Million Dollar Monday

The Evolution of Domino's Pizza with Founder Tom Monaghan

April 19, 2021 Greg Muzzillo
Million Dollar Monday
The Evolution of Domino's Pizza with Founder Tom Monaghan
Show Notes Transcript Chapter Markers

Tom Monaghan, Founder of Domino’s Pizza, grew the company into one of the world’s largest pizza companies and then sold it for a billion dollars. Despite his inauspicious childhood and business challenges, he transformed the pizza industry. Monaghan discusses with Host Greg Muzzillo his five key priorities that have been a roadmap for his success and life.

“These five priorities are my roadmap for life – spiritual, social, mental, physical and financial.”

Chapter Summaries:

  • 01:11- Introducing Tom Monaghan
  • 04:54 - Joining The Marines
  • 06:45 - Five Priorities in Life
  • 08:39 - Starting Domino's Pizza
  • 11:19- Franchising
  • 13:18- Trouble with Trademark
  • 19:28 - Founding Ave Maria University
  • 20:45- Staying True to Yourself

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Greg Muzzillo :

The story about the whole Domino Sugar company that owned them lawsuit really was tragic at the time. It had to be frightening because you lost the initial lawsuit and actually had to change the name. What did you change the name to?

Tom Monaghan:

Pizza dispatch. If I lost that lawsuit, I would have been out of business because all the, all these franchisees were paying for the use of the name and I didn't own the name.

Greg Muzzillo :

Hello, and welcome to Million Dollar Monday. I'm your host, Greg, Muzzillo bringing you real successful people with real useful advice for people with big dreams. I understand big dreams. I turned an investment of $200 and a lot of great advice from some really successful people into my big dream proforma. That today is a half billion dollar company. Well, hello listeners. I am truly honored and even humbled by my guest for today, a man whose childhood would suggest he had no right to ever be successful facing such challenges, losing his father at the age of four, living in more foster homes than he probably can count spending many years in an orphanage and just struggling his way through his childhood and his youth. And yet somehow he achieved great success in starting a business, growing it to thousands of stores, selling that business for a billion dollars. And then, moving from success to significance and starting a university and a law school that's near and dear his faith creating another wonderful success story there. So I am really looking forward to our guest today telling us his great story. Welcome. And thank you for joining me, Tom Monaghan, founder of Domino's and founder of Ave Maria University. Tom, thank you. Well, let's start at the beginning , it's very touching how you were very drawn to your father, but tell us the , and it was very sad how you lost him at such a young age, but tell us about that. Tell us about your those early years. And , and , some of the challenges of those early years.

Tom Monaghan:

We were poor and my father , had a lot of health problems. I wasn't aware of t hem, o f course, until he died. You k now, he had ulcers, they didn't have penicillin back then he died at the age of 29 and Christmas Eve. And I was four, I was almost five a nd I remember him very well. I could write a small book about memories I have o f my dad he's very dear to me. And, u h, I'm sure he's in heaven.

Greg Muzzillo :

By the way, Tom mentions a book. And I think for anybody that really wants to read an unbelievable story about truly an unbelievable man , Monaghan , A life is , just truly all inspiring . All right. So move us on into , uh, your, I know your mother placed you into different foster care situations. Can you even recall how many foster care families you lived with over those early years?

Tom Monaghan:

There were probably about 8 or 10 of them. A couple of them are just a week or two when My dad first died, but , after that there maybe a year to, a year and a half, a lot of them were , farms. And , because I asked the welfare people that put me on farms, cause I enjoyed farming. I liked working , milking the cows and all that. And , invariably the people I lived with , treat me like a member of the family. I was a good kid, I didn't get in trouble. I like to work , and they as long as they gave me enough to eat ,

Greg Muzzillo :

I know you had , in and out of foster homes and other living situations and then in and out of college. And it seemed like that never quite worked for you , being able to have the money , and to be able to afford to go to college. So get us caught up on that trip to Chicago.

Tom Monaghan:

I was walking by the post office in Harvey, Illinois suburb of Chicago. Saw a recruiting sign for joining the military, and I had said " Hey I'll join", when you join the army, they'll pay for your college education. So I thought I'd go and and check it out. And there was a recruiter there and he told me, that's true. If you joined for three years, you get two years of college all paid for. They said, would that be good at admission? He said, yeah , no problem. So I signed up , and , he never , mentioned that he was a Marine. He always, never corrected me when I said the army. So I went down to the federal building in Detroit, went through the , all the , as it goes now on the other stuff. And they , I was trying to sign in I saw a golden anchor down at the bottom of the thing. I t hought there was all branches there, but it was just a big day for Marines. C ause everybody g oes Marine. So t hat's w hy I a sked the guy next to me, i s this the M arines, or is, this is this the army he s ays, i t's the Marine Core. I t's my favorite. What's the difference? A nd I signed a nd I f ound there's a big difference. I t w as the best thing that ever happened.

Greg Muzzillo :

And , kind of , kind of interesting that you had a fellow Marine that ended up being , although not for a good reason, ended up becoming famous. Huh?

Tom Monaghan:

Yeah, Lee Harvey Oswald. Yeah.

Greg Muzzillo :

I didn't know he was a Marine , goodness. That's kind of crazy. All right. So you served your time in the Marines , And I liked the story about how you were in the Marines, and , you started daydreaming. I think it was, maybe it was because you were on a boat , being transported to and from Japan.

Tom Monaghan:

Yeah. So we were out in the middle of the Pacific. Actually since I wrote the book, so it reminded me that that wasn't the timing. The timing is when we were on the maneuvers in the Philippines, we were out in the middle of the South Pacific with nothing to do for awhile . And so I was laying in my bunk dreaming about all the things I was going to do and be when I got out of the Marines. And that was pretty elaborate because , I did a lot of this weekly on the farm just to entertain myself and keep busy. And all of a sudden I realized so what if I accomplished all this and do all this, what good is it going to do me. So then I really said, well , what is important? And that's where I came up with my five priorities for life. It's been a roadmap for my life and it still is today.

Greg Muzzillo :

Yeah. Tell us what those five priorities are. I love them, Tom. I think that there's something we should all live by.

Tom Monaghan:

The first one was , spiritual , second is social, Third is mental. The fourth is physical and the fifth is financial, but they have to be in that order. And , I was more inclined to the bottom one, but I realized that doesn't do me any good. I was more inclined to the bottom one, but I realized that doesn't do me any good by now . So I see that in the higher priorities. So that's , as soon as I discovered that idea, it became a roadmap for my life. I said, I want to get an a, in all five of those categories. I hope to do. I'm still working on the top, top one. That's the hard one.

Greg Muzzillo :

We're still, we're still a work in progress, all of us. And , I don't think it's about getting to the destination. I think it's about the wonderful journey , which you're certainly living. All right now, as I follow the story, this, when you got home , is when your brother approached you with the idea of getting into the pizza business

Tom Monaghan:

After about a year, year and a half, I was, I went to , University of Michigan , for three weeks, ran out of my textbooks and then , so worked about two or three jobs, trying to get some money together for the next semester, Went back the next semester. And I was so tired of working so much. I couldn't, so I couldn't stay awake in class. Like I said, I dropped out and again, and maybe the following year. And then that's when my brother approached me about this pizza place that was for sale. And it was , it was , $500 hundred dollars down and I think closed for some time, never stayed open more than a, month or so. And the idea was, I'd worked half the night, He'd work half the night. It was only open at night, had plenty of time studying and enough money to go to school. And so, we did that. We borrowed $900 from a credit union and gave the owner 500 and bought some food and opened up. But after we signed the papers, my brother, he got cold feet and didn't want to give security of his post office job as a mailman. So I was stuck with that alone and I'd given up all my things that I was doing. So there goes college. And after that , I was working seven nights a week and losing money bills are piling up. And I told my brother, I got to have a day off. You won't have this. So I took a day off. He came back and the next day, he came into the store and he said, I don't want anything to do with this. Why don't you just take it over? You don't have to pay me. I said, well, it's true that it's not worth anything, but I feel that you did take a risk . I should give you something. Then w e h ad the Volkswagen, a used Volkswagen. I think we paid $ 1,5 00, i said , you take the Volkswagen, I'll keep making the payments. That's how I bought o ut 50% o f w hat became the largest pizza chain in the world.

Greg Muzzillo :

Not a bad trade of Volkswagen for half a Dominos.

Tom Monaghan:

At the time he had the better deal.

Greg Muzzillo :

I mean , I I'm sure that's true. I'm sure that's true because the story didn't start out with your making a lot of money. And if I remember correctly, you got like, you had no clue how to make pizzas and you got 15 minutes worth of training from the former owner and you had to figure it out from there. All right. So, so now you're, I think the original name was Dominic's , and, when did the idea for franchising come into the operation?

Tom Monaghan:

Well, the first store , became within a year or two the busiest pizzeria in the state of Michigan and ,, Dominic , owned the store in Ann Arbor and same County. And he called me up one day and said, you can't use my name anymore. He had the name registered at the courthouse. So I had to scury around and find a new name. And so talking to employees about different names and one of the drivers came back from his delivery, he says, I got a new name, Dominos. we wanted to be Italian and we wanted to be something that's not common in pizza. And so where'd you get that? And he says, well, there is a shoe store, and a salesman ordered the pizza said, Hey, there's a guy from Dominos Wow. So we, I have two other lttle st ores I started. And, a nd we had three stores. I s aid, we ll, change the name, to Dominos on the stores And we'll put three dots on the Domino for a l o go. And, a n d by the way, I was the first one that ever used car, top si gns in pizza delivery cars, w e had a big red dow els on top of our delivery cars.

Greg Muzzillo :

When did you start selling franchises though?

Tom Monaghan:

After about , I'm gonna say about 65 or 66. I started in 60. And that's when we started, I took one of my , smaller stores and sold it to someone. I financed it and no money down, maybe 2% of the sales. And that's how I got in the franchise . Yeah.

Greg Muzzillo :

Pretty typical. Right. Pretty typical give, kind of give the first few away. And then how many stores did you have when the people that own Domino Sugar , uh , entered the scene?

Tom Monaghan:

About 275 or so or 250, I wasn't making any money. And then all the stores that weren't able to pay royalties, but I was growing and working my way out of a real big debt that I got myself into , but that lawsuit took five years and we finally won that in 1980. And that's when I took off about 300 stores then. And we were the fastest growing restaurant chain in history. And one year we opened 954 stores, a nd m ost o f t hem w ere o pened by a chain i n history, a ll focused on the pizza delivery.

Greg Muzzillo :

Yeah, the story about the whole Domino Sugar company that owned them lawsuit really was tragic. At the time it had to be frightening because you lost the initial lawsuit and actually had to change the name. What did you change the name?

Tom Monaghan:

Pizza Dispatch. Yes . We opened during the , appeal period . We opened some stores under that name because the judge wouldn't let us open anymore under the name Dominos, which we were surprised , and so when we won the appeal everything would revert back, revert them all to Dominos, and that was really , and if I lost that lawsuit, I'd have been out of the business because , all these franchisees are paying royalties for the use of the name. And t hen I didn't own the name. So that was living under that c loud for five years w as v ery tough.

Greg Muzzillo :

Yeah. So many hurdles that you've had to overcome, including, I think that your original store and first offices burned down.

Tom Monaghan:

Yes . Yeah. And that just about put me out of business and I liked to overexpanded , after I got going again, and that just about put me out of business, I did lose control of the, of the company and , and the people that came in helped it the, then they handed it back to me with , a lot more debt and still I had to work two or three years to get out from under that debt. And then the Domino Sugar thing came along. And then when that was five years, and then finally all those problems were behind me. I took off like a rocket,

Greg Muzzillo :

Just so many hurdles. I, I can't help, but think that maybe God prepared you for the tough life of growing Domino's with all of the ups and then the downs and the hurdles through the tough life that you had as a child. I mean, it probably more than prepared you for some of those tough things. So, but during the course of those five years, you bought the tigers won a world series and five years later , I think it was about 1985. You were over two and a half thousand stores.

Tom Monaghan:

That's about right? Yeah . Yeah. Something like that. Yeah . We got up to , the lawsuit was over in 80 by about 88 or 89. We had 5,000 stores.

Greg Muzzillo :

So at some point talk to me about coming to the decision to want to sell your business, to sell your baby.

Tom Monaghan:

Well, yeah, you're leaving out . The last and the biggest , combat it because , uh , after things really got successful, I got caught up in the success and a lot of toys and I got into a lot of other businesses. And the next thing, you know, I'm in trouble again. And Pizza Hut p assed us up a s we h ad 54% of all the pizzas over the United States and they passed us up in just in a few years. A nd so I had to go back and bail out the company. We were half a billion i n debt stores were loosing money closing up. And so, a nd the banks were all over me. So I had to come back in and turn the company around again. I don't think I ever worked harder. And that was about 91, 92. And, about 94, I completely t urned the company around better shape than ever. But they say it was the biggest comeback in the history of the, of the restaurant industry. And then from that I , and along the line, before I got in trouble, I read a book by CS Lewis called Mere Christianity . And there was a chapter in there on pride. And , and , I couldn't sleep. Then I realized what a big ego I had, everything I was doing was to impress people. And , I didn't like that. That's not what I wanted to be sort of a closet show off. And so, I gave up all the luxuries and all the toys got rid of it all . I took what I called a millionaire's vow of poverty, as a good thing I did because later on, I got in a lot of trouble. So when I came out of it this time around, I got that out of my system. So everything I was going to do with my success was going to be for the church. And in the last three years before I sold the company, we were by most people's estimate, the best run national restaurant chain in the country. And that is, we had the highest same-store sales increased per store of any national restaurant chain. And then it sold out because I was 61 years old. I wanted to do this university take all my time. I figured I had 10 good years left, and that was how Ave Maria University came.

Greg Muzzillo :

So, so tell us about , your university Ave Maria University and the law school.

Tom Monaghan:

I couldn't get the zoning. We started out in Michigan I bought a , closed up , elementary school at auction. And I used that to start, but I was going to build this , beautiful university , in Ann Arbor where I had the land. There was a couple of thousand acres around Domino's farms where Dominos headquarters is, but I couldn't get zoning. And meanwhile, I'm operating in Ypsilanti and it was bursting at the seams. So I prayed hard . What am I going to do? So I decided, well, maybe I, maybe Ann Arbor, isn't the best place, just because it's convenient for me, where's the best place in the country to open a new Catholic university. I figured that it was, it was , Southwest Florida, Naples, the wealthiest area in the country per capita , great weather , very few Catholic schools in the South , yet , the population is moving that way. Uh, and I probably be in the easiest place to attract good faculty and students too . So I , , moved it to Naples.

Greg Muzzillo :

Well, congratulations.I know from reading the book that , sticking and being true to your faith, sometimes this cost you dearly , cost. You dearly with people complaining that , some of your positions , were hurting your franchising business and yet you've stayed true to your faith and you stay true to your beliefs. And so you're to be , respected for that now. So you've successfully build a large, one of the largest, most successful franchising pizza chains ever. You then sell that for a billion dollars. You build a very successful Catholic university and law school. What big dreams do you have now for this season of your life?

Tom Monaghan:

I think the university, as you know , we've had to deal with a lot of problems with the housing crisis and everything that we haven't been able to really get going. And now the town is booming and we got a brand new president who's outstanding fully in line with my vision. And , and I think we're really, ready to launch that rocket Tom, your story is,

Greg Muzzillo :

Admirable, I am truly humbled and honored that you would join me today and share your story. And I really appreciate your time and respect you more than you know. Thank you, Tom. Thank you very much.

Introducing Tom Monaghan
Joining The Marines
Five Priorities in Life
Starting Domino's Pizza
Franchising
Trouble with Trademark
Founding Ave Maria University
Staying True to Yourself