domino’s suffered significant damage.
But today, Domino’s has 18,848 branches worldwide, 145 more than Pizza Hut. When it comes to employees, Domino’s has only 13,500 compared to Pizza Hut’s 350,000. Domino’s generates nearly four times more sales than Pizza Hut. To add to this, around 3 million Domino’s pizzas are made daily worldwide. And it’s worth mentioning that Domino’s chef Zagros Chaf has twice set the world record as the fastest pizza maker, astonishing everyone by making three large pizzas in just 70 seconds.