How to reinvent franchising with tech and transparency

The story of Dodo Pizza — a digital-first pizza delivery franchise
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Dodo reaches beyond pizza

Dodo reaches beyond pizza

07 November 2019

Fyodor Ovchinnikov

Dodo Pizza CEO

Fyodor Ovchinnikov

Our expertise isn’t just in pizza. We know how to create retail concepts, merge IT and operational business, build a franchising system, and team with strong entrepreneurs.

So we are going to start launching new retail concepts based on the Dodo franchising platform that includes the Dodo IS digital platform, our supply network, quality control, training, communications, funding for franchisee growth, and many other things. We’re talking about coffee shops, sushi bars, bakeries, and even bed-and-breakfasts or dry cleaners. We will be changing people’s lives for the better by creating everyday goods and services for millions of people in cooperation with entrepreneurs, using state-of-the-art IT.

Where does our main expertise lie? We’ve managed to create a company that merges IT and retail. On the one hand, Dodo Pizza today is an IT company with a vibrant engineer culture and its own cloud-based digital platform, and great developers want to work with us. On the other hand, Dodo Pizza is a retail franchising company.

Our main product is the digital franchise. We will search for business models with profitable unit economics, where customer value in the form of products and services is created on the spot, and franchising is more efficient than a corporation. This type of business can be profitable or it can lose money. The result depends on a huge number of factors—operational efficiency, brand, location, cost prices, culture, drive, and the engagement of franchise owners. We already have advantages. We know how to attract and support strong entrepreneurs and build a community. We know how to digitalize a retail business to achieve transparency and better efficiency. We know how to build a brand and attract retail customers. We know how to manage, adjust, and support a chain. 

Of course, we are going to start with Russia where we already have millions of customers, a strong brand in the franchising market, entrepreneurs and suppliers trust, and a supply and quality control system. If tomorrow we open, say, a coffee shop in Norilsk, we already have the infrastructure ready for that. Today, the Dodo Pizza quality control and supply system functions in Russia all the way from Baltiysk to Sakhalin.

And what about Dodo Pizza’s global development? Nothing changes. We are going to continue our development in Europe, the US, Africa, and China. Our big goal is to deliver pizza in every country on Earth, and Dodo Pizza will be our flagship brand, but, possibly, some other franchising concepts will enter international markets as well. 

Why have we reached this decision? From the very beginning, we had a “big idea.” From day one, we’ve been building a franchise based on a digital platform as a web service. In eight years we’ve created our own IT platform, having invested millions of dollars in its development. Today, our company employs about 120 programmers, and we aren’t planning on stopping anytime soon. From the very start, we’ve been building a business that can go global in the future. Developing our own digital platform wouldn’t make any sense if we weren’t planning on building a global pizza chain, because the domestic market just wouldn’t be enough to warrant investing in the development of a big IT product from scratch for a single project.

At the end of the day, we’ve been successful, investors believe that growth on the global market is possible for us and have given us a chance, but at present, we observe a contradiction. On the one hand, we can’t stop investing in company and platform development, but on the other hand, international market growth takes time, and the pizza market in Russia and other Russian-speaking countries in the area isn’t all that large, and we’re about to see its limits. We don’t doubt that we can achieve a breakthrough in the pizza market in China and Britain, but to achieve real growth we might need another three or four years. Over the course of these three or four years we need to continue investing in the system, the team, and the development of our international structure. All the while the size of the Russian market constrains us, and to compete with aggregators and be a strong global player in the future we have to continue developing our own technology.

It’s important to note that we’re building an international business from Russia (not exactly teeming with venture capital funding), and big investors don’t have faith in the global growth of Russian-based companies. If we were, for instance, in the US, the size of the domestic market and plentiful investment opportunities would probably allow us to focus on creating a big digital platform for a single product, but Russia is where Dodo was born. And we don’t regret it, of course, as everything has its upsides. We only have to find them.

One upside to this market is its emptiness. While the US has hundreds of strong franchises, Russia has very few, and Dodo Pizza stands out. In the US it would’ve been quite difficult to launch new concepts for new market segments, because the competition is simply incredible, but in Russia, we have ample opportunity for that. Not only is there no serious competition here, but we also already have a retail chain infrastructure, entrepreneurs believe in us, and talented people are joining our team because our company stands out in the market, while in the US there are hundreds of such companies.

It may sound somewhat paradoxical, but Russia is a country of opportunity where we can create an incubator for concepts and grow rapidly, creating resources to invest in an IT system that will allow us to grow globally.

For example, here we can create and expand the idea of “smart” bed-and-breakfasts and then roll out this franchise in other countries using our digital platform. Within the company, we’re going to be making decisions about investing in these internal startups, and there will be a few important criteria for idea selection—unit economics that have proved to be profitable, a franchising model tailored to a particular product, and a concept with potential for global growth.

How will this strategy influence Dodo Pizza’s current business and our franchisee partners? Previously, we thought launching any new projects on our platform would be unfocused and a departure from our “big idea.” Now I’ve understood that it’s not unfocused, but a reinforcement of our strategy. We can scale our business in Russia, and that will bring us more resources to invest in our main product—the digital franchising platform. For example, we are currently developing a cloud POS system for pizza shops (a cash register in the browser, essentially). We are creating it for a specific project, but it can be utilized in any retail business. If we develop a cash register for multiple concepts, we will have more opportunities for its development. That’s exactly how the ecosystem of IT startups (who create aggregators that become our competitors) works.

Launching new concepts will have a positive impact on the business of active Dodo Pizza franchisees in Russia. The growth of Dodo’s business in the domestic market will result in more influence and purchasing power and will help us attract talented people to the company. Of course, these new concepts will be launched by new people who will come to Dodo, and that won’t impact the Dodo Pizza chain production at all. New concepts will help active franchisees expand their business in their markets. Without a doubt, we will be developing a single loyalty system, a unified customer base, and much more, and that will strengthen the synergy of our different businesses.

But will we be able to create multiple different retail concepts, all of high quality? Why do we think we could succeed in launching, for example, a successful chain of mini coffee shops or bakeries? I am sure we’ve got a chance. The key part of any company is its culture. If you’ve got it, everything else will come with it. We will develop an open, entrepreneurial culture in the company and attract talented people, offering them opportunities to grow and create something new. We already have knowledge, a platform, and resources. We have already amassed our expertise in interior design, product marketing, construction, premises evaluation, and, for example, retail business unit economics, and we can apply all of that knowledge to new products. 

Quality will be the main factor. Everything we do has to be high quality. Everything is going to be built based on the key values of our company—openness and partnership with every business partner, including franchisees. “Our success is our partners’ success” is going to be the formula for any Dodo franchising business.

When will we start to launch new franchising concepts in Russia? Pretty soon. We are now considering a kebab (shawarma) chain with a mobile app for order processing, the option to adjust recipes to your liking, and guaranteed safety and hygiene standards. We’re also considering chains of bakeries, coffee shops, sushi and wok bars. We dream of an accessible bed-and-breakfast chain with cool, stylish design and usability that will be managed through a smartphone, without managers, and with a mobile app instead of keys. All of that is a very familiar retail business. It works on the same principles. A multitude of details influences profitability. A multitude of customers. We know that very well. And we are going to implement existing technology and the Dodo IS digital platform everywhere.

It is breathtaking to think of what awaits us. If you want to embark on that journey with us as a member of our team, a franchisee partner, an investor, or a supplier, follow our updates and don’t forget to subscribe to our newsletter.

Expect news soon.

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