FDD Talk Daily: Average Variable Costs, Fixed Costs, and EBITDA of Domino’s Pizza Stores

Highlights of Domino’s Pizza’s Item 19 Financial Performance Representations (2012 FDD) – Part 2

Section II – Other Financial Data

• Set forth below are calculations for EBITDA as a percentage of royalty sales, and other financial indicators based upon Average Weekly Unit Sales (AWUS) of $9,000, $12,000, $15,000, and $18,000.

• These pro forma statements have been derived from profit and loss statements submitted by franchised stores in operation as of the end of calendar year 2010.

• Stores that did not submit profit and loss statements or whose profit and loss statements were considered incomplete or not properly prepared were excluded from these calculations.

• Average Weekly Unit Sales (AWUS):  Total royalty sales reported divided by the number of weeks reported.

• Total Variable Costs: Include operating expenses that tend to vary with a change in sales. These expenses include food costs, variable labor cost (excluding manager salary), bonus, payroll taxes, worker’s compensation insurance, mileage reimbursement and related delivery expenses, advertising expenses, royalty expense, and operating supplies.

• Total Cash Fixed Costs:  Include operating expenses that tend to not vary with a change in sales. These expenses include telephone and utilities, rent, repairs and maintenance, professional fees, small equipment and computer expenses, other taxes (real and personal property taxes, and business taxes), insurance (excluding worker’s compensation), manager salary, and miscellaneous operating expenses.

• EBITDA: Earnings before interest, taxes, depreciation, and amortization. EBITDA is calculated as follows: Royalty Sales minus Total Variable Costs minus Total Fixed Costs, plus Supply Chain Profit Sharing and Volume Discount Rebates.

• Individual stores may experience expense variations from the figures specified in each of the categories. Additionally, accounting, operational and management methods employed by a store, different geographic areas of the country, number of households in the delivery service area, and menu price variations, among other factors, may significantly affect profitability in any given operation.

• 1,115 Stores were included in these calculations.