Battle for Melbourne begins as Domino's Pizza Aus. swallows 16 Big Daddy's

July 7, 2004

MELBOURNE, Australia--The recent acquisition of 16 Big Daddy's Pizza units will give Domino's Pizza Australia immediate penetration into the Melbourne pizza market.

According to The Age, over the next few months the units, located in and around Melbourne, will be converted to Domino's stores. The city itself, the report said, has about 800 pizzerias.

"We think we'll have about 83 stores over the next four to five years," said Domino's Australian chief executive Don Meij. " ... Melbourne is a very developed pizza market, more diverse in terms of the style of your pizza places, but it's very underdeveloped from a home delivery perspective."

Meij believes Domino's entry into the market won't force smaller pizzerias out of business. The brand's penetration into new markets, however, has ignited price wars in both Australia and New Zealand.

"I'd be surprised if the price of a pizza in Melbourne got too much lower because it's already very competitive," Meij said. "And I doubt that the smaller operators will go out of business because this market is just too big for us to have that sort of impact."

Meij believes Domino's is different enough from competitors such as Pizza Hut and Pizza Haven, which center more on restaurant-style service. The goal of the world's second-largest pizza chain, he said, is to "get pizzas to the door quicker and hotter than anybody and ... we offer a choice and variety of pizza that genuinely hasn't existed here yet."

Some competitors agree with Meij, saying they can handle Domino's coming to town.

"I don't mind. It won't affect me at all," said Con Colokithas, who has run the Borrack Square Pizza for 14 years. Other pizza competitors have been around for a long while, and the market sustained them all, he added. "I have loyal customers here. They know they are going to get good quality when they come in here. They might go and try what these new guys have to offer, but they'll be back."

Colokithas said he won't get into a price battle should Domino's start one.

"Big Daddy's up the road here have been charging $5.90 for a large pizza. I charge anywhere from $9.50 to $11.80 and I'm still doing OK," he said. "I won't be changing that. ... My customers pay for quality. People aren't silly; they know what they are paying for."

Michelangelo Pizza and Pasta Restaurant owner Angelo Lomonaco isn't worried about Domino's either.

"We've been here for seven years now. We're a family business with a good name around here," he said. "Big Daddy's opened up nearby 12 months ago and it didn't affect us. In fact sales increased, so I don't think this will interfere with our business."

Read related stories ...
* Domino's Pizza lands in New Zealand, ignites price war
* Domino's to open 50 new sites in Australia in '03

Topics: Domino's Pizza

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