Monaghan, Thomas

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Monaghan, Thomas

(1937-)
Domino's Pizza, Inc.

Overview

Domino's Pizza, Inc., known world-wide as a leader in the world of fast-food, was imagined and built by Thomas Stephen Monaghan, who rose from a world of poverty in his youth, to become one of America's business giants. With tremendous faith in his religion and himself, he built a fortune by offering a popular, tasty, reliable and relatively inexpensive food that was delivered quickly to where the customers wanted it. He has become one of the true success stories of the pizzeria business and, for a time, even parlayed his success into professional sports.

Personal Life

Thomas Stephen Monaghan was the elder of two sons born to Francis and Anna (Geddes) Monaghan in the college town of Ann Arbor, Michigan on March 25, 1937. Younger brother Jim was born two years later.

On Christmas Eve, 1941, Monaghan's father, a truck driver, died suddenly from peritonitis, an infection of the muscle tissue covering the abdomen, devastating the families financial situation. Monaghan's mother was left with only her job, earning $27.50 per week, to provide for the family. His mother found circumstances unmanageable and placed both her sons into the first of a series of foster homes, while she trained as a nurse. She assured her sons that she would return to take them back after she had found a job.

At the age of six, Monaghan entered the St. Joseph's Home for Boys, an orphanage operated by the Roman Catholic church and the Felician order of nuns in Jackson, Michigan. He developed a close bond with one of the nuns, Sister Berarda, and would later write that, "She became my surrogate mother, and I flourished under her care." When he was 12 years old, his mother, who had become a nurse, was finally able to take him home.

Home life in the Monaghan house was not perfect and the young sixth grader soon began to argue with his mother. Although he was industrious in his new setting, selling vegetables and fish door-to-door, and newspapers on street corners, his mother was very unhappy with his behavior, and two years later placed him in a foster home; this time on a farm just outside of Traverse City.

Tom began high school at St. Francis High School, in Traverse City and decided during his freshman year that he wanted to become a priest. He soon entered the St. Joseph's Seminary in Grand Rapids, Michigan. Monaghan was too active, however, broke too many rules, and was kicked out of the seminary in less than a year. It was a bitter disappointment to the young Monaghan and he later said; "Never before had I felt so crushed. I am no stranger to failure, but no other setback devastated me as this one did, because it was so final."

Following this setback, Monaghan soon returned to his mother's home and St. Francis High School. The problems with his mother continued, however, and at 16 he was arrested for using his mother's car without her permission. At 17, his mother had him placed in a detention home where he spent six months before being released into the care of an aunt and uncle who took him to live with them in Ann Arbor. Monaghan enrolled at St. Thomas High School but was a poor student and graduated last in his high school class.

Monaghan met his future wife while making a pizza delivery. He and Marjorie Zybachon were married on August 25 1962, and they have four daughters: Mary, Susan, Margaret, and Barbara.

Career Details

An early admiration for architect Frank Lloyd Wright peaked Monaghan's interest in architecture. But poor grades and his inability to afford tuition caused his initial rejection from the University of Michigan in Ann Arbor. Instead, Monaghan enrolled at the architectural trade school at Ferris State College in Michigan and earned tuition by working several odd jobs. Monaghan's first year at Ferris State College was very successful and he hoped his grades would allow him to transfer to the University of Michigan. After forwarding his grades to the University of Michigan, however, he was denied admittance once again.

Monaghan was determined to turn his life around and decided to join the U.S. Army in order to take advantage of their educational benefits. After filling out his application, he soon discovered that he had joined the U.S. Marine Corps, instead. After basic training, Monaghan was stationed on the island of Okinawa. There, he read every book he could and was especially fond of self-help inspirational writings by Dale Carnegie and Norman Vincent Peale, where being 'positive' about life was stressed and where self-esteem was encouraged. Later, stationed in Japan, he used his leave to travel to Tokyo to study the Wright-designed Imperial Hotel.

Monaghan finished his service in the Marine Corps on July 2, 1959, and was finally accepted to the University of Michigan for the fall 1959 term. He worked as a delivery manager for the Washington News Agency to help pay for his tuition.

Monaghan was not successful as a student and dropped out after only three weeks. In 1960, he re-enrolled in the University of Michigan for their spring 1960 term, but again, left after only three weeks. It seemed as if his dream of becoming an architect was dead and he was at a loss with what to do with his life.

In September of 1960, Monaghan's brother James heard that a small pizzeria in Ypsilanti, Michigan named DomiNick's was for sale by Dominick DiVarti for only $500 and debts the owner had accumulated. The two brothers agreed to go into business together. Monaghan planned to work in the pizzeria at night while attending classes at the University of Michigan, which he had again enrolled in for the fall term. The two brothers gave Di-Varti a $75 deposit and took out a loan for the rest from the post office credit union.

Monaghan did not feel that Monaghan's Italian Pizza sounded right, so the name DomiNick's Pizza stayed. Before leaving, DiVarti gave the brothers a few lessons in the art of making pizzas. "I was captivated by (DiVarti's) description of the recipe for the sauce," Monaghan said. "His statement 'The secret of good pizza is in the sauce' made a lasting impression on me. I vowed right then that I would have the best pizza sauce in the world."

Monaghan soon discovered that he liked the physical side of pizza-making. "I found that the manual work of rolling out the dough and slapping it into shape appealed to me." Monaghan soon hired two unemployed factory workers as delivery men and visited other pizzerias in the area to sample their products. Meanwhile, the Monaghan's partnership was falling apart because Jim's job as a mailman kept him from having time enough to devote to the business. After about eight months, Monaghan bought out his brother's share of the business in exchange for a 1959 Volkswagen Beetle they had purchased as a delivery car.

Monaghan soon gave up his dream of becoming an architect and devoted his life to his business. By 1961 DomiNick's had become successful enough to allow him to employ his first hourly employees. He took on a new partner, Jim Gilmore, and bought a pizzeria in Ypsilanti. In May of 1962, Monaghan and Gilmore opened their third store, Pizza King, on the campus of the University of Michigan.

In May of 1963 Monaghan opened a second Ypsilanti pizzeria and in July of 1964 he and Gilmore bought Ann Arbor's leading pizzeria, Pizza From The Prop. In March of 1965, Monaghan and Gilmore dissolved their partnership and Gilmore received $20,000 and control of the Pizza King in Ann Arbor. Monaghan retained control of his two Ypsilanti pizzerias and the Pizza From The Prop pizzeria. Monaghan soon began to search for a new name for his pizzerias and settled on the name Domino's Pizza. He also contacted a local advertising executive, Sam Fine, to design a new logo for the company. Fine's resulting design featured a domino with three white dots representing Monaghan's three pizzerias and is still used today.

Monaghan believed that he would be most successful by offering the best-tasting pizza in the Ann Arbor-Ypsilanti area. To accomplish this he set strict guidelines for the ingredients that went into his pizzas. He would use only the freshest toppings and only cheese made with whole milk. He insisted on using only the most expensive flour for his pizza dough which would be made daily. At the same time, Monaghan eliminated all other food from the menu besides pizza, and made his pizzerias take-out or delivery only. He guaranteed a hot pizza at the door within 30 minutes or the pizza would be free. To further motivate his employees, Monaghan began giving bonuses to delivery drivers who collected the most cash. Monaghan soon contacted the Triad Container Company of Detroit to develop the stiff corrugated cardboard box that has become synonymous with home-delivered pizza ever since.

Chronology: Thomas Monaghan

1937: Born.

1960: Purchased DomiNick's pizzeria.

1961: Purchased bother's share of DomiNick's pizzeria.

1961: Opened second DomiNick's.

1965: Became sole owner of DomiNick's.

1965: Renamed pizzeria chain to Domino's Pizza, Inc.

1966: Developed corrugated cardboard pizza box.

1967: Began franchising Domino's Pizza.

1983: Purchased Detroit Tigers.

1989: Opened 5,000th pizzeria.

1989: Resigned as president of Domino's Pizza, Inc.

In April of 1967, he began franchising Domino's Pizza when he sold his second Ypsilanti store to businessman Chuck Gray. Monaghan had a recipe that worked, a good brand name, and a good logo, and in 1968 he opened his first out-of-state store in Vermont. By January of 1969 he had 12 stores and 12 more in development. He aimed to open one new store a week and in the first 10 months of 1969 came close to achieving this goal with 32 new stores, bringing the total to 44.

But, Monaghan's expansion proved to be too much for his bottom line. Because most of his new stores had opened in residential areas, many of them were failing and closed. By the early spring of 1970, he was $1.5 million in debt and faced lawsuits from 150 creditors. He was forced to relinquish 49 percent of the business to Ypsilanti businessman Ken Heavlin.

By May 1, 1970, Monaghan had regained control over his many business misfortunes and by 1972, had 54 stores in operation. In 1973, he continued expanding and had 76 stores, in 13 states. By 1978, he had expanded to 200 stores. In 1997 Domino's operated 4,431 stores in the United States and its main subsidiary, Domino's Pizza International, had 1521 units. Sales totaled $3.2 billion.

Like one of his heroes, McDonald's founder Ray Kroc, Monaghan turned his business success into the ownership of a professional sports team. A faithful fan of the Detroit Tigers baseball team, Monaghan realized a childhood dream in 1983 when he purchased the team from John E. Fetzer for $53 million. A year later, Monaghan's Tigers defeated Kroc's San Diego Padres to win the 1984 World Series. Monaghan sold the team in 1992 but remains a devoted fan.

In 1989, Monaghan shocked the business world by handing over the presidency of Domino's to a former operations vice-president, P. David Block. Although he persists in a behind-the-scenes role as the chief executive officer (CEO) of Domino's Pizza, Inc., he devotes most of his time primarily to activities involving children's related charities and the Catholic church.

Social and Economic Impact

Domino's pizzerias have been at the front of the fast-food industry in America for more than a decade. Aside from providing inexpensive and tasty food for millions of people every day, the sheer numbers of his operations have created jobs for thousands of people, from teenagers delivering the pizzas, to professional business executives managing all levels of this world-wide operation.

Since 1989, Monaghan has given back to the community far more than pizza and quick home-delivery service. In the service of his church, he has given large sums of money to Legatus, an organization of Catholic executives. He heavily financed the computer system at the Vatican, in Rome, Italy. He funds a Catholic mission in Honduras and has given millions to relief aid, particularly in Latin America.

The Monaghan style has been one of sticking to the work and playing by the rules, despite the many problems of the business world. Ellen Stern wrote of Monaghan's style: "Tom Monaghan lives by the rules, not by breaking them."

Sources of Information

Contact at: Domino's Pizza, Inc.
30 Frank Lloyd Wright Dr.
PO Box 997
Ann Arbor, MI 48106-0997
Business Phone: (212)930-3030
URL: http://www.dominos.com