In this FDD Talk post, you’ll learn the following:
- Section I – Estimated initial investment (franchise costs) for a Domino’s Pizza franchise, based on Item 7 of the company’s 2022 FDD
- Section II – Initial franchise fee, royalty fee, and marketing fee for a Domino’s Pizza franchise, based on Items 5 and 6 of the company’s 2022 FDD
- Section III – Number of franchised and company-owned Domino’s Pizza outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
- Section IV – Background information on the Domino’s Pizza franchise opportunity, including relevant news updates
- Section V – Presentation and analysis of Domino’s Pizza’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- 2020, 2019, 2018, 2017, and 2016 average and median weekly unit sales for company-owned, franchised, and combined company-owned and franchised Domino’s Pizza Traditional Stores located in the United States (not including Stores located in U.S. territories of Guam, Puerto Rico, and U.S. Virgin Islands) that were open at year end and were open and operational for the 12-month period of the applicable year
- number and percentage of Domino’s Pizza Stores in operation during the entire 12-month period in 2020, 2019, 2018, 2017, and 2016 that achieved or exceeded the average weekly unit sales for the year
- 2020 average total variable costs, total fixed costs, and EBITDA for franchised Domino’s Pizza Stores in operation as of the end of the fiscal year 2020 that have operated for at least 12 months and 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 VI – Key ratios, comparables, computations, and analyses for the Domino’s Pizza franchise opportunity (exclusive content for Platinum subscribers)
Section I – Domino’s Pizza Franchise Costs
- Domino’s Pizza (traditional store) franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Fee: $0 to $10,000
- Leasehold Improvements: $25,000 to $300,000
- Furniture, Fixtures, and Equipment: $81,000 to $145,000
- Signage: $5,200 to $35,000
- 3 Months’ Rent: $3,000 to $25,000
- Security Deposit: $1,000 to $10,000
- Opening Inventory and Supplies: $2,750 to $6,500
- Opening Advertising and Promotion: $0 to $3,000
- Training Expenses: $1,000 to $3,000
- Insurance: $25,000 to $65,000
- Miscellaneous Opening Costs: $2,500 to $7,000
- Additional Funds – 3 Months: $10,000 to $73,000
- Total Estimated Domino’s Pizza Franchise Costs: $156,450 to $682,500
Section II – Domino’s Pizza’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Domino’s Pizza’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Initial Fee: $0 to $10,000
- Royalty Fee: 5.5% of Store’s weekly Royalty Sales
- Advertising Fund: 4% of Store’s weekly Royalty Sales
- Advertising Cooperatives: 1-4% of Store’s weekly Royalty Sales
Section III – Number of Franchised and Company-Owned Domino’s Pizza Outlets
- 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: 6,030
- Outlets at the End of the Year: 6,222
- Net Change: +192
- 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
- Outlets at the Start of the Year: 362
- Outlets at the End of the Year: 375
- Net Change: +13
Section IV – Background Information on the Domino’s Pizza Franchise
16 Things You Need to Know About the Domino’s Pizza Franchise
Celebrates Opening of 18,000th Store
1. In mid-July 2021, Domino’s Pizza celebrated the monumental grand opening of the brand’s 18,000th store in the world in La Junta, Colorado. Ritch Allison, Domino’s CEO (at the time), said, “This is a remarkable milestone for Domino’s, and I am thrilled it is happening in La Junta. We’ve grown our total global store count by more than 5,100 stores in the past five years, and we couldn’t be more ecstatic to commemorate the brand’s 18,000th store in the world, right here in Colorado.”
2. The commemorative 18,000th store, located at 1 Conley Road, hosted a ribbon-cutting ceremony with Allison; Frank Garrido, Domino’s executive vice president of U.S. operations and support; La Junta Domino’s franchise owner Brian Bailey; and other key company executives on Thursday, July 15 at 11 a.m. Bailey also presented an $18,000 donation to La Junta Associated Charities, in honor of the 18,000th store.
3. Bailey said, “I’m honored to have the La Junta store be a part of this milestone and I’m thrilled that we are able to give back to an organization that does such tremendous work in the local community. La Junta Associated Charities provide food and emergency relief to those in need and I’m so grateful our Domino’s team can help support their mission.”
Announces Senior Vice President Promotions
4. In early December 2021, Domino’s Pizza announced the promotions of Kate Trumbull, Christopher Thomas-Moore, and Juan Joachin to senior vice president of various departments, effective immediately. “These three individuals have been instrumental in bringing growth and innovation to Domino’s in their respective areas,” said Ritch Allison, Domino’s CEO (at the time). “Their promotions are well-deserved, and I can’t wait to see the positive impact they’ll continue bringing to the brand.”
5. In Trumbull’s new role as senior vice president – brand and product innovation, she will oversee advertising, media, product innovation, and national sales. She was named vice president of advertising in 2017, after serving as director of digital marketing and director of loyalty. Trumbull joined Domino’s in 2011 from Procter & Gamble. She earned her bachelor’s degree from the University of Pennsylvania and her MBA from Indiana University’s Kelley School of Business.
6. As Domino’s senior vice president – customer and store experience, Thomas-Moore will lead digital experience and loyalty, retail technology, delivery technology, operation innovations, and international digital marketing. He previously served as Domino’s vice president of digital marketing, media, and product innovation. Thomas-Moore joined the company in 2018 from Extended Stay America and holds a bachelor’s degree in political science from North Carolina Agricultural and Technical State University.
7. As the newly named senior vice president – finance, Joachin will oversee financial support and business insights of Domino’s supply chain, corporate-owned store division, franchise operations, development, marketing, and analytics and insights functions. He previously served as Domino’s vice president of finance operations. Joachin joined Domino’s in 2018 from Dawn Foods, LLC. He earned a bachelor’s degree in finance from Universidad del Valle de Mexico and an MBA from Universidad Autonoma de Queretaro in Mexico.
Announces Leadership Succession Plan
8. At the beginning of March 2022, Domino’s Pizza announced that Ritch Allison had informed the board of directors of his intention to retire from the company. Allison continued to serve as chief executive officer through April 30, 2022 and remained on Domino’s board of directors until the company’s 2022 annual meeting of shareholders on April 26, 2022.
9. The board appointed Russell Weiner, Domino’s chief operating officer and president – Domino’s U.S., to succeed Allison as the company’s next CEO, effective May 1, 2022. Weiner stood for election to the board at the annual meeting of shareholders. Allison continued to provide his guidance and expertise to the company in an advisory capacity until he retired from Domino’s on July 15, 2022.
10. In connection with the announcement, David A. Brandon transitioned from chairman of the board to the newly established position of executive chairman, effective May 1, 2022.
11. In addition, the company announced that Sandeep Reddy had been appointed as Domino’s next chief financial officer, effective April 1, 2022. As CFO of Six Flags, Reddy led the company’s emergence from the pandemic with strong financial results in 2021 and also served as a strategic thought partner to the CEO and the leadership team in strategy development. Prior to that, as CFO of Guess?, Inc., Reddy, along with the management team, led a turnaround of financial results with strong improvement in revenue, profitability, and shareholder value.
12. Domino’s Pizza 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. Although the Monaghan brothers initially wanted to share the responsibility of running the restaurant, James didn’t want to quit his full-time job. So, eight months later, James sold his half of the business to Tom for the Volkswagen Beetle they used for pizza deliveries.
13. Over the next few years, Tom Monaghan continued to successfully run the restaurant and opened two more locations. However, the original owner of DomiNick’s wouldn’t let Monaghan use the restaurant’s name for the new locations. An employee, Jim Kennedy, suggested the name Domino’s and it stuck. The company’s logo, a domino tile with three dots, was created – each dot represents the first three Domino’s restaurants.
14. Following the success of the first three locations, Monaghan began franchising Domino’s. The company grew rapidly and by the early 1980s, Domino’s opened its 1,000th location. Around that time, in 1983, Domino’s opened its first international location in Canada. Domino’s strong domestic and international growth continued over the next decade.
15. In 1998, Monaghan decided to retire and he sold Domino’s to Bain Capital, Inc. for about $1 billion. Today, Domino’s is one of the largest pizza franchises in the world with stores in over 83 countries.
Entrepreneur’s Franchise 500
16. Domino’s did not rank on Entrepreneur’s 2022 Franchise 500 list.
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Domino’s Pizza Franchise (Item 19, 2022 FDD)
- Set forth below is information concerning the average weekly unit sales (“AWUS”) and other financial data of franchised and company-owned Domino’s Pizza Traditional Stores located in the United States (not including Stores located in U.S. territories of Guam, Puerto Rico, and U.S. Virgin Islands) for the calendar years 2016 through 2020.
- AWUS is calculated by dividing the total Royalty Sales reported by all Stores operating during the year by the number of weeks reported.
- Royalty Sales means the total receipts from all sales by the Stores of all pizza, beverages, and other products or services authorized for sale at the Stores or at any approved off-site location but exclusive of sales or equivalent taxes, coupon and similar discounts, and beverage container deposits approved by Domino’s.
- Franchised (4,712 Stores): $19,517
- Company-Owned (373 Stores): $21,957
- Combined (5,085 Stores): $19,696
- Franchised (4,862 Stores): $20,832
- Company-Owned (360 Stores): $23,385
- Combined (5,222 Stores): $21,077
- Franchised (5,137 Stores): $22,185
- Company-Owned (373 Stores): $25,373
- Combined (5,510 Stores): $22,401
- Franchised (5,494 Stores): $22,843
- Company-Owned (326 Stores): $24,112
- Combined (5,821 Stores): $22,914
- Franchised (5,757 Stores): $25,264
- Company-Owned (335 Stores): $26,579
- Combined (6,092 Stores): $25,336
Median Weekly Unit Sales
- Franchised (4,712 Stores): $18,002
- Company-Owned (373 Stores): $20,314
- Combined (5,085 Stores): $18,209
- Franchised (4,862 Stores): $19,320
- Company-Owned (360 Stores): $22,554
- Combined (5,222 Stores): $19,623
- Franchised (5,137 Stores): $20,733
- Company-Owned (373 Stores): $23,485
- Combined (5,510 Stores): $21,016
- Franchised (5,494 Stores): $21,448
- Company-Owned (326 Stores): $23,585
- Combined (5,821 Stores): $21,663
- Franchised (5,757 Stores): $23,845
- Company-Owned (335 Stores): $25,776
- Combined (6,092 Stores): $24,004
- These Store counts include all Stores open at year end that were open and operational for the full twelve-month period of the applicable year.
- In 2020, the average number of households in the delivery areas of these Domino’s Pizza Stores with delivery service areas was 14,449, and the average dollar per household was approximately $1.75.
- The charts below show the number and percentage of Stores in operation during the entire 12-month period which achieved or exceeded AWUS for the applicable year.
Number and Percentage of Stores in Operation During the Entire 12-Month Period Which Achieved or Exceeded AWUS for the Year
- Franchised: 1,997 (42%)
- Company-Owned: 210 (56%)
- Combined: 2,207 (43%)
- Franchised: 2,010 (41%)
- Company-Owned: 209 (58%)
- Combined: 2,219 (42%)
- Franchised: 2,139 (42%)
- Company-Owned: 224 (60%)
- Combined: 2,363 (43%)
- Franchised: 2,354 (43%)
- Company-Owned: 177 (54%)
- Combined: 2,531 (43%)
- Franchised: 2,503 (43%)
- Company-Owned: 179 (53%)
- Combined: 2,682 (44%)
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 the fiscal year 2020 that have operated for at least 12 months.
- At the end of 2020, there were 5,982 franchised stores in operation. These calculations are based on the information received from 5,385 Stores. 372 Stores did not submit or submitted incomplete or improperly prepared profit and loss statements and 225 Stores were not operational for the full year. Accordingly, these 597 Stores were excluded from these calculations.
Average Weekly Unit Sales: <$10,000 (46 Stores)
- Total Variable Costs: 80.8%
- Total Cash Fixed Costs: 24.6%
- EBITDA: -5.4%
- 26 (or 57%) of these Stores achieved or exceeded the -5.4% EBITDA
Average Weekly Unit Sales: $10,001 to $15,000 (457 Stores)
- Total Variable Costs: 77.2%
- Total Cash Fixed Costs: 17.5%
- EBITDA: 5.4%
- 241 (or 53%) of these Stores achieved or exceeded the 5.4% EBITDA
Average Weekly Unit Sales: $15,001 to $20,000 (1,156 Stores)
- Total Variable Costs: 75.5%
- Total Cash Fixed Costs: 14.6%
- EBITDA: 9.9%
- 598 (or 52%) of these Stores achieved or exceeded the 9.9% EBITDA
Average Weekly Unit Sales: $20,001 to $25,000 (1,287 Stores)
- Total Variable Costs: 74.6%
- Total Cash Fixed Costs: 13.0%
- EBITDA: 12.3%
- 561 (or 44%) of these Stores achieved or exceeded the 12.3% EBITDA
Average Weekly Unit Sales: $25,001+ (2,439 Stores)
- Total Variable Costs: 73.9%
- Total Cash Fixed Costs: 10.5%
- EBITDA: 15.5%
- 1,238 (or 51%) of these Stores achieved or exceeded the 15.5% EBITDA
- 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.
- Some Stores have achieved these sales or earned these amounts. Your individual results may differ. There is no assurance that you will achieve these sales or earn as much.