“Fedor, you talk so much about IT, but where is the pizza?”- what is behind the Dodo Empire»
The founder of the Dodo pizza chain, Fedor Ovchinnikov, told His business how to overtake international pizza giants, capture Moscow with a franchise from the regions, and conquer the Chinese market.
You said that at the start of the business, you did not hesitate to copy competitors. When should I stop looking at others and start developing my own?
There is an important thing that I have learned in practice. Market economy and private business are like nature. As a result of natural selection, certain models survive, they adapt, develop, and find their niches. When you start a business and find yourself in a highly competitive environment, your first task is simply to survive. Learn how to generate profits so that your business can exist. When you have already learned how to earn money, collected certain competencies, you can start to change something. Trying to innovate right away leads, I feel, to failures in 99% of cases.
When did you realize it was time to scale your business?
When I opened my first small pizzeria in the Syktyvkar basement, there was already a plan to create a global company. There was an understanding that this market exists all over the world and that by creating a unique franchise, you can go to any country and develop.
And then we burned the bridges. We said that we will start selling the franchise commercially in may 2013. We announced it six months in advance and realized that we would only have a raw product ready, and the first franchisees would help us Refine it. We have always tried to get products up and running as quickly as possible. And then, focusing on specific requests from consumers, improve and create what the market really needs, and not what is in our head.
The first franchise was bought by the Manager of our company. I told him that nothing was ready for the franchise yet, but he knew the business and how it worked. He went to another city, opened a franchise, and described what was missing, what needed to be added and supplemented.
We know that you have never lost a franchise partner. How do you keep them? Why don’t they leave?
First, it is difficult to get away from us because of our own IT system. There are all the clients, all the information, all the communications-it will be very time-consuming to rebuild everything from scratch.
Second, and most importantly, franchising is a business built on partnership and long-term cooperation. We want the franchisee to be profitable to work with us. If he wants to leave, no system, no contract will hold him back. Franchisees do not view themselves as oppressed participants in the system. They just have their own role in the chain from business to consumer.
We are a single business, and it is simply unprofitable to leave us.
Your franchise is one of the cheapest on the market. Why are you dumping?
This is true, we have a low input, we always reduce it on purpose. Our business is client-oriented, and the involvement of the entrepreneur is very important here. And we believe that it works better when business is run by people with burning eyes, hungry, for whom it is their whole life.
In seven years, we have twice outperformed international companies with huge resources in the old competitive market. And the number of pizzerias, and revenue. The secret of success is that we took burning entrepreneurs, IT platform and capital and connected them. About 4.5 billion rubles of live money has been invested in our network. Most of them are invested by private investors.
What does the IT platform give you? Why is it so important?
We have always thought of business as a platform. In Russia, the network’s revenue can reach a billion dollars, and there is still the whole world. Many people say: “Fedor, you talk so much about IT, but where is the pizza?”We can make a pizza right now that you try and say it’s the most delicious pizza in the world. The question is how to make this pizza produced every day, every second. Now we accept an average of two orders per second in Russia. How can we make sure that we eat the same pizza in Norilsk and Moscow? That’s what we need a platform for. Just making delicious pizza is a different restaurant business. You found a unique chef, brought him, and he prepares pizza for a very narrow circle of people.
Pizza is a product of mass demand. You can sell it anywhere. And decentralized production and an online system allow it to be managed effectively. Our business is to create a platform that connects franchisees, investors, and everyone else. But the core is the product itself, which is in demand everywhere. This is a chance and opportunity to grow globally.
You started developing your business in the province and just now you have come to Moscow. What is the reason for this?
It’s just a matter of tactics. There are two options for entering the market. Or you immediately invest money in advertising, create a brand, and there is no coverage yet. Or you create coverage first, and then ads. But in the same Moscow, to get out and start earning, you need a lot of points. How do I create multiple points at the same time? We need to create a lot of base camps around Moscow and come all at the same time. Our tactics are more long-term, but have shown their effectiveness.
We have created a huge network, a huge logistics system, and now we are all going to Moscow. And our competitors will come from Moscow, and they do not yet understand what a difficult country this is. I think it will be much more difficult for them in the future.
You are growing very fast in America, China, the UK and Romania. Tell us about the experience of entering new countries?
No research will ever provide a complete understanding of the market. There are two approaches. One is professed by large American companies: to come to the country with their own model and sell the market. McDonald’s came to Japan and said, ” We will make McDonald’s and you will love it.” And they put money into it. Invest-invest, and at some point the market accepts them.
Different, as we try to do. First of all, we enter the country and start acting like everyone else in the market. They came to China and started behaving like Chinese. Copied typical ingredients, recipes. Then we start listening to customers and trying to improve something and come up with our own.
In China, for example, we have been working for two years and in March 2019 we will open our own pizzeria with a new model, completely without cashiers and our own delivery. The fact is that in the West, pizza is perceived as a typical delivery product. In China, aggregators began to develop very actively four years ago, and now a Chinese can order delivery of almost anything. And here pizza is just one of these products.
Explain how openness helps your business? Why build a transparent company?
Openness greatly enhances the credibility of the business. We made open revenue in any restaurant. No franchise in the world today says how much each point earns. We have today at any pizzeria you can see the revenue online. This gives a huge trust from partners. Investing in an industry like pizza is a lot of money. It is clear that we have a small lump sum, but to build the pizzeria itself is from 8 million rubles. And if a person is going to connect life with this business, it is important that he is sold not a beautiful picture at the exhibition, but a reality. And we see that there are pizzerias that earn a little, there are those who do a lot, we do not hide. Nothing attracts people like knowing about other people’s income. This openness has spread like a virus in the business environment.