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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Domino’s Pizza’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2019, 2018, 2017, 2016, and 2015 average weekly unit sales for company-owned, franchised, and combined company-owned and franchised Domino’s Pizza Stores, including Domino’s Pizza Traditional Stores and Domino’s Pizza Non-Traditional Stores
- 2019, 2018, 2017, 2016, and 2015 median weekly unit sales for company-owned, franchised, and combined company-owned and franchised Domino’s Pizza Stores, including Domino’s Pizza Traditional Stores and Domino’s Pizza Non-Traditional Stores
- 2019, 2018, 2017, 2016, and 2015 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 and Domino’s Pizza Non-Traditional Stores
- number and percentage of Domino’s Pizza Stores in operation at year-end 2019, 2018, 2017, 2016, and 2015 that achieved or exceeded the average weekly unit sales for the year
- 2019 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 $25,000+, respectively
Section I – Background Information
16 Things You Need to Know About the Domino’s Pizza Franchise
Makes Several Changes to Executive Team
1. Throughout 2020, Domino’s made several changes to its executive team following the retirement in July of Jeffrey D. Lawrence, executive vice president and chief financial officer, who had worked with Domino’s for more than 20 years. Later that month, Domino’s promoted Art D’Elia to executive vice president and chief marketing officer. In this expanded role, D’Elia will run all global marketing initiatives for the brand, leading all U.S. marketing and advertising, and working with the brand’s master franchise companies around the world. D’Elia will report to Russell Weiner, chief operating officer and president, Domino’s U.S.
2. D’Elia joined Domino’s in 2018 as senior vice president, chief brand and innovation officer, leading the company’s U.S. product development and innovation, national TV advertising, and field marketing efforts. Earlier in 2020, he gained responsibilities for the brand’s digital marketing efforts. Prior to joining Domino’s, D’Elia spent seven years with Danone taking on progressive roles, most recently serving as marketing director in the U.K. Before Danone, D’Elia spent nearly seven years in marketing at PepsiCo Inc.
3. COO Russell Weiner said, “Art has been instrumental in building strong relationships with our U.S. franchisees. His strategic and creative leadership has made us better as a company. Art is a highly respected leader at Domino’s, and we’re thrilled with his appointment as EVP and CMO. I am also excited for Art to have a greater opportunity to have a positive impact on our international business.”
4. In early August 2020, Domino’s appointed Stu Levy, then-executive vice president, supply chain services, as the company’s chief financial officer, succeeding Jeffrey Lawrence, who announced his intention to retire from the company earlier in the year. Levy will report to Ritch Allison, Domino’s chief executive officer. At the same time, Domino’s announced the promotion of Cindy Headen to executive vice president, supply chain services, succeeding Levy. She will join the company’s executive leadership team and will report to CEO Ritch Allison.
5. Levy joined Domino’s in 2019 after serving as executive vice president, chief transformation officer for Republic Services, Inc., a leading provider of non-hazardous solid waste collection, transfer, disposal, recycling, and energy services. Since joining Domino’s, Levy and his team have continued to improve service to the U.S. and Canadian franchisees while also driving significant efficiencies across all critical areas of the production and distribution operations.
6. Headen joined Domino’s in 2015 as vice president of procurement and product management, and in 2018 was promoted to senior vice president of global procurement and supply chain operations, overseeing global procurement, inventory management, commodities, Progressive Food Solutions, logistics, transportation, continuous improvement and management of Domino’s Canadian supply chain operations. Prior to joining Domino’s, Headen spent nearly 15 years with Pepsico USA, where she was responsible for global procurement.
Announces Plans to Hire 20,000 New Team Members
7. In mid-August 2020, Domino’s announced that its corporate and franchise stores were looking to fill more than 20,000 positions, including delivery experts, pizza makers, customer service representatives, managers, and assistant managers. In addition, supply chain centers across the U.S. were actively hiring production and warehouse team members, as well as CDL drivers.
8. Tom Curtis, Domino’s executive vice president of operations and support, said, “It’s a privilege to be able to feed families across the country and provide them with a small sense of normalcy during this pandemic. The health and safety of the brand’s customers and store team members is our top priority, and because of that, Domino’s is continuing to offer contactless delivery and carryout, as well as Domino’s Carside Delivery.”
9. Domino’s stores across the U.S. have also implemented several cleanliness, sanitization, and contactless service precautions based on advice from federal, state, and local health and safety officials. They include wearing masks, the use of a pizza pedestal for contactless pizza deliveries, closing all in-store seating options, and increasing the frequency of sanitation of all regularly touched surfaces.
10. As new stores continue to be built and existing stores remain busy nationwide, the need to find great team members remains a priority for store managers in corporate and franchise stores nationwide. What starts out as a part-time job could also become a career, as more than 95% of Domino’s U.S. franchise owners began their career as part-time team members.
11. Curtis added, “We realize that these are tough times, and not only do we want to maintain strong service levels, but we also want to provide opportunities to those who have lost their jobs or are facing reduced hours. Domino’s stores offer flexible work options, which include part-time and full-time opportunities. If you’re looking for a steady income and want to be a part of a great team, we encourage you to apply.”
12. Domino’s was founded in 1960 when brothers Tom and James Monaghan took over the operation of DomiNick’s, an existing location of a small pizza restaurant chain that had been owned by Dominick DeVarti, in Ypsilanti, Michigan. Initially, the brothers agreed to split the work of running the business evenly, but James decided that he didn’t want to quit his job as a postman. After a few months, James traded his half of the business to Tom.
13. Over the next few years, Tom Monaghan continued to run DomiNick’s and opened additional locations in the area. Monaghan wanted to use the name DomiNick’s for the new locations, but was forbidden by original owner Domincik DeVarti. One of Monaghan’s employees came up with the name Domino’s and Monaghan changed the name of the business in 1965.
14. Two years later, in 1967, the first franchised Domino’s store opened and the chain expanded rapidly over the next decade. In the early 1980s, Domino’s began opening international locations in Canada. Around that time, Domino’s also opened its 1,000th store. This growth continued into the 1990s and in 1998, Monaghan announced that he was retiring. Monaghan sold 93 percent of the company to Bain Capital, Inc. for about $1 billion.
15. Since then, Domino’s has continued to grow around the world. The brand has also expanded its menu and dropped the “Pizza” from its name to reflect its other menu offerings. Today, there are Domino’s locations all around the world.
Entrepreneur’s Franchise 500
16. Domino’s did not rank on Entrepreneur’s 2021 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 2021 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 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 5,254
- Outlets at the End of the Year: 5,514
- Net Change: +260
- Outlets at the Start of the Year: 5,514
- Outlets at the End of the Year: 5,815
- Net Change: +301
- Outlets at the Start of the Year: 5,815
- Outlets at the End of the Year: 6,030
- Net Change: +215
- Outlets at the Start of the Year: 392
- Outlets at the End of the Year: 390
- Net Change: -2
- Outlets at the Start of the Year: 390
- Outlets at the End of the Year: 342
- Net Change: -48
- Outlets at the Start of the Year: 342
- Outlets at the End of the Year: 362
- Net Change: +20
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
- Set forth below is information concerning the average weekly unit sales and other financial data of Domino’s Pizza Traditional Stores and Domino’s Pizza Non-Traditional Stores 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 and Domino’s Pizza Non-Traditional 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.
- Franchised: $17,633
- Company-Owned: $19,964
- Combined: $17,633
- Franchised: $19,370
- Company-Owned: $22,050
- Combined: $19,566
- Franchised: $20,722
- Company-Owned: $23,984
- Combined: $20,958
- Franchised: $22,045
- Company-Owned: $25,314
- Combined: $22,270
- Franchised: $22,648
- Company-Owned: $24,760
- Combined: $22,773
Median Weekly Unit Sales
- Franchised: $16,174
- Company-Owned: $18,666
- Combined: $16,329
- Franchised: $17,744
- Company-Owned: $20,416
- Combined: $17,996
- Franchised: $19,088
- Company-Owned: $22,271
- Combined: $19,404
- Franchised: $20,485
- Company-Owned: $23,428
- Combined: $20,739
- Franchised: $21,140
- Company-Owned: $23,471
- Combined: $21,305
Store Counts (Year-End)
- Franchised: 4,816
- Company-Owned: 384
- Combined: 5,200
- Franchised: 4,979
- Company-Owned: 392
- Combined: 5,371
- Franchised: 5,195
- Company-Owned: 392
- Combined: 5,587
- Franchised: 5,486
- Company-Owned: 390
- Combined: 5,876
- Franchised: 5,784
- Company-Owned: 342
- Combined: 6,126
Number and Percentage of Stores in Operation at Year-End Which Achieved or Exceeded AWUS for the Year
- Franchised: 1,962 (41%)
- Company-Owned: 149 (39%)
- Combined: 2,125 (41%)
- Franchised: 2,069 (42%)
- Company-Owned: 162 (41%)
- Combined: 2,240 (42%)
- Franchised: 2,199 (42%)
- Company-Owned: 157 (40%)
- Combined: 2,348 (42%)
- Franchised: 2,330 (42%)
- Company-Owned: 154 (39%)
- Combined: 2,481 (42%)
- Franchised: 2,467 (43%)
- Company-Owned: 156 (46%)
- Combined: 2,626 (43%)
- The Store counts include all Stores open at year end, including those opened during the year.
- The AWUS for Domino’s Pizza Traditional Stores and Domino’s Pizza Non-Traditional Stores for 2019 was $22,773.
- For the year 2019, the AWUS for Domino’s Pizza Traditional Stores was $22,820, while the AWUS for Domino’s Pizza Non-Traditional Stores was $7,753.
- The Median Weekly Unit Sales for Domino’s Pizza Traditional Stores and Domino’s Pizza Non-Traditional Stores for 2019 was $21,305.
- The Median Weekly Unit Sales for Domino’s Pizza Traditional Stores was $21,338, while the Median Weekly Unit Sales for Domino’s Pizza Non-Traditional Stores was $7,132.
- The average number of households in the delivery areas of these Domino’s Pizza Stores with delivery service areas was 14,648, and the average dollar per household was approximately $1.55.
Part 2 – Other Financial Data
- Set forth below are calculations of EBITDA as a percentage of Royalty Sales, and other financial indicators based upon Average Weekly Unit Sales (AWUS) of <$10,000; $10,001 to $15,000; $15,001 to $20,000; $20,001 to $25,000; and $25,000+.
- 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 2019.
- 300 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 Cash 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.
- 5,484 Stores were included in these calculations.
Average Weekly Unit Sales: <$10,000 (115 Stores)
- Total Variable Costs: 80.4%
- Total Cash Fixed Costs: 22.5%
- EBITDA: -2.9%
- 63 (or 55%) of these Stores achieved or exceeded the -2.9% EBITDA
Average Weekly Unit Sales: $10,001 to $15,000 (766 Stores)
- Total Variable Costs: 77.4%
- Total Cash Fixed Costs: 17.2%
- EBITDA: 5.4%
- 390 (or 51%) of these Stores achieved or exceeded the 5.4% EBITDA
Average Weekly Unit Sales: $15,001 to $20,000 (1,297 Stores)
- Total Variable Costs: 75.6%
- Total Cash Fixed Costs: 14.8%
- EBITDA: 9.7%
- 753 (or 53%) of these Stores achieved or exceeded the 9.7% EBITDA
Average Weekly Unit Sales: $20,001 to $25,000 (1,205 Stores)
- Total Variable Costs: 74.8%
- Total Cash Fixed Costs: 13.1%
- EBITDA: 12.1%
- 673 (or 52%) of these Stores achieved or exceeded the 12.1% EBITDA
Average Weekly Unit Sales: $25,001+ (1,861 Stores)
- Total Variable Costs: 74.5%
- Total Cash Fixed Costs: 11.1%
- EBITDA: 14.4%
- 978 (or 53%) of these Stores achieved or exceeded the 14.4% EBITDA