Domino's revamps pizza recipe amid competition
* Company tied for last place in terms of taste
* Analysts call the move a calculated risk
* Domino's shares fall 1.3 percent
By Lisa Baertlein
LOS ANGELES, Dec 16 (Reuters) - Domino's Pizza Inc (DPZ.N), the U.S. pizza delivery chain that earns high marks for convenience but low grades for taste, is revamping its pizza recipe as it tries to take a bigger slice of consumers' wallets.
Domino's is making its pizza crusts more garlicky, tweaking its tomato sauce and upgrading its cheese. The new pizzas will be sold in all U.S. outlets by Dec. 27.
Domino's and rivals Papa John's (PZZA.O) and Pizza Hut (YUM.N) are battling not only each other but improving frozen offerings from the likes of Kraft Foods Inc KFT.N as recession-weary diners continue to look for inexpensive meals.
Research firm Brand Keys said Domino's is the No. 1 ranked pizza chain overall, but that when it comes to taste it is tied for last place with children's pizza party chain Chuck E. Cheese (CEC.N).
Fixing that weakness is Domino's biggest opportunity to steal share from rivals, said Robert Passikoff, president of Brand Keys.
"Does it change the game for them? I think it does," Passikoff said.
Feltl and Co analyst Mark Smith called Domino's move a calculated risk.
"When you're down toward the bottom of the pack, it's hard to fall much further," said Smith, who added that while Coca-Cola Co (KO.N) was unsuccessful in changing the formula of its namesake flagship beverage, Hardee's CKR.N improved its fortunes by beefing up its menu with bigger, higher-quality hamburgers.
Domino's representatives said the company spent two years working on the recipe relaunch and that the related financial investment was "much larger" than what it spent on prior food launches.
They declined give specifics on the budgets for research and development or the planned advertising campaign, which will feature promotions on social networking outlets like Facebook and Twitter as well as on popular television and sports programs.
The big three U.S. pizza chains -- Domino's, Papa John's and Yum Brands Inc's Pizza Hut -- are running specials that are virtually indistinguishable as restaurant discounting runs rampant across the United States.
The pizza chains are particularly closely matched rivals.
For example, Passikoff said, Domino's ranks a close second to Pizza Hut in terms of value, while the two chains share the top ranking for location and service.
Papa John's is No. 1 on taste, No. 3 on value and just behind Pizza Hut and Domino's on location and service.
Pizza Hut, which lately has been struggling in the United States, ranks No. 3 on taste. [ID: nN04154847]
Shares of Domino's were down 10 cents, or 1.3 percent, at $7.73 on Wednesday afternoon. Papa John's shares were down 1.7 percent, while shares of Pizza Hut parent Yum were up 0.2 percent. (Reporting by Lisa Baertlein, editing by Matthew Lewis)
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