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FDD Talk: The Domino’s Pizza Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on February 15, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Pizza Franchises



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Domino's Pizza Exterior Photo by wreckinturn3

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Domino’s Pizza franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Domino’s Pizza franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Domino’s Pizza’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2013, 2012, 2011, 2010, and 2009 average weekly unit sales for company-owned, franchised, and combined company-owned and franchised Domino’s Pizza Stores, including Domino’s Pizza Traditional Stores, Domino’s Pizza Non-Traditional Stores, and Domino’s Pizza Transitional Stores
  • 2013, 2012, 2011, 2010, and 2009 store count at year-end for company-owned, franchised, and combined company-owned and franchised Domino’s Pizza Stores, including Domino’s Pizza Traditional Stores, Domino’s Pizza Non-Traditional Stores, and Domino’s Pizza Transitional Stores
  • number of Domino’s Pizza Stores in operation at year-end 2013, 2012, 2011, 2010, and 2009 that achieved or exceeded the average weekly unit sales for the year
  • average total variable costs, total fixed costs, and EBITDA for franchised Domino’s Pizza Stores that submitted complete and properly prepared profit and loss statements with average weekly unit sales of $9,000 to $10,000; $12,000 to $13,000; $15,000 to $16,000; and $18,000 to $19,000, respectively

Section I – Background Information

Domino’s Continues Rise Amid Focus on Smart Tech

Domino’s Pizza, the brand that once apologized for its offerings and launched a major comeback, is now the world’s second-largest pizza chain, trailing only Pizza Hut, with more than 12,000 locations in more than 70 countries.

Today, the quick-service pizza chain is rolling out more than just pizza dough, including its DXP (Delivery Expert) vehicle, five years in the making. The car, equipped with a 140-degree oven in the back seat to keep pizzas warm, has room for only one person, leaving space for storage and stabilization of pizzas, drinks, dipping sauces, napkins and other items. The car’s exterior can be personalized so each is local and unique.

These are pricey cars, costing between $20,000 and $25,000, compared to the regular $12,000 vehicle. About 100 cars are currently on the road.

Easy Order Is Newest Techy Way to Order

Domino’s offers creative ways to place orders, including most recently the development of a button gadget customers can program with a preferred pizza and press whenever they want to place an order. The Easy Order uses Bluetooth to sync with a user’s phone and the Domino’s app. It was introduced to select users in December 2015 and has been gradually rolled out to a wider customer base.

The pizza chain introduced a digital ordering platform on Samsung’s Smart TVs in April 2015 as part of Domino’s AnyWare, a tech suite that enables customers to order in various ways on various devices. The suite in March 2015 enabled the service on Android Wear, Pebble smartwatch apps and Ford Sync AppLink.

To use the TV ordering service, you’ll need a Samsung Smart TV manufactured in 2013 or later, and you’ll need to have created a Pizza Profile with a saved Easy Order, or simply a recent order. You can also pay for your order through Google Wallet, a feature that was introduced in April 2014 to go with its Android ordering app.

In May 2015, Domino’s customers became able to add a Twitter handle to their Pizza Profiles and order a pizza by tweeting #EasyOrder (or the pizza emoji) to @dominos.

Brothers Started Business

Domino’s Pizza was founded in 1960 by Tom and James Monaghan in Ypsilanti, Michigan. The brothers bought a pizzeria named DomiNick’s, and eight months later the duo became a solo act as James kept his job as a mailman and Tom took full control of the business.

By 1965, Tom Monaghan had opened two additional locations and had invented an insulated, stackable pizza box that drew positive attention. Since the original owner of DomiNick’s refused to allow the name to be used at the new locations, Tom went with Domino’s, based on the suggestion of an employee. The three dots on the chain’s logo represent its first three locations.

Franchising began in 1967. By 1978 the company had 200 locations, and by 1983 it had surpassed 1,000, including its first international store in Winnipeg, Manitoba, Canada. Bain Capital bought Domino’s in 1998 and took the company public in 2004.

Pizza Chain Launched Major Comeback

The pizza chain, headquartered in Ann Arbor Charter Township near Ann Arbor, Michigan, hit lows with customers in 2009 and later launched a major comeback that involved reformulating its pizzas, expanding its menu and launching a marketing campaign that admitted the pizzas were unappealing and promised better.

Menu Offers Variety

In addition to a wide variety of specialty pizzas and build-your-own options, Domino’s robust menu offers pastas, chicken, oven-baked sandwiches, breads, beverages and desserts, including the new Domino’s Marbled Brownie, which joins Cinna Stix and Chocolate Lava Crunch Cake. Many dipping sauces are also on the menu.

Anderson Promoted, Ellis Joins Company

Domino’s Pizza named Eric Anderson as executive vice president of international operations in January 2016. Anderson has been with Domino’s since 2010, most recently as regional vice president of Domino’s EMEA region (Europe, the Middle East and Africa). He will now oversee the chain’s Europe region and the new MACE region (the Middle East, Africa, Central Asia and Eastern Europe), as well as the international supply chain and quality assurance teams. Prior to joining Domino’s, Anderson was regional vice president for the Americas and business strategy for global consulting firm Bain & Co.

Domino’s named Troy A. Ellis as executive vice president – supply chain in June 2015. He replaces the retiring John Macksood, who put in 29 years. Ellis most recently worked as senior vice president of conversion for Coca-Cola Refreshments.

Section II – Estimated Costs

  • Please click here for detailed estimates of Domino’s Pizza franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis



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