How to reinvent franchising with tech and transparency

It was a historic occurrence! Every Monday in the morning, all of our teams gather at our office for a half hour meetup. Usually, a few managers give speeches to bring everybody up to speed on the recent developments at the company. Sometimes, the floor is taken by our guests—usually our partners from other cities. But yesterday, we had the most unusual Monday meetup ever. For the first time in our history, our speaker gave his speech not in Russian, not even in English, but in German. It was Thomas Kochmann.

Him and his brother, Michael, have been in the pizza business since 1992. In the beginning of the ‘90s, young Michael Kochmann was a sailor. His ship sailed to the States where he got acquainted with the perks of pizza delivery—a service which, back then, wasn’t very popular in Germany. So Michael and his brother opened their own pizza delivery in their hometown, Halle, in the German state, Saxony-Anhalt. They named it UNO Pizza.

Within 25 years, they have built a solid and successful business in central and eastern Germany. They relied only on their own capital and reinvesting their profits. The brothers have never taken a single loan. Today, there are 15 UNO Pizza shops in 6 different cities, though with its high minimum wages, taxes, and competition, the market in Germany isn’t an easy one. However, the chain saw €7,5 millions—all the pizzerias are profitable. UNO Pizza is a real success story. So, why was Thomas giving a speech in our Moscow office?

Two weeks ago, we signed a letter of intent with our new German partners. We’re going to open together the very first Dodo Pizza in Germany. Then, all UNO Pizza shops will change to the Dodo Pizza brand. By that time, there will be 20 of them, and the Kochmann brothers will become Dodo Pizza’s master franchisee in Germany.

We’ll do everything humanly possible to put all our ambitious plans into action. Dodo Pizza and our partners are ready for a fight to win the leadership in the German pizza delivery market. And as strange as it sounds, we believe that it’s exactly the right moment for a rapid growth in this market.

In 2016, there were 1,470 McDonald’s units in Germany. And the largest pizza delivery chain had only 200 locations. It was Domino’s—or, actually, Joy Pizza—a chain that Domino’s bought a few years before. Last year, Domino’s bought out another local player, Hallo Pizza. So there are 380 pizza delivery shops now working under the blue-and-red logo. The closest competitors have 104 pizza shops, and there is also a significant amount of smaller players. Domino’s is going to open 1000 units in Germany—as many as they have in the UK (though there are 30 million more people living in Germany).

Thomas is 46, Michael, 47. They are experienced entrepreneurs and have tons of energy. After 25 years, they’ve accumulated lots of knowledge about management in the pizza business. They know the in and out of their market. Now it’s time for a breakthrough—we want to reinforce their experience and wisdom with the youthness and creativity of our company.

Why did the experienced German entrepreneurs choose a startup from Russia to partner with? When Domino’s started buying local players, Thomas and Michael began considering their options. What to do next? Further develop their own chain? Sell the company to some big international brand?

They studied Domino’s, Papa John’s, and TelePizza, but didn’t find anything unique that they didn’t have themselves, nor anything that was worth giving up a brand they had been growing for 25 years. Then, they looked to the East and found Dodo Pizza. So they studied our company and then sent us a letter. We invited them to Moscow, showed them our pizzerias, our company, and shared a pizza. :) Then, our team paid them a visit in Germany, and in the beginning of this year, we decided to join forces.

So, why have they chosen us over big well-established pizza companies? Sometimes, your freshness and your size can become your key advantage. Being a newcomer makes you see things differently and implement innovations that weren’t available before. I can confidently say that our big idea, turned down by venture funds some time ago, works! Thomas and Michael have chosen Dodo Pizza because we have our own IT system—Dodo IS.

It’s a major shift for our company. For the first time, we’ll be working with partners who don’t speak Russian (all our current international partners are Russian-speaking) and who already have built a big pizza chain.

For us, it’s an interesting challenge—and an enormous responsibility. For 25 years, Thomas and Michael have been growing their chain and their brand. UNO Pizza is their child. And they are ready to join us and change UNO for Dodo.