Domino's Still Waiting to Conquer Germany

Domino's German Expansion

[Photograph: Adam Kuban]

Domino's—that leviathan of the pizza industry—is reexamining it's over-optimistic plans for expansion in Germany, after two years of slow growth.

According to Australian Yahoo, there's an enticing market gap in Germany waiting for a company like Domino's—but there have been some major impediments along the way to filling it.

The biggest: a rise in minimum restaurant staff wages, which also applies to pizza delivery outfits. Understanding the German preference for thinner crusts and steady, lower prices (versus cheesy, deep pan pies and sales promotions) are other factors in play.

And another challenge? Germany has a lot of independent businesses competing with their chains. In 2012, German independent pizza restaurants generated revenues of $694 million versus chains' $509 million. In Britain, on the other hand, the chains took in $1.213 billion, more than twice as much as the independents' $515 million.

However, the Germans certainly have a penchant for pizza. The leading pizza brand (Joey's) earns a profit margin of perhaps 14%, versus Domino's 8.4% in the UK. If I'm Domino's looking at that, my mouth would be watering.