‘Acting quickly and transparently’: Domino’s to close hundreds of stores globally

Domino’s is prepping to shutter 205 unprofitable stores, including one-sixth of its outlets in Japan.

Domino’s Pizza Enterprises, the master franchise for the brand in Australia, announced the mass closures in a trading update on Friday.

The ASX-listed company operates 3800 pizza stores in Australia, Europe and Asia. 172 of the 205 restaurant closures will occur in Japan, which has 1000 stores across the country.

The remaining stores to be axed will be in Europe and Australia, however the chain did not detail exactly where those store closures would be.

The significant move is an effort to improve Dominos’ long-term financial viability, the company said, and estimated the closures would carry a one-off cost of $97 million, but would result around $15.5 million in annualised savings.

Domino’s is prepping to shutter 205 unprofitable stores. Picture: Getty

“Many of these stores were opened during the COVID-19 sales surge but have since struggled with declining post-pandemic demand and higher input costs,” a statement from Domino’s Pizza Enterprises read.

“Stores selected for closure have low weekly order volumes and limited ability to reach profitable weekly order counts in the near term.”

Japan’s losses have cost the company $45 million in the Asia region, despite positive growth in Singapore, Taiwan and Malaysia.

Domino’s had already begun closing some locations last year, revealing it would close approximately 10% of its stores in Japan and France and abandon plans of having 7,100 restaurants globally by 2033.

Australia and New Zealand was the only market to deliver “positive results” and growth for the company, partly off the back of new products including new dessert offerings such as giant donuts.

‘Decisive action’ from a new CEO

The cost-cutting move was executed by the company’s newly appointed CEO and Managing Director, Mark van Dyck, who took over the role following the recent retirement of long-time boss Don Meij.

“When I started in this role three months ago I said we would move decisively to reshape our business for long-term success,” Mr van Dyck said in the statement.

“Where change is required, we are acting quickly and transparently. Our priority remains clear – creating value for customers, franchise partners, and shareholders.”

The cost-cutting move was executed by the company’s newly appointed CEO and Managing Director, Mark van Dyck. Picture: Getty

Prior to taking on the role as Domino’s CEO, Mr van Dyck served on the executive board of Compass Group, a London-listed food service company with a market capitalisation of $79 billion.

In November, Domino’s chairman Jack Cowin said Mr van Dyck was chosen for the head role at Dominos due to his “track record of successful transformations”.

Cowin also praised the successful and lengthy 22-year tenure of exiting CEO, Don Meij.

“Under his leadership Domino’s Pizza grew from a Brisbane-based company to a truly global business, the market leader in each of the markets the company has operated for more than three years in Europe and the Asia-Pacific,” he said.

“Don has done an exceptional job of delivering positive outcome for all our stakeholders, including franchise partners, shareholders and employees. He leaves an impressive legacy.”

How Domino’s popularised home delivery in Australia

Domino’s first launched down under in 1983, opening its first store in Brisbane, which was soon followed by locations in Sydney and Perth.

The brand immediately set out to challenge rival Pizza Hut’s position as Australia’s leading pizza chain by targeting the home delivery market – a service Pizza Hut was yet to provide its customers.

Despite this point of difference, Domino’s stores in Australia initially struggled, with many franchisees going under.

2013 marked the beginning of Domino’s rapidly overtaking Pizza Hut as the leading pizza chain in the country. Picture: Getty

The chain finally achieved success in 1993 when its master franchise was acquired by Silvio’s Dial-a-Pizza – Australia’s pioneers of home-delivered pizza – connecting Domino’s with a larger and more established delivery network.

Despite failing to outperform Pizza Hut at the time, Domino’s had successfully popularised home delivery in Australia and laid the groundwork for its future success.

2013 marked the beginning of Domino’s rapidly overtaking Pizza Hut as the leading pizza chain in the country, with the company’s profits growing exponentially.

IBISWorld figures show that from 2012 – 2014, Domino’s market share in Australia more than doubled from 8.5% to 18% with profits soaring from $258 to $561 million.

In 2017, the company made headlines when previous CEO Don Meij became the highest-paid chief executive in Australia, earning a staggering sum of $37 million.