The Homeless Man who made DOMINO’S a $9 Billion Franchise | How Dominos was made?

How Domino's was made - CEOCOLUMN.COM
Table of Contents

The dominoes we know and love today has become a billion-dollar empire.

But before it joined the ranks of McDonald’s and KFC, it was an unwanted pizza store.

That changed when the founder went from being homeless to the genius behind delivering for free. Let’s find out How Dominos was made in this blog?

THE UNWANTED CHILD – 28 years before Domino’s Opened

In 1937, TOM was born on Saint Patrick’s Day in Ann Arbor, Michigan.

When Tom was just four years old, his father passed away on Christmas Eve.

Without their father, Tom’s mother could no longer afford to raise her own kids.

She placed both Tom and his brother James into a FOSTER HOME.

On the first day at his new home Tom got into a fight, he longed day after day for his mother to return.

Nearly seven years later, Tom’s mother had become a nurse and was able to provide for her two sons.

She moved the family back to Traverse City, Michigan where Tom started school.

At Tom’s new catholic school he met FATHER RUSSELL PASENO.

He was aware of Tom’s family situation and gave Tom odd jobs to do around the school and church for 35 cents an hour.

After the seventh grade, Tom moved schools.

He was still keen on working and decided to look for an opportunity by walking up and down the main street of his town.

He later found a job SELLING NEWSPAPERS and a summer job PICKING CHERRIES.

The work was hard and tedious.

He remembers thinking that, the business would be more efficient if they made a machine to shake down the trees and catch the cherries in the tarp.

It was the first instance where he started thinking like an entrepreneur.

To make more money Tom would go fishing and then sell his catches door to door while thinking of other ideas.

As his carefree and entrepreneurial spirit grew, his relationship with his mother withered.

They constantly argued until his mother decided to put him and his brother back into foster care.

Tom moved from one farm to another and ended up getting a job at a bowling alley.

He worked from 6:30 until midnight five days a week.

By high school, Tom moved again, but this time into a ramshackle farm that had no electricity.

During the wintertime, frosts and light peered through the cracks of the walls.

Life was difficult, the clothes Tom wore were worn out and filled with holes, and his shoes were always covered in manure.

While walking to school he would keep his feet to the floor hoping no other students would notice.

One day, he started to reflect on his path while shovelling a pile of manure that reached his ankles.

“How did I get so off track.” it was then that he decided that he was going to fulfil his dream of becoming a priest.

So he applied to a seminary and was able to attend after his mother offered to pay with her savings.

Tom felt right at home at the seminary and didn’t get homesick like the other boys.

He was even somewhat mischievous, he got into pillow fights and would talk in the study hall but he never did anything too serious.

In less than a year, he kicked Tom out of the seminary and told him he didn’t have a vocation.

Tom’s dream of becoming a priest was crushed.

Afterward, he was forced to move back into his mother’s home.

They constantly argued as they did before until his mother gave up on him.

Without telling him she sent a police officer to fetch him after school and send him to a juvenile delinquent home.

“I felt like a criminal but had done nothing wrong,” embarrassed.

Tom would walk a different route from school to home so that his classmates would never know.

Fortunately, when his aunt and uncle found out they petitioned the courts to have him live with them instead.

THE FIRST BIG MISTAKE – 10 years before Domino’s invented the Modern Pizza Box.

By then Tom didn’t care about graduating high school until he saw his aunt making preparations for his graduation.

Not wanting to disappoint her, he asked his teacher if there was anything he could do to graduate.

She gave in to his plays and allowed him to graduate last in his class.

In his yearbook, he wrote “the harder I try to be good, the worse I get, but I may do something sensational yet.”

He attended FERRIS STATE COLLEGE improved his marks and applied to the University of Michigan.

After being accepted he couldn’t afford the tuition.

So he left to join the Marine Corps thinking it was the army.

By the time he realized it was too late, he could no longer attend college for another two years.

All he could do was make the best out of the situation. “If I could survive the marines, I knew I could handle anything.”

While training he decided to focus on improving himself mentally and physically.

He started reading inspirational books and would imagine himself building an empire.

ROBBED OF COLLEGE DREAM – 8 Year’s before Domino’s became a Franchise.

In 1959, Tom was dispatched from the marines.

He had $2000 dollars in savings put aside for his college tuition.

But he lost every penny after meeting a slick businessman who convinced him to invest in a get rich quick scheme.

With only 15 dollars left in his pockets, he hitchhiked from San Diego to Ann Arbor.

He moved in with his younger brother James and got a job as a supervisor for a local newspaper.

He scraped just enough money for his college tuition but dropped out after three weeks.

He had no money left for books and decided to try again in the next semester.

To make more money he started selling newspaper subscriptions, he ended up getting many customers by offering to deliver.

The experience showed him the appeal in delivery and that when you see an opportunity it’s important to seize it.

When the semester came around he was able to pay for his tuition and books, but he dropped out again he was so busy working that he had no time to study.

At 23 years old, he was a two-time dropout driving a beat-up car.

He felt like any dreams he had for the future was falling apart.

That’s when his younger brother James came to his rescue.

He heard that a small store was on the market for a cheap price, it was called Dominick’s in Ypsilanti Near Eastern Michigan University.

Dominicks Pizza - How Domino's was made - CEOCOLUMN
Dominicks Pizza – How Domino’s was made – CEOCOLUMN

He asked Tom if he wanted to buy the store with him.

They could split shifts so that Tom would have enough time to study.

Tom only had $77 dollars in his bank account, so he took out a $500 loan and bought the store with James.

Right after they signed the agreement James got cold feet, he was scared to leave the security of his job as a mailman.

Six months later, he gave into his fears.

After Tom took his first night off, James realized that running the store was too much work and quit.

So Tom had no choice but to take over instead of returning to college.

At first, he was disappointed, he decided that if he was going to be in the pizza business it would have to be the best in the country.

FORCED INTO HOMELESSNESS – 22 years before Domino’s Opened Over 1000 stores.

Tom was thinking big, but his business was far from growing, in fact, the store was losing money every single week.

When he ran out of money he had no choice but to live off stale popcorn that he found in a cupboard for a week.

He couldn’t afford to eat his own pizza unless it was burned.

Eventually, he became homeless too, he couldn’t pay for his rent and slept in the store.

His luck seemed to be getting worse with each passing day.

One evening, half of his staff didn’t show up, so that’s when he decided to limit the types of pizzas they made, it turned out to be their most profitable night ever.

From then on he focused on keeping his menu simple and delivering for free.

He was the first pizza store to do this.

After the Ypsilanti store became profitable, he decided to open a second store in Mount Pleasant near central Michigan University.

The night that he signed the agreement he laid in bed feeling scared to death.

Why am I taking a risk on a second store when the first one is doing so well?

Tom realized it too late to go back on his commitment.

Not only was the agreement signed but he had also purchased the equipment.

Fortunately, it turned out to be a risk well worth taking.

That location along with the first became the busiest pizza store in the country.

They sold thousands of pizzas each week.

Most of its business came from students living on campus and customers wanting delivery.

CHALLENGING THE INDUSTRY STANDARD – 20 Years before Domino’s Expanded Globally.

After just a few years, Tom slowly built his empire.

Much like he envisioned when he was training in the marines.

When he opened his third store the former owner called, Tom wasn’t allowed to use their name anymore since their customers were getting confused.

So he settled on Domino’s after one of his drivers told him he was known as that guy from Dominos’.

This was the least of his problems.

The more pizza he delivered the more issues he’d encountered.

It was hard to keep a balance of the ingredients staying moist and the crust crispy.

So Tom asked a manufacturer to develop a box made of corrugated paper with holes since it could strengthen insulation and retain heat longer.

They were reluctant to make it, but Tom kept pushing.

American technology is putting space satellites in orbit these days and you’re telling me you can’t punch a clean hole in a piece of cardboard.

Tom’s idea ended up being extremely cheap and mass-producible.

It inspired him to come up with more ideas that became the industry standard including heated pouches, conveyor ovens, doe trays, and commissaries.

A BILLION DOLLAR EMPIRE – 48 years before Domino’s become a $9 Billion Empire.

In the late 60s, Tom attended a franchise seminar at Boston College.

There he met Ray Kroc from McDonald’s and Josh Brown from KFC.

Both men were responsible for turning what was once a small restaurant into a major franchise.

They inspired Tom to continue to deliver with a focus on franchising.

“Nobody thought you could make money on delivery. Most places delivered just to get some volume before they could afford to cut out the service. But I thought I could do it.”

It was then that he set the ambitious goal of opening a new store a week.

By 1969, he nearly met that goal.

32 domino stores open, but almost all of them failed and Tom found himself $1.5 million dollars in debt.

To avoid bankruptcy, he relinquished control of the company to a bank.

They brought in a so-called expert who made things even worse by raising prices and cutting back on quality.

Within a year the bank handed the company back to Tom, it was in the worst financial shape ever.

Franchisees filed lawsuits and suppliers hadn’t been paid in a long time.

“I had well over a thousand creditors and got lawsuits from about 150 of them. I was on the phone every day telling them all the same thing: all I can do is pay for my food and rent so I can stay open and pay you.” ~ Tom Monaghan

One at a time, Tom slowly won them back and within a year he paid off his debt.

All of the lawsuits in his debt made him realize that he needed to change his business model.

Anyone who wanted to franchise no longer had to pay an initial fee, instead, they had to manage a store for at least a year successfully.

Tom’s idea not only worked but proved to be extremely successful.

By 1983, there were over one thousand domino stores, a three thousand percent increase.

The company grew even more after Tom created a new policy. “If customers didn’t receive their order within 30 minutes, it was free.”

Only a year later, Tom opened over 5000 stores and Domino’s became the largest pizza delivery company in the world.

He also managed to buy the DETROIT TIGERS.

Today Domino’s is worth $9 Billion and has stores in more than 85 countries.

This is the story of how an orphan with the worst luck turned a single pizza store into a billion-dollar empire.

Table of Contents

Share:

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on linkedin
LinkedIn

1 thought on “The Homeless Man who made DOMINO’S a $9 Billion Franchise | How Dominos was made?”

Leave a Comment