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Domino’s Pizza | Franchise Cost Worth Profit Potential In 2022?

Written by: Patrick Findaro
Last Updated: December 9, 2021
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Domino’s Pizza franchises sell pizza and other authorized products through delivery and carry-out services. Dominos‘ offers both traditional and non-traditional stores in the food & beverage industry. Domino’s started franchising in 2007.

The Chief Executive Officer of Domino’s is Richard Allison Jr who has been in this position since July of 2018. Before this position he was the President of Domino’s International from 2014 to 2018.

There are currently 6,157 Domino’s stores in the U.S. 5,815 are franchised operated, while 342 are company-owned. Throughout the world there are over 17,000 Domino’s locations!

Domino’s Pizza franchise fee for single stores ranges from $0 to $10,000 and is calculated by a number of considerations including the number of stores included in a development agreement and the duration of the development agreement.

Domino’s Pizza Franchise Cost:

The Total investment ranges from $144,450 to $582,500 for Traditional Store’s (retail outlets primarily in shopping centers, strip centers, and similar retail locations with appropriate parking for delivery vehicles). Meanwhile, the total investment ranges from $101,450 to $573,500 for non-traditional stores (office buildings, shopping malls, stadiums. These stores usually only offer carry out service)

Domino’s Franchise Cost Breakdown:

  • Initial Franchise Fee: $0 – $10,000
  • Lease Improvements: $25,000 – $225,000
  • Furniture, Fixtures and Equipment: $81,000 – $145,000
  • Signage: $5,200 – $35,000
  • 3 Month’s Rent: $3,000 – $25,000
  • Security Deposit: $1,000 – $10,000
  • Opening Inventory and Supplies: $2,750 – $6,500
  • Opening Advertising and Promotion: $0 – $3,000
  • Training Expenses: $1,000 – $3,000
  • Insurance: $13,000 – $40,000
  • Miscellaneous Opening Costs: $2,500 – $7,000
  • Additional Funds (3 months): $10,000 – $73,000

dominos pizza

Ongoing Franchise Costs and Fees:

 Royalty Fee: 5.5% of store’s weekly Royalty sales

License Fee: 10% of stores weekly gross sales

Pulse Initial Software Fee: $4,200

Annual Software Enhancement Fee: $611.34

Local Advertising Payment

Domino’s Pizza has set up an advertising fund which is 4% of store’s weekly royalty sales

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Domino’s Pizza Sales Figures:

The financial data below is from the year ending in 2018 and shows the financial performance for both franchise stores and company-owned stores. “AWUS” presented below represents Average Weekly Unit Sales.

AWUS

 20142015201620172018
Franchised$15,693$17,633$19,370$20,722$22,045
Company-Owned$17,745$19,964$22,050$23,984$25,314
Combined$15,848$17,633$19,566$20,958$22,270
 20142015201620172018
Average Weekly Unit Sales<$10,000$10,001 – $15,000$15,001 – $20,000

$20,001 – $25,000

$25,001+
Total Variable Costs81.4%77.3%75.4%74.7%74.2%
Total Cash Fixed Costs21.5%17.0%14.5%12.8%10.8%
EBITDA-2.9%5.7%10.1%12.5%15.0%

Key Insights from Sales Figures:

From 2014 Franchisee operated units had Average Weekly Unit Sales (AWUS) has increased from $15,693 (2014) to $22,045 (2018). The Franchisee’s has seen consistent growth in “AWUS”.

On a per year basis, the Average Unit Sales was over a million dollars per year! This was calculated by multiplying the AWUS by 52 for a year yielding $1,146,340 in average annual sales.

The last figure shown above shows the “EBITDA percentage of these sales in which 5,175 stores were included in these calculations.

EBITDA is calculated by: Royalty Sales – Total Variable Costs – Total Cash Fixed Costs + Supply Chain Profit and Volume Discount Rebates

 

140 stores were in the <$10,000 Range (-2.9% EBITDA)

849 Stores were in the $10,001 to $15,000 range (5.7% EBITDA)

1,413 stores were in the $15,001 to $20,000 range (10.1% EBITDA)

1,205 stores were in the $20,001 to $25,000 range (12.5% EBITDA)

1,568 stores were in the $25,000+ range (15.0% EBITDA)

Domino’s Pizza Franchise Income Statement:

Consolidated Statements of Income (In Thousands)

For years ended:201920182017
Revenues:   
U.S. Company-owned stores$453,560 $514,804$490,846
U.S. franchise royalties and fees$428,504$391,493$351,387
Supply chain$2,104,936$1,943,297$1,739,038
International franchise royalties and fees$240,975$224,747$206,708
US. franchise advertising$390,799$358,526
Total revenues $3,618,774$3,432,867$2,787,979
    
Cost of sales:   
U.S. Company-owned stores$346,168$398,158$377,674
Supply chain$1,870,107$1,732,030$1,544,314
Total cost of sales$2,216,275$2,130,188$1,921,988
    
Operating margin$1,402,499$1,302,679$865,991
General and administrative$382,293$372,464$344,759
U.S. franchise advertising$390,799$358,526
Income from operations$629,407$571,689$521,232 
Interest income$4,048 $3,334$1,462
Interest expense$(150,818)$(146,345)$(122,541)
Income before provision for income taxes$482,637 $428,678 $400,153 
Provision for income taxes$81,928$66,706 $122,248
Net income$400,709$361,972$277,905

Domino’s Pizza Franchise Income Statement Key Insights:

Domino’s Pizza is profitable business for the franchisor with a net income in 2019 of 400 million in 2019. The franchise has seen an increase every year in the past year of net income, in 2018 net income was 362 million and 2017 was 288 million.

Competition:

Domino’s Pizza competes in the fast-food market against big brand companies such as Pizza Hut, McDonald’s, Subway, and KFC.

Conclusion:

Domino’s has both traditional and non-traditional locations to suit a variety of needs for potential franchisee’s and allows you to open a store-front in different locations such as shopping malls, free standing units, and delivery only units.

While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in Food and Beverage Industry.

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