How to reinvent franchising with tech and transparency

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.

 

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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.

(more…)

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