Domino's Names New CEO After 2021 Growth and Additional China Franchisee Investment

This is an English adaptation of a FoodBud historical article originally published on March 9, 2022.

Founded in 1960, Domino's had 18,800 stores across more than 90 markets as of January 2, 2022.

In 2021, the company added 1,204 net new stores: 205 net openings in the U.S. (214 openings and 9 closures) and 999 net openings internationally (1,094 openings and 95 closures).

Domino's largest franchisee was Domino's Pizza Enterprises, itself a public company, operating 3,229 stores across 10 markets including Australia, New Zealand, Japan, France, and Taiwan. That represented 17% of Domino's total store count, but 1.7% of 2021 revenue.

From 2016 to 2021, the U.S. pizza category grew from $35.9 billion to $40.6 billion, making it the second-largest category within the $304.8 billion quick-service restaurant market.

For 2021, Domino's reported:

• Revenue of $4.357 billion, up 5.8% year over year
• Net income of $510 million
• Systemwide sales of $17.8 billion, up 11.7%
• Average annual unit revenue above $1.3 million in the U.S.
• Global average annual unit sales close to $1 million

Over the prior five years, Domino's spent $2.4 billion on advertising. In 2021, its loyalty program had 29 million active members and 70 million registered users.

As of January 2, Domino's had about 13,500 employees, including 9,000 in the U.S. Around 6,100 employees were part-time and roughly 7,400 were full-time. About 3,000 employees supported U.S. and Canada supply-chain operations, 100 employees managed international franchising, and about 1,400 were corporate employees.

Three Core Business Segments

U.S. Stores

Domino's U.S. store business generated $1.5 billion in 2021 revenue, equal to 37% of total revenue.

As of January 2, the U.S. system included 6,185 franchised stores operated by 735 franchisees, with an average of about eight stores per franchisee. Franchised stores accounted for 94% of the U.S. estate, while company-owned stores numbered 375.

In the U.S., 22 franchisees each operated more than 50 stores. The largest franchisee operated 177 stores, while 216 franchisees operated one store each.

Company-owned U.S. stores generated $479 million in 2021 revenue and $100 million in store-level profit.

International Franchising

International franchising generated $298 million in 2021 revenue, or 7% of total revenue. As of January 2, Domino's international franchise network covered 12,288 stores across more than 90 markets.

The top 10 international markets by store count were India, the U.K., Japan, Mexico, Australia, Turkey, Canada, South Korea, China, and France, with 1,495, 1,169, 882, 802, 724, 605, 568, 475, 472, and 457 stores respectively. Together, these 10 markets accounted for 62% of international stores.

Supply Chain

Domino's supply-chain business generated $2.56 billion in 2021 revenue, or 59% of total revenue, with $266 million in profit.

In the U.S., Domino's operated 21 regional dough manufacturing and supply-chain centers, two thin-crust manufacturing plants, one vegetable processing center, and one equipment and supplies center serving U.S. and international markets.

The supply-chain division leased more than 900 trucks and regularly supplied food ingredients and other inputs to over 7,100 stores. Domino's said it planned to keep investing in supply chain, with another regional dough manufacturing and supply center expected to open in 2022.

Domino's Continued Investment in Its China Franchisee

In the second quarter of 2020, Domino's invested $40 million in DPC Dash, formerly Dash Brands, whose subsidiary was the Domino's franchisee in China. The investment agreement included certain performance targets for DPC Dash.

Domino's then made an additional $40 million investment in DPC Dash in the first quarter of 2021, followed by another $9.1 million in the fourth quarter. Cumulative investment reached $89.1 million.

At an earlier investor event, Domino's had estimated China's potential store base at 5,000 locations. As of January 2, China had 472 Domino's stores. The market opened more than 100 new stores in 2021, and China same-store sales grew by double digits in the fourth quarter.

Domino's executives expressed strong confidence in the long-term potential of the China market and said there remained significant room for growth.

CEO and CFO Changes

In March 2022, Domino's announced that CEO Ritch Allison would retire on April 30. Russell Weiner, then COO and president of Domino's U.S. business, was set to succeed him on May 1.

Weiner joined Domino's in 2008 as CMO. During his tenure as president of the U.S. business, Domino's U.S. store revenue rose from $3 billion to $8 billion, digital sales mix increased from 11.5% to 75%, and market share doubled.

Domino's also announced that Sandeep Reddy, then CFO of Six Flags, would join the company as CFO on April 1. Board chairman David A. Brandon was set to move into the newly created role of executive chairman, effective May 1.

Note: Forward-looking store targets, planned openings, executive transition dates, and investment figures are historical as of the original March 9, 2022 article.