What’s Behind the Dodo Empire
The founder of the Dodo Pizza chain, Fyodor Ovchinnikov, told Svoiy delo how to overtake international giant pizzerias, capture Moscow with a franchise from the regions and conquer the Chinese market.
You said that at the start of your business, you were not shy about copying your competitors. When do you need to stop looking at others and start developing your own?
There is an important thing that I realized in practice. The market economy and private business are like nature. As a result of natural selection, certain models survive, they adapt, develop, find their niches. When you first start a business and find yourself in an ultra-competitive environment, your first task is simply to survive. Learn how to generate profit so that your business can exist. When you have already learned how to earn money, have collected certain competencies, you can begin to change something. Trying to innovate right away leads, in my opinion, to failure 99% of the time.
When did you realize it was time to scale your business?
When I opened my first small pizzeria in a basement in Syktyvkar, 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, it will be possible to go to any country and develop.
And then we burned the bridges. We said that from May 2013 we are starting the commercial sale of the franchise. We announced six months in advance and understood that we would only have a raw product ready, and the first franchisees would help finalize it. We have always tried to launch products as quickly as possible. And then, focusing on the specific requests of 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 everything works. He went to another city, opened a franchise and described what was missing, what needed to be added and supplemented.
We know you’ve never lost a franchise partner. How do you keep them? Why don’t they leave?
Firstly, it is difficult to leave us because of our own IT system. All clients, all information, all communications are there – it will be very time-consuming to rebuild everything from scratch.
Secondly, and most importantly, franchising is a business built on partnerships and long-term cooperation. We want the franchisee to be profitable to work with us. If he wants to leave, no system, no treaty will hold him back. Franchisees do not see 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 leaving us is simply unprofitable.
Your franchise is one of the cheapest on the market. Why are you dumping?
It’s true, we have a low entry, we always deliberately reduce it. Our business is client-oriented, the involvement of the entrepreneur himself is very important here. And we believe that it works better when business is run by people with burning eyes, hungry, for whom business is their whole life.
In seven years in the old competitive market, we have outpaced international companies with huge resources by half. And in terms of the number of pizzerias, and in terms of revenue. The secret of success is that we have taken burning entrepreneurs, IT platform and capital and put them together. About 4.5 billion rubles of real money have been invested in our network. Most of them are invested by private investors.
What does the IT platform give you? Why is she so important?
We have always thought of business as a platform. In Russia, the network’s revenue can reach a billion dollars, but there is still the whole world. Many people say: “Fyodor, you talk so much about IT, but where is the pizza here?” We can make pizza right now that you will try and say that it is the most delicious pizza in the world. The question is how to make this pizza produced every day, every second. Now we take an average of two orders per second in Russia. How can we make sure that we eat the same pizza in Norilsk and Moscow? For this we need a platform. Just making delicious pizza is another business – restaurant business. You found a unique chef, brought him in, and he cooks pizza for a very narrow circle of people.
Pizza is a consumer product. You can sell it anywhere. And decentralized production and an online system allow it to be managed efficiently. 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 an opportunity to grow globally.
You started to develop your business from the provinces and have just now come to Moscow. What is it connected with?
It’s just a matter of tactics. There are two options for entering the market. Or you immediately invest in advertising, create a brand, but there is no coverage yet. Or you first create coverage, and then advertising. But in the same Moscow, in order to go out and start earning, you need a lot of points. And how to create many points at the same time? It is necessary to create many base camps around Moscow and come all at the same time. Our tactics are more long-term, but have shown their effectiveness.