Ann Arbor — This college town probably couldn’t lay claim to being Michigan’s biggest exporter — unless you’re talking pizza.

Domino’s Pizza Inc. is one of the state’s biggest growth stories since the end of the Great Recession, a long-time-ago start-up that now can be had from more than 13,000 stores in more than 80 countries. It’s a darling of Wall Street, and it’s even trying to conquer the toughest pizza market on the planet: Italy.

“We’re learning,” CEO Patrick Doyle said in an interview this week. “Our attitude is, if we’re going to be a global pizza company, how can we not be in Italy?”

Fair question, that. Italy is second only to the United States in consumption of the round pies, making it a bellwether of sorts for a company in the business of offering customers cutting-edge digital technology to get dinner delivered in some 30 minutes.

It’s working. India is the company’s largest market outside the United States, claiming 1,000 outlets. Domino’s is approaching 1,000 stores in the United Kingdom. It’s growing in Australia, Brazil and Canada; it’s displacing Germany’s largest chain with its own stores; it’s the largest operator of pizza outlets in France.

It’s active in Japan, South Korea and China, where the introduction of American-style pizza delivered to private residences encountered at least two points of resistance. Only relatively recently has dairy become part of the typical Chinese diet, and Chinese consumers preferred to eat inside a restaurant to having a meal delivered.

“Both of those things have changed,” Doyle said, explaining a shift years in the making. Today China has 100 outlets, one-third of France and one-tenth of India.

None of this is easy. The pizza segment in the broader restaurant space is notoriously fragmented between behemoths like Pizza Hut, such regional chains as Hungry Howie’s and Papa Romano’s, and a profusion of mom-and-pop places. In restaurants, the top player could claim something like 25-percent market share; in pizza, that number is closer to 15 percent.

“Business is good,” Doyle said. “It started from getting the food right in 2010. Certainly technology has been a big part of that. It’s made it easier to access the business. We’ve had a great run.”

He’s got that right. About the time Domino’s under then-CEO (and still chairman) David Brandon was “getting the food right,” shares in DPZ closed trading on Dec. 7, 2010, at $15.19. Wednesday, shares in Domino’s closed at $167.72.

That’s the kind of performance nearby automakers (and a lot of others) could only dream about. It’s also shows how technology wisely deployed can transform an existing business model and change how and where investors see value. In a market hungry for evidence of growth in both top and bottom lines, Domino’s is delivering both.

Last-year’s annual sales totaled $2.22 billion, up from $1.65 billion in 2011; net income equaled $192.8 million, compared to $105.36 million in 2011; earnings before interest and taxes totaled $438.07 million last year, a big jump from the $281 million booked five years earlier.

Half of Domino’s business, especially within its 5,200 stores across the United States, is digital — orders placed by computer or smartphone. A decade ago, that number was zero, and the grub usually arrived in a battered car sporting some kind of (removable) Domino’s logo.

That’s changing, too. With the help of General Motors Co. and Livonia-based Roush Industries, Domino’s developed its DXP delivery vehicle that it offers for sale to franchisees. Based on the Chevrolet Sonic subcompact, nearly 200 DXP vehicles are making deliveries, each a rolling advertisement that doubles as yet another technology platform.

A little more than five years ago, 75 of the company’s headquarters staff worked in what today would be called “technology” — online ordering, tracking and processing. Today, fully half of the 800 folks working there work in technology, refining online and app-powered systems, mining the data culled from ordering patterns and preferences.

Domino’s isn’t alone. From automakers and retailers to web giants and search engines, business is flipping the proverbial script on consumers. Their demonstrated shopping and search habits provide business with road maps to what customers want and how much they may be willing to pay.

Just a few years ago, Domino’s didn’t know for sure that customers would ditch the telephone and order pizza online, either through a laptop or smartphone apps. Now that they do, Domino’s and others can use the data to more accurately predict their openness to menu changes and sensitivity to increasing prices.

The trick: Domino’s and many other companies like it don’t pay for the data. The customers do, and just because they ordered a pizza.


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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.

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