Franchising and Domino

PROJECT REPORT ON sum CHAIN MANAGEMENT OF DOMINOS pizza pie pie SUBMITTED TOSUBMITTED BYDR. HAIDER ALI KUMAR SHANTANU ROLL NO. 22 1 MBA(E-BUSINESS) SEMESTER IV TABLE OF CONTENTS SL NO. 1. 2. 3. 4. 5. 6 7. PARTICULARS ABOUT DOMINOS PIZZA DOMINOS IN INDIA MENU IN DOMINOS COMPETITIVE STRENGTHS OF DOMINOS BUSINESS system OF DOMINOS transshipment center OPERATIONS SUPPLY CHAIN OF DOMINOS PAGE NO. 3 3 5 6 7 9 12 2 ABOUT DOMINOS PIZZAFounded in 1960, half masks pizza is the recognized world leader in pizza delivery in operation(p) a internet of company-owned and right-owned lay ins in the coupled States and inter fieldist markets. dominos Pizzas Vision illustrates a company of exceptional people on a mission to be the best Pizza sales pitch conjunction in the world. half masks started out small with the legendary Tom Monaghan who bought his first pizza memory board and called it Dominicks. It was re-chris decennaryed dominos Pizza in 1965. Ho dominosver, in 1978, the 200th eye masks line exposed, and things in reliableity began to cook.By 1983 there Were 1000 eye masks stores, rising to 5000 in 1989. today, there atomic add 18 more than 9000 claimd and company owned stores in the joined States and 60 international markets . dominos is listed on the NYSE under the symbol DPZ. The half masks Pizza brand was named a Megabrand by Advertising Age magazine. dominos Pizza was named Chain of the Year by Pizza Today magazine, the leading publication of the pizza industry. In 2009, Dominos ranked number one in customer satisfaction in a survey of consumers of the U. S. argest limited usefulness restaurants, according to the annual American Customer Satisfaction Index (ACSI). Dominos has hyperbolizeed its visiting card solidly since 2008 to include Oven Baked Sandwiches and BreadBowl Pasta, and recently debuted its Inspired New Pizza- a permanent change to its core hand-tossed product, reinvented from the crust up with new sauce, cheese and garl ic seasoned crust. DOMINOS IN INDIA Jubilant Food plant life Limited, a Jubilant Bhartia Group Company holds the Master dealershipe Rights for Dominos Pizza for India, Nepal, Sri Lanka and Bangladesh.The company has been listed on the Indian btheses recently. Prior to Sep 24, 2009, the company was known as Dominos Pizza India Limited and underwent a name change, rest of the terms remaining the 3 homogeneous. The promoters of the company be Mr. Shyam S Bhartia, Mr. Hari S Bhartia and Jubilant Enpro Private Ltd. Dominos Pizza opened its first store in India in January 1996, at New Delhi. Today Dominos Pizza India has grown into a countrywide network of more than three hundred stores with a team of everywhere 9,000 people.According to the India Retail Report 2009, It was the largest Pizza kitchen range in India and the fastest growing multinational fast fodder cooking stove betDominosen 2006-2007 and 2008-2009 in terms of number of stores. all everywhere the period since 199 6, Dominos Pizza India has remained counseled on delivering great tasting Pizzas and sides, superior smell, exceptional customer service and cherish for bills whirls. It has endeavored to establish a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes or else FREE to a community of loyal consumers from all the stores around the country.Dominos vision is focused on Exceptional people on a mission to be the best pizza delivery company in the world . It is committed to bringing fun, comfort and convenience to lives of the consumers by delivering palatable pizzas to their doorstep and efforts ar aimed at fulfilling this commitment towards a large and ever-growing customer dwelling house. Dominos constantly strives to develop products that suit the tastes of the consumers and hence delighting them. Dominos gestates strongly in the strategy of Think global and act local.Thus, time and again it has been innovating with delicious new p roducts such(prenominal) as crusts, toppings and flavthes suitable to the taste buds of Indian Consumers. Further providing value for bills and affordable products to the consumers has been an important part of its efforts. Dominos initiatives such as Fun Meal and Pizza Mania pass water been extremely popular with consumers looking for an affordable and value for money meal option. The rat Positioning of Khushiyon ki Home Delivery (Happiness Home delivered) is the emotional benefit it offers to the consumers.All the efforts, whether it is a new innovative and delicious product, offering consumers value for money deals, great service, country wide presence or delivery in 30 minutes or free are all oriented towards delivering happiness to the homes of the consumers. Consumers can order their pizzas by calling the single Happiness Hotline number 1800-111-123 (in most cities of Dominos Pizzas Presence) and 44448888 (in NCR, Mumbai and Bangalore). 4 MENU IN DOMINOS VEGETARIANSIMPLY VE G Margherita give up and Tomato pizza VEG I Double Cheese Margherita Fresh Veggie Country Special Farm House VEG II Peppy Paneer Mexican yard Wave Deluxe Veggie Gthemet FEAST PIZZA Veg Extravaganza NON-VEGETARIAN SIMPLY NON VEG Cheese And Barbeque volaille NON VEG I Barbeque Chicken Spicy Chicken NON VEG II Chicken Mexican Red Wave FEAST PIZZA Meatzaa Keema Do Pyaaza Non Veg Extravaganza Chicken Golden Cheese And Delight Pepperoni SIDE ORDERS 5 VEGETARIAN Veg Mexican roll out Veg Pasta Italiano White Veg Pasta Italiano Red Garlic Breadsticks Cheese Jalapeno Dip Cheese Dip Choco Lava CakeNON-VEGETARIAN Veg Mexican Wrap Veg Pasta Italiano White Veg Pasta Italiano Red Chicken Wings COMPETITIVE STRENGTHS OF DOMINOS ? hefty and proven festering and earnings model- Over a 50- socio-economic class old history, it has developed a focused growth and earnings model. This model is anchored by stong store-level economics, which stick out an entrepreneurial incentive for dealership, and generate crave for new stores. The franchise system in return has produced strong and consistent earnings with supply chain and royalty payments revenue, with minimal associated capital expenditures. Strong store-level economics- It has developed a court-efficient store model, characterized by a delivery and carry-out oriented store design, with low capital withdrawments and a focused menu of quality, affordable pizza and complimentary side items. At the store level, it believes that simplicity and efficiency of trading operations gives it advantages over its rivals. ? Strong and Overall-diversified franchise system- It has developed a large, global and diversified franchise network that is critical component of its system-wide success and efficient pizza delivery.The franchise system network consists of 8284 stores, 55% of which are turn up in United States. 6 ? Strong cash lean and earnings stream- A substantial percentage of the earnings are generated by the commited, own er-operator franchises through royalty payments and revenues to vertically integrated supply chain system. ? Strong brand awareness- Dominos pizza brand is one of the most widely known consumer brand in the world. Consumers associate the brand with timely delivery of pizza, affordable pizza and complimentary side items. Dominos brand has been routinely recognized as a megabrand by Advertising Age. Internal popsicle manufacturing and supply chain system- In addition to generating significant revenues and earnings, the vertically integrated dough manufacturing and supply chain system enhances the quality and consistency of the products and the relationship with the franchises. It overly helps in leveraging economies of scale to offer loDominosr cost to stores and allows the store managers to better focus on store operations and customer service by relieving them of the responsibility of integrateing dough in the stores. BUSINESS STRATEGY OF DOMINOSIt intends to achieve further gro wth and strengthen the competitive position through the continued implementation of trading strategy which includes the following elements? cover to execute the mission statement- The mission statement of Dominos is exceptional franchises and team members on a mission to be the best pizza delivery company in the world. It implements this by following a business strategy that- puts franchises and company owned stores at the foundation of all the opinion and decisions emphasizes the capability to select,develop and retain exceptional team embers and franchises 7 provides a strong infrastructure to support the stores builds excellent store operations to create loyal customers ? increment the leading position in an attractive industry - U. S. pizza delivery and carry-out are the largest components of the U. S. QSR pizza category. They are also highly fragmented. Pizza delivery, through which a majority of retail sales are generated, had sales of $10. 9 billion in the twelve mon ths ended November 2008. As the leader in U. S. izza delivery, dominos believes that convenient store situations, simple operating model, widely-recognized brand and efficient supply chain system are competitive advantages that position it to capitalize on futurity growth. Carry-out had $13. 8 billion of sales in the twelve months ended November 2008. While the primary focus is on pizza delivery, dominos is also favorably positioned as a leader in carry-out given the strong brand, convenient store locations and quality, affordable menu offerings. ? Leveraging the strong brand awareness - Dominos believes that he strength of the Dominos Pizza brand makes us one of the first choices of consumers seeking a convenient, quality and affordable meal. Dominos intend to continue to promote the brand name and enhance the reputation as the leader in pizza delivery. In 2007 Dominos launched the rill, You Got 30 Minutes, which built on the Companys 30-minute delivery heritage. In 2007 and 200 8, separately of the municipal stores contributed 4% of their retail sales to the ad farm animal for national advertising in addition to contributions for market-level advertising.Additionally, for 2007 the national stores within active co-operatives elected to allocate an spare 1% of their advertising contributions to support national advertising initiatives. Dominos intend to leverage the strong brand by continuing to introduce innovative, consumer-tested and profitable new product varieties (such as Dominos Brooklyn Style Pizza and Dominos Oven Baked Sandwiches), complementary side items (such as buffalo wings, cheesy prize, Dominos Buffalo Chicken Kickers and Cinna Stix) and value promotions as through market affiliations with brands such as Coca-Cola. Additionally, Dominos may from time-to-time partner with other organizations in an effort to promote the Dominos Pizza brand. Dominos believes these opportunities, when coupled with the scale and share leadership, will al low to grow the position in U. S. pizza delivery. ? Expand and perfect the domestic store base - Dominos plan to continue expanding the base of domestic stores to take advantage of 8 the attractive growth opportunities in U. S. pizza delivery.Dominos believes that the scale allows to expand the store base with limited marketing, dispersion and other incremental infrastructure be. Additionally, the franchise-oriented business model allows to expand the store base with limited capital expenditures and working capital requirements. While Dominos plan to expand the traditional domestic store base primarily through opening new franchise stores, Dominos will also continually evaluate the mix of Company-owned and franchise stores and strategicalally conduct franchise stores and refranchise Company-owned stores. Continue to grow the International Business - Dominos believe that pizza has global appeal and that there is strong and growing international demand for delivered pizza. Domino s have successfully built a broad international platform, almost exclusively through the passe-partout franchise model, as evidenced by the 3,726 international stores in more than 60 countries. Dominos believes that Dominos continue to have significant commodious-term growth opportunities in international markets where Dominos have established a leading presence.In the current top ten international markets, Dominos believe that the store base in total for these ten markets is somewhat half of the total long-term potential store base in those markets. Generally, Dominos believe Dominos will achieve long-term growth internationally as a result of the favorable store-level economics of the business model, the growing international demand for delivered pizza and the strong global recognition of the Dominos Pizza brand. The international stores have produced positive quarterly same store sales growth for 60 consecutive quarters. STORE OPERATIONSDominos believe that the focused and pro ven store model provides a significant competitive advantage relative to many of the competitors who focus on multiple components of the pizza category, particularly dine-in. Dominos have been focused on pizza delivery for 48 years. Because the domestic stores and most of the international stores do not offer dine-in areas, they typically do not require expensive real estate, are relatively small and are relatively inexpensive to build and equip. The stores also benefit from lower maintenance cost, as store assets have long lives and updates 9 re not frequently required. The simple and efficient operational processes, which Dominos have refined through continuous improvement, include strategic store locations to facilitate delivery service production-oriented store designs product and process innovations a focused menu efficient order taking, production and delivery Dominos pulse rate point-of-sale system and a comprehensive store audit program. Strategic store locations to f acilitate delivery service Dominos locate the stores strategically to facilitate timely delivery service to the customers.The majority of the domestic stores are located in populated areas in or beside to large or mid-size cities, or on or near college campuses. Dominos use geographic information software, which incorporates variables such as traffic volumes, competitor locations, household demographics and visibility, to evaluate and identify potential store locations and new markets. Production-oriented store designs The typical store is relatively small, occupying approximately 1,000 to 1,300 square stipendt, and is designed with a focus on efficient and timely production of consistently high quality pizza for delivery.The store layout has been refined over time to provide an efficient flow from order taking to delivery. The stores are primarily production facilities and, accordingly, do not typically have a dine-in area. Product and process innovations The 48 years of fancy a nd innovative culture have resulted in numerous new product and process developments that increase both quality and efficiency. These include the efficient, vertically-integrated supply chain system, a sturdier corrugated pizza box and a mesh screen that helps cook pizza crust more evenly.The Dominos HeatWave impetuous bag, which was introduced in 1998, keeps the pizzas hot during delivery. Dominos also continue to introduce new products such as Dominos Oven Baked Sandwiches, which Dominos launched in 2008. Additionally, Dominos have added a number of complementary side items to the menu such as buffalo wings, Dominos Buffalo Chicken Kickers, kale sticks, cheesy bread and Cinna Stix. Focused menu 10 Dominos maintain a focused menu that is designed to present an attractive, quality offering to customers, while minimizing order errors, and expediting the order taking and food preparation processes.The basic menu has common chord choices for pizza products pizza type, pizza size and pizza toppings. some of the stores carry two or three sizes of Traditional Hand-Tossed, Ultimate Deep Dish, Brooklyn Style and Crunchy Thin Crust pizza. During 2008, Dominos added the new Dominos Oven Baked Sandwiches to the menu that are available in fthe main varieties. The typical store also offers buffalo wings, Dominos Buffalo Chicken Kickers, bread sticks, cheesy bread, Cinna Stix and Coca-Cola soft drink products. Dominos also occasionally offer other products on a promotional basis.Dominos believe that the focused menu creates a strong identity among consumers, improves operating efficiency and maintains food quality and consistency. Efficient order taking, production and delivery Each store executes an operational process that includes order taking, pizza preparation, cooking (via automated, conveyor-driven ovens), boxing and delivery. The entire order taking and pizza production process is designed for completion in approximately 12-15 minutes. These operational processe s are supplemented by an extensive employee homework program designed to ensure world-class quality and customer service.It is the priority to ensure that all Dominos store operates in an efficient, consistent manner while maintaining the high regulations of food quality and team member safety. Dominos shiver point-of-sale system The computerized management information systems are designed to improve operating efficiencies, provide corporate management with timely access to financial and marketing data and reduce store and corporate administrative time and expense. Dominos have installed Dominos PULSE, the proprietary point-of-sale system, in every Company-owned store in the United States and significantly all of the domestic franchise stores.Some enhanced features of Dominos PULSE over the foregoing point-ofsale system include touch screen ordering, which improves accuracy and facilitates more efficient order taking a delivery driver routing system, which improves delivery ef ficiency amend administrative and reporting capabilities, which enable store managers to better focus on store operations and customer satisfaction and enhanced online ordering capability, including Pizza Tracker which was introduced in 2007.Dominos require the domestic franchisees to install Dominos PULSE and are in the process of installing Dominos PULSE in the remaining domestic 11 franchise stores. Additionally, Dominos have installed Dominos PULSE in over 1,000 international franchise stores. Comprehensive store audit program Dominos utilize a comprehensive store audit program to ensure that the stores are concussion both the stringent standards as the expectations of the customers.The audit program focuses primarily on the quality of the pizza the store is producing, the customer service the store is providing and the condition of the store as viewed by the customer. Dominos believe that this store audit program is an integral part of the strategy to maintain high standard s in the stores. SUPPLY CHAIN OF DOMINOS Dominos operates in three business members 12 house servant stores- The domestic stores segment consists of the domestic franchise operations, which supervise the network of 4,558 franchise stores located in the conterminous United States, and the domestic Company-owned store operations, which operate the network of 489 Company-owned stores located in the contiguous United States Domestic supply chain- The domestic supply chain segment operates 17 regional dough manufacturing and food supply chain centers, one supply chain center providing equipment and supplies to original of the domestic and international stores and one vegetable processing supply chain center and International- The nternational segment oversees the network of 3,726 international franchise stores in more than 60 countries. The international segment also distributes food to a limited number of markets from six dough manufacturing and supply chain centers in Alaska, Haw aii and Canada (fthe). Domestic stores During 2008, the domestic stores segment accounted for $511. 6 million, or 36%, of the consolidated revenues. The domestic franchises are operated by entrepreneurs who own and operate an average of three to fthe stores.Only six of the domestic franchisees operate more than 50 stores, including the largest domestic franchisee, which operates 144 stores. The principal sources of revenues from domestic store operations are Company-owned store sales and royalty payments establish on retail sales by the franchisees. The domestic network of Company-owned stores also plays an important strategic role in the predominantly franchised operating structure.In addition to generating revenues and earnings, Dominos use the domestic Company-owned stores as test sites for new products and promotions as Overall as store operational improvements and as forums for training new store managers and prospective franchisees. Dominos also believe that the domestic Compa ny-owned stores add to the economies of scale available for advertising, marketing and other costs that are primarily borne by the franchisees. While Dominos continue to be primarily a franchised business, Dominos continually evaluate the mix of domestic Company-owned and franchise stores in an effort to hone the profitability.The domestic Company-owned store operations are divided into eleven geographic areas located throughout the contiguous United States while the domestic franchise operations are divided into fthe regions. The team members within these areas provide direct supervision over the domestic Company-owned stores provide training, store operational audits and marketing services and provide financial analysis and store development services to the franchisees. Dominos maintain a fill up relationship with the franchise stores through regional franchise teams, an array of computer-based training materials that help franchise stores comply 13 ith the standards and franchi se advisory groups communications betDominosen us and the franchisees. Domestic supply chain that facilitate During 2008, the domestic supply chain segment accounted for $771. 1 million, or 54%, of the consolidated revenues. The domestic supply chain segment is comprised of dough manufacturing and supply chain centers that manufacture fresh dough on a daily basis and purchase, receive, store and deliver quality pizza-related food products and complementary side items to all of the Company-owned stores and over 99% of the domestic franchise stores.Each regional dough manufacturing and supply chain center serves approximately 300 stores, generally located within a one-day delivery radius. Dominos regularly supply approximately 5,000 stores with various supplies and ingredients, of which, eight product groups account for over 90% of the volume. The domestic supply chain segment made approximately 575,000 full-service deliveries in 2008 or betDominosen two and three deliveries per store , per Dominosek and Dominos produced over 273 million pounds of dough during 2008.Dominos believe that the franchisees voluntarily choose to obtain food, supplies and equipment from us because Dominos provide the most efficient, convenient and cost-efficient alternative, while also providing both quality and consistency. In addition, the domestic supply chain segment offers a profit share arrangement to stores that purchase all of their food from the domestic dough manufacturing and supply chain centers. This profit-sharing arrangement generally provides domestic Company-owned stores and participating franchisees with 50% of their regional supply chain centers pre-tax profits.Profits are shared with the franchisees based upon each franchisees purchases from the supply chain centers. Dominos believe these arrangements strengthen the ties with these franchisees. The information systems used by the domestic dough manufacturing and supply chain centers are an integral part of the quali ty service Dominos provide the stores. Dominos use routing strategies and software to optimize the daily delivery schedules, which maximizes on-time deliveries.Through the strategic dough manufacturing and supply chain center locations and proven routing systems, Dominos achieved delivery accuracy rates of approximately 99% during 2008. The supply chain center drivers unload food and supplies and stock store shelves typically during non-peak store hthes, which minimizes disruptions in store operations. International During 2008, the international segment accounted for $142. 4 million, or 10%, of the consolidated revenues.Dominos have 592 franchise stores in Mexico, representing the largest presence of any QSR company in Mexico, 512 franchise stores in the United Kingdom, 412 franchise stores in Australia, 14 305 franchise stores in South Korea, 296 franchise stores in Canada, 227 franchise stores in India and over 100 franchise stores in each of Japan, France, Taiwan and Turkey. The principal sources of revenues from the international operations are royalty payments generated by retail sales from franchise stores and sales of food and supplies to franchisees in certain markets.Dominos have grown by more than 1,200 international stores over the past five years. Dominos empower the managers and franchisees to adapt the standard operating model, within certain parameters, to satisfy the local eating habits and consumer preferences of various regions outside the contiguous United States. Currently, most of the international stores are operated under master franchise agreements, and Dominos plan to continue entering into master franchise agreements with qualified franchisees to expand the international operations in selected countries.Dominos believe that the international franchise stores appeal to potential franchisees because of the Overall-recognized brand name, the limited capital expenditures required to open and operate the stores and the systems favorable s tore economics. The following table shows the store count as of December 28, 2008 in the top ten international markets, which account for 78% of the international stores.Number of stores Mexico 592 United Kingdom 512 Australia 412 South Korea 305 Canada 296 India 227 Japan 181 France 140 Taiwan 120 Turkey 106 The franchise program As of December 28, 2008, the 4,558 domestic franchise stores Were owned and operated by the 1,216 domestic franchisees. The success of the franchise formula, which enables franchisees to benefit from the brand name with a relatively low initial capital investment, has attracted a large number of cause entrepreneurs as franchisees.As of December 28, 2008, the average domestic franchisee operated approximately three to fthe stores and had been in the franchise system for tDominoslve years. At the same time, only six of the domestic franchisees operated more than 50 stores, including the largest domestic franchisee, which operates 144 stores. Domestic franch ises 15 Dominos apply rigorous standards to prospective franchises. Dominos generally require prospective domestic franchises to manage a store for at least one year before being granted a franchise.This enables us to discover the operational and financial performance of a potential franchisee prior to entering into a long-term contract. Dominos also generally restrict the ability of domestic franchisees to become involved in other businesses, which focuses the franchisees attention on operating their stores. As a result, the vast majority of the franchisees come from within the Dominos Pizza system. Dominos believe these standards are unique to the franchise industry and result in qualified and focused franchisees operating their stores.Franchise agreements Dominos enter into franchise agreements with domestic franchisees under which the franchisee is granted the right to operate a store in a particular location for a term of ten years, with options to renew for an additional ter m of ten years. Dominos currently have a franchise contract variation rate of over 99%. Under the current standard franchise agreement, Dominos assign an exclusive area of primary responsibility to each franchise store.During the term of the franchise agreement, the franchisee is required to pay a 5. 5% royalty fee on sales, subject, in limited instances, to loDominosr rates based on area development agreements, sales initiatives and new store incentives. Dominos have the contractual right, subject to state law, to terminate a franchise agreement for a variety of reasons, including, but not limited to, a franchisees failure to make required payments when due or failure to stick by to specified Company policies and standards.Franchise store development Dominos provide domestic franchisees with assistance in selecting store sites and conforming the space to the forcible specifications required for a Dominos Pizza store. Each domestic franchisee selects the location and design for each store, subject to the approval, based on accessibility and visibility of the site and demographic factors, including population density and anticipated traffic levels. Dominos provide design plans and sell fixtures and equipment to most of the franchise stores. Franchise training nd support Training store managers and employees is a critical component of the success. Dominos require all domestic franchisees to complete initial and ongoing training programs provided by us. In addition, under the standard domestic franchise agreement, domestic franchisees are required to implement training programs for their store employees. Dominos assist the 16 domestic and international franchisees by making training materials available to them for their use in training store managers and employees, including computer-based training materials, comprehensive operations manuals and franchise development classes.Dominos also maintain communications with the franchisees online, through various new sletters and through face-to-face meetings. Franchise operations Dominos enforce stringent standards over franchise operations to protect the Dominos Pizza brand. All franchisees are required to operate their stores in form with written policies, standards and specifications, which include matters such as menu items, ingredients, materials, supplies, services, furnishings, decor and signs. Each franchisee has full discretion to determine the prices to be charged to customers.Dominos also provide ongoing support to the franchisees, including training, marketing assistance and consultation to franchisees who experience financial or operational difficulties. Dominos have established several(prenominal) advisory boards, through which franchisees contribute to developing systemwide initiatives. International franchises The vast majority of the markets outside of the contiguous United States are operated by master franchisees with franchise and distribution rights for entire regions or c ountries.In select regions or countries, Dominos franchise directly to individual store operators. The master franchise agreements generally grant the franchisee exclusive rights to develop or sub-franchise stores and the right to operate supply chain centers in a particular geographic area for a term of ten to tDominosnty years, with options to renew for additional terms. The agreements typically contain growth clauses requiring franchisees to open a minimum number of stores within a specified period.Prospective master franchisees are required to possess or have access to local market knowledge required to establish and develop Dominos Pizza stores. The local market knowledge focuses on the ability to identify and access targeted real estate sites along with expertise in local customs, culture, consumer behavior and laws. Dominos also seek candidates that have access to sufficient capital to meet their growth and development plans. The master franchisee is generally required to pay an initial, one-time franchise fee as Overall as an additional franchise fee upon the opening of each new store.In addition, the master franchisee is required to pay a continuing royalty fee as a percentage of retail sales, which varies among international markets. Marketing operations 17 The domestic stores generally contribute betDominosen 4% to 5% of their retail sales to fund national marketing and advertising campaigns. In addition to the required national advertising contributions, in those markets where Dominos have co-operative advertising programs, the domestic stores also generally contribute to market-level media campaigns.These national and market-level funds are administered by Dominos National Advertising Fund Inc. , or DNAF, the not-for-profit advertising subsidiary. The funds remitted to DNAF are used primarily to purchase television advertising, but also support market research, field communications, public relations, commercial production, endowment fund payments and other activities supporting the Dominos Pizza brand. DNAF also provides cost-effective print materials to the domestic stores for use in local marketing that reinforce the national branding strategy.In addition to the national and market-level advertising contributions, domestic stores spend additional measuring rods on local store marketing, including targeted database mailings, saturation print mailings and community inter-group communication through school and civic organizations. Additionally, Dominos may from time-to-time partner with other organizations in an effort to promote the Dominos Pizza brand. By communicating a common brand message at the national, local market and store levels, Dominos create and reinforce a poDominosrful, consistent marketing message to consumers.This is evidenced by the successful previous marketing campaign with the slogan Get the Door. Its Dominos. and the current marketing campaign with the slogan You Got 30 Minutes. Over the past five years, Dominos estimate that domestic stores have invested approximately $1. 4 billion on national, local and co-operative advertising. Internationally, marketing efforts are primarily the responsibility of the franchisee in each local market. Dominos assist international franchisees ith their marketing efforts through marketing workshops and sharing of best practices and successful concepts. Third- fellowship suppliers Dominos have maintained active relationships of 15 years or more with more than half of the major suppliers. The suppliers are required to meet strict quality standards to ensure food safety. Dominos review and evaluate the suppliers quality assurance programs through, among other actions, onsite visits, third party audits and product evaluations to ensure compliance with the standards.Dominos believe that the length and quality of the relationships with suppliers provides us with priority service and quality products at competitive prices. Dominos believe that two f actors have been critical to maintaining longlasting relationships and keeping the purchasing costs low. First, Dominos are one of the largest domestic volume purchasers of pizza-related products such as flthe, cheese, sauce and pizza boxes, which allows us to maximize leverage with the suppliers when items are put out for bid on a scheduled 18 asis. Second, Dominos use a combination of single-source and multi-source procurement strategies. Each supply category is evaluated along a number of criteria including value of purchasing leverage, consistency of quality and reliability of supply to determine the appropriate number of suppliers. Dominos currently purchase the pizza cheese from a single supplier. In 2007, the Company entered into a new arrangement with this supplier.Under this arrangement, the supplier agreed to provide an uninterrupted supply of cheese and the Company agreed to a five year pricing period during which it agreed to purchase all of its primary pizza cheese for the Companys United States stores from this supplier or, alternatively, pay to the supplier an amount reflecting any benefit previously received by the Company under the new pricing terms. The pricing schedule is directly correlated to the CME block cheddar cheese price. The majority of the meat toppings come from a single supplier under a contract that began in July 2008 and expires in July 2010.The Crunchy Thin Crust dough is currently sourced by another single supplier pursuant to requirements contracts that expire in 2009. Dominos have the right to terminate these arrangements for quality failures and for uncured breaches. Dominos believe that alternative suppliers for all of these ingredients are available, and all of the pizza boxes, sauces and other ingredients are sourced from various suppliers. While Dominos may get additional costs if Dominos are required to replace any of the suppliers, Dominos do not believe that such additional costs would have a material adverse effec t on the business.Dominos also entered into a multi-year agreement with Coca-Cola effective January 1, 2003 for the contiguous United States. The contract provides for Coca-Cola to be the exclusive beverage supplier and expires on the later of December 31, 2009 or such time as a minimum number of cases of Coca-Cola products are purchased by us. Dominos continually evaluate each supply category to determine the optimal sourcing strategy. It has not experienced any significant shortages of supplies or any delays in receiving our food or beverage inventories, restaurant supplies or products.The current economic environment has created additional financial pressures for some of the suppliers all the same it does not currently anticipate disruptions in our supplies. Prices charged by suppliers are subject to fluctuation, and dominos has historically been able to pass increased costs and savings on to stores. It may periodically enter into financial instruments to manage the risk from ch anges in commodity prices. Dominos does not engage in speculative transactions nor does it holds or issue financial instruments for trading purposes. 19