+ stores in
Nov 2016—Nov 2017
update in 30 seconds
Meet Mr. Xie. Mr. Xie is a real estate agent. He works with retail property. And he believes in us. We wouldn’t be able to meet the managers of a big shopping mall in Hangzhou and interest them in collaboration with Dodo Pizza if it wasn’t for him. Personal relationships and contacts are very important in China. Why did Mr. Xie help us? He saw the long-term opportunities and felt that he could trust us. He has yet to make money from our collaboration, but he’s already done a lot. A few days ago, he invited managers of shopping malls all over Hangzhou to WeWork so we could do a presentation of our company and the concept of our pizzeria here. As per usual in China, a lot of precise and straightforward questions were asked. And after that, we invited everybody to dinner. In China, a good business meeting always ends with a meal. Business, relationships, and food are inseparable here. I’m certain that everybody who was there will come to our “pizzeria of the future” grand opening, and this will be a new beginning and a new step forward for us. Today we plant the seeds with open hearts, and tomorrow some of them are bound to grow. Thank you, Mr. Xie. We will not let you down. We highly appreciate our partnership and your trust.
It so happens that Dodo Pizza has become one of the first residents of WeWork, an international coworking space in Hangzhou, China. WeWork opened here just recently, so half of it is still empty. I’ve been at WeWork for three days, and now I have first-hand knowledge of what they’re trying to create here. Most importantly, it’s a specific atmosphere that charges you with energy, and even three beer taps with unlimited refills don’t hamper your motivation. And, of course, WeWork creates community. Over the last three days, I’ve met a lot of interesting people here.
The scale and thoroughness of their work are astounding. Everything is made to be durable and American-style; they didn’t save money on anything, and you see it in every square inch of the interior finish. Ten thousand square meters of offices on two floors encircle a huge courtyard under a skylight—that’s where the communal area is located. There are kitchens, conference rooms large and small, and phone booths.
A few days ago, there was a great party at WeWork for the Hangzhou coworking space grand opening. The party budget was staggering. There was professional lighting, live music, various recreational activities, actors, entertainers, a whole team of chefs, and unlimited alcohol—cocktails, wine, and also oysters and hors d’oeuvres. Whatever guests wanted.
Christian Lee, the managing director of WeWork Asia, attended the opening. A Chinese ballet company appeared on stage, as well as an illusionist and a Chinese blues band. The director of the first Hangzhou coworking space said that WeWork never begrudged money on repairs and refurbishment, and one square meter of interior finish cost about $1000. So, WeWork has spent 10 million dollars on the refurbishment of rented premises, save furniture and the opening ceremony costs. I walked around and wondered how and when they were going to cover all these expenses.
The thoroughness and the scope of everything, from the coworking space interior to the party itself, were amazing indeed. And keep in mind that currently, WeWork is not profitable. They invest a lot of money in the future. No, I’m not a conspiracy theorist always looking for a catch. I believe in WeWork, and WeWork believes that offices and the approach to work itself will change dramatically, and then they will become the new Facebook and the investment will pay off, because they’ll be on top. No, they don’t want to make money off rent. It will never cover such investments. They want to create a new global business community.
Sometimes we believe in an idea that needs testing. We try to persuade investors. Sometimes we spend years and millions of dollars to prove that the idea will work.
This is our future Hangzhou commissary; here we’re going to produce special dough for our new pizzeria in China. What’s different about our new dough? I’ll tell you soon.
Interestingly, builders in China prefer thin brick walls to plasterboard—they say it’s simpler, stronger, and cheaper.
Our construction managers are Eric and Ali. They’ve been with us for two years and have come to Hangzhou from Yantai, where our first Chinese pizzeria is located. We couldn’t embark on such a high-risk project, a new kind of pizzeria in one of the largest cities in China, without our team and our partners. The team is the key.
Hangzhou, day 2.
It’s been raining all day. We’ve had a meeting with our real estate agents and the managers of a big shopping mall, and we’ve done a presentation of our company and our future pizzeria. In China’s business culture, they value modesty. Two laobans (“bosses”) of a huge shopping mall were unpretentious and wore casual suits and no ties. They asked very precise questions about our business model and Dodo IS. I think we all liked what we saw, and maybe now we’ll rent a space belonging to a former bakery. Bakeries are a big hit in China right now. Also, we drank tea from beer glasses.
In the evening, we were at WeWork. The atmosphere was dandy, and the creative community of startuppers here is the potential clientele of our Hangzhou pizzeria. WeWork is planning a big party for residents and guests on Friday, so today they’ve been mounting professional equipment, projectors, laser lighting, and a DJ stage. WeWork doesn’t skimp on money :-) Stand by for a full report.
Also, yesterday evening, I’d been looking for an ATM in the rain. This proved to be an ordeal, as China is almost completely cash-free now. The ATM where I withdrew cash in August has been dismantled already. Two ATMs were out of operation, and two more didn’t accept Visa or Mastercard. I had to walk two kilometers to another neighborhood, and only there I finally got lucky :-)
Soon we’ll know if we are getting premises at the shopping mall. Stay tuned.
Alibaba Group lobbied for a direct Beijing Capital Airlines flight between Moscow and Hangzhou and succeeded :-) It suits Dodo Pizza just fine, as Hangzhou, the Internet capital of China, is the very place where we are going to launch our cashier-less “pizzeria of the future.” Our target opening date is April 1, 2019. For the next week and a half I’ll be with our team in China.
It is our first day in Hangzhou in the photo. This is our China team, Bauyrzhan, Patty, and Cheng. You don’t see Eric and Ali here, since they are at the construction site—we’re building the “pizzeria of the future” production facility already. Here we are at the Dodo Pizza China headquarters, meaning a small room at the WeWork coworking space in downtown Hangzhou.
Today, we’ve met with real estate agents, and I’ve told them about our company and our plans. Together we’ve been getting ready for tomorrow’s meeting with the administration of the most fashionable shopping center in Hangzhou. In the afternoon and in the evening, we checked premises where we may open our pizzeria, and counted foot traffic there. After that, we ate frogs with pepper (and it still burns something terrible), and talked about our project concept a lot. And then, we took the subway to the hotel and took a walk through the evening city…
The R&D team is working on our new products for Dodo Pizza China. Super tasty) I almost went crazy, honestly 🤪
We are now on the verge of a product manufacturing breakthrough.
For more than a year, the Dodo Pizza R&D team has been working on our own special pizza sauce. Pizza sauce is one of the key ingredients defining pizza flavor. Being a small chain before, we used to resort to a basic sauce that was rather bland, and our pizza flavor was strongly affected by it. Now that we have grown, we are able to create our own sauce.
Nowadays, they produce excellent mozzarella cheese in Russia, but alas, nobody makes pizza sauce here. You need a special kind of tomato for it that is widespread in Italy, Greece, Spain, and Turkey but not in Russia. So we approached Mutti, an Italian family business and one of the leading pizza sauce manufacturers in Europe. The Mutti company was founded in 1899, and it commands vast expertise in the field.
After a lot of experiments, tests, and focus groups, we created a pizza sauce recipe specially designed for our Russian customers. In August, our new sauce beat our main competitor’s sauce in blind taste tests. We are trying it out in 20 of our pizzerias, and again, it turns out that this new sauce is winning against competitors. Soon it will be adopted in all our pizzerias. And the most welcome news for our franchisee partners is that the new sauce is going to be 15% cheaper than the old basic one thanks to the better terms of our contract with the global supplier from Italy.
Perhaps you’re wondering, why cut prices for the franchisee partners when the franchiser could make money out of the price differential? Well, the key value of our company is openness. We are absolutely open with our franchisees. Unlike other international pizza networks in Russia, we don’t profit from the supplies delivery on principle.
For example, Domino’s Pizza makes its franchisees buy all their ingredients from the franchiser on account of standards compliance. As a matter of fact, Domino’s Pizza makes additional profit from the supplies delivery. And it’s not a secret; it is specified in the company public reports. But you can ensure quality control and standard compliance even without “corporate” supply delivery.
Dodo Pizza franchisees buy all their key ingredients from one logistics operator, the East West company. All our official suppliers deliver the ingredients to the East West warehouses, and then East West packs them into handy parcels and delivers them to our pizzerias. East West charges only for logistics and delivery, and Dodo Pizza doesn’t make a single ruble out of the supplies, though we are still responsible for delivery control, quality control, and standard compliance; incidentally, McDonald’s operates the same way. And because of this, our partners get the ingredients at lower prices than the franchisees of international pizza chains.
We profit from the royalties only. Why? First of all, it’s an honest and transparent method because it involves no hidden royalties. Second, profitable pizzerias are the foundation of our business. If our partners make more money, they are able to invest into the team, business development, marketing, and pizzeria upgrades more. In the long run, it makes the whole enterprise healthier and more sustainable. Above all, such openness builds real trust. And trust is a real strength; it creates a real team. And people united will never be defeated.
Our IT team always tries out various management techniques. And recently, we’ve made one of our most significant decisions ever and implemented the “stop the line” practice.
Actually, this was invented at the Toyota factories. The administration there was of an opinion that those who work at the assembly line understand the situation better than managers. So if there was an issue with the product on the line, any worker could push the red button and stop the whole line to deal with the cause of the problem. Of course, our IT department is no assembly line, and although flaws happen, they can’t be readily seen. We use the “stop the line” method in our own way.
Our software releases take 24 to 48 hours on average. But sometimes lots of teams come up with lots of additional patches, and then the release takes up to three days.
Such a cumbersome release is not a good thing. In three days, all our teams can develop even more features, so we will have to deliver all of them in a single patch. And the larger the patch package, the higher the risk that something goes wrong.
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