Domino's Pizza is having a Super Big Taste Bailout. "We know times are hard, it's a reality we are all facing," says [Dave] Brandon, [CEO]. "But I didn't go to Washington to ask for a bailout. Instead, we are giving one. I'm proud to be able to offer our consumers a promotion with such a great deal on pizza. By adding our oven baked sandwiches to the mix we are further increasing the number of taste varieties to the offering." (Yahoo Finance)
After watching the TV commercial on Fox TV, I can't help but roll my eyes and yet be amazed at such a genius marketing campaign. People will tend to reduce their fine $300 dining to something cheaper -- guess what, pizza just so happens to be convenient and decently affordable. When there are so many pizza eateries competing for market share, you need a good strategy to bait your customers.
Hearing the word "bail-out" being used loosely makes me cringe. First, in basic economic terms, it is an "economic stimulus package". I understand it is a lengthy phrase to use, but "bail" kind of rhymes with "jail" -- it somewhat leaves a bad taste in my ears; it might connote free money when it's taxpayers' money. Of course, most of you would have heard about the recent AIG executives' compensation scandal by now. Nevertheless, when the average North American is hooked on tabloid news, it's so easy for people to sensationalize the state of the economy. Little do they know when the media delivers unnecessary bad news, they are playing with fire: economic confidence can be dwindling further. There is a fine line between telling the truth and dressing up the facts with feather boa and stiletto heels. Sadly though, the reality is: bad news sell.
All of a sudden, it is super cool to be frugal again. Many companies are adjusting their marketing campaigns accordingly. Maybe this recession should bring us a reality check. Do we really need what we want? I know things are so much cheaper now, compared with prices during the boom periods. We, however, need to realize we are living in a demand-driven society. If the manufacturer receives very few orders, based on our purchasing habits, for a particular item, it would not be profitable for them to produce so much. There is about 80% over-capacity in the auto industry; cars are not going to sell when people have less disposable income during a recession.
Having a quick glance at DPZ's (Domino's Pizza) Dec 2008 financials, they are not doing too shabby financially; they have decent liquidity ratios. Present economic times will still present some challenges for DPZ, but it would not be as major as most would think. I think the CEO's quoted comment is cute/smart: you can't really compare food industry to the auto nor financial industry. (Different industries do well at different cycles of the economy; different goods have different values in price.) So, the usage of the term "bailout", in this case, is meant to create hype.
Are we going to see a recovery? Yes, I would hope so. I believe it will recover, in time. It will take time for my generation to build net worth and invest in equity. The growth might not be as significant as it was when Baby Boomers were holding onto their stocks, but it is not the end of the world. The Andex charts can prove it.
