Big Apple Pie: Domino's Franchisee "Makes It" in Nation's Toughest Pizza Market
Dave Melton had heard Frank Sinatra's "New York, New York" countless times before he opened his first Domino's Pizza restaurant in Manhattan. But it took a little time to really understand the truth in the song's line "If I can make it there, I'll make it anywhere..."
"When I first came to Manhattan, I walked around--like all New York tourists--with my eyes looking up and my mouth open, just amazed at the size and pace of it all. My friend and I spent several days there eating pizzas at dozens of pizza places, and at the end of that trip I actually thought we had a good-enough pizza and good-enough service to compete," he says.
"I had underestimated the reality of doing business in Manhattan. I stayed on the Upper East Side for seven or eight months, working 80 hours a week, getting that first store off the ground, and it still took several years to become successful."
Twenty years later, Melton has four successful Domino's in Manhattan and two more in Connecticut, and he loves his life with wife and partner Angie, spending weekdays in the city and weekends at their country home in Connecticut.
He and Tim McIntyre, Domino's vice president of communications, last year published a book, Hire the American Dream, which outlines how Melton created an impressive zero turnover rate among his store managers for eight years. The book focuses on his best practices in building a stellar team from minimum-wage workers.
His 120 employees know that those practices start and end with friendliness and customer service. "I tell new employees, 'Think about how you feel if you go into a grocery store and pay $150 for three bags of groceries and the clerk doesn't even look at you as he takes your money,'" Melton says. "You want the clerk to say something friendly and show a little personality. That's what I want from my delivery people. I convince them that this is the way to sell more pizzas and make more money. Happier customers mean more sales. More sales means more pizza to deliver, and so we all make more money. If you're in the back folding boxes or washing dishes, you're not making money."
As much as Melton enjoys making money and serving a great product, he says his favorite compliment from customers is, "You sure have nice people working for you."
The Richmond, Va., native, who earned a degree in business management from James Madison University, spent only a couple of months in banking before leaving in search of a better career fit. He'd been on the job search path for a while before then-girlfriend (now wife) Angie hit him with six little words that got his attention fast, he jokes: "Get a job or get out!"
He spotted an ad for assistant manger at a Domino's and interviewed for the job with Frank Meeks, described by Domino's founder Tom Monaghan as "the greatest franchisee in the history of Domino's."
"Here's a guy who could be whatever he wanted, and he was completely juiced up on Domino's Pizza," says Melton. He also was impressed to learn that a store manager would be paid a percentage of the profits in addition to salary, so he took the job as assistant manager, thinking he'd do it until he found something better.
At the end of six months of training, Melton became general manager at Meeks's Quantico, Va., store. After his first year, he was nominated for Rookie of the Year. Having found his niche, he later became his mentor's vice president of operations and director of franchise development.
Eventually, he decided to take the plunge and open a store in Manhattan. Having survived his baptism by fire, Melton now loves working in the vibrant city and has served as New York advertising co-op president for the past 18 years.
He remains enthusiastic about his work. "The most satisfying thing about my business is watching other people become successful," he says. "There's nothing greater than seeing a delivery guy who started as a kid on a bike now owning his own store and living in a million-dollar home."
Name: Dave Melton
Company: DPNY Inc. in New York, DPCT LLC in Connecticut
No. of units: 6 Domino's Pizza
Family: Wife Angie
Years in current position: 20
Years in franchising: 28
Key accomplishments: Building and getting a chain franchisee to be successful in Manhattan was important. Another big accomplishment was helping lead NY DMA to become the most successful DMA market in Domino's Pizza. Last year, we took over the number-one slot for sales in any Domino's market. It's the first time we've been able to turn the tables on Los Angeles.
Biggest mistake: I trusted a lot of early decisions to people in my company who didn't have the same attitude about customer service that I did. Eventually, I was able to recruit and develop a core of people, who, like me, realized that satisfied customers were the only way we'd survive and eventually thrive.
Smartest mistake: Thinking that we had a good-enough pizza and good-enough service to compete in Manhattan. The reality of doing business in Manhattan was much tougher than I imagined. Now, 20 years later, Domino's sells more pizzas in Manhattan than any other pizza company.
How do you spend a typical day? Normally, I get up and check performance for the previous day. Everything now is web-enabled so I can get sales, service, and schedules emailed to me on my cell phone so I can stay connected on how the stores are doing. It isn't a replacement for being in the stores, so we get around and visit them once or twice a week. My role is being a cheerleader, recognizing great performances, and making sure our stores have the resources they need.
Work week: Whatever is demanded. If my phone rings at 3 a.m., I have to deal with it. But it works both ways, and lots of times on Tuesday I can leave work at 11 a.m. and go play golf. Even then, I still have to stay in touch.
Favorite fun activities: Golf, fly fishing, and my wife and I like to travel. I have a workshop and a garden at our house in Connecticut so we spend most weekends there. During the week, we're at the apartment in New York.
Favorite stuff/tech toys: I'm definitely a "gear" guy. I have more golf gadgets, fly-fishing gizmos, woodworking tools, gardening stuff--and thousands of books on all of it.
What are you reading? Hire the American Dream is one of my favorites--and it has nothing to do with the fact that Domino's VP of Communications Tim McIntyre and I wrote it! It has all the best stuff I use in business and that others use, so I find myself going back to it over and over again. It's basically about how to develop minimum-wage and entry-level employees into a high-performance, customer-focused team.
Do you have a favorite quote or advice you give? Things are never as good as they seem, and never as bad as they seem.
Best advice you ever got: Have a mentor and then be a mentor to someone else.
Formative influences/events: One was meeting my wife in college. We've been married 26 years and we're a great team. Another great influence came from Frank Meeks, a Washington, D.C., franchisee who interviewed me for my first Domino's job. I was Frank's first VP of operations and being around him, I learned so much about leadership and getting things done.
How do you balance life and work? I don't get too consumed with these stores. I hire people who have responsibilities and I expect them to meet them, but I don't do their jobs. I'm a realistic person, too--I don't expect people to work 80 hours a week. I want them to have a family life and other interests. It makes them happier people and better employees.
Business philosophy: Again, I'm a realist. I realize that I can't win or be successful unless the people who work for me in my business win and are successful. They have to win before I do. When you have that philosophy, you have a business that people respect and don't steal from. Would you say you are in the franchising, real estate, or customer service business? Why? I'm a franchisee, and my real estate I pay for, but customer service is it. If you don't have customers, you're out of business. If a customer leaves, so does his money. I tell my employees that we spend 7 or 8 percent of our sales on marketing and advertising, so that with a $10 pizza, that's 80 cents spent directly on marketing and advertising. When we spend that much money just to get the phone to ring, we have to recognize and be grateful for the opportunity, even if a customer is calling back for the 50th time. What gets you out of bed in the morning? I get excited to see how we did the day before. What's your passion in business? Helping people become successful and watching them grow. Management method or style: My management style is supportive. I serve as a resource, and one of my most important roles is to have a philosophy and make sure every single person in the company knows what it is and why it's good for them. Greatest challenge: Handling the numbing routine tasks that are necessary to stay in business. Making sure that whatever the government requires, whatever the franchisor requires on a daily, weekly, and monthly basis, get done. How close are you to operations? Close enough to know what's going on, but not so close that I do the managers' jobs. They're in their positions for a reason, and I'm not going to stand over their shoulders and comment. Personality: I'm proud of my business and I like to have fun. But I'm also someone who calls 'em like I see 'em. I don't sit in the back row and grumble under my breath. I sit in the front row and tell the franchisors what they need to hear, because I want the best for the company. How do others describe you? I have a reputation for being direct when there's a problem. How do you hire and fire? In hiring, I look for someone who's a good fit. I can't hire someone who's destined to fail. We identify people who are nice, because this is a people business. If a person can't display their personality and give the sense of someone you'd like to know during the interview process, are they suddenly going to become a different person at the customer's door? I don't think so. At our company, a person knows that they're going to be fired because we have rules and clearly defined expectations. How do you train and retain? Our employees are well trained, and we keep them because we respect them, treat them well, and help them grow. Nothing is more thrilling than to watch someone come up through the ranks and wind up as a franchisee with his own store. Among our GMs, we've had no turnover in eight years now. Even in the assistant manager ranks we've had a few around for five to seven years. They're senior people who will be great managers when we have the spots. How do you deal with problem employees? Our company has a team culture that says: If you're not making customers happy, you're affecting my income. And if you're creating tension or not delivering as quickly as the rest of us and that customer leaves us, then you're costing me money. It's all part of doing business.
BOTTOM LINEAnnual revenue: $6 million
2010 goals: Increase revenue by 10 percent.
Growth meter: How do you measure your growth? Sales is everything. We look at growth in order counts and dollars of sales. We like to look at order counts because the average ticket can change, but the number of customers is also a pretty important number.
How has the most recent economic cycle affected you, your employees, your customers? We're certainly tightening our belts, trying to be more streamlined and efficient and to do more with less. The great thing about having low turnover and experienced staff is that you make fewer mistakes. Mistakes are what drives the customers crazy. The reality is that during tough economic times, people don't want to lose their jobs and so they're more focused and work harder.
Are you experiencing economic growth/recovery in your market? In New York City things are humming right along.
What did you change/do differently during the recent tough economic times that you plan to continue doing into the future? We've focused hard on our marketing budget--what part is working and what isn't. We have to be brutal about analyzing and cutting out stuff that's not working. One of the best things we do is database marketing. We're looking at who our existing customers are and finding out what kinds of offers they like. Most of our marketing is reminding them, giving a nudge, thanking them for past business, and finding offers that match what they've liked in the past. We rely on national TV to drive new customers.
How do you forecast for your business during trying times? Can you even forecast at all? We can do a lot of that with our computers by looking at last year, week, month. We know the cycles and try to be optimistic and prepare for the bigger weeks. But sometimes the wheels come off. I believe that if you level with the customer, they'll give you a break.
Where do you find capital for expansion? We have a long-term relationship with Chase Bank, and they've been good to us.
Is capital getting easier to access? Why/why not? No, because it's a major pain in the ass to fill out the increasing number of forms.
Where do you see yourself in 5 years/10 years? I'd like to have a few more of my managers become franchisees and continue mentoring some of our up-and-coming stars and seeing them become successful store managers.
What kind of exit strategy do you have in place for your business? I have a great business that is a lot of fun, so that strategy is years away.
What kinds of things are you doing to take care of your employees? We pay our people based on sales increases and profitability, so each person is a miniature "owner." We also have lots of guys from other countries, and we help them become citizens. Or, if they haven't seen their dad in 10 years, we've bought tickets for them to go home.
How are you handling rising employee costs (payroll, healthcare, etc.)? It's not just employee costs, it's insurance, taxes, rents. In my opinion, the only one way to handle rising costs is raise sales faster. We just build our top line to stay ahead of rising costs.
How do you reward/recognize top-performing employees? Each month, each store chooses an MVP who gets a $50 bonus and their name on a store plaque. For the annual MVPs, we have a holiday party, and each store's MVP gets their picture taken with me and their manager and gets an embroidered shirt saying MVP for that year. This July, Domino's is celebrating its 50th anniversary in Las Vegas and we've set up an incentive program that could have me buying lots of tickets to Vegas.
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