Dominos Pizza to Shut Down Around 100 Fast Food Outlets to Improve Profits

A Domino's employee sits in her car after delivering pizza in Albany, Western Australia, on Feb. 21, 2024. (Susan Mortimer/The Epoch Times)

Domino’s Pizza will close around 100 fast food outlets in Japan and France following a review of sales and operations.

The news sent the company’s share price tumbling 8 percent on the Australian Stock Exchange (ASX: DMP) on July 18.

However, the fast food outlet reported ongoing positive performance in Australia, New Zealand, Germany, and Singapore. Performance also improved in Belgium, Netherlands and Luxembourg.

Domino’s opened its first Australian store in Springwood, Queensland in 1983. Domino’s now has 728 stores across Australia as of July 2024.

The pizza chain advised (pdf) the market it will close 80 “low volume” stores in Japan following a review of locations, which will be offset by 20 new stores at higher potential locations.

The company noted this would not have a massive impact on delivery customers, given these people could still receive orders—a situation that will lessen the overall impact on sales.

Meanwhile, the closure of the Japan fast food outlets comes after the company opened 403 stores between the 2020 and 2023 financial year. This was a 67 percent boost on previous operations.

“The company advised in April this resulted in a larger weighting of immature stores, in underpenetrated markets,” Dominos noted.

European Closures

In France, the company will reduce its small footprint by 10 to 20 in the 2025 financial year.

“Domino’s France outlined in May plans to apply proven global strategies, with local nuance, in this important market,” the company said.

“A focus of these efforts included aligning stores on best practice systems, to improve operations and customer satisfaction.”

Overall, Domino said store growth is expected to be flat to slightly positive in FY25 globally, rising to 3 to 4 percent net growth in the 2026 financial year.

This is at least half of what Dominos predicted in its three to five year outlook.

“Both FY25 and FY26 store openings are below the 3 to 5 year outlook of 7 to 9 percent new store openings,” Dominos said.

“The timeline for returning to the medium term outlook for store growth will be determined by continuing improvements in franchise profitability—a key focus of Domino’s in all markets.”

Over 7,000 Stores in the Future

Long term, Dominos believes its target of 7,100 stores, which is 1.9 times its current network, “remains appropriate.”

“These long-term outlooks are conservative, modelled on significantly lower store penetration than established networks, even when countries have larger existing pizza markets.”

Domino’s previously advised the timing of achieving the long-term outlook was under review.

“Given the lower levels of store openings in FY24 to FY26, the previous timeline of 2033 will not be achieved,” the company added.

“Management is focused near-term on building franchise partner profitability and reducing average store payback, to facilitate higher, sustainable organic store growth to reach the long-term outlook.”

Who Competes With Domino’s On the ASX?

Domino’s fast food competitors on the ASX include Guzman y Gomez, Collins Foods, and Restaurant Brands New Zealand.

KFC and Taco Bell restaurant operator Collins Foods recently reported (pdf) financial results that were well-received by the market.

The company’s revenue rose 10.4 percent to nearly $1.5 billion (US$1 billion), while underlying net profit rose 15.6 percent to $60 million. The company was able to deliver a final dividend of 15.5 cents per share.

Management said this result was driven by growth across all business units. For example, KFC Europe reported a 26.1 boost in revenue to $313.5 million.

In Australia, KFC revenue soared 6.6 percent to $1.1 billion.

CEO and Managing Director Kevin Perkins said, “Our solid FY24 performance is even more impressive given the challenging macro environment.”

Guzman y Gomez joined the ASX  on June 20 with an initial public offering price (IPO) of $22 per share.

The company’s share price soared 36 percent on debut to $30, but has since pulled back to $26.80 at the time of writing. Domino’s shares by comparison, closed at $33.12 on July 18.

Steven Marks, the founder and co-CEO of Guzman y Gomez, described the company’s listing on the ASX on June 20 as emotional.

“We’ve been working so hard for 20 years, and the values and culture is so strong, and we’re building this amazing business, and hopefully, you can see that today,” he told media.