Italy made the first pizza, then kicked American Domino's out

Domino's seems to have run out of its pizza business in Italy, the birthplace of pizza. This is because of increased local competition from traditional Neopolitan pizza places (which now home deliver pizzas through local delivery apps), increasing mom-and-pop stores, and high debts. After 7 years of operations in Italy, Domino's has closed its 29 stores after its 90-day protection period, which comes after filing for bankruptcy, ended in July 2022.

The background: Domino's entered the Italian market in 2015 through its franchise partner ePizza SpA. Since then, it has opened 29 stores in Italy. In 2020, Domino's also announced that it was planning to add 850 stores in Italy. They wanted to achieve a 2% market share by 2030 in a land where locals thronged the streets of Rome for authentic square pizza made in wood fire ovens.

But, in April 2022, the franchise filed for bankruptcy because its business was failing. The court granted the franchise a 90-day court protection, which prevented the franchise's creditors from selling its assets and demanding repayment. The 90-day period ended in July 2022, and now Domino's has shut shop in Italy.

Why Domino's failed in Italy: Domino's cannot compete with traditions.

If you have never been to Italy (like me) and like eating pizza to some extent, you will know that Naples, Italy, is the place where Pizza was born. Italians love their traditional wood-fired pizza and no foreigner who visits Italy will return without tasting multiple Italian pizza slices at Pizzerium in Rome or Pizzeria Fratelli Salvo. (Pizzarium and Salvo both rank 2nd and 7th on Food & Wine's List of 'Top 20 Places to Eat Pizza before You Die'. 

The Italian pizza life is a big world in itself where locals prefer their centuries-old, uneven-looking Napoletana pizza made in wooden fire ovens over Domino's machine-made pizzas. Simple and fresh ingredients like a basic dough, raw tomatoes, fresh mozzarella cheese, fresh basil and olive oil without any fancy toppings make Napolitana pizza a hit. 

A bolder yet traditional version of the Neopolitan pizza includes:

• Innovative combinations of veggies (like earthy local chickpeas, sweet onions and pungent figs).
• Rectangle sheet-style pizzas where flavors change based on the season.
• Staple flavors of Vesuvio tomatoes with oregano and potatoes and juicy buffalo mozzarella. 

Now compare this with Domino's: a brand that believes in creating batch-style standardized pizzas made with fancy toppings like pineapple. It might work across the world, but not in Italy. In fact, people are even wondering why Domino's even thought of selling pizza in Italy in the first place. Isn't it similar to selling snow at the North Pole? 

Domino's financial status in Italy: In 2021, ePizza SpA reported sales of €10.4mn (about Rs 84.34 crore), up 8.6% on the year before but 36.8% down on the target sales for that year. In December 2021, the company’s cash reserves stood at only €492,000 (about Rs 4 crore), nearly 80% below their budget. 

As per Financial Times, Domino’s stopped accepting delivery orders from its Italian website on July 29, 2022. Domino's Italy Instagram page received comments from customers inquiring why some stores had shut down. As per Domino's:

• Covid had crushed long-term demand as Italians had failed to develop a taste for American pies.
• There was increased competition from “mom and pop’ restaurants”.
• Domino's debts were super high and it had run out of cash (since it had borrowed heavily to add 850 stores in the coming years).
• Traditional pizza outlets were now offering pizza delivery through local delivery apps like Deliveroo Plc and Just Eat Takeaway.com.

How could Domino's survive with so much going on?