While some companies are afraid to try new things, you can't say that of Domino's (NYSE:DPZ). It has never chickened out when it comes to introducing products that on the surface seem at best odd or at worst like terrible ideas.
Monday, the company that brings you pasta served in a bread bowl and something called "Stuffed Cheesy Bread with Spinach & Feta" will introduces what USA Today describes as a "new chicken platform that places its pizza toppings on breaded, boneless chicken pieces -- almost like toppings on pizza."
There's nothing customers enjoy eating as much as a new platform and the product, which has been given the less-than-catchy name of "Specialty Chicken," rolls out in the company's U.S. stores on April 21 as part of the chain's $5.99 value menu.
Domino's knows this may not work
In a commercial for the new chicken offering, Domino's actually highlights the phrase "failure is an option." Andy Wetzel, identified as being from Domino's Product Innovation, starts the ad saying that "we know not everything is going to work."
Scott Hinshaw, Domino's Executive Vice President of Operations, comes on screen next adding that "in order to get better, in order to get ahead, you're going to make mistakes."
Failures including the short-lived Cookie Pizza are acknowledged before Domino's Chicken Chef Tate Dillow introduces the new Specialty Chicken. They are breaded white meat chicken pieces with sauces, toppings, and cheese baked on top.
Basically, the company is acknowledging that the new product might be a terrible idea. That seems like an odd strategy to get customers to try it. "This might be a failure" is certainly not the most inspiring advertising concept, but it's not out of line with Domino's 2010 campaign that acknowledged its pizza needed to be improved.
Domino's needs change for growth
Specialty Chicken is the first new product for Domino's since the launch of Handmade Pan Pizza in September 2012, and developing new products is a key part of keeping customers coming back. Domino's has steadily broadened its menu in recent years, adding sandwiches and pasta along with various chicken options.
"We are proud to be known as a pizza company, but Specialty Chicken shows we are not afraid to step out of our comfort zone and take risks – something that is truly part of our brand fabric," said Russell Weiner, Domino's Pizza chief marketing officer via a release. "Not every risk we have taken has turned out to be successful, but as a brand we have learned that sometimes you have to fail in order to be great."
Expanding its chicken offerings makes sense because the new offering likely does not require new kitchen equipment for the chain's restaurants. Chicken sales in general have been strong across the restaurant industry, with boneless chicken sales rising 11% over the past three years, according to research company NPD Group.
The Domino's menu is already very chicken-heavy, with the company offering the popular poultry in wings, boneless tenders, as a pizza topping, in sandwiches, and on pasta dishes. The Premium Chicken offering is an attempt to make chicken more like pizza by adding toppings.
That's a clever idea, but Specialty Chicken won't be a free-for-all where customers can put any toppings on their chicken. Instead, the chicken will be offered in four fixed varieties.
The opening lineup is Crispy Bacon & Tomato, Spicy Jalapeno & Pineapple, Classic Hot Buffalo, and Sweet BBQ Bacon. Domino's CEO J. Patrick Doyle told USA Today that those could change over time.
Some are skeptical of Domino's ability to succeed with the product.
"Every time a pizza chain tries to diversity, it usually doesn't work so well," Bob Goldin, executive vice president at Technomic, told USA Today.
What's at stake for Domino's
While Domino's had a strong finish to 2013, with domestic same store sales growing 3.7% during the fourth quarter versus and 5.4% for the full year, the company faces intense competition not only in the pizza market but also from other restaurants as well. With Subway attacking Domino's on the value front with its $5 foot-long campaign, Papa Johns (NASDAQ:PZZA) going after its pizza audience by claiming to offer a better product with its "Better Ingredients. Better Pizza." slogan, and increasing competition from fast-casual restaurants, Domino's has to try new things or risk falling behind.
For most companies, launching a product using the concept that not every product makes it would be a recipe for disaster. After all, the last thing that McDonald's (NYSE: MCD) wants to remind customers of is how many ridiculous McDLT-level bombs it has produced. Being modest has worked for Domino's, though. The company famously acknowledged consumer complaints about its pizza with its 2012 "Oh Yes We Did" promotion when it revamped its recipe.
That campaign not only changed the company's pizza recipe, it also changed how people perceived the brand. Domino's might be the late-night pizza call of last resort, but the company admitted that it needed to improve. While it may not be the best pizza you have ever had, it is by most accounts better.
Specialty Chicken seems like an interesting idea that is being poorly executed, since it would have been a lot cooler if customers could pick their own toppings and customize their chicken like a pizza. Still, if the product sells then Domino's has shown that it listens to its customers. It's not hard to imagine the line evolving that way if customers (beyond me) want it to.
Daniel Kline has no position in any stocks mentioned. There is a chapter on The Noid in his book Worst Ideas Ever. The Motley Fool recommends McDonald's. The Motley Fool owns shares of McDonald's and Papa John's International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.