Silverman on Domino’s Theory

The best seat in the house? For Domino's Pizza young CFO Harry Silverman, it's not in the office.

How do you balance both your finance and operations roles on a daily basis?

What is critical is for me to work as closely as possible with our entire management team. You can’t be in the back office working on financial statements all day. My job is to understand what’s going on in marketing, and how that is going to affect operations, for example, and try to be as objective as possible. You take the CEO’s vision and run with it while working with other members of the management team. I am also very fortunate because I have a tremendous team of people working underneath me, which allows me to take care of the bigger issues.

You were largely responsible for centralizing Domino’s’ finance department. What were the main obstacles you faced, and what have been some of the benefits?

We had a lot of inconsistency in our reporting when I came in. In a rapidly growing company, we really could not afford to be inconsistent with our financial reporting. It was actually not an easy thing to pull off in practice. We ended up getting it down to two or three regional accounting centers and then rolling it up to Ann Arbor in the mid-Nineties. Our costs of doing the bookkeeping and finances went down 50 to 60 percent as a consequence of the consolidation. Our reporting also became much better because it was consistent across regions.

Do you every worry about relying too heavily on a franchise model? Are you ever concerned that the quality of the business might become diluted by having others run the businesses while using your brand?

We have upwards of 1400 franchisees, and 90 percent of our stores are franchises. What makes us a little different than most is that to become a franchisee at Domino’s, you have to be a manager at one of our stores for at least a year. Our franchise model really relies on having operations people running the businesses. We also have store auditors who go out on a daily basis to make sure that the franchisees are following Domino’s standards.

Franchisees can be your biggest critics, but they can also generate the best ideas. I’m sitting here in Ann Arbor, but the franchisees are out there making it happen every day. Any idea that comes up, or if they see something that something works well in their stores, they can provide us with that information. Because franchisees own their own business, they also have that added entrepreneurial sense, and the incentive to want to constantly improve the business. We have an extremely healthy return on investment from our franchisees. That is really the only way to grow a system as quickly as we have.

Domino’s was sold to Bain Capital in 1998. How has different ownership affected Domino’s — and your job?

The marriage with Bain has been great for us. Bain is a very professional venture capital firm with finance and a lot of strategic planning expertise, which has really helped us. We are now a more public company, although we do not issue public equity. We are not followed as much by the analysts, but because we do issue public bonds, we are required to file 10Qs and 10Ks. On a personal note, going through the process of selling the company to Bain was a great learning experience for me as well.


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