DOMINOS PIZZA INC

Domino's Pizza, Inc. operates in the quick service restaurant (QSR) pizza category, which is large, fragmented, and highly competitive. From 2024 through 2025, the U.S. QSR pizza category grew from $42.8 billion to $43.4 billion ¹ and is primarily comprised of dine-in, delivery and carryout, with delivery and carryout comprising the two largest segments. The four industry leaders, including Domino's, account for approximately 61% of U.S. pizza delivery and approximately 51% of U.S. pizza carryout ², with regional, independent and local establishments comprising the remainder of the category. The company is the largest pizza company in the world with more than 22,100 locations in over 90 markets around the world as of December 28, 2025 ³.

Within the U.S. QSR pizza category, Domino's is recognized as number one, with approximately 23.3% total market share based on consumer spending data for the year ending December 2025 (up from approximately 22.5% for the year ended December 2024) ⁴. The company is the market share leader in both delivery and carryout, with approximately 32.9% and 19.6% share in each segment, respectively ⁵. In the U.S., the company competes primarily against national chains Pizza Hut, Papa John's and Little Caesars Pizza as well as regional, independent and local establishments. Internationally, the company competes primarily with Pizza Hut and Papa John's which have significant global presence, as well as country-specific national, regional and local pizzerias.

Domino's is primarily a franchisor, with approximately 99% of Domino's global stores owned and operated by its independent franchisees as of December 28, 2025 ⁶. The company generates revenues and earnings by charging royalties and fees to franchisees, selling food and other products to franchisees through its supply chain operations primarily in the U.S. and Canada, and by operating a number of Company-owned stores in the U.S. The business model yields significant cash flows through consistent franchise royalty and supply chain revenue streams within an asset-light model. The company has historically returned cash to shareholders through dividend payments and share repurchases.

The company operates three business segments: U.S. stores, international franchise and supply chain. During 2025, the U.S. stores segment accounted for $1.61 billion, or 32.6%, of consolidated revenues ⁷. This segment is comprised primarily of franchise operations, which consisted of 6,924 franchised stores located in the U.S. as of December 28, 2025 ⁸, and 262 U.S. Company-owned stores ⁹, for a total U.S. store count of 7,186 ¹⁰. The international franchise segment accounted for $338.7 million, or 6.9%, of consolidated revenues during 2025 ¹¹, and is comprised of a network of 14,956 international franchised stores in over 90 international markets as of December 28, 2025 ¹². The supply chain segment accounted for $2.99 billion, or 60.5%, of consolidated revenues during 2025 ¹³. In the U.S., the company operates 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities and one vegetable processing center ¹⁴, and also operates five regional dough manufacturing and supply chain centers in Canada ¹⁵.

During 2025, the company launched its Parmesan Stuffed Crust Pizza, as well as its Spicy Chicken Bacon Ranch specialty pizza and Garlic and Cinnamon Bread Bites. The company has multinational agreements with Uber Technologies, Inc. and DoorDash, Inc. to allow customers to order Domino's products through their respective marketplaces. As of December 28, 2025, the company had fully launched the website and mobile web portion of the redesign and is in the process of rolling out an updated version of its mobile apps. The company sold 4,200,000 ordinary shares of its investment in DPC Dash in the second quarter of 2025 for net proceeds of $44.1 million ¹⁶. During 2025, the company refranchised 37 U.S. Company-owned stores, primarily in Maryland, for net proceeds of $8.6 million ¹⁷. On September 5, 2025, the company completed a refinancing transaction (the "2025 Refinancing") in which certain subsidiaries issued $500.0 million Series 2025-1 4.930% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated repayment date of July 2030 (the "2025 Five-Year Notes") and $500.0 million Series 2025-1 5.217% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated repayment date of July 2032 (the "2025 Seven-Year Notes") ¹⁸. The company used cash of $354.7 million in 2025 for share repurchases ¹⁹ and declared dividends of $237.3 million (or $6.96 per share) in 2025 ²⁰.

Consolidated revenues increased $233.6 million, or 5.0%, in 2025 to $4,940.0 million ²¹, primarily due to higher supply chain revenues, higher U.S. franchise advertising revenues and higher U.S. franchise royalties and fees. Income from operations increased 8.5% to $954.0 million ²². Net income was $601.7 million ²³, diluted EPS was $17.57 ²⁴ versus $16.69 ²⁵ in the prior year. Global retail sales, excluding foreign currency impact, increased 5.4% as compared to 2024 ²⁶. U.S. same store sales increased 3.0% ²⁷ and international same store sales (excluding foreign currency impact) increased 1.9% ²⁸. Global net store growth was 776 stores, including 172 net store openings in the U.S. and 604 net store openings internationally ²⁹.

A significant component of the Hungry for MORE growth strategy includes the opening of new U.S. and international franchised stores to generate more global retail sales and ultimately increase operating income. The company expects to continue its strategy of building additional stores in markets and regions where it has existing stores, a strategy referred to as "fortressing," which may negatively impact sales at existing stores. The company also plans to continue investing in supply chain productivity and capacity initiatives in the future. Another component of the growth strategy involves ongoing participation on the third-party aggregator marketplace, though this avenue for sales may ultimately prove to be unsuccessful and sales or the potential size of this opportunity may not meet expectations.

The company plans to continue investing in consumer and store technology, supply chain centers and corporate store operations. The company expects that its capital expenditures will be approximately $120 million in 2026 ³⁰. The company expects to continue to use its unrestricted cash and cash equivalents, cash flows from operations, any excess cash from its refinancing and recapitalization transactions and available borrowings under its 2025 Variable Funding Notes to, among other things, fund working capital requirements, invest in its core business and other strategic opportunities, repay outstanding borrowings under its securitized debt, pay dividends and repurchase and retire shares of its common stock.

The company expects to continue investing in consumer and store technology, supply chain centers and corporate store operations. The company expects that its capital expenditures will be approximately $120 million in 2026 ³¹. The company expects to continue to use its unrestricted cash and cash equivalents, cash flows from operations, any excess cash from its refinancing and recapitalization transactions and available borrowings under its 2025 Variable Funding Notes to, among other things, fund working capital requirements, invest in its core business and other strategic opportunities, repay outstanding borrowings under its securitized debt, pay dividends and repurchase and retire shares of its common stock.

As of December 28, 2025, the company had $459.7 million remaining under the $1.0 billion share repurchase authorization approved by the Board of Directors on February 21, 2024 ³². The Board of Directors declared a quarterly dividend of $1.99 per common share on February 18, 2026 payable on March 30, 2026 to shareholders of record at the close of business on March 13, 2026 ³³. The company currently anticipates continuing the payment of quarterly cash dividends.

The company faces structural headwinds including significant increases in food costs and labor costs, which have impacted and could further impact profitability and that of franchisees and which could impact the opening of new U.S. and international franchised stores, lead to store closures, negatively impact sales and adversely affect operating results. Economic conditions, including inflationary and cost pressures seen in recent years, may also impact the discretionary purchasing power of customers. Labor shortages and increased turnover rates for team members and those of franchisees have led to and could in the future lead to increased costs. The company also faces risks from changes in consumer tastes, including potential shifts away from pizza due to health or dietary preferences or the increased use of prescription weight-loss therapies, including GLP-1 agonists and other related drugs.

The company faces execution risks related to its growth strategy, including challenges in opening new stores such as construction, permitting or development delays, employment and training of qualified personnel, selection and availability of suitable new store sites, availability and negotiation of leases and financing with acceptable terms, securing required U.S. or foreign governmental permits, licenses and approvals, and general economic and business conditions. The opening of additional franchise stores also depends upon the availability of suitable prospective franchisees who meet the company's criteria. The company's fortressing strategy could also result in store closures if executed too rapidly, as seen in certain international markets in recent years.

The QSR pizza category is highly competitive, and the company faces competition from national chains such as Pizza Hut, Papa John's and Little Caesars Pizza, as well as regional, independent and local establishments, and order and delivery aggregation companies. The company's substantial indebtedness, which was approximately $4.82 billion as of December 28, 2025 ³⁴, could adversely affect its business and limit its ability to plan for or respond to changes in the business. Increases in food, labor and other costs, labor shortages or negative economic conditions could adversely affect profitability and operating results; labor costs and food costs, including cheese, generally represent approximately 55% to 65% of the sales at a typical Company-owned store ³⁵, and cheese represents approximately 25% of the food basket purchased by Company-owned stores ³⁶. The company's international operations subject it to additional risks, including recessionary trends, changes in inflation or foreign exchange rates, and political and economic instability; a hypothetical 10% adverse change in foreign currency rates in international markets would have resulted in a negative impact on international royalty revenues of approximately $30.0 million in 2025 ³⁷. The company's earnings and business growth strategies depend on the success of its franchisees, and as of December 28, 2025, the largest international master franchisee operated 3,524 stores in 12 international markets, which accounted for approximately 24% of the international store count ³⁸.

Management's message emphasizes the company's Hungry for MORE strategy, which aims to generate MORE sales, MORE stores and MORE profits. The strategic imperatives of this strategy are: Most Delicious Food, Operational Excellence, Renowned Value, and Enhanced by Best-in-Class Franchisees. Management highlights that global retail sales, excluding foreign currency impact, increased 5.4% as compared to 2024 ³⁹, U.S. same store sales increased 3.0% ⁴⁰, international same store sales (excluding foreign currency impact) increased 1.9% ⁴¹, and global net store growth was 776 stores ⁴². Management also notes that income from operations increased 8.5% ⁴³ and that the company believes its global retail sales growth, marketing initiatives, operations and emphasis on technology have combined to strengthen the brand.