Domino's Streamlines Global Operations; Closing Underperforming Stores and Asian Commissaries to Boost Earnings

To bolster financial performance, Domino's Pizza is closing up to 70 underperforming corporate-owned outlets worldwide and its Asian commissaries, a move expected to save the company millions annually.

This right-sizing plan may lead to one-off costs between A$80 million and $93 million and is expected to save the business around $53 million to $59 million per annum. The company expects the closures and streamlining to enhance its global reach and scale while improving fiscal 2024 earnings before interest and taxation by A$25 million ($16.89 million) to A$30 million.

Moreover, having each store prepare dough in-house will improve product quality and supply chain resilience and reduce costs.

Despite the tough decision to close certain stores, Group CEO & MD Don Meij said that "for these stores, it is the right one." Be it geographical expansion or growth, corporations like Domino's will always have to take tough calls to stay competitive.

Among those to be shut are 27 stores in Denmark and its construction and supply arm in Australia under its efforts to improve its performance.

According to the company, commissaries in Asia, where pizza dough was made and delivered to stores, will be gradually shut down. This action was always planned as part of the purchase integration of the companies in Taiwan, Malaysia, Singapore, and Cambodia. It is anticipated that preparing dough in-store will increase product quality, strengthen the supply chain, and save expenses.

In contrast, the closing of up to 20% of its corporate-owned network of 913 locations only accounts for roughly 2% of its 3827 outlets worldwide. All underperforming stores that have been "open for some time but not expected to reach sustainable sales or profitability levels in the near term" will close between 65 and 70 stores.
This move will help improve the company's fiscal year 2024 earnings before interest and taxation by A$25 million ($16.89 million) to A$30 million.

The closures and streamlining will aid Domino's reach and operations globally. For instance, the move to have each store prepare dough in-house will improve product quality and supply chain resilience and reduce costs. Furthermore, franchisees will be sought for another 70 to 75 corporate stores described as having "turnaround" status. This change is expected to improve the company's overall performance and hasten its growth in the market.

Photo: Dailymemers/Wikimedia Commons(CC BY-SA 4.0)