New Domino’s CEO Allison Will Face Challenges in Post-Doyle Era

The incoming CEO of Domino’s has big shoes to fill and some examples of foundering peers to remind him that leadership in the quick-serve-food industry isn’t for the faint of heart.

Richard “Ritch” Allison will become CEO of Ann Arbor, Mich.-based Domino’s on July 1 in the wake of the just-announced departure of J. Patrick Doyle Jr. on June 30.

The news stunned outsiders. On Wednesday, Domino’s stock price recovered only $3 of the $10 a share that it lost after Doyle’s surprise announcement on Tuesday that he would be leaving the company at 55 years of age, and after an unprecedented record of success for Domino’s. Investors bid down Domino’s stock initially from about $207 a share to about $197 a share presumably because they feared they will miss Doyle’s winning and steady hand.

But as Doyle himself said in a press release, the company had achieved in his eight-plus years at the helm the three main goals he established when he ascended to the CEO job: becoming the No. 1-selling pizza brand in the world, which happened when Domino’s finally eclipsed Pizza Hut last year; creating better experiences for customers (partly by adding a digital component) and thereby boosting returns for franchisees; and having a solid succession plan in place.

“The thing we’re not going to do is slow down. We’re going to continue to invest in the things that have helped us get where we are today: technology, our franchisees, re-imaging our stores – and our people.”-Richard Allison

“History shows that with public-company CEOs, after 10 years their performance doesn’t tend to be as strong,” Doyle told Chief Executive. “I always had in my mind 10 years. But I’ll be here eight-and-a-half years at the end of June and I’ve hit specific goals I had for the performance of the business, and I’ve got a terrific successor as CEO, and he’s ready to go. You take that window and say, ‘It’s time to do it.’”

Doyle also managed to put together several consecutive years of quarterly same-store sales gains, which recently have been in the 6- to 12-percent range while competitors including Pizza Hut and Papa John’s have been foundering. And he established Domino’s as the undisputed leader in digital ordering and delivery platforms that are the lifeblood of a business where efficiency is as important as food quality.

Meanwhile, the CEO of No. 3 industry player Papa John’s, John Schnatter, recently gave up his role while remaining as chairman, dealing with the extra complication of controversy over his remarks about NFL anthem protests.

And another restaurant CEO who was a high flyer for a long time, Chipotle chief Steve Ells, stepped out of the chief role and remained chairman as he couldn’t turn around the chain after a devastating series of food-safety incidents.

Allison joined Domino’s in 2011 after decades of restaurant experience and became president of international operations, where Doyle also cut his teeth. The new CEO-in-waiting told Chief Executive that he’s “fortunate” to start where Doyle left off but also mindful that his first challenge will be to continue the momentum – no easy task after Domino’s rose to the pinnacle of the industry under Doyle.

“The thing we’re not going to do is slow down,” Allison said. “We’re going to continue to invest in the things that have helped us get where we are today: technology, our franchisees, re-imaging our stores – and our people.

“Just as Patrick has, I’ll continue to challenge our system and push harder and faster as well and not let up even though we’re No. 1.”

As international chief, Allison oversaw vibrant Domino’s expansion in key markets such as the UK and India, but also recognized that the company is playing catch-up with Pizza Hut in the crucial China market.

And while he declined to make specific observations about the travails of Schnatter and Ells, Allison acknowledged that competition in the restaurant business is ever-changing and relentless.

“There are multiple dynamics and competitors we have to be mindful of,” he said. “Traditional players, fast-casual players. And increasingly there are aggregators and others who are getting into food delivery. We have to make sure that we’re always delivering great value to our consumers, and a high level of service.

“And by being mindful of the competition, it pushes us to get better every day. Being out front – a goal that we’d been striving for for a long time – we’re not going to pause.”