{"id":315,"date":"2005-06-04T23:37:51","date_gmt":"2005-06-04T23:37:51","guid":{"rendered":"http:\/\/fiveforks.com\/jeb\/2005\/06\/tom_monaghan_fo\/"},"modified":"2005-06-04T23:37:51","modified_gmt":"2005-06-04T23:37:51","slug":"tom_monaghan_fo","status":"publish","type":"post","link":"https:\/\/www.fiveforks.com\/jeb\/2005\/06\/tom_monaghan_fo\/","title":{"rendered":"Tom Monaghan, Founder of Domino’s"},"content":{"rendered":"

… and also founder of Ave Maria University<\/a> in Naples, spoke at this year’s Eucharistic Congress. He turned away from an ostentatious life after reading C.S. Lewis’ Mere Christianity<\/a>. I found this article in Fortune which represents most of his speech.<\/p>\n

Mom and I were laughing through most of the speech because most of it does not sound like a success story, but just one disaster after another. (Tom tells a good story.)<\/p>\n

<\/p>\n

Copied from Fortune<\/p>\n

Magazine<\/a>.<\/p>\n

HOW WE GOT STARTED<\/strong><\/p>\n

Tom Monaghan: Domino’s Pizza<\/p>\n

The pioneering pizza-delivery chain I started almost didn’t make it out of<\/p>\n

the oven.<\/p>\n

By Tom Monaghan <\/p>\n

\"tom_monahgan_125x150.jpg\"<\/p>\n

(Photo: Greg Miller) Tom Monaghan<\/p>\n

Tom Monaghan sums up his life as a "great Horatio Alger story," and<\/p>\n

he’s not being boastful. Monaghan’s father died on Christmas Eve when he was<\/p>\n

4. His mother, not up to single parenthood, sent him to a Michigan orphanage<\/p>\n

run by Polish nuns, and he later went to a series of foster homes. Unable to<\/p>\n

pay for college, he bought a single pizza place in 1960 in Ypsilanti, Mich.,<\/p>\n

that would ultimately grow into the Domino’s Pizza empire—now with more<\/p>\n

than 7,000 locations and some $4 billion in annual sales. Along the way Monaghan<\/p>\n

managed to buy himself a few treats, including an enormous collection of classic<\/p>\n

cars, several Frank Lloyd Wright houses, and even the Detroit Tigers baseball<\/p>\n

team. But after renouncing such worldly pleasures, he cashed out of Domino’s<\/p>\n

in 1999 for a reported $1 billion to focus on religious and philanthropic work.<\/p>\n

A devout Catholic who attends mass daily, the ex-CEO has already helped found<\/p>\n

a religious college called Ave Maria, and last month he unveiled plans to build<\/p>\n

the largest Catholic church in the U.S.<\/p>\n

From his office at Domino’s Farms in Ann Arbor, Mich., Monaghan tells his<\/p>\n

story, a tale with all the toppings.<\/p>\n

—Julie Sloane<\/em><\/p>\n\n

<\/p>\n\n

\n

\n

\n

Tom Monaghan, 66, Founder
Company: Domino’s Pizza subsImg()<\/A><\/i> (Startup year: 1960)<\/td>\n<\/tr>\n
First venture:<\/b> The pizza prince was once a … fishmonger? “When I first got out of the orphanage [at age 12], I would go out and catch fish on the dock, clean them, and sell them door-to-door.”<\/td>\n<\/tr>\n
Inspiration:<\/b> Ray Kroc of McDonald’s. “I liked his attitude. When he went to a store, he wouldn’t go in. He’d go around the parking lot picking up the trash. That was my kind of businessman.”<\/td>\n<\/tr>\n
Darkest hour:<\/b> “It’s not fair! I’ve had<\/p>\n

too many.” But when forced to pick, he cites the time when he was sued by his<\/p>\n

own franchisees.<\/td>\n<\/tr>\n

In 20 years …<\/b> “Domino’s? I think they’ll be a player.” Ave Maria? “It will produce more priests and nuns than any university in the world.”<\/td>\n<\/tr>\n<\/table>\n

I determined I was going to be a priest from the time I was in the second<\/p>\n

grade. I entered the seminary in tenth grade but got kicked out—I think<\/p>\n

probably because I was more rambunctious than most kids. I got into pillow<\/p>\n

fights in the dorm. I got caught talking in study hall. The rector told me<\/p>\n

when I packed my bags at Easter to pack them for good. I floundered during<\/p>\n

the rest of high school and graduated last in my class. They weren’t even going<\/p>\n

to graduate me, but I pleaded with a nun. She said, "Well, you got good<\/p>\n

marks in the seminary, so I’ll let you graduate. But don’t ever ask me to recommend<\/p>\n

you for college."<\/p>\n

I saved up enough money driving a truck to attend Ferris State College in<\/p>\n

Big Rapids, Mich., where I went for a quarter, earned good marks, and got accepted<\/p>\n

at the University of Michigan. But I didn’t have any money. I ended up joining<\/p>\n

the Marine Corps in 1956, which was the best experience I could have had. It<\/p>\n

gave me a sense of confidence. When I was in the Marine Corps, I was aboard<\/p>\n

a ship in the Pacific doing something I’ve always done a lot of: daydreaming.<\/p>\n

I was thinking about my future, the lifestyle I was going to have, all the<\/p>\n

cars and the beautiful home and the yachts and the airplanes. I wasn’t sure<\/p>\n

it was going to happen, but it wasn’t any fun doing this daydreaming if it<\/p>\n

wasn’t possible. I saved half the money I made in the Marine Corps, but it<\/p>\n

went to a con artist with an oil-drilling scheme. Then I found a job supervising<\/p>\n

newspaper boys for the out-of-town papers. I started a New York Times home-delivery<\/p>\n

route that I did myself on Sundays and bought a newsstand on the main corner<\/p>\n

in downtown Ann Arbor. Twice I enrolled at Michigan, but with no money for<\/p>\n

tuition or books, I dropped out both times after three weeks.<\/p>\n

One day in 1960, my brother told me about a pizza shop in Ypsilanti, Mich.,<\/p>\n

called DomiNick’s, that a friend of his was selling. My brother was interested<\/p>\n

but afraid to do it on his own, so he asked if I’d do it with him. I was having<\/p>\n

problems paying my way through school, so I said yes. It was $500 down, and<\/p>\n

we borrowed $900. I got a 15-minute lesson in making pizza from Dominick, and<\/p>\n

I was off. We opened up without an attorney. I didn’t even collect sales tax—didn’t<\/p>\n

know I had to. The plan was for me to work half the night and my brother to<\/p>\n

work the other half. But it didn’t work because he didn’t want to leave his<\/p>\n

full-time job as a mailman. Within about eight months he wanted out, and I<\/p>\n

bought him out by giving him the Volkswagen we used for deliveries.<\/p>\n

For the first year I was busy all the time, but I wasn’t making any money.<\/p>\n

I couldn’t pay the bills. My life was going down the tubes. I had all this<\/p>\n

debt. College was out of the picture. One Sunday night most of my employees<\/p>\n

didn’t show up. That was our busiest night—we were on campus then, and<\/p>\n

the dorms didn’t serve meals on Sundays—and I didn’t know whether to<\/p>\n

open or not because we had only half our help. Someone said, "Why don’t<\/p>\n

you just cut out the six-inch pizzas?" We had five sizes, but most of<\/p>\n

our business was the six-inch. It took just as long to make as the big one<\/p>\n

and just as much time to deliver but cost less. I decided we would try that,<\/p>\n

and if we got behind, we’d pull the phones. That was our plan. We never got<\/p>\n

busy, and yet we made 50% more money that night than we ever had. All of a<\/p>\n

sudden I was making money, just like that. The next night I cut out the nine-inch<\/p>\n

pizza, and all the bills caught up. I learned then that keeping things simple<\/p>\n

could be more profitable.<\/p>\n

I bought another place and then another. All three were in the same county,<\/p>\n

and I wanted to get them all under the same name, but I couldn’t use "DomiNick’s" because<\/p>\n

Dominick wouldn’t let me. So we had to come up with something else. One day<\/p>\n

an employee came back from delivering a pizza and said, "I’ve got our<\/p>\n

name! Domino’s!" I said, "That’s great!" I’d never heard of<\/p>\n

a Domino’s pizza before. It was Italian, and we could use a domino logo. I<\/p>\n

decided we’d put three dots on the domino because we had three stores, and<\/p>\n

every time we added one, we’d add a dot. You can see I wasn’t thinking of a<\/p>\n

national chain back then.<\/p>\n

But I started getting big ideas. My pizzerias at the University of Michigan<\/p>\n

and Michigan State and in Ypsilanti were probably the busiest in the country.<\/p>\n

We sold about 3,000 pizzas a week at each store. The Ypsilanti store got up<\/p>\n

to 5,000 per week. I was there from opening to close, and I made everyone else<\/p>\n

work hard. I was fanatical about preparing for the rush, saving time and motion.<\/p>\n

I was constantly trying to improve the pizza. I did man-in-the-street interviews.<\/p>\n

I even hired blind people to taste-test the pizza. The crew really responded.<\/p>\n

I had great people. I was the best man at just about every wedding for an employee<\/p>\n

who got married.<\/p>\n

In the late ’60s I attended a franchise seminar at Boston College, and that’s<\/p>\n

when I started getting inspired. I met Ray Kroc. I met John Y. Brown from KFC.<\/p>\n

These guys flew in on their Learjets and had their Rolls-Royces outside. I<\/p>\n

said, Wow, what I’ve got with this concept of pizza delivery is just as good<\/p>\n

as what they have; I just don’t have as many stores. Delivery at the time was<\/p>\n

pretty minimal, so I decided to focus on that, and it was the best thing I’ve<\/p>\n

done. Nobody thought you could make money on delivery. Most places just delivered<\/p>\n

to get some volume before they could afford to cut out the delivery. But I<\/p>\n

thought I could do it. It was a challenge. I just had to figure out how.<\/p>\n

After meeting all these national-chain people, I decided that what I had to<\/p>\n

do was go public. I met a broker in Detroit, and he told me I needed to get<\/p>\n

more professional. He said, "You can’t be a seat-of-the-pants operation<\/p>\n

like you are now. You’ve got to hire more guys with MBAs and degrees. You’ve<\/p>\n

got to computerize your accounting." And the main thing he said is that<\/p>\n

we had to grow. I did everything he said.<\/p>\n

In 1969, I went from 12 stores to 44 in ten months. But I had all these employees<\/p>\n

around, and I didn’t know what they were doing. I had a computer. I’d financed<\/p>\n

all these franchisees, but they weren’t doing any business. It wasn’t that<\/p>\n

they were doing poor business—they weren’t doing any business. I had<\/p>\n

the busiest pizzerias in the world and the slowest pizzerias, all in the same<\/p>\n

chain. Instead of stores near universities, we got into residential areas around<\/p>\n

Detroit, and the stores got lost. I kept selling the franchisees food they<\/p>\n

couldn’t pay for, and they weren’t paying royalties. I kept them going because<\/p>\n

I thought they would be all right. I couldn’t believe a Domino’s store could<\/p>\n

do so badly.<\/p>\n

I ended up losing 51% of the company to the bank, which brought in a so-called<\/p>\n

expert and made things even worse. He ran roughshod over the franchisees—raised<\/p>\n

prices on the food, cut back on service, cut back on the quality. He had the<\/p>\n

stores use cheaper cheese, with nondairy cheese mixed in. There was nothing<\/p>\n

I could do. After ten months the franchisees hired an attorney and were ready<\/p>\n

to file suit. They accused us of overcharging for food and forcing them to<\/p>\n

buy from the company commissaries. (We did require them to buy from the commissary,<\/p>\n

but not at a profit, because we wanted to continue quality and make it easier<\/p>\n

for stores to focus on the rush.) The company was in such bad shape that the<\/p>\n

bank actually handed it back to me. I returned to a disaster. The bank hadn’t<\/p>\n

paid a supplier in all the time it was there unless it absolutely had to to<\/p>\n

keep the doors open. But I was thrilled to get Domino’s back, and I thought<\/p>\n

for sure the franchisees who hadn’t yet filed suit wouldn’t because they had<\/p>\n

me back.<\/p>\n

Well, they sued. Their attorney had them worked into a lather. That killed<\/p>\n

me. I actually did a fair amount of crying—I couldn’t believe it. But<\/p>\n

I worked my way out. It started with some franchisees pulling out of the lawsuit<\/p>\n

and beginning to pay royalties again. One at a time, I won them back. Finally<\/p>\n

we "parted company" with the last few—they changed their store<\/p>\n

names and were no longer Domino’s franchisees.<\/p>\n

I still had the debt to pay off, though. It took me about two years of going<\/p>\n

day to day, thinking each day would be the end. I had well over 1,000 creditors,<\/p>\n

and I got lawsuits from about 150 of them. I was on the phone every day, telling<\/p>\n

them all the same thing: "All I can do is pay for my food and pay my rent<\/p>\n

so I can stay open so I can get caught up and pay you." From 29 employees,<\/p>\n

we were down to three in the home office, two of whom were me and my wife.<\/p>\n

I couldn’t declare bankruptcy. I thought there was a more than likely chance<\/p>\n

that someone would force me into bankruptcy, but I wasn’t going to be the one<\/p>\n

who did it. I remember how exciting it was when we were growing, and I wanted<\/p>\n

to get that feeling back. All the lawsuits I got, I defended them myself. I<\/p>\n

couldn’t afford an attorney. I was living in a house with no furniture and<\/p>\n

driving old delivery cars. I got to know the judge really well, and he saved<\/p>\n

my shirt, usually working out terms where I paid creditors a few dollars a<\/p>\n

week over a long, long period. I had some checks printed up with the name Operation<\/p>\n

Surprise. Most of the creditors had written off the debt. I wrote letters thanking<\/p>\n

them for being patient and said, "Here is the first check—I hope<\/p>\n

there will be more." In about a year I paid everyone off.<\/p>\n

Within a few years all the problems were behind me. I was financially strong.<\/p>\n

We had about 300 stores that were doing well. Same-store sales were climbing<\/p>\n

like crazy. A lot of people wanted to franchise, and we’d worked out a successful<\/p>\n

system. After the franchisee lawsuit, I wasn’t willing to do it in the usual<\/p>\n

fashion anymore, so I came up with a better way. We waived the initial franchise<\/p>\n

fee, but anyone who wanted a franchise had to spend at least a year as a successful<\/p>\n

manager of one of our stores before applying. We set up a company to finance<\/p>\n

them. I was saving money in that I didn’t have to spend time with attorneys<\/p>\n

negotiating franchise deals. It’s the best franchise system in the industry.<\/p>\n

And Domino’s took off. By the fall of ’83, we had around 1,100 stores.<\/p>\n

I was finally getting my act together and could do a lot of things I really<\/p>\n

wanted to do. We designed incentive programs for managers and franchisees.<\/p>\n

We started having national conventions and advertising on a larger basis. The<\/p>\n

30-minutes-or-free guarantee was as responsible for our growth as anything.<\/p>\n

Delivery times improved, and that’s the whole key to our success. It was also<\/p>\n

a great management tool, because it put the emphasis where it should be—on<\/p>\n

handling the rush. Delivering pizzas fast is not a matter of driving fast;<\/p>\n

it’s a matter of getting the pizzas in the oven fast. That’s where you get<\/p>\n

behind. But then I had to stop it in 1993 because of a big lawsuit. [A St.<\/p>\n

Louis jury ordered Domino’s to pay $79 million to a woman struck by one of<\/p>\n

its drivers who ran a red light.]<\/p>\n

I was making money like I never had in my life. There were more stores all<\/p>\n

the time, sales were going up, the system was really clicking. I think something<\/p>\n

happened to me because of the success and the media attention. After all those<\/p>\n

years of making wish lists, I went a little overboard in buying material, worldly<\/p>\n

things. It started with the Detroit Tigers in 1983. I had been a fan since<\/p>\n

childhood, but owning the team was a far-off dream. I decided to do it after<\/p>\n

I went to a meeting where Fred Wilpon, who bought the Mets, gave a talk. He<\/p>\n

said that before he owned the Mets, he went into business meetings and spent<\/p>\n

about 55 minutes establishing his credibility, and then had maybe five minutes<\/p>\n

to work out a deal. After he bought the Mets, he said, he spent 55 minutes<\/p>\n

answering questions about baseball. "What’s Steinbrenner like? Ted Turner?" Then,<\/p>\n

in the last five minutes, they’d say, "Where do we sign?" After that<\/p>\n

I was ready to buy the Tigers. The team created pride within the company, especially<\/p>\n

with the kind of year they had in 1984, winning the World Series.<\/p>\n

I also built Domino’s Farms [a 1,700-acre complex in Ann Arbor, where Domino’s<\/p>\n

has its corporate headquarters] and bought 244 collector cars. I bought the<\/p>\n

largest Frank Lloyd Wright collection in the world, including a couple of Frank<\/p>\n

Lloyd Wright houses. I justified it by saying it was an investment. The cars—I’d<\/p>\n

been a car buff my whole life, and I knew what would go up in value and what<\/p>\n

wouldn’t. Cars tied in with delivery, so I thought a Domino’s car collection<\/p>\n

made sense. Domino’s Farms would attract top help. The airplanes were timesavers—time<\/p>\n

is money.<\/p>\n

At the same time I had been getting more involved in religious work. I started<\/p>\n

a foundation in 1983, because I saw needs out there and I wanted to fill them.<\/p>\n

I started Legatus, an organization for Catholic CEOs. I built a cathedral in<\/p>\n

Managua, Nicaragua. I also did some promotion for the pro-life cause. As a<\/p>\n

result, Domino’s ended up with a national boycott from the National Organization<\/p>\n

of Women. After that, I realized I couldn’t just do the things I wanted to.<\/p>\n

I couldn’t jeopardize the franchisees and employees. Yet I thought these things<\/p>\n

were important. So in 1989, I decided to sell the business and spend the rest<\/p>\n

of my life serving the Catholic Church.<\/p>\n

I announced I was stepping aside as president to show a buyer that the company<\/p>\n

could get along without me. I thought Domino’s would be sold in a matter of<\/p>\n

months, but that went on for 2c years. Meanwhile, the company deteriorated.<\/p>\n

Pizza Hut got into the delivery business and took over our lead. Little Caesars<\/p>\n

took off. We showed others how to do it, and they did it better. I didn’t have<\/p>\n

any choice but to come back. We were half-a-billion dollars in debt. The turnaround<\/p>\n

took longer than I thought it would. It was just a day-by-day thing, getting<\/p>\n

back to basics—trying to run the stores better, get the delivery times<\/p>\n

down.<\/p>\n

In that time I made another change. I read a book by C.S. Lewis called Mere<\/p>\n

Christianity. There’s a chapter in there on pride, and it hit me right between<\/p>\n

the eyes. It basically said that sometimes when you work harder than other<\/p>\n

people and set higher goals than other people, you do it for the wrong reasons—so<\/p>\n

you have more than other people. And that’s pride. I was taught pride was the<\/p>\n

greatest sin, and I realized, my gosh, I thought those things were virtues.<\/p>\n

I’m probably the biggest sinner in the world. So I changed. I took a millionaire’s<\/p>\n

vow of poverty and sold most of my big possessions. I don’t drive luxury cars,<\/p>\n

I don’t fly first-class, I don’t own yachts, airplanes, any ostentatious things.<\/p>\n

It was a tremendous sense of freedom. I even sold the Tigers.<\/p>\n

We didn’t find a buyer for Domino’s until 1999—Bain Capital—but<\/p>\n

once we did, I sold the company in 14 weeks. A lot of people thought I couldn’t<\/p>\n

live without Domino’s, but I do not miss it. What I’m doing now has so much<\/p>\n

more meaning to me. The idea of founding a Catholic college had been brewing<\/p>\n

for years in my mind, so we started Ave Maria College here in Ypsilanti in<\/p>\n

1997. We bought an old, abandoned schoolhouse and had probably a dozen full-time<\/p>\n

students that first year. And then in 1999 we started Ave Maria Law School.<\/p>\n

My goal now is to have the finest Catholic university and law school in the<\/p>\n

world. We were going to move the campus to Domino’s Farms, but we couldn’t<\/p>\n

persuade the township to buy the idea of a university here. So I prayed about<\/p>\n

it a lot, and my answer was to put it in the Naples, Fla., area. I’d vacationed<\/p>\n

there many times and enjoyed it. Naples has great weather, and there are few<\/p>\n

Catholic universities in Florida, or even in the Southeast. We have an interim<\/p>\n

campus down there now, and the permanent campus will open in 2006 with architecture<\/p>\n

in the style of Frank Lloyd Wright. The main chapel on campus will have the<\/p>\n

largest seating capacity of any Catholic church in the U.S.<\/p>\n

I’m thankful that I have my faith, because I couldn’t have gotten through<\/p>\n

Domino’s without it. I don’t think anyone in business had a tougher time than<\/p>\n

I had. My faith sustained me when we had internal problems with franchisees,<\/p>\n

when the media would write nasty things. I’ve lived by my faith as well. I’ve<\/p>\n

always tried to be fair in everything that I’ve done. When I got into trouble,<\/p>\n

there were always suppliers who trusted me, had faith in me. I’ve always been<\/p>\n

able to attract good employees. And I’m lucky.<\/p>\n

Feedback? Write to fsb_mail@timeinc.com<\/p>\n","protected":false},"excerpt":{"rendered":"

… and also founder of Ave Maria University in Naples, spoke at this year’s Eucharistic Congress. He turned away from an ostentatious life after reading C.S. Lewis’ Mere Christianity. I found this article in Fortune which represents most of his … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[],"class_list":["post-315","post","type-post","status-publish","format-standard","hentry","category-faith"],"_links":{"self":[{"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/posts\/315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/comments?post=315"}],"version-history":[{"count":0,"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/posts\/315\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/media?parent=315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/categories?post=315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fiveforks.com\/jeb\/wp-json\/wp\/v2\/tags?post=315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}