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 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Domino’s Pizza franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Domino’s Pizza outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Domino’s Pizza’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2016, 2015, 2014, 2013, and 2012 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

• 2016, 2015, 2014, 2013, and 2012 median 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

• 2016, 2015, 2014, 2013, and 2012 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 and percentage of Domino’s Pizza Stores in operation at year-end 2016, 2015, 2014, 2013, and 2012 that achieved or exceeded the average weekly unit sales for the year

• 2016 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 <$10,000; $10,001 to $15,000; $15,001 to $20,000; $20,001 to $25,000; and $25,001+, respectively

Section I – Background Information

21 Things You Need to Know About the Domino’s Pizza Franchise

Launches Campaign to Fix Potholes Across the U.S.

1.  At the beginning of June 2018, Domino’s launched a campaign aiming to fix potholes around the country. Domino’s said that cracks, bumps, potholes, and other road conditions put its pizza at risk after they leave the store. The brand wants customers to nominate their town for pothole repairs at pavingforpizza.com.

2.  Russell Weiner, president of Domino’s USA, said, “Have you ever hit a pothole and instantly cringed? We know that feeling is heightened when you’re bringing home a carryout order from your local Domino’s store. We don’t want to lose any great-tasting pizza to a pothole, ruining a wonderful meal. Domino’s cares too much about its customers and pizza to let that happen.”

3.  At the time of the announcement, Domino’s had already worked with four municipalities to help repair roads that directly affect their customers, including Bartonville, Texas; Milford, Delaware; Athens, Georgia; and Burbank, California. Customers interested in nominating their town for a paving grant from Domino’s can enter the zip code at pavingforpizza.com. If their town is selected, the customer will be notified and the city will receive funds to help repair roads so pizzas make it home safely.

Launches Over 150,000 Domino’s Hotspots Nationwide

4.  On April 16, 2018, Domino’s launched a new delivery innovation with the release of over 150,000 Domino’s Hotspots nationwide. The Hotspots allow customers to receive deliveries in areas that don’t have a traditional address – places such as parks, sports fields, and beaches, as well as thousands of other unexpected sites. Local Domino’s stores around the country have selected these Domino’s Hotspots, which are now locations where drivers can meet customers curbside to hand off orders.

5.  According to Russell Weiner, president of Domino’s USA, “We listened to customers and their need for pizza delivery to locations without a traditional address. We know that delivery is all about convenience, and Domino’s Hotspots are an innovation that is all about flexible delivery options for customers.”

6.  Domino’s Hotspots are online-only for prepaid orders on dominos.com and in mobile apps. Once a customer’s location has been determined, local Domino’s Hotspots that are available for delivery will appear on a map for customers to select. Before checking out, customers can leave instructions to help the driver find them. After completing their order, customers will receive text message alerts about their Domino’s Hotspot delivery progress, including a final text that gives the estimated arrival of the driver at the hand-off spot.

7.  Weiner added, “Now customers spending time at some of our new Domino’s Hotspots locations, like Tommy Lasorda Field of Dreams in Los Angeles or even next to the James Brown statue in Augusta, Georgia, can have a pizza conveniently delivered to them, thanks to our innovative Domino’s Delivery Hotspots.”

Testing Artificial Intelligence to Take Telephone Orders

8.  Around the end of April 2018, Domino’s announced that it was accelerating its quest for digital dominance in the restaurant industry and continuing its investment in developing platforms using artificial intelligence (AI) by launching a voice recognition application to take telephone orders coming into its stores.

9.  Domino’s was the first to introduce a voice recognition app that conducted a retail transaction when it launched its virtual ordering assistant, DOM, in 2014. Today, Domino’s conducts more than 65 percent of its sales in the U.S. via numerous digital platforms.

10.  J. Patrick Doyle, president and CEO of Domino’s, said, “DOM was a key milestone not only for us, but for voice recognition technology in general. DOM was also the public face of our initial investment in artificial intelligence. Voice is a more natural way for people to interact with technology and that’s why we have been investing in AI for more than half a decade.”

11.  Doyle added, “We believe natural voice recognition is the future, as seen by the rise in virtual assistants, such as Amazon’s Alexa and Google Home. More importantly, artificial intelligence provides great learning platforms that will enable us to do more to deliver convenience for our customers and better job experiences for our team members. With DOM on the phones, our AnyWare ordering technology and plans we have for future in-store technology, our goal is to one day be 100 percent digital.”

12.  At the time of the press release, DOM was being tested on the phones in 20 stores across the U.S. and Domino’s said it had plans to expand the platform to more stores in the coming months. Domino’s first tested DOM for phoned-in carryout orders in a few of its company-owned stores. Initial response from customers and team members was positive. DOM can also help customers determine where their orders are in the process.

13.  Dennis Maloney, Domino’s chief digital officer, said, “While many of our orders come via digital platforms, there are still millions of customers who like to call in their orders directly to their local stores. DOM can now take those orders, freeing up our store team members to focus on preparing orders and serving customers already in the lobby.”

14.  Maloney added, “Some calls to the stores are from customers who have already ordered. Based on the phone number, this system will automatically determine if this is a new call or a follow-up. If it’s a follow-up call, DOM will act as a version of Domino’s Tracker and provide customers with the information they’re looking for.”

Company History

15.  Domino’s (formerly Domino’s Pizza) was started in 1963 after Tom Monaghan and his brother James took over the operation of a small pizza restaurant called DomiNick’s in Ypsilanti, Michigan. Initially, the brothers planned to split the work hours evenly, but James did not want to quit his full-time job as a postman. Eight months later, James traded his half of the business to Tom for the Volkswagen Beetle they used for pizza deliveries.

16.  Over the next two years, Tom Monaghan acquired two more pizzerias. He wanted all three locations to have the same branding, but the original owner would not let him use the name DomiNick’s. However, an employee named Jim Kennedy came up with the name “Domino’s” and Monaghan changed the company’s name to Domino’s Pizza, Inc. in 1965.

17.  Monaghan also created the Domino’s logo around this time and the three dots on the domino tile represented the three restaurants. He wanted to add a new dot with each additional restaurant, but dropped the idea after Domino’s experienced rapid growth. The first franchised location opened in 1967 and by the end of the next decade, Domino’s had 200 stores.

18.  During the early 1980s, Domino’s opened its first international locations in Canada and Australia. The company continued to expand both domestically and globally and by the end of the 1980s, there were 5,000 Domino’s restaurants around the world.

19.  In the 1990s, Domino’s began to add new items to its menu, including bread sticks, Thin Crust pizza, and Buffalo Wings. Around this time, Domino’s also launched its website, updated its logo, and introduced an industry innovation, Domino’s HeatWave®, a hot bag using patented technology that keeps pizza oven-hot to the customer’s door. In 1998, Tom Monaghan decided to retire and sold 93 percent of Domino’s to Bain Capital, Inc. for about $1 billion.

20.  Over the next two decades, Domino’s continued to grow around the world and introduced new innovations such as Cinna Stix, online and mobile ordering, new pizza flavors, Breadbowl Pasta, Lava Crunch Cakes, and sandwiches. In 2012, Domino’s dropped the “Pizza” part of its name to emphasize the brand’s variety of non-pizza products. The company also unveiled a new logo and “Pizza Theater” store design. Since then, Domino’s has continued to innovate and expand around the world.

Entrepreneur’s Franchise 500

21.  Domino’s did not rank on Entrepreneur’s Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Domino’s Pizza franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Domino’s Pizza’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Traditional Outlets

Franchised

2015

• Outlets at the Start of the Year:  4,721
• Outlets at the End of the Year:  4,853
• Net Change:  +132

2016

• Outlets at the Start of the Year:  4,853
• Outlets at the End of the Year:  5,029
• Net Change:  +176

2017

• Outlets at the Start of the Year:  5,029
• Outlets at the End of the Year:  5,254
• Net Change:  +225

Company-Owned

2015

• Outlets at the Start of the Year:  377
• Outlets at the End of the Year:  384
• Net Change:  +7

2016

• Outlets at the Start of the Year:  384
• Outlets at the End of the Year:  392
• Net Change:  +8

2017

• Outlets at the Start of the Year:  392
• Outlets at the End of the Year:  392
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• Set forth below is information concerning the average weekly unit sales and other financial data of Domino’s Pizza Traditional Stores, Domino’s Pizza Non-Traditional Stores, and Domino’s Pizza Transitional Stores operated in the Continental United States for the years noted.

• You should take this information into consideration only if you are acquiring a franchise for a Store now located or to be located in the Continental United States.

Part 1 – Average Weekly Unit Sales (AWUS) and Other Financial Data of Stores

• The AWUS of franchised and company-owned Stores for the past 5 calendar years is set forth below. These Stores include Domino’s Pizza Traditional Stores, Domino’s Pizza Non-Traditional Stores, and Domino’s Pizza Transitional Stores.

• AWUS means the average weekly unit sales (i.e. average weekly Royalty Sales). AWUS is calculated by dividing the total Royalty Sales reported by all Stores operating during the year by the number of weeks reported.

AWUS

2012