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What changed in Domino's's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Domino's's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+356 added−360 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-26)

Top changes in Domino's's 2025 10-K

356 paragraphs added · 360 removed · 303 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

85 edited+14 added−18 removed54 unchanged
Biggest changeThis segment is comprised of a network of franchised stores in over 90 international markets. As of December 31, 2023, we had 13,737 international franchised stores. The principal sources of revenues from those operations are royalty payments generated by retail sales from franchised stores, as well as certain technology fees.
Biggest changeInternational Franchise During 2024, our international franchise segment accounted for $318.7 million, or 7%, of our consolidated revenues. This segment is comprised of a network of franchised stores in over 90 international markets. As of December 29, 2024, we had 14,352 international franchised stores.
We are operating under exemptions from registration in several states based on the net worth of our subsidiary, Domino’s Pizza Franchising LLC, and experience.
We are operating under exemptions from registration in several states based on our experience and the net worth of our subsidiary, Domino’s Pizza Franchising LLC.
Talent Development and Recruiting Having best-in-class talent across the globe is crucial to all aspects of Domino’s business, brand and long-term success. We are focused on attracting, developing and retaining high-performing, diverse teams and building an inclusive culture that inspires leadership, encourages innovative thinking and supports the development and advancement of all team members.
Talent Development and Recruiting Having best-in-class talent across the globe is crucial to all aspects of Domino’s business, brand and long-term success. We are focused on attracting, developing and retaining high-performing teams and building an inclusive culture that inspires leadership, encourages innovative thinking and supports the development and advancement of all team members.
We will grow together, deliver exceptional results together, celebrate wins together, have fun together, and leave the Domino’s brand in a better place for those that come after. 10 Compensation and Benefits Exceptional people are the core of our business. We are committed to providing competitive pay and benefits to attract and retain great talent, whether in our U.S.
We will grow together, deliver exceptional results together, celebrate wins together, have fun together, and leave the Domino’s brand in a better place for those that come after. Compensation and Benefits Exceptional people are the core of our business. We are committed to providing competitive pay and benefits to attract and retain great talent, whether in our U.S.
We strive to be a company where all team members can bring their full selves to work and know that they can belong, contribute and reach their potential. Create Inspired Solutions: We are a company built on entrepreneurship and innovation. We get better every day by having the humility and the courage to embrace and lead change.
We strive to be a company where all team members can bring their full selves to work and know that they can belong, contribute and reach their potential. 10 Create Inspired Solutions: We are a company built on entrepreneurship and innovation. We get better every day by having the humility and the courage to embrace and lead change.
We have a privacy policy posted on our website at dominos.com . The security of our financial data, customer information and other personal information is a priority for us. Trademarks We have many registered trademarks and believe that the Domino’s mark and Domino’s Pizza names and logos, in particular, have significant value and are important to our business.
We have a privacy policy posted on our website at dominos.com . The security of our financial data, customer information and other personal information is a priority for us. 13 Trademarks We have many registered trademarks and believe that the Domino’s mark and Domino’s Pizza names and logos, in particular, have significant value and are important to our business.
The information included in our Corporate Stewardship Report is not incorporated by reference herein and should not be considered a part of this document. Additional Disclosures Working Capital Information about the Company’s working capital is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7.
The information included in our Corporate Stewardship Report is not incorporated by reference herein and should not be considered a part of this document. 12 Additional Disclosures Working Capital Information about the Company’s working capital is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7.
We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. Our Strengths Strong Brand Equity We are the largest pizza company in the world, and we believe our Domino’s brand is one of the most widely-recognized consumer brands in the world.
We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. 8 Our Strengths Strong Brand Equity We are the largest pizza company in the world, and we believe our Domino’s brand is one of the most widely-recognized consumer brands in the world.
We also operate five dough manufacturing and supply chain centers in Canada. We plan to continue investing in supply chain productivity initiatives in the future. Our supply chain segment leases a fleet of more than 1,000 tractors and trailers.
We also operate five regional dough manufacturing and supply chain centers in Canada. We plan to continue investing in supply chain productivity initiatives in the future. Our supply chain segment leases a fleet of more than 1,000 tractors and trailers.
The Partners Foundation is committed to meeting the needs of Domino’s team members facing crisis situations, such as fire, illness, natural disasters or other personal tragedies. You can find more information about our initiatives and read our 2023 Corporate Stewardship Report, which includes both Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) indexed tables, at stewardship.dominos.com .
The Partners Foundation is committed to meeting the needs of Domino’s team members facing crisis situations, such as fire, illness, natural disasters or other personal tragedies. You can find more information about our initiatives and read our 2024 Corporate Stewardship Report, which includes both Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) indexed tables, at stewardship.dominos.com .
The four industry leaders, including Domino’s, account for approximately 52% of the U.S. carryout segment. (Source: Circana, CREST, year ending December 2023). In contrast to the U.S., international pizza delivery is relatively underdeveloped, with only Domino’s and two other competitors having a significant global presence.
The four industry leaders, including Domino’s, account for approximately 52% of the U.S. carryout segment. (Source: Circana, CREST, year ending December 2024). In contrast to the U.S., international pizza delivery is relatively underdeveloped, with only Domino’s and two other competitors having a significant global presence.
The reference to these website addresses anywhere in this Annual Report on Form 10-K (the “Form 10-K”) does not constitute incorporation by reference of the information contained on the websites and information appearing on those websites, including ir.dominos.com , stewardship.dominos.com and dominos.com , should not be considered a part of this document. 13
The reference to these website addresses anywhere in this Annual Report on Form 10-K (the “Form 10-K”) does not constitute incorporation by reference of the information contained on the websites and information appearing on those websites, including ir.dominos.com , stewardship.dominos.com and dominos.com , should not be considered a part of this document. 14
Franchise Agreements We enter into franchise agreements with U.S. franchisees under which the franchisee is generally granted the right to operate a store in a particular location for a term of ten years, with an ability to renew for an additional term of ten years. We had a franchise agreement renewal rate of approximately 99% in 2023.
Franchise Agreements We enter into franchise agreements with U.S. franchisees under which the franchisee is generally granted the right to operate a store in a particular location for a term of ten years, with an ability to renew for an additional term of ten years. We had a franchise agreement renewal rate of approximately 99% in 2024.
Domino’s offers a comprehensive benefits package to eligible team members, including several benefits designed to promote an inclusive workplace like paid parental leaves, adoption support, discounted childcare tuition, and health plans that are available to dependents, spouses and domestic partners and include fertility and gender transition support.
Domino’s offers a comprehensive benefits package to eligible team members, including several benefits designed to promote an inclusive workplace like paid parental leaves, adoption support, discounted childcare tuition, and health plans that are available to dependents, spouses and domestic partners and include fertility support.
Internationally, our franchise stores are subject to national and local laws and regulations that are often similar to those affecting our U.S. stores, including laws and regulations concerning franchises, advertising, labor, health, sanitation and safety. Our international stores are also often subject to tariffs and regulations on imported commodities and equipment, and laws regulating foreign investment.
Internationally, our franchise stores are subject to national and local laws and regulations that are often similar to those affecting our U.S. stores, including laws and regulations concerning franchises, advertising, labor, health, sanitation and safety. Our international stores are also often subject to tariffs and regulations on imported commodities, equipment and other products, and laws regulating foreign investment.
In recent years, we have focused specifically on increasing our presence in our existing markets to provide better service to our customers, including condensing our delivery areas to provide better delivery service and adding locations that are closer to our carryout customers. We call this approach our fortressing strategy.
In recent years, we have focused specifically on increasing our presence in our existing markets to provide better service to our customers, including condensing our delivery areas to provide better delivery service and adding locations that are closer to our carryout customers. We call this approach our “fortressing” strategy.
Our Customers Our business is not dependent upon a single retail customer or small group of customers, including franchisees. No customer accounted for more than 10% of our total consolidated revenues in 2023, 2022 or 2021.
Our Customers Our business is not dependent upon a single retail customer or small group of customers, including franchisees. No customer accounted for more than 10% of our total consolidated revenues in 2024, 2023 or 2022.
Founded in 1986, the mission of the Partners Foundation is “Team Members Helping Team Members.” Primarily funded by team member and franchise contributions, the Partners Foundation is a separate, not-for-profit organization that has disbursed over $12.3 million over the past five years.
Founded in 1986, the mission of the Partners Foundation is “Team Members Helping Team Members.” Primarily funded by team member and franchise contributions, the Partners Foundation is a separate, not-for-profit organization that has disbursed nearly $14 million over the past five years.
We believe that demand for pizza delivery and pizza carryout is large and growing throughout the world, driven by international consumers’ increasing emphasis on convenience, and is supported by our proven success of 40 years of conducting business abroad. Our Competition The global pizza delivery and carryout segments, as well as the broader QSR sector, are highly competitive.
We believe that demand for pizza delivery and pizza carryout is large and growing globally, driven by international consumers’ increasing emphasis on convenience, and is supported by our proven success of more than 40 years of conducting business abroad. Our Competition The global pizza delivery and carryout segments, as well as the broader QSR sector, are highly competitive.
During 2023, there were no material environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2024.
During 2024, there were no material environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2025.
It is the second-largest category, by sales, within the $349.9 billion U.S. QSR sector. The U.S. QSR pizza category is primarily comprised of delivery, dine-in and carryout, with carryout and delivery comprising the two largest segments.
It is the second-largest category, by sales, within the $358.4 billion U.S. QSR sector. The U.S. QSR pizza category is primarily comprised of delivery, dine-in and carryout, with carryout and delivery comprising the two largest segments.
Our franchisees are independent business owners, so their employees are not our employees and therefore are not included in our employee count. None of our employees are covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
Our franchisees are independent business owners, so their employees are not our employees and therefore are not included in our employee count. As of December 29, 2024, none of our employees were covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
Company-owned stores and U.S. franchise operations (our U.S. stores segment), approximately 3,200 employees supporting our U.S. and Canadian supply chain operations (our supply chain segment), approximately 100 employees supporting our international franchise operations (our international franchise segment) and approximately 1,000 corporate employees. Approximately 4,700 of our employees are part-time and approximately 6,500 are full-time equivalent.
Company-owned stores and U.S. franchise operations (our U.S. stores segment), approximately 3,100 employees supporting our U.S. and Canadian supply chain operations (our supply chain segment), approximately 100 employees supporting our international franchise operations (our international franchise segment) and approximately 1,000 corporate employees. Approximately 4,300 of our employees are part-time and approximately 6,400 are full-time equivalent.
In 2023, we introduced the concept of the Domino’s Operating System (“DOM OS”) which is the combination of tools, processes and technologies that work together to optimize and orchestrate operations at our stores, including the flow of orders. The foundation of DOM OS is our proprietary point-of-sale system called Domino’s PULSE ™ .
The Domino’s Operating System (“DOM OS”) is the combination of tools, processes and technologies that work together to optimize and orchestrate operations at our stores, including the flow of orders. The foundation of DOM OS is our proprietary point-of-sale system called Domino’s PULSE ™ .
In addition, our stores, including those in our Pizza Theater image, are generally smaller and less expensive to build, furnish and maintain as compared to many other restaurant concepts, and they create a positive experience for our carryout customers.
In addition, our stores are generally smaller and less expensive to build, furnish and maintain as compared to many other restaurant concepts, and they create a positive experience for our carryout customers.
We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of December 31, 2023.
We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of December 29, 2024.
Item 1. Business. Overview Domino’s is the largest pizza company in the world with more than 20,500 locations in over 90 markets around the world as of December 31, 2023, and operates two distinct service models within its stores, with a significant business in both delivery and carryout.
Item 1. Business. Overview Domino’s is the largest pizza company in the world with more than 21,300 locations in over 90 markets around the world as of December 29, 2024, and operates two distinct service models within its stores, with a significant business in both delivery and carryout.
We believe that Domino’s appeals to potential international franchisees because of our recognized brand name and technological leadership, the moderate capital expenditures required to open and operate the stores and the system’s desirable store-level profitability.
Currently, the vast majority of our international stores operate under master franchise agreements. We believe that Domino’s appeals to potential international franchisees because of our recognized brand name and technological leadership, the moderate capital expenditures required to open and operate the stores and the system’s desirable store-level profitability.
Contributions by our U.S. franchisees to DNAF are primarily used to purchase media for advertising, and also to support market research, field communications, public relations, commercial production, talent payments and other activities to promote the Domino’s brand. In addition to the national and market-level advertising contributions, U.S. stores generally spend additional funds on local store marketing activities.
(“DNAF”), the Company’s consolidated not-for-profit advertising subsidiary, are primarily used to purchase media for advertising, and also to support market research, field communications, public relations, commercial production, talent payments and other activities to promote the Domino’s brand. In addition to the national and market-level advertising contributions, U.S. stores generally spend additional funds on local store marketing activities.
Under the current standard franchise agreement, we assign an exclusive area of primary responsibility to each franchised store. Each franchisee is generally required to pay a 5.5% royalty fee on sales, as well as certain technology fees. In certain instances, we will collect lower rates based on certain incentives.
Under the current standard franchise agreement, we assign an exclusive area of primary responsibility to each franchised store. Each franchisee is generally required to pay a 5.5% royalty fee on sales, as well as certain technology fees.
Through a variety of internal and consumer-based activities, including a national consumer fundraising campaign called St. Jude Thanks and Giving ® , the Domino’s system has contributed approximately $124.7 million to St. Jude since our partnership began in 2004, including raising approximately $15.5 million in 2023.
Through a variety of internal and consumer-based activities, including a national consumer fundraising campaign called St. Jude Thanks and Giving ® , the Domino’s system has contributed approximately $143 million to St. Jude since our partnership began in 2004, including raising approximately $18 million in 2024.
Enhanced by Best-in-Class Franchisees: Our franchisees play a vital role in driving results and excitement across the more than 90 markets in which we operate. 4 Our Industry The U.S. QSR pizza category is large and fragmented. From 2018 through 2023, the U.S. QSR pizza category has grown from $37.5 billion to $41.3 billion.
Enhanced by Best-in-Class Franchisees: Our franchisees play a vital role in driving results and excitement across the more than 90 markets in which we operate. 4 Our Industry The U.S. QSR pizza category is large and fragmented. From 2019 through 2024, the U.S. QSR pizza category has grown from $37.6 billion to $42.1 billion.
This contract, renegotiated in December 2023, provides for Coca-Cola to continue to be our exclusive beverage supplier and expires on December 31, 2030 or at such time as a minimum number of cases of Coca-Cola products are purchased by Domino’s, whichever occurs later. We believe alternative third-party suppliers are available for all of these referenced products.
This contract, renegotiated in December 2023, provides for Coca-Cola to continue to be our exclusive beverage supplier and expires on December 31, 2030 or at such time as a minimum number of cases of Coca-Cola products are purchased by Domino’s, whichever occurs later.
Labor costs are largely a function of the minimum wage for a majority of our store personnel and certain supply chain personnel. A significant number of both our and our franchisees’ food service personnel are paid at rates related to the applicable minimum wage, and past increases in the minimum wage have increased labor costs, as would future increases.
A significant number of both our and our franchisees’ food service personnel are paid at rates related to the applicable minimum wage, and past increases in the minimum wage have increased labor costs, as would future increases.
The four industry leaders, including Domino’s, account for approximately 60% of U.S. pizza delivery, based on reported consumer spending, with the remaining dollars going to regional chains and independent or local establishments. From 2018 to 2023, the carryout segment grew from $16.9 billion to $20.2 billion.
The four industry leaders, including Domino’s, account for approximately 60% of U.S. pizza delivery, based on reported consumer spending, with the remaining dollars going to regional chains and independent or local establishments. From 2019 to 2024, the carryout segment grew from $17.3 billion to $20.5 billion.
In the U.S., we compete in the delivery and carryout segments of the pizza industry, and we are the dollar market share leader for delivery and carryout among pizza QSRs. Delivery segment dollars of $16.5 billion in 2023 (up from $14.0 billion in 2018) account for approximately 40% of total U.S. consumer spend at pizza QSRs.
In the U.S., we compete in the delivery and carryout segments of the pizza industry, and we are the dollar market share leader for delivery and carryout among pizza QSRs. Delivery segment dollars of $16.9 billion in 2024 (up from $13.9 billion in 2019) account for approximately 40% of total U.S. consumer spend at pizza QSRs.
While we may incur additional costs if we are required to replace any of our supply partners, we do not believe such additional costs would have a material adverse effect on our business. We continually evaluate each supply category to determine the optimal sourcing strategy.
We believe alternative third-party suppliers are available for all of these referenced products. While we may incur additional costs if we are required to replace any of our supply partners, we do not believe such additional costs would have a material adverse effect on our business. We continually evaluate each supply category to determine the optimal sourcing strategy.
The following table shows our store count as of December 31, 2023 in our ten largest international markets, which accounted for approximately 64% of our international stores as of that date.
The following table shows our store count as of December 29, 2024 in our ten largest international markets, which accounted for approximately 65% of our international stores as of that date.
Additionally, 22 of our U.S. franchisees operated more than 50 stores (including our largest U.S. franchisee who operated 143 stores) and 209 of our U.S. franchisees each operated one store as of December 31, 2023. We apply rigorous standards to prospective U.S. franchisees.
Additionally, 22 of our U.S. franchisees operated more than 50 stores (including our largest U.S. franchisee who operated 158 stores) and 223 of our U.S. franchisees each operated one store as of December 29, 2024. We apply rigorous standards to prospective U.S. franchisees.
Many of these stores offer casual seating and enable customers to watch the preparation of their orders, but do not offer a full-service dine-in experience. As a result, our stores generally do not require expensive restaurant facilities and staffing. 5 Our Business Segments We operate, and report, three business segments: U.S. stores, international franchise and supply chain. U.S.
Many of these stores offer casual seating and enable customers to watch the preparation of their orders, but in the U.S. and many international markets, do not offer a full-service dine-in experience. As a result, our stores generally do not require expensive restaurant facilities and staffing.
The master franchisee is also required to pay a continuing royalty fee as a percentage of sales, which varies among international markets and may also differ based on certain incentives and concessions, and averaged approximately 3.0% in 2023. We also have agreements with certain of our international master franchisees with respect to certain technology fees.
The master franchisee is also required to pay a continuing royalty fee as a percentage of sales, which varies among international markets and may also differ based on certain incentives and concessions and averaged approximately 3.0% in 2024.
As of December 31, 2023, our largest franchisee based on store count, Domino’s Pizza Enterprises (DMP: ASX), operated 3,840 stores in 12 international markets, which accounted for approximately 28% of our international store count and 19% of our global store count. Revenues from this master franchisee accounted for 1.7% of our consolidated revenues in 2023.
As of December 29, 2024, our largest franchisee based on store count, Domino’s Pizza Enterprises (DMP: ASX), operated 3,741 stores in 12 international markets, which accounted for approximately 26% of our international store count and 18% of our global store count. Revenues from this master franchisee accounted for 1.5% of our consolidated revenues in 2024.
Under our September 2017 agreement which expires in September 2024, our U.S. supplier agreed to provide the Company with an uninterrupted supply of cheese and the Company agreed to purchase all of its U.S. pizza cheese from this supplier.
Under our December 2024 agreement which expires in December 2029, our U.S. supplier agreed to provide the Company with an uninterrupted supply of cheese and the Company agreed to purchase substantially all of its U.S. pizza cheese from this supplier during the five-year term of the contract.
Our centers produce fresh dough and purchase, receive, store and deliver quality food and other complementary items to substantially all of our U.S. stores and most of our Canadian franchised stores.
Our centers produce fresh dough and purchase, receive, store and deliver quality food and other complementary items to substantially all of our U.S. stores and most of our Canadian franchised stores. We regularly supply over 7,600 stores with various food and other products.
Third-Party Suppliers A significant amount of our annual food spend is with suppliers with whom we maintain long-standing partnerships. Our supply partners are required to meet strict quality standards to ensure food safety. We review and evaluate these partners’ quality assurance programs through (among other actions) on-site visits, third-party audits and product evaluations designed to ensure compliance with our standards.
Our supply partners are required to meet strict quality standards to ensure food safety. We review and evaluate these partners’ quality assurance programs through (among other actions) on-site visits, third-party audits and product evaluations designed to ensure compliance with our standards.
We have the contractual right, subject to state law, to terminate a franchise agreement for a variety of reasons, including, but not limited to, a franchisee’s failure to adhere to the Company’s franchise agreement, failure to make required payments or failure to adhere to specified Company policies and standards. 6 International Franchise During 2023, our international franchise segment accounted for $310.1 million, or 7%, of our consolidated revenues.
We have the contractual right, subject to state law, to terminate a franchise agreement for a variety of reasons, including, but not limited to, a franchisee’s failure to adhere to the Company’s franchise agreement, failure to make required payments or failure to adhere to specified Company policies and standards.
We are the recognized world leader in pizza delivery, and, in the U.S., we are also the market share leader in carryout. We believe consumers associate our brand with the timely delivery of quality, affordable food and with technological innovation.
We are the recognized world leader in pizza delivery, and, in the U.S., we are also the market share leader in carryout. We believe consumers associate our brand with quality, affordable food and with technological innovations and extensive advertising through innovative marketing promotions.
Our more than 60 years of innovation have resulted in numerous new product developments. Product innovation is also present in our global markets, where our master franchisees have the ability to recommend products to suit their local market tastes.
Product innovation is also present in our global markets, where our master franchisees have the ability to recommend products to suit their local market tastes.
Market Number of stores India (JUBLFOOD: NS) 1,916 United Kingdom (DOM: L) 1,254 Japan (DMP: ASX) 1,015 Mexico (ALSEA: MX) 894 China (1405: HK) 771 Australia (DMP: ASX) 747 Turkey (DPEU: L) 689 Canada 605 France (DMP: ASX) 489 South Korea 480 International Franchisee Profile The vast majority of our markets outside of the U.S. are operated by master franchisees with franchise and distribution rights for entire regions or countries.
Market Number of stores India (JUBLFOOD: NS) 2,136 United Kingdom (DOM: L) 1,299 China (1405: HK) 1,011 Mexico (ALSEA: MX) 961 Japan (DMP: ASX) 943 Australia (DMP: ASX) 742 Turkey (JUBLFOOD: NS) 728 Canada 620 South Korea 484 France (DMP: ASX) 462 International Franchisee Profile The vast majority of our markets outside of the U.S. are operated by master franchisees with franchise and distribution rights for entire regions or countries.
When rewards members accumulate a certain amount of points, Domino’s Rewards offers loyalty members the opportunity to redeem points for a wide selection of our menu items.
Our simple to understand and easy to use Domino’s Rewards ® loyalty program provides members reward points for qualifying orders. When rewards members accumulate a certain amount of points, Domino’s Rewards offers loyalty members the opportunity to redeem points for a wide selection of our menu items.
Our share position and scale allow us to leverage our purchasing power, supply chain strength and marketing investments. We believe our scale and market coverage allow us to effectively serve our customers’ demands for convenience and timely delivery.
Our share position and scale allow us to leverage our purchasing power, supply chain strength and marketing investments. We believe our scale and market coverage allow us to effectively serve our customers’ demands for convenience and timely delivery. Outside the U.S., we have significant market share positions in many of the markets in which we compete.
Our stores in the United States generally contribute 6.0% of their sales to fund national marketing and advertising campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). Beginning on March 27, 2023, Domino's National Advertising Fund Inc.
In certain instances, we will collect lower rates based on certain incentives. 6 Our stores in the U.S. generally contribute 6.0% of their sales to fund national marketing and advertising campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). Contributions by our U.S. franchisees to the Domino’s National Advertising Fund Inc.
Our typical store also offers side items including bread products, wings, boneless chicken, pastas, oven-baked sandwiches, dips, soft drink products and desserts. During 2023, we launched our newest menu items in the U.S., Domino’s Loaded Tots and Pepperoni Stuffed Cheesy Bread.
Our typical store also offers side items including bread products, wings, boneless chicken, pastas, oven-baked sandwiches, dips, soft drink products and desserts. During 2024, we launched our newest menu items in the U.S., 5-Cheese Mac & Cheese and New York Style Pizza.
We have developed this model over our many years of operation, and it is anchored by strong store-level economics, which provide an entrepreneurial incentive for our franchisees and historically has generated strong demand for new stores. Over the past ten years, average U.S. store profitability in the Domino’s system has increased meaningfully, resulting in higher profitability for our franchise owners.
We have developed this model over our many years of operation, and it is anchored by strong store-level economics, which provide an entrepreneurial incentive for our franchisees and historically has generated strong demand for new stores.
These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and equipment to those sub-franchisees, as well as by running pizza stores.
In our international markets, we generally grant geographical rights to the Domino’s Pizza ® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and other products to those sub-franchisees, as well as by running pizza stores.
Supply Chain During 2023, our supply chain segment accounted for $2.72 billion, or 61%, of our consolidated revenues. In the U.S., we operate 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities, one vegetable processing center and one center providing equipment and supplies to our U.S. and certain international stores.
We also have agreements with certain of our international master franchisees with respect to certain technology fees. 7 Supply Chain During 2024, our supply chain segment accounted for $2.85 billion, or 60%, of our consolidated revenues. In the U.S., we operate 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities and one vegetable processing center.
We also committed to a 10-year, $100 million campaign to raise funds to build Domino’s Village at St. Jude, a housing complex that opened in 2023 and accommodates up to 140 patient families during long-term stays at the hospital. We also support the Domino’s Pizza Partners Foundation (the “Partners Foundation”).
Included in that effort was Domino’s 10-year, $100 million commitment to raise funds to build the Domino’s Village at St. Jude, a housing complex that accommodates up to 140 patient families during long-term stays at the hospital, which opened in 2023. During 2024, we announced a campaign to raise a cumulative $300 million for St.
Store Image and Operations We operate two distinct service models within our stores with a significant business in both delivery and carryout. In the U.S., delivery and carryout generally contribute evenly to our overall system transaction count. The majority of our U.S. and international stores are constructed in the carryout-friendly Pizza Theater design.
In the U.S., delivery and carryout generally contribute evenly to our overall system transaction count. The majority of our U.S. and international stores are constructed in the carryout-friendly Pizza Theater design.
Company-owned stores, in our supply chain centers or in our corporate offices. We enable this by benchmarking and analyzing pay and benefits both externally and internally. In recent years, we have made investments in frontline team member wage rates in our U.S. Company-owned stores and supply chain centers. We are committed to providing pay equity for all employees.
Company-owned stores, in our supply chain centers or in our corporate offices. We enable this by benchmarking and analyzing pay and benefits and we are committed to pay equity for all employees.
We have established significant commitments on greenhouse gas emissions: we set and submitted our Science Based Targets for validation in 2023 and we have established a commitment to achieve those Science Based Targets by 2032 and achieve net zero carbon emissions by 2050.
We have established significant commitments on greenhouse gas emissions and in October 2024 our near-term and net zero targets were approved by the Science-Based Targets initiative (SBTi). We have established a commitment to achieve our near-term targets by 2032 and achieve net zero carbon emissions by 2050.
For the same period, we are also leading in carryout with approximately 19% share of carryout/drive-thru QSR pizza consumer spending, up from approximately 18% share for the year ended December 2022. (Source: Circana, CREST). With 6,854 stores located in the U.S., our store delivery areas cover a majority of U.S. households.
Within the pizza QSR segment, we are number one in delivery with approximately 32% share of delivery dollars, and we are also leading in carryout with approximately 19% share of carryout/drive-thru QSR pizza consumer spending (Source: Circana, CREST). With 7,014 stores located in the U.S., our store delivery areas cover a majority of U.S. households.
We remain the number one pizza delivery company in the U.S. with approximately 30% share of delivery dollars at pizza QSRs, based on consumer spending data for the year ending December 2023, down from approximately 31% share for the year ended December 2022.
We are the number one pizza company in the U.S. with approximately 23% market share at pizza QSRs, based on consumer spending data for the year ending December 2024.
Our Domino’s PULSE system is designed to drive operating efficiencies for our franchisees and our corporate management and assist franchisees in independently managing their business.
Our Domino’s PULSE system is designed to drive operating efficiencies for our franchisees and our corporate management and assist franchisees in independently managing their business. We believe our integrated technology solutions throughout our system provide us with competitive advantages over other concepts.
Human Capital As of December 31, 2023, we had approximately 11,200 employees, including approximately 6,900 employees supporting our U.S.
Human Capital As of December 29, 2024, we had approximately 10,700 employees, including approximately 6,500 employees supporting our U.S.
Our supply chain facilities are also licensed and subject to similar regulations by federal, state and local health and fire codes. 12 We are also subject to the Fair Labor Standards Act and various other federal and state laws governing such matters as minimum wage requirements, overtime and other working conditions and citizenship requirements.
We are also subject to the Fair Labor Standards Act and various other federal and state laws governing such matters as minimum wage requirements, overtime and other working conditions and citizenship requirements. Labor costs are largely a function of the minimum wage for a majority of our store personnel and certain supply chain personnel.
We believe our store financial returns have led to a strong, well-diversified franchise system. This established franchise system has produced strong cash flows and earnings for us, enabling us to invest in the Domino’s brand, stores, technology and supply chain centers, pay dividends, repurchase and retire shares of our common stock and service our debt obligations.
This established franchise system has produced strong cash flows and earnings for us, enabling us to invest in the Domino’s brand, stores, technology and supply chain centers, pay dividends, repurchase and retire shares of our common stock and service our debt obligations. 9 Technological Innovation Technological innovation is vital to our brand and our long-term success, and technology is critical to competing in the global pizza and broader QSR industries.
Directly operating Domino’s stores contributes significantly to our ability to act as a credible franchisor. We also use our Company-owned stores as test sites for technological innovation and promotions, as well as operational improvements. Additionally, we also use them for training new store managers and operations team members, as well as developing prospective franchisees.
We also use our Company-owned stores as test sites for technological innovation and promotions, as well as operational improvements. Additionally, we also use them for training new store managers and operations team members, as well as developing prospective franchisees. While we are primarily a franchised business, we continuously evaluate our mix of U.S. Company-owned and franchised stores.
Outside the U.S., we have significant market share positions in many of the markets in which we compete. 8 Strong and Proven Business Model Our business model generates U.S. and international franchise royalties and fees, supply chain revenues and retail sales at Company-owned stores.
Strong and Proven Business Model Our business model generates U.S. and international franchise royalties and fees, supply chain revenues and retail sales at Company-owned stores.
Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new store in a particular area or cause an existing store to cease operations.
Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new store in a particular area or cause an existing store to cease operations. Our supply chain facilities are also licensed and subject to similar regulations by federal, state and local health and fire codes.
Our supply chain segment offers profit-sharing arrangements to U.S. and Canadian franchisees who purchase all of their food for their stores from our centers. These profit-sharing arrangements generally offer participating franchisees and Company-owned stores with 50% of the pre-tax profit from our supply chain center operations. We believe these arrangements strengthen our ties to and provide aligned benefits with franchisees.
These profit-sharing arrangements generally offer participating franchisees and Company-owned stores with 50% of the pre-tax profit from our supply chain center operations. We believe these arrangements strengthen our ties to and provide aligned benefits with franchisees. Third-Party Suppliers A significant amount of our annual food spend is with suppliers with whom we maintain long-standing partnerships.
We will continue to showcase the breadth of our menu, while highlighting the deliciousness of our food through our innovative marketing promotions. Operational Excellence: We are relentless in our focus on convenience, consistency and efficiency for both our and our franchisees’ customers. Renowned Value: We are committed to continuing to offer competitive pricing and personalized value for our customers.
Operational Excellence: We are relentless in our focus on convenience, consistency and efficiency for our customers. Renowned Value: We are committed to continuing to offer competitive pricing and personalized value for our customers that is innovative and memorable.
It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, with moderate capital expenditures. We have historically returned cash to shareholders through dividend payments and share repurchases. At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders.
It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, through an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores.
We believe utilizing Domino’s PULSE with our integrated technology solutions throughout our system provides us with competitive advantages over other concepts. 9 Product Innovation We believe our core hand-tossed pizza recipe has contributed to long-term growth in customer reorder rates, consumer traffic and increased sales. This recipe is now in use in other markets around the world.
Product Innovation We believe our core hand-tossed pizza recipe has contributed to long-term growth in customer reorder rates, consumer traffic and increased sales in the U.S. This recipe is now in use in other markets around the world. Our more than 60 years of innovation have resulted in numerous new product developments.
Royalties are ongoing percent-of-sales fees for use of the Domino’s ® brand marks. We also generate revenues and earnings by selling food, equipment and supplies to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the United States.
We also generate revenues and earnings by selling food and other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers.
We have the right to terminate these arrangements for quality failures and for certain uncured breaches. We have entered into a multi-year agreement with Coca-Cola ® .
The majority of our meat toppings in the U.S. come from a single supplier under a contract that expires at the end of December 2025. We have the right to terminate these arrangements for quality failures and for certain uncured breaches. We have entered into a multi-year agreement with Coca-Cola ® .
We regularly supply over 7,400 stores with various food and supplies. 7 We believe our franchisees voluntarily choose to obtain food, supplies and equipment from us because we offer the most efficient, convenient and cost-effective alternative, while also offering both quality and consistency.
We believe our franchisees voluntarily choose to obtain food and other products from us because we offer the most efficient, convenient and cost-effective alternative, while also offering both quality and consistency. Our supply chain segment offers profit-sharing arrangements to U.S. and Canadian franchisees who purchase all of their food for their stores from our centers.
As of December 31, 2023, the average U.S. franchisee owned and operated approximately nine stores and had been in our franchise system for over 17 years.
Our franchise formula enables franchisees to benefit from our brand recognition with a relatively low initial capital investment. As of December 29, 2024, the average U.S. franchisee owned and operated approximately nine stores and had been in our franchise system for over 15 years.
Our franchise system, in turn, has produced strong and consistent earnings for us through royalty and fee payments and through supply chain gross margins. We developed a cost-efficient store model, characterized by a delivery and carryout-oriented store design, with moderate capital requirements and a menu of quality, value-oriented and affordable items.
In the U.S., we have developed a cost-efficient store model, characterized by a delivery and carryout-oriented store design, with moderate capital requirements and a menu of quality, value-oriented and affordable items.
In the U.S., Domino’s generated more than 85% of U.S. retail sales in 2023 from digital channels, and our emphasis on technological innovation has allowed us to develop many innovative ordering platforms, providing seven unique ways to order Domino’s. During 2023, the Company entered into a new global agreement with Uber Technologies, Inc.
In the U.S., Domino’s generated more than 85% of U.S. retail sales in 2024 from digital channels, and our emphasis on technological innovation has allowed us to develop many innovative ordering platforms. In 2024, the Company completed the redesign of its e-commerce platforms and intends to roll them out across the U.S. system in 2025.
Our international franchisees employ our basic standard operating model and adapt it to satisfy the local eating habits and consumer preferences of various regions outside the U.S. Currently, the vast majority of our international stores operate under master franchise agreements.
The principal sources of revenues from those operations are royalty payments generated by retail sales from franchised stores, as well as certain technology fees. Our international franchisees employ our basic standard operating model and adapt it to satisfy the local eating habits and consumer preferences of various regions outside the U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe and our franchisees are subject to the Fair Labor Standards Act of 1938, as amended (the “FLSA”), which, along with the Family and Medical Leave Act, governs such matters as minimum wage and overtime requirements and other working conditions and various family leave mandates, as well as a variety of other laws enacted, or rules and regulations promulgated, by federal, state and local governmental authorities that govern these and other employment matters.
Biggest changeGiven that misclassification claims have been successful against or applied to a franchisor under AB-5 and may be successful under similar state laws, a franchisor could be liable to its franchisees (and potentially their employees) based the rights and remedies available to employees under such laws and, thereafter, have to treat its franchisees (and their employees) as the franchisor’s employees under these laws. 27 We and our franchisees are subject to the Fair Labor Standards Act of 1938, as amended (the “FLSA”), which, along with the Family and Medical Leave Act, governs such matters as minimum wage and overtime requirements and other working conditions and various family leave mandates, as well as a variety of other laws enacted, or rules and regulations promulgated, by federal, state and local governmental authorities that govern these and other employment matters.
We depend on the performance of suppliers, aggregators and other third parties in our business operations. Third-party business processes we utilize include information technology, gift card authorization and processing, other payment processing, benefits, and other accounting and business services.
We depend on the performance of suppliers, aggregators and other third parties in our business operations. Third-party business processes we utilize include information technology, gift card authorization and processing, payment processing, benefits, and other accounting and business services.
These covenants limit the ability of certain of our subsidiaries to, among other things: • sell assets; • alter the business we conduct and engage in mergers, acquisitions and other business combinations; • declare dividends or redeem or repurchase capital stock; • incur, assume or permit to exist additional indebtedness or guarantees and make loans and investments; • incur liens; and • enter into transactions with affiliates.
These covenants limit the ability of certain of our subsidiaries to, among other things: • sell assets and incur liens; • alter the business we conduct and engage in mergers, acquisitions and other business combinations; • incur, assume or permit to exist additional indebtedness or guarantees and make loans and investments; • declare dividends or redeem or repurchase capital stock; and • enter into transactions with affiliates.
These factors, many over which neither we nor our master franchisees have control, may include both internal and external factors including: • recessionary or expansive trends in international markets and global markets and economic downturns; • changing labor conditions and difficulties in staffing and managing our foreign operations; • increases in the taxes we pay and other changes in applicable tax laws both in the U.S. and globally; • tariffs and trade barriers or foreign policy changes; • legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws; 18 • changes in inflation rates or foreign exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • ongoing and new relationships between our master franchisees and order and delivery aggregators our master franchisees may partner with internationally and the success of those aggregators and relationships; • difficulty in collecting our royalties and longer payment cycles; • expropriation of private enterprises; • the inherent risk of doing business in China resulting from our equity investment in DPC Dash; • national and international conflicts, sanctions, acts of war or terrorist acts; • increases in anti-American sentiment and the identification of Domino’s as an American brand, including those seen as a result of the geopolitical tensions in the Middle East and further escalations and the impact thereof; and • political and economic instability and uncertainty around the world and related geopolitical risk.
These factors, many over which neither we nor our master franchisees have control, may include both internal and external factors including: • recessionary or expansive trends in international markets and global markets and economic downturns; • changing labor conditions and difficulties in staffing and managing our foreign operations; • increases in the taxes we pay and other changes in applicable tax laws both in the U.S. and globally; • tariffs and trade barriers or foreign policy changes; • legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws; • changes in inflation rates or foreign exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • ongoing and new relationships between our master franchisees and order and delivery aggregators our master franchisees may partner with internationally and the success of those aggregators and relationships; • difficulty in collecting our royalties and longer payment cycles; • expropriation of private enterprises; • the inherent risk of doing business in China resulting from our equity investment in DPC Dash; • national and international conflicts, sanctions, acts of war or terrorist acts; • increases in anti-American sentiment and the identification of Domino’s as an American brand, including those seen as a result of the geopolitical tensions in the Middle East and further escalations and the impact thereof; and • political and economic instability and uncertainty around the world and related geopolitical risk.
The increased labor costs at franchised restaurants in California could impact their profitability and the desire to open new stores or renew the franchise agreements for existing stores and result in price increases, which could impact demand for our products or lead to operational changes. Further, this bill could prompt similar legislation in other states or localities.
The increased labor costs at franchised restaurants in California could impact their profitability and the desire to open new stores or renew the franchise agreements for existing stores and result in additional price increases, which could impact demand for our products or lead to operational changes. Further, this bill could prompt similar legislation in other states or localities.
Further, we may be subject to employee, franchisee and other claims in the future based on, among other things, discrimination, harassment, working and safety conditions, wrongful termination and wage, expense reimbursement, rest break and meal break issues, including claims relating to minimum wage and overtime compensation.
Further, we may be subject to employee, franchisee and other claims in the future based on claims of, among other things, discrimination, harassment, working and safety conditions, wrongful termination and wage, expense reimbursement, rest break and meal break issues, including claims relating to minimum wage and overtime compensation.
We compete within the food service market and the QSR market not only for customers, but also for management and hourly employees, including store team members, drivers and qualified franchisees, as well as suitable real estate sites.
We compete within the food service market and the QSR market not only for customers, but also for management and employees, including store team members, drivers and qualified franchisees, as well as suitable real estate sites.
We are generally responsible for up to $2.0 million per occurrence under these retention programs for workers’ compensation and general liability, depending on policy year and line of coverage.
We are generally responsible for up to $1.0 million per occurrence under these retention programs for workers’ compensation and up to $2.0 million per occurrence under these retention programs for general liability, depending on policy year and line of coverage.
The overall food service market, food delivery market and the QSR market are intensely competitive with respect to food quality, price, service, image, convenience and concept, and are often affected by changes in: • consumer tastes; • international, national, regional or local economic conditions; • marketing, advertising and pricing, including both price increases and discounting; • disposable purchasing power and demographic trends; and • currency fluctuations and geopolitical considerations related to international operations.
The overall food service market, food delivery market and the QSR market are intensely competitive with respect to food quality, price, service, image, convenience and concept, and are often affected by changes in: • consumer tastes and perceptions; • international, national, regional or local economic conditions; • marketing, advertising and pricing, including both price increases and discounting, and publicity; • disposable purchasing power and demographic trends; and • currency fluctuations and geopolitical considerations related to international operations.
In addition, more than 85% of our U.S. retail sales in 2023 were derived from digital channels, primarily through our online ordering website and mobile applications, where customers enter personally identifiable information that we retain. Our use and retention of personally identifiable information is regulated by foreign, federal and state laws and regulations, as well as by certain third-party agreements.
In addition, more than 85% of our U.S. retail sales in 2024 were derived from digital channels, primarily through our online ordering website and mobile applications, where customers enter personally identifiable information that we retain. Our use and retention of personally identifiable information is regulated by foreign, federal and state laws and regulations, as well as by certain third-party agreements.
This rule may reduce a franchisor’s risk of liability that currently exists under the joint employer standard now in effect under the FLSA (though ultimately, the facts specific to the franchisor-franchisee model at issue would be considered when determining liability). On July 29, 2021, the current administration’s Department of Labor issued a final rule rescinding the 2020 rule.
This rule may reduce a franchisor’s risk of liability that currently exists under the joint employer standard now in effect under the FLSA (though ultimately, the facts specific to the franchisor-franchisee model at issue would be considered when determining liability). On July 29, 2021, the Department of Labor issued a final rule rescinding the 2020 rule.
Additionally, the effects of climate change could increase the frequency and duration of weather impacts on our operations and could adversely affect our operating results. 16 The food service market is affected by consumer preferences and perceptions. Changes in these preferences and perceptions may reduce the demand for our products, which would reduce sales and harm our business.
Additionally, the effects of climate change could increase the frequency and duration of weather impacts on our operations and could adversely affect our operating results. 17 The food service market is affected by consumer preferences and perceptions. Changes in these preferences and perceptions may reduce the demand for our products, which would reduce sales and harm our business.
The preferences of customers also may change as a result of advances in technology or alternative delivery methods or channels as well as geopolitical considerations. If we are not able to respond to these changes, or our competitors respond to these changes more effectively than us, our business and operating results could be adversely affected.
The preferences of customers also may change as a result of advances in technology or alternative delivery methods or channels as well as geopolitical considerations. If we are not able to respond to these changes, or our competitors respond to these changes more effectively than us, our operating results could be adversely affected.
If such an event was to occur, we may not be able to respond to it quickly and effectively. The potential for acts of terrorism affecting our global food supply also exists and, if such an event occurs, could have a negative impact on us and could severely hurt sales and profits.
If such an event were to occur, we may not be able to respond to it quickly and effectively. The potential for acts of terrorism affecting our global food supply also exists and, if such an event occurs, could have a negative impact on us and could severely hurt sales and profits.
Reports, whether true or not, of product contamination, food-borne illnesses and injuries caused by food tampering have in the past severely injured the reputations of participants in the QSR market and could in the future as well. These events could occur both at the store and supply chain center levels.
Reports, whether true or not, of product contamination, food-borne illnesses and injuries caused by food tampering have in the past severely injured the reputations and operating results of participants in the QSR market and could in the future as well. These events could occur both at the store and supply chain center levels.
As privacy and information security laws and regulations change, we may incur additional costs to ensure that we remain in compliance with those laws and regulations, and our current and future planned uses of personal and other data may be adversely affected by future adopted privacy and information security laws, regulations and rulings.
As privacy and information security laws and regulations change, we may incur additional costs to ensure that we are in compliance with those laws and regulations, and our current and future planned uses of personal and other data may be adversely affected by future adopted privacy and information security laws, regulations and rulings.
Our earnings and business growth strategy depend on the success of our franchisees, and we may be harmed by actions taken by our franchisees, or employees of our franchisees, that are outside of our control. A significant portion of our earnings comes from royalties and fees generated by our franchise stores.
Our earnings and business growth strategy depend on the success of our franchisees, and we may be harmed by actions taken by our franchisees, or employees of our franchisees, which are outside of our control. A significant portion of our earnings comes from royalties and fees generated by our franchise stores.
In accordance with our debt agreements, the payment of principal on the outstanding senior notes may be suspended if the leverage ratio for the Company is less than or equal to 5.0x total debt, as defined, to adjusted EBITDA, as defined in the indenture governing our securitized debt, and no catch-up provisions are applicable.
In accordance with our debt agreements, the payment of principal on the outstanding senior notes may be suspended if the Holdco Leverage Ratio for the Company is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing our securitized debt, and no catch-up provisions are applicable.
If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower demand for our products, reduced margins, loss of management or hourly employees, reduced service levels, disruption in our supply chain, the inability to take advantage of new business opportunities and the loss of market share, all of which would have an adverse effect on our operating results and could cause our stock price to decline. 14 If we fail to successfully implement our growth strategy, which includes opening new stores and generating more sales, our ability to increase our revenues and operating profits could be adversely affected.
If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower demand for products, reduced margins, loss of management or employees, reduced service levels, disruption in our supply chain, the inability to take advantage of new business opportunities, store closures and the loss of market share, all of which would have an adverse effect on our operating results and could cause our stock price to decline. 15 If we fail to successfully implement our growth strategy, which includes opening new stores and generating more sales, our ability to increase our revenues and operating profits could be adversely affected.
We anticipate that fluctuations in operating results will continue in the future, and such fluctuations may result in significant fluctuations or a significant decline in our stock price. 28 Item 1B. Unres olved Staff Comments. None.
We anticipate that fluctuations in operating results will continue in the future, and such fluctuations may result in significant fluctuations or a significant decline in our stock price. 29 Item 1B. Unres olved Staff Comments. None.
Moreover, because we are primarily dependent on a single product, if consumer demand for pizza should decrease, our business would suffer more than if we had a more diversified menu, as many other food service businesses do, and the QSR pizza category may also not grow as quickly as other categories within the food service industry.
Moreover, because we are primarily dependent on a single product, if consumer demand for pizza should decrease, our business would suffer more than if we had a more diversified menu and the QSR pizza category may also not grow as quickly as other categories within the food service industry.
We are generally responsible for up to between $500,000 and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities, depending on policy year and line of coverage.
We are generally responsible for between $500,000 and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities, depending on policy year and line of coverage.
These risks include, but are not limited to: • those relating to the application of local, state, federal and foreign bankruptcy laws and other applicable laws governing creditors’ rights generally and the impact such laws could have on our ability to collect payments and fees under applicable franchise agreements; • those relating to franchisees that are operating entities, which generally are not limited-purpose entities, including business, credit, financial and other risks in addition to risks related to unions; • those relating to franchisee changes in control and succession in general and the ability to find acceptable successors who are able to perform a former franchisee’s obligations under applicable franchise agreements or successfully operate impacted stores in the event of a change of control or other succession event; • those relating to franchisee insurance, including the inadequacy of, or inability to obtain, insurance coverage, losses in excess of policy limits or payments not being made on a timely basis, extraordinary hazards not being subject to coverage (or only being subject to coverage at prohibitively high rates) or third parties seeking to recover losses from us to the extent those losses experienced by such third parties are either not covered by the franchisee’s insurance or exceed the policy limits of the franchisee’s insurance; • those relating to instances of termination of or default under a franchisee’s franchise agreement or the non-renewal thereof at the end of such agreement’s expiration date and the corresponding impact on the franchisee’s or our operations; • those relating to product liability exposure or noncompliance with labor and employment, health and safety regulations and the impact such events could have on a franchisee’s ability to make payments under applicable franchise agreements, on us if an aggrieved party seeks to recover their losses from us and on our brand’s reputation; • the imposition of injunctive relief, fines, damage awards or capital expenditures under laws or regulations that could adversely affect the ability of a franchisee to make payments under applicable franchise agreements; 22 • litigation involving franchisees, including litigation involving us or litigation involving a third-party directed at a franchisee, which could impede the ability of a defendant-franchisee to make its royalty payments and divert our resources regardless of whether the allegations in such litigation are valid or whether we are liable; and • those relating to the reliance of a franchised store business on its franchisees and the nature of franchisees in general, including the retention of franchisees (especially including our top-performing franchisees) in the future or our ability to attract, retain, and motivate sufficient numbers of franchisees of the same caliber in the future as well as our ability to maintain a positive and constructive relationship with our franchisees.
These risks include, but are not limited to: • those relating to the application of local, state, federal and foreign bankruptcy laws and other applicable laws governing creditors’ rights generally and the impact such laws could have on our ability to collect payments and fees under applicable franchise agreements; • those relating to franchisees that are operating entities, which generally are not limited-purpose entities, including business, operational, credit, financial and other risks in addition to risks related to unions; • those relating to franchisee changes in control and succession in general and the ability to find acceptable successors who are able to perform a former franchisee’s obligations under applicable franchise agreements or successfully operate impacted stores in the event of a change of control or other succession event; • those relating to franchisee insurance, including the inadequacy of, or inability to obtain, insurance coverage, losses in excess of policy limits or payments not being made on a timely basis, extraordinary hazards not being subject to coverage (or only being subject to coverage at prohibitively high rates) or third parties seeking to recover losses from us to the extent those losses experienced by such third parties are either not covered by the franchisee’s insurance or exceed the policy limits of the franchisee’s insurance; • those relating to instances of termination of or default under a franchisee’s franchise agreement or the non-renewal thereof at the end of such agreement’s expiration date and the corresponding impact on the franchisee’s or our operations; • those relating to product liability exposure or noncompliance with labor and employment, health and safety regulations and the impact such events could have on a franchisee’s ability to make payments under applicable franchise agreements, on us if an aggrieved party seeks to recover their losses from us and on our brand’s reputation; • the imposition of injunctive relief, fines, damage awards or capital expenditures under laws or regulations that could adversely affect the ability of a franchisee to make payments under applicable franchise agreements; • litigation involving franchisees, including litigation involving us or litigation involving a third-party directed at a franchisee, which could impede the ability of a defendant-franchisee to make its royalty payments and divert our resources regardless of whether the allegations in such litigation are valid or whether we are liable; and • those relating to the reliance of a franchised store business on its franchisees, both domestic and international, and the nature of franchisees in general, including the successful operations and retention of franchisees (especially including our top-performing franchisees) in the future or our ability to attract, retain, and motivate sufficient numbers of franchisees of the same caliber in the future as well as our ability to maintain a positive and constructive relationship with our franchisees. 23 Our current insurance coverage may not be adequate, insurance premiums for such coverage may increase and we may not be able to obtain insurance at acceptable rates, or at all.
Most ingredients used in our pizza, particularly cheese, are subject to significant price fluctuations as a result of seasonality, weather, demand and other factors. For example, we have experienced increased volatility in prices for some ingredients in recent years. Cheese is a significant cost to us, representing approximately 25% of the market basket purchased by our Company-owned stores.
Most ingredients used in our pizza, particularly cheese, are subject to significant price fluctuations as a result of seasonality, weather, demand and other factors and we have experienced increased volatility in prices for some ingredients in recent years. Cheese, in particular, is a significant cost to us, representing approximately 25% of the food basket purchased by our Company-owned stores.
We have in the past experienced disruptions within our supply chain resulting from, among other things, capacity, volume, systems, staffing, operational and COVID-19-related challenges and may experience such supply chain disruptions again in the future, which could materially and adversely affect our business and operational results.
We have in the past experienced disruptions within our supply chain resulting from, among other things, capacity, volume, systems, staffing and operational challenges and may experience such supply chain disruptions again in the future, which could materially and adversely affect our business and operational results.
Our success will also continue to depend on our ability to attract and retain qualified personnel to operate our stores, dough manufacturing and supply chain centers and international operations.
Our success will also continue to depend on our ability to attract and retain qualified personnel to operate our stores, dough manufacturing and supply chain centers, corporate offices and international operations.
Total insurance limits under these retention programs vary depending upon the period covered and range up to $110.0 million per occurrence for general liability and owned and non-owned automobile liabilities and up to the applicable statutory limits for workers’ compensation. These insurance policies may not be adequate to protect us from liabilities that we incur in our business.
Total insurance limits under these retention programs vary depending upon the period covered and range up to $112.5 million per occurrence for general liability and owned and non-owned automobile liabilities and up to the applicable statutory limits for workers’ compensation. These insurance policies may not be adequate to protect us from liabilities that we incur in our business.
Our failure to successfully execute these transactions could have an adverse effect on our operating results and could cause our stock price to decline. Another component of our growth strategy also involves our recent entry into the third-party order aggregator marketplace. This new avenue for sales may prove to be unsuccessful and sales may not meet our expectations.
Our failure to successfully execute these transactions could have an adverse effect on our operating results and could cause our stock price to decline. Another component of our growth strategy also involves our participation on the third-party order aggregator marketplace. This avenue for sales may prove to be unsuccessful and sales may not meet our expectations.
The rapid evolution and increased adoption of artificial intelligence technologies amplifies these concerns. 20 A significant portion of our retail sales depends on the continuing operation of our information technology and communications systems, including DOM OS, our online and mobile ordering platforms and our credit card processing systems.
The rapid evolution and increased adoption of AI technologies amplifies these concerns. A significant portion of our retail sales depends on the continuing operation of our information technology and communications systems, including DOM OS, our online and mobile ordering platforms and our credit card processing systems.
We may experience increased competition from existing or new companies in the delivery and carryout pizza categories, in addition to competition from order and delivery aggregators both in the pizza category and more broadly, that may create increasing pressures to grow our business in order to maintain our market share.
We have and may continue to experience increased competition from existing or new companies in the delivery and carryout pizza categories, in addition to competition from order and delivery aggregators both in the pizza category and more broadly, that may create further pressures to grow our business in order to maintain our market share.
Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties may have filed for “Domino’s” or similar marks in countries where Domino’s has not registered its brand for reasons including lack of presence by the brand where actual use is required to obtain trademark registration.
Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties may have filed for “Domino’s” or similar marks in countries where Domino’s has not registered its brand for reasons including lack of presence by the brand where actual use is required to obtain trademark registration. 20 In addition, certain countries have use requirements to maintain a trademark registration.
Item 1A. Risk F actors. For a business as large and globally diverse as the Company, a wide range of factors could materially affect future developments and performance.
Item 1A. Risk F actors. For a business as large and globally diverse as Domino’s, a wide range of factors could materially affect future developments and performance.
We currently anticipate that this 6.0% obligation will remain in place for the foreseeable future, though the actual contribution rate could be lower in certain instances due to certain incentives and waivers. Beginning on March 27, 2023, the Company effectuated a temporary reduction of 0.25% to its standard 6.0% advertising contribution, which will expire on March 24, 2024.
We currently anticipate that this 6.0% obligation will remain in place for the foreseeable future, though the actual contribution rate could be lower in certain instances due to certain incentives and waivers. From March 27, 2023 through March 24, 2024, the Company effectuated a temporary reduction of 0.25% to its standard 6.0% advertising contribution.
These factors include, among other things: • variations in the timing and volume of our sales and our franchisees’ sales, including same store sales; • the timing of expenditures in anticipation of future sales; • changes in the cost or availability of our ingredients or labor; • planned or actual changes to our capital or debt structure; • strategic actions by us or our competitors, such as sales promotions, acquisitions or restructurings; • changes in our dividend policy or any share repurchase program; • significant litigation or legislation or other regulatory developments affecting us or our industry; • changes in competitive and economic conditions generally as well as general market conditions; and • foreign currency exposure.
These factors include, among other things: • variations in the timing and volume of our sales and our franchisees’ sales, including same store sales; • our performance versus expectations of securities analysts or investors or against our guidance metrics; • the timing of expenditures in anticipation of future sales; • changes in the cost or availability of our ingredients or labor; • planned or actual changes to our capital or debt structure; • strategic actions by us or our competitors, such as sales promotions, acquisitions or restructurings; • changes in our dividend policy or any share repurchase program; • significant litigation or legislation or other regulatory developments affecting us or our industry; • changes in competitive and economic conditions generally as well as general market conditions; and • foreign currency exposure.
Any failure or perceived failure by us to manage ESG issues successfully could have a material adverse effect on our reputation and on our business, results of operations, financial condition or stock price, including the sustainability of our business over time. 23 Risks Related to Our Indebtedness Our substantial indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business.
Any failure or perceived failure by us to manage ESG issues successfully could have a material adverse effect on our reputation and on our business, results of operations, financial condition or stock price. Risks Related to Our Indebtedness Our substantial indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control.
Cyber-attacks and data breaches at a payment processing contractor could compromise confidential information or adversely affect our ability to deliver products and services to our customers. There is also a potential heightened risk of cyber security incidents as a result of geopolitical events outside of our control, such as the ongoing Russia-Ukraine conflict.
Cyber-attacks and data breaches at a payment processing contractor could compromise confidential information or adversely affect our ability to deliver products and services to our customers. There is also a potential heightened risk of cyber security incidents as a result of geopolitical events outside of our control.
We have a substantial amount of indebtedness. As of December 31, 2023, our consolidated total indebtedness was approximately $4.99 billion. We may also incur additional debt, which would not be prohibited under the terms of our current securitized debt agreements. Our substantial indebtedness could have important consequences for our business and our shareholders.
We have a substantial amount of indebtedness. As of December 29, 2024, our consolidated total indebtedness was approximately $4.98 billion. We may also incur additional debt, which would not be prohibited under the terms of our current securitized debt agreements. Our substantial indebtedness could have important consequences for our business and our shareholders.
Changes we make to our current and future work environments may not meet the needs or expectations of our employees and may be perceived as less favorable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified personnel. Our international operations subject us to additional risk.
Changes we make to our current and future work environments may not meet the needs or expectations of our employees and may be perceived as less favorable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified personnel.
Our failure to add new stores would adversely affect our ability to increase revenues and operating income. Additionally, our growth strategy and the success of new stores depend in large part on the availability of suitable store sites and leases.
Our failure to add new stores or closures of existing stores would impact global retail sales and adversely affect our ability to increase revenues and operating income. Additionally, our growth strategy and the success of new stores depend in large part on the availability of suitable store sites and leases.
There also has been increased political focus, including by U.S. and foreign governmental authorities, on environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water usage; there has also been pushback to certain ESG initiatives in recent years which could also have an adverse effect.
There also has been increased political focus, including by U.S. and foreign governmental authorities, on environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water usage; there has also been pushback to certain ESG initiatives in recent years which could also have an adverse effect in the event we were to become a target of pushback or subject to additional regulatory measures.
A hypothetical 10% adverse change in the foreign currency rates in our international markets would have resulted in a negative impact on international royalty revenues of approximately $27.4 million in 2023.
A hypothetical 10% adverse change in the foreign currency rates in our international markets would have resulted in a negative impact on international royalty revenues of approximately $28.2 million in 2024.
As of December 31, 2023, our largest international master franchisee operated 3,840 stores in 12 markets, which accounted for approximately 28% of our total international store count. Our U.S. and international franchisees may not operate their franchises successfully.
As of December 29, 2024, our largest international master franchisee operated 3,741 stores in 12 markets, which accounted for approximately 26% of our total international store count. Our U.S. and international franchisees may not operate their franchises successfully.
However, we cannot predict consumer acceptance of these delivery channels or their impact on our business. We may incorporate traditional and generative AI solutions into our business, and these solutions may become important in our operations over time. The use of these AI solutions may expose us to additional risks and expenses.
However, we cannot predict consumer acceptance of these delivery channels or their impact on our business. We may incorporate traditional and generative AI solutions into our business, and these solutions may become important in our operations over time.
There can be no assurance that the New York Fed will not discontinue the publication of Term SOFR, in which case interest payments on our 2021 Variable Funding Notes and 2022 Variable Funding Notes would need to be calculated using a different index, or alter the manner in which Term SOFR is calculated.
There can be no assurance that the Federal Reserve Bank of New York (the “New York Fed”) will continue the publication of Term SOFR, and if the New York Fed discontinues the publication of Term SOFR, interest payments on our 2021 Variable Funding Notes and 2022 Variable Funding Notes would need to be calculated using a different index, or alter the manner in which Term SOFR is calculated.
Alternative methods of delivery may also impact the potential labor pool from which we recruit our delivery experts and could reduce the available supply of labor. If we are not able to successfully respond to these challenges, our business could be materially and adversely affected. We are subject to a variety of additional risks associated with our franchisees.
Alternative methods of delivery may also impact the potential labor pool from which we recruit our delivery drivers and could reduce the available supply of labor. If we are not able to successfully respond to these challenges, our business could be materially and adversely affected.
In the U.S., we operate 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities, one vegetable processing center and one center providing equipment and supplies to our U.S. and certain international stores. We also operate five dough manufacturing and supply chain centers in Canada.
In the U.S., we operate 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities and one vegetable processing center to our U.S. and certain international stores. We also operate five dough manufacturing and supply chain centers in Canada. We plan to continue investing in supply chain productivity initiatives in the future.
As of December 31, 2023, we had 735 independent U.S. franchisees operating 6,566 U.S. stores. As of that same date, 22 of these franchisees each owned and operated more than 50 U.S. stores, including our largest U.S. franchisee who owned and operated 143 stores and the average U.S. franchisee owned and operated approximately nine stores.
As of December 29, 2024, we had 751 independent U.S. franchisees operating 6,722 U.S. stores. As of that same date, 22 of these franchisees each owned and operated more than 50 U.S. stores, including our largest U.S. franchisee who owned and operated 158 stores, and the average U.S. franchisee owned and operated approximately nine stores.
If we are unable to refinance or repay amounts under the securitized debt prior to the expiration of the term, our cash flow would be directed to the repayment of the securitized debt and, other than a weekly management fee sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business.
If we are unable to refinance or repay amounts under the securitized debt prior to the expiration of the term, our cash flow would be directed to the repayment of the securitized debt which would become due and payable on an accelerated schedule, and, other than technology fees and a weekly management fee sufficient to cover certain general and administrative expenses, would not be available for operating our business.
We are subject to numerous federal, state, local and foreign laws and regulations, as well as requirements issued by other groups, including those relating to: • the preparation, sale and labeling of food; • building and zoning requirements and environmental protection; • labor and employment, including minimum wage, overtime, insurance, discrimination and other labor requirements as well as working and safety conditions; • franchise arrangements; • taxation; • antitrust; • payment card industry standards and requirements; and • advertising, social media, information privacy and consumer protection.
We and our franchisees are subject to extensive laws and government regulation and requirements issued by other groups and our failure to comply with existing or increased laws and regulations could adversely affect our business and operating results. 26 We are subject to numerous federal, state, local and foreign laws and regulations, as well as requirements issued by other groups, including those relating to: • the preparation, sale and labeling of food; • building and zoning requirements and environmental protection; • labor and employment, including minimum wage, overtime, insurance, discrimination and other labor requirements as well as working and safety conditions; • franchise arrangements; • taxation; • antitrust; • payment card industry standards and requirements; and • advertising, social media, information privacy and consumer protection.
Given the present inflationary environment, which we anticipate may continue, there has been and may continue to be significant increases in food costs and labor costs, which have impacted and could further impact our profitability and that of our franchisees and which could impact the opening of new U.S. and international franchised stores and adversely affect our operating results.
In recent years, there have been and may continue to be significant increases in food costs and labor costs, which have impacted and could further impact our profitability and that of our franchisees and which could impact the opening of new U.S. and international franchised stores, lead to store closures and adversely affect our operating results.
Sales made by franchised stores outside the U.S. are denominated in the currency of the country in which the store is located, and this currency could become less valuable in U.S. dollars as a result of exchange rate fluctuations.
We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars. Sales made by franchised stores outside the U.S. are denominated in the currency of the country in which the store is located, and this currency could become less valuable in U.S. dollars as a result of exchange rate fluctuations.
While we do not have long-term employment agreements with our executive officers, for all of our executive officers we have non-compete and non-solicitation agreements that extend for 24 months following the termination of such executive officer’s employment, although the FTC has proposed a new rule that would ban the use of non-compete agreements.
While we do not have long-term employment agreements with our executive officers, for all of our executive officers we have non-compete and non-solicitation agreements that extend for 24 months following the termination of such executive officer’s employment.
Additionally, our senior notes have original scheduled principal payments of $51.5 million in 2024, $1.17 billion in 2025, $39.3 million in 2026, $1.31 billion in 2027, $811.5 million in 2028, $625.9 million in 2029, $10.0 million in 2030 and $905.0 million in 2031.
Additionally, our senior notes have original scheduled principal payments of $1.18 billion in 2025, $39.3 million in 2026, $1.31 billion in 2027, $817.9 million in 2028, $631.0 million in 2029, $10.0 million in 2030 and $912.5 million in 2031.
While substantially all U.S. franchisees purchased food, equipment and supplies from us in 2023, U.S. franchisees are not required to purchase food, equipment or supplies from us and they may choose to purchase from outside suppliers.
While substantially all U.S. franchisees purchased food and other products from us and our suppliers in 2024, U.S. franchisees are not required to purchase food and other products from us, and they may choose to purchase from outside suppliers.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our debt agreements; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes; and • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at a competitive disadvantage compared to our peers that may have less debt.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our debt agreements; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes; and • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at a competitive disadvantage compared to our peers that may have less debt. 24 Further, our 2021 and 2022 Variable Funding Notes bear interest at fluctuating interest rates that in certain circumstances is based on a forward-looking term rate based on the Secured Overnight Financing Rate (“Term SOFR”).
Any prolonged disruption in the operations of any of these facilities, whether due to technical, systems, operational or labor difficulties, destruction or damage to the facility, real estate issues, limited capacity or other reasons, or our failure to successfully increase capacity and open new centers, could adversely affect our business and operating results. 17 Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our business.
Any prolonged disruption in the operations of any of these facilities, whether due to technical, systems, operational or labor difficulties, destruction or damage to the facility, real estate issues, limited capacity or other reasons, or our failure to successfully increase capacity and open new centers, could adversely affect our business and operating results. 18 Our international operations subject us to additional risk.
While the Company saw an increase in sales in certain markets, including within the U.S., at times during the COVID-19 pandemic, including higher sales related to heightened reliance on delivery and carryout businesses, future sales are not possible to estimate, and it is unclear what sales will be as consumer behavior and general economic and business activity move on from the COVID-19 pandemic.
While the Company saw an increase in sales in certain markets, including within the U.S., at times in recent years, including higher sales related to heightened reliance on delivery and carryout businesses, future sales are not possible to estimate, and it is unclear what future sales will be.
The advent of legislation aimed at predictive scheduling may impact labor for our stores and our franchisees’ stores. Additionally, while we do not currently have any unionized employees, certain employees of other companies in our industry have recently become unionized.
The advent of legislation aimed at predictive scheduling may impact labor for our stores and our franchisees’ stores. Additionally, while we only have a small number of unionized employees in our international operations, certain employees of other companies in our industry have recently become unionized in the U.S.
In addition, the implementation of technology changes and upgrades to maintain and upgrade our systems, errors or vulnerabilities in our systems, or damage to or failure of our systems, including because of systems becoming obsolete, could result in interruptions in our services and non-compliance with certain laws or regulations, which could reduce our sales, revenues and profits and damage our business and brand.
Increases in remote working could also exacerbate certain risks to our business, including an increased risk of cyber incidents and improper dissemination of personal or confidential information. 21 In addition, the implementation of technology changes and upgrades to maintain and upgrade our systems, errors or vulnerabilities in our systems, or damage to or failure of our systems, including because of systems becoming obsolete, could result in interruptions in our services and non-compliance with certain laws or regulations, which could reduce our sales, revenues and profits and damage our business and brand.
We and our franchisees have faced an increasingly competitive labor market in recent years due to labor shortages and increased turnover at times resulting in part from the COVID-19 pandemic which caused us and our franchisees to in certain cases make operational changes and delay store openings which could ultimately impact our growth and competitive position.
We and our franchisees have faced at times a competitive labor market in recent years, which caused us and our franchisees, in certain cases, to make operational changes and delay store openings, which could ultimately impact our growth and competitive position.
We depend in large part on our brand and branded products and believe that they are very important to our business. We rely on a combination of trademarks, copyrights, domain names, patents, trade secrets and similar intellectual property rights to protect our brand and branded products.
We rely on a combination of trademarks, copyrights, domain names, patents, trade secrets and similar intellectual property rights to protect our brand and branded products.
For example, labor and regulatory compliance costs could be adversely impacted as a result of California Assembly Bill No. 1228 (AB 1228), which was signed into law in September 2023 and which will raise the minimum wage for employees of restaurants that are part of a national fast food chain effective April 1, 2024.
As more jurisdictions implement minimum wage increases, we expect that labor costs will continue to increase. For example, labor and regulatory compliance costs could be adversely impacted as a result of California Assembly Bill No. 1228 (AB 1228), which raised the minimum wage for employees of restaurants that are part of a national fast food chain effective April 1, 2024.
Adverse government regulations and enforcement efforts or non-compliance by us or our franchisees with any of the foregoing laws and regulations could lead to various claims or governmental or judicial fines, sanctions or other enforcement measures, which could negatively impact our business.
Adverse government regulations and enforcement efforts or non-compliance by us or our franchisees with any of the foregoing laws and regulations could lead to various claims or governmental or judicial fines, sanctions or other enforcement measures, which could negatively impact our business. 28 Market and General Risks Fluctuations in value of the U.S. dollar in relation to other currencies may lead to lower revenues and earnings.
Such litigation could result in substantial costs and diversion of resources and could negatively affect our sales, profitability and prospects regardless of whether we are able to successfully enforce our rights.
We may, from time to time, be required to institute or defend litigation to enforce our intellectual property rights, or to protect our trade secrets. Such litigation could result in substantial costs and diversion of resources and could negatively affect our sales, profitability and prospects regardless of whether we are able to successfully enforce our rights.
In addition, we expect to continue our strategy of building additional stores in markets and regions where we have existing stores, a strategy we refer to as “fortressing,” which may negatively impact sales at existing stores.
In addition, we expect to continue our strategy of building additional stores in markets and regions where we have existing stores, a strategy we refer to as “fortressing,” which may negatively impact sales at existing stores. This strategy could also result in store closures if executed too rapidly, as seen in certain international markets in recent years.
Any other material disruption or other adverse event affecting one or more of our digital ordering platforms, including, for instance, power loss, technological or systems failures, user error or cyber-attacks, could similarly result in adverse publicity, loss of sales and cash flows and other costs, which could in turn materially and adversely affect our reputation, business and results of operations. 21 We cannot predict the impact that new or improved technologies, alternative methods of delivery, including autonomous vehicle delivery, or changes in consumer or employee behavior facilitated by these technologies and alternative methods of delivery will have on our business.
Any other material disruption or other adverse event affecting one or more of our digital ordering platforms, including, for instance, power loss, technological or systems failures, user error or cyber-attacks, could similarly result in adverse publicity, loss of sales and cash flows and other costs, which could in turn materially and adversely affect our reputation, business and results of operations.
We plan to continue investing in supply chain productivity initiatives in the future. Our U.S. dough manufacturing and supply chain centers service all of our Company-owned and substantially all of our U.S. franchise stores.
Our U.S. dough manufacturing and supply chain centers service all of our Company-owned and substantially all of our U.S. franchise stores.
Execution of these strategies and achievement of these goals are subject to risks and uncertainties, many of which are outside of our control and may prove to be more costly than we anticipate.
We have established a commitment to achieve our near-term targets by 2032 and achieve net zero carbon emissions by 2050. Execution of these strategies and achievement of these goals are subject to risks and uncertainties, many of which are outside of our control and may prove to be more costly than we anticipate.
If we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to affect any other action relating to our indebtedness on satisfactory terms or at all, our business may be harmed. 24 The terms of our securitized debt financing of certain of our wholly-owned subsidiaries have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.
The terms of our securitized debt financing of certain of our wholly-owned subsidiaries have restrictive terms and our failure to comply with any of these terms could put us in default, which would have an adverse effect on our business and prospects.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the U.S. We may, from time to time, be required to institute or defend litigation to enforce our intellectual property rights, or to protect our trade secrets.
All of the steps we have taken to protect our intellectual property globally may not be adequate. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the U.S.
While additional funds for advertising in the past have been provided by us, our franchisees and other third parties, none of these additional funds are legally required. The lack of continued financial support for advertising activities could significantly curtail our marketing efforts, which may in turn affect our business and our operating results.
While additional funds for advertising in the past have been provided by us, our franchisees and other third parties, none of these additional funds are legally required.
The NLRB’s final rule is scheduled to go into effect on February 26, 2024; if it is adopted by other government agencies and/or applied generally to franchise relationships, it could cause us to be liable or held responsible for unfair labor practices and other violations of our franchisees and subject us to other liabilities, and require us to conduct collective bargaining negotiations regarding employees of totally separate, independent employers, most notably our franchisees.
While the NLRB’s final rule was vacated in April 2024, returning the law to the NLRB’s prior rule that entities can be considered joint employers if they process and actually exercise “substantial direct and immediate control,” if a broader rule is ultimately enacted or adopted by the NLRB or other government agencies and/or applied generally to franchise relationships, it could cause us to be liable or held responsible for unfair labor practices and other violations of our franchisees and subject us to other liabilities, and require us to conduct collective bargaining negotiations regarding employees of totally separate, independent employers, most notably our franchisees.
While active efforts to narrow the reach of AB-5 continue, a bill (SB 967), which was introduced specifically to exempt the relationship between a franchisor and franchisee from the scope of AB-5, was not successful in the legislature. 26 On November 3, 2020, the California electorate approved proposition 22, the effect of which is to exempt app-based transportation (ride shares) and delivery drivers from the application of AB-5 by treating these workers as independent contractors, rather than employees, provided certain conditions are met.
On November 3, 2020, the California electorate approved proposition 22, the effect of which is to exempt app-based transportation (ride shares) and delivery drivers from the application of AB-5 by treating these workers as independent contractors, rather than employees, provided certain conditions are met. The ballot measure does not affect how AB-5 applies to other businesses and workers.
Claims within our industry of improper supplier actions also occasionally arise that, if made against one of our suppliers, could potentially damage our brand image. 25 In addition, class action lawsuits have been filed, and may continue to be filed, against various QSRs alleging, among other things, that QSRs have failed to disclose the health risks associated with high-fat foods and that QSR marketing practices have encouraged obesity.
In addition, class action lawsuits have been filed, and may continue to be filed, against various QSRs alleging, among other things, that QSRs have failed to disclose the health risks associated with certain foods and that QSR marketing practices have encouraged obesity.
Our current insurance coverage may not be adequate, insurance premiums for such coverage may increase and we may not be able to obtain insurance at acceptable rates, or at all. For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities.
For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities.
Accordingly, we may not be able to adequately protect our trademarks everywhere in the world and our use of these trademarks may result in liability for trademark infringement, trademark dilution or unfair competition. All of the steps we have taken to protect our intellectual property globally may not be adequate.
In those countries where we do not currently operate but have registered trademarks, we may be unable to renew those registrations when they expire due to non-use. Accordingly, we may not be able to adequately protect our trademarks everywhere in the world and our use of these trademarks may result in liability for trademark infringement, trademark dilution or unfair competition.
If one or more of our key franchisees were to be unsuccessful, become insolvent or otherwise were unable or unwilling to pay us our royalties or other amounts owed, our business and results of operations would be adversely affected. 19 We may not be able to adequately protect our intellectual property, which could harm the value of our brand and branded products and adversely affect our business.
If one or more of our key franchisees were to be unsuccessful, become insolvent or otherwise were unable or unwilling to pay us our royalties or other amounts owed, our business and results of operations would be adversely affected. 19 If we were to be unable or fail to recognize, respond to and effectively manage the accelerated impact of social media or become the subject of a boycott, our business could be adversely impacted.
Changes in tax laws or tax policy more broadly, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction or any change in the pronouncements relating to accounting for income taxes could also impact our financial condition and results of operations. 27 We may also become subject to legislation or regulation seeking to tax and/or regulate high-fat foods, foods with high sugar and salt content, or foods otherwise deemed to be “unhealthy,” and our capital expenditures could increase due to remediation and compliance measures related to these laws or regulations.
Changes in tax laws or tax policy more broadly, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction or any change in the pronouncements relating to accounting for income taxes could also impact our financial condition and results of operations.
A breach of these covenants could result in a rapid amortization event or default under the securitized debt. If amounts owed under the securitized debt are accelerated because of a default under the securitized debt and we are unable to pay such amounts, the investors may have the right to assume control of substantially all of the securitized assets.
If amounts owed under the securitized debt are accelerated because of a default under the securitized debt and we are unable to pay such amounts, the investors may have the right to assume control of substantially all of the securitized assets. 25 During the term following issuance, the outstanding senior notes will accrue interest in accordance with the terms of the debt agreements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+2 added−0 removed18 unchanged
Biggest changeIn accordance with the NYSE listed company rules, the Audit Committee assists the Board of Directors in its oversight of Domino’s company-wide risk management and the process established to identify, assess, measure, monitor and manage risks, including major information security and cybersecurity risks, with input from the Company’s internal committee dedicated to assessing and managing enterprise risk comprised of members of the Company’s Executive Leadership Team who report directly to our Chief Executive Officer in addition to other senior leaders within the Company (the “Enterprise Risk Committee”).
Biggest changeThe Audit Committee assists the Board of Directors in its oversight of Domino’s company-wide risk management and the process established to identify, assess, measure, monitor and manage risks, including major information security and cybersecurity risks, with input from the Company’s internal committee dedicated to assessing and managing enterprise risk comprised of Company executives in addition to other senior leaders within the Company (the “Enterprise Risk Committee”).
Domino’s maintains this comprehensive information security program with a dedicated team that is responsible for directing, coordinating, planning and organizing information security activities throughout the Company and is led by the Company’s CISO. 29 The Company leverages a combination of the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Center for Internet Security (CIS) Critical Security Controls as the scale against which to assess its information security program and invest in its ability to proactively defend against security risks within its environment.
Domino’s maintains this comprehensive information security program with a dedicated team that is responsible for directing, coordinating, planning and organizing information security activities throughout the Company and is led by the Company’s CISO . 30 The Company leverages a combination of the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Center for Internet Security (CIS) Critical Security Controls as the scale against which to assess its information security program and invest in its ability to proactively defend against security risks within its environment.
See “Risk Factors – The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, or damage to our employee and business relationships, any of which could subject us to loss and harm our brand” for further information.
See “ Risk Factors – The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, or damage to our employee and business relationships, any of which could subject us to loss and harm our brand ” for further information.
The Company additionally has established and maintains a dedicated Security Operations Center (SOC) team that is responsible for quickly identifying and treating events that could pose risk to its technology environments and that has a documented incident response plan in place.
The Company additionally has established and maintains a dedicated Security Operations Center (SOC) team that is responsible for quickly identifying and treating events that could pose risk to its technology environments and that has a documented incident response plan in place, which is periodically tested, reviewed and updated as appropriate.
Added
In addition to maintaining insurance coverage to address cyber incidents, the Company has also implemented processes, procedures and controls to help mitigate these risks.
Added
The Company trains its team members through annual cybersecurity awareness training, phishing simulations and periodic communications about timely cybersecurity topics and threats.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeWe believe that our existing headquarters and other leased and owned facilities are adequate to meet our current requirements, but we plan to continue investing in additional supply chain productivity initiatives in the future. 30
Biggest changeWe believe that our existing headquarters and other leased and owned facilities are adequate to meet our current requirements, but we plan to continue investing in additional supply chain productivity initiatives in the future. 31

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed4 unchanged
Biggest changeThe listing of executive officers of the Company is set forth under Part III Item 10. Directors, Executive Officers and Corporate Governance, which is incorporated herein by reference. 31 Part II
Biggest changeThe listing of executive officers of the Company is set forth under Part III, Item 10. Directors, Executive Officers and Corporate Governance, which is incorporated herein by reference. 32 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes our repurchase activity during the fourth quarter ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) Period #10 (September 11, 2023 to October 8, 2023) 1,245 $ 381.87 — $ 199,511 Period #11 (October 9, 2023 to November 5, 2023) 146,404 344.33 145,187 149,511 Period #12 (November 6, 2023 to December 3, 2023) 15,318 351.63 14,320 144,515 Period #13 (December 4, 2023 to December 31, 2023) 8,065 394.55 8,065 141,333 Total 171,032 $ 347.63 167,572 $ 141,333 (1) 3,460 shares were purchased as part of the Company’s employee stock purchase discount plan.
Biggest changeThe following table summarizes our repurchase activity during the fourth quarter ended December 29, 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) Period #10 (September 9, 2024 to October 6, 2024) 1,178 $ 428.84 — $ 926,333 Period #11 (October 7, 2024 to November 3, 2024) 104,843 419.70 103,661 882,824 Period #12 (November 4, 2024 to December 1, 2024) 127,894 438.74 127,894 826,712 Period #13 (December 2, 2024 to December 29, 2024) 28,353 458.34 27,013 814,337 Total 262,268 $ 433.20 258,568 $ 814,337 (1) 3,700 shares were purchased as part of the Company’s employee stock purchase discount plan.
The repurchase of shares in any particular period and the actual amount of such purchases remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future. 32 The following comparative stock performance line graph compares the cumulative shareholder return of the common stock of Domino’s Pizza, Inc.
The repurchase of shares in any particular period and the actual amount of such purchases remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future. 33 The following comparative stock performance line graph compares the cumulative shareholder return of the common stock of Domino’s Pizza, Inc.
The cumulative total return computations set forth in the performance graph assume the investment of $100 in each of the Company’s common stock, the S&P 500 and the S&P 1500 Restaurant Index on December 31, 2018.
The cumulative total return computations set forth in the performance graph assume the investment of $100 in each of the Company’s common stock, the S&P 500 and the S&P 1500 Restaurant Index on December 27, 2019.
During the fourth quarter, the shares were purchased at an average price of $369.05. (2) Authorization for the repurchase program may be modified, suspended, or discontinued at any time.
During the fourth quarter, the shares were purchased at an average price of $437.79. (2) Authorization for the repurchase program may be modified, suspended, or discontinued at any time.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. As of February 19, 2024, Domino’s Pizza, Inc. had 170,000,000 authorized shares of common stock, par value $0.01 per share, of which 34,812,723 were issued and outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. As of February 17, 2025, Domino’s Pizza, Inc. had 170,000,000 authorized shares of common stock, par value $0.01 per share, of which 34,296,712 were issued and outstanding.
We currently anticipate continuing the payment of quarterly cash dividends. The actual amount of such dividends, if any, will depend upon future earnings, results of operations, capital requirements, our financial condition and certain other factors.
The actual amount of such dividends, if any, will depend upon future earnings, results of operations, capital requirements, our financial condition and certain other factors.
(NYSE: DPZ) for the five-year period between December 31, 2018 and December 31, 2023, with the cumulative total return of (i) the Standard & Poor’s 500 Index (the “S&P 500”) and (ii) the Company’s peer group, the Standard & Poor’s Composite 1500 Restaurant Index (the “S&P 1500 Restaurant Index”).
(Nasdaq: DPZ) for the five-year period between December 27, 2019 and December 29, 2024, with the cumulative total return of (i) the Standard & Poor’s 500 Index (the “S&P 500”) and (ii) the Company’s peer group, the Standard & Poor’s Composite 1500 Restaurant Index (the “S&P 1500 Restaurant Index”).
Subsequent to the end of fiscal 2023, on February 21, 2024, our Board of Directors authorized an additional share repurchase program to repurchase up to $1.0 billion of our common stock, in addition to the $141.3 million that was previously remaining for a total authorization of $1.14 billion for future share repurchases.
On February 21, 2024, our Board of Directors authorized an additional share repurchase program to repurchase up to $1.0 billion of our common stock, in addition to the $141.3 million that was previously remaining under our Board of Directors’ previous July 20, 2021 authorization for a total authorization of $1.14 billion for future share repurchases as of that date.
As of February 19, 2024, there were 1,480 registered holders of record of Domino’s Pizza, Inc.’s common stock.
As of February 17, 2025, there were 1,458 registered holders of record of Domino’s Pizza, Inc.’s common stock.
Any future purchases of our common stock would be funded by current cash amounts, available borrowings or future excess cash flow.
As of December 29, 2024, we had $814.3 million remaining under this authorization for repurchases of shares of our common stock. Any future purchases of our common stock would be funded by current cash amounts, available borrowings or future excess cash flow.
Domino’s Pizza, Inc.’s common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “DPZ.” Our Board of Directors declared a quarterly dividend of $1.51 per common share on February 21, 2024 payable on March 29, 2024 to shareholders of record at the close of business on March 15, 2024.
Our Board of Directors declared a quarterly dividend of $1.74 per common share on February 19, 2025 payable on March 28, 2025 to shareholders of record at the close of business on March 14, 2025. We currently anticipate continuing the payment of quarterly cash dividends.
Removed
As of December 31, 2023, we had a Board of Directors-approved share repurchase program for up to $1.0 billion of our common stock, of which $141.3 million remained available for future purchases of our common stock.
Added
Beginning on January 2, 2025, Domino’s Pizza, Inc.’s common stock is traded on The Nasdaq Stock Market LLC (“Nasdaq”) under the ticker symbol “DPZ” following our voluntary withdrawal from listing on the New York Stock Exchange (“NYSE”) after market close on December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeActual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to, the following: • our substantial increased indebtedness as a result of the 2021 Recapitalization, 2019 Recapitalization, 2018 Recapitalization, 2017 Recapitalization and 2015 Recapitalization and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; • the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; • our future financial performance and our ability to pay principal and interest on our indebtedness; • the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets; • our ability to successfully implement our growth strategy, including through our participation in the third-party order aggregation marketplace; • labor shortages or changes in operating expenses resulting from increases in prices of food (particularly cheese), fuel and other commodity costs, labor, utilities, insurance, employee benefits and other operating costs or negative economic conditions; • the effectiveness of our advertising, operations and promotional initiatives; • shortages, interruptions or disruptions in the supply or delivery of fresh food products and store equipment; • the impact of social media and other consumer-oriented technologies on our business, brand and reputation; • the impact of new or improved technologies and alternative methods of delivery on consumer behavior; • new product, digital ordering and concept developments by us, and other food-industry competitors; • the additional risks our international operations subject us to; 49 • our ability to maintain good relationships with and attract new franchisees and franchisees’ ability to successfully manage their operations without negatively impacting our royalty payments and fees or our brand’s reputation; • our ability to successfully implement cost-saving strategies; • our ability and that of our franchisees to successfully operate in the current and future credit environment; • changes in the level of consumer spending given general economic conditions, including interest rates, energy prices and consumer confidence or negative economic conditions in general; • our ability and that of our franchisees to open new restaurants and keep existing restaurants in operation and maintain demand for new stores; • the impact that widespread illness, health epidemics or general health concerns, severe weather conditions and natural disasters may have on our business and the economies of the countries where we operate; • changes in foreign currency exchange rates; • changes in income tax rates; • our ability to retain or replace our executive officers and other key members of management and our ability to adequately staff our stores and supply chain centers with qualified personnel; • our ability to find and/or retain suitable real estate for our stores and supply chain centers; • changes in government legislation or regulation, including changes in laws and regulations regarding information privacy, payment methods, advertising and consumer protection and social media; • adverse legal judgments or settlements; • food-borne illness or contamination of products or food tampering or other events that may impact our reputation; • data breaches, power loss, technological failures, user error or other cyber risks threatening us or our franchisees; • the impact that environmental, social and governance matters may have on our business and reputation; • the effect of war, terrorism, catastrophic events, geopolitical or reputational considerations or climate change; • our ability to pay dividends and repurchase shares; • changes in consumer taste, spending and traffic patterns and demographic trends; • changes in accounting policies; and • adequacy of our insurance coverage.
Biggest changeActual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to, the following: • our substantial increased indebtedness as a result of the 2021 Recapitalization, 2019 Recapitalization, 2018 Recapitalization, 2017 Recapitalization and 2015 Recapitalization and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; • the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; • our future financial performance and our ability to pay principal and interest on our indebtedness; • the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets; • our ability to successfully implement our growth strategy, including through our participation in the third-party order aggregation marketplace; • labor shortages or changes in operating expenses resulting from increases in prices of food (particularly cheese), fuel and other commodity costs, labor, utilities, insurance, employee benefits and other operating costs or negative economic conditions; • the effectiveness of our advertising, operations and promotional initiatives; • shortages, interruptions or disruptions in the supply or delivery of fresh food products and store equipment; • the additional risks our international operations subject us to, which may differ in each country in which we and our franchisees do business; • the dependence of our earnings and business growth strategy on the success of our franchisees; • our ability and that of our franchisees to successfully operate in the current and future credit environment; • the impact of social media or a boycott on our business, brand and reputation; • the impact of new or improved technologies and alternative methods of delivery on consumer behavior; 50 • new product, digital ordering and concept developments by us, and other food-industry competitors; • our ability to maintain good relationships with and attract new franchisees and franchisees’ ability to successfully manage their operations without negatively impacting our royalty payments and fees or our brand’s reputation; • our ability to successfully implement cost-saving strategies; • changes in the level of consumer spending given general economic conditions, including interest rates, energy prices and consumer confidence or negative economic conditions in general; • our ability and that of our franchisees to open new restaurants and keep existing restaurants in operation and maintain demand for new stores; • the impact that widespread illness, health epidemics or general health concerns, severe weather conditions and natural disasters may have on our business and the economies of the countries where we operate; • changes in foreign currency exchange rates; • changes in income tax rates; • our ability to retain or replace our executive officers and other key members of management and our ability to adequately staff our stores and supply chain centers with qualified personnel; • our ability to find and/or retain suitable real estate for our stores and supply chain centers; • changes in government legislation or regulation, including changes in laws and regulations regarding information privacy, payment methods, advertising and consumer protection and social media; • adverse legal judgments or settlements; • food-borne illness or contamination of products or food tampering or other events that may impact our reputation; • data breaches, power loss, technological failures, user error or other cyber risks threatening us or our franchisees; • the impact that environmental, social and governance matters may have on our business and reputation; • the effect of war, terrorism, catastrophic events, geopolitical or reputational considerations or climate change; • our ability to pay dividends and repurchase shares; • changes in consumer taste, spending and traffic patterns and demographic trends; • changes in accounting policies; and • adequacy of our insurance coverage.
Additional information related to our 2022 Variable Funding Notes is included in Note 3 to our consolidated financial statements. 2021 Recapitalization On April 16, 2021, we completed the 2021 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
Additional information related to our 2021 Variable Funding Notes is included in Note 3 to our consolidated financial statements. 2021 Recapitalization On April 16, 2021, we completed the 2021 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in food and commodity prices as well as the mix of products we sell.
Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.
Same store sales growth is calculated for a given period by including only retail sales from stores that also had sales in the comparable weeks of both periods. International same store sales growth is calculated similarly to U.S. same store sales growth.
Same store sales growth is calculated for a given period by including only sales from stores that also had sales in the comparable weeks of both periods. International same store sales growth is calculated similarly to U.S. same store sales growth.
Quantitative and Qualitative Disclosures About Market Risk. 48 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Form 10-K includes various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.
Quantitative and Qualitative Disclosures About Market Risk. 49 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Form 10-K includes various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.
We are generally responsible for up to $2.0 million per occurrence under these retention programs for workers’ compensation and general liability, depending on policy year and line of coverage.
We are generally responsible for up to $1.0 million per occurrence under these retention programs for workers’ compensation and up to $2.0 million per occurrence under these retention programs for general liability, depending on policy year and line of coverage.
Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues. 34 Critical accounting estimates The following discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues. 35 Critical accounting estimates The following discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
There were no triggering events in 2023, 2022 or 2021, and accordingly, we did not record any impairment losses on long-lived assets in 2023, 2022 and 2021. Casualty insurance reserves For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities.
There were no triggering events in 2024, 2023 or 2022, and accordingly, we did not record any impairment losses on long-lived assets in 2024, 2023 and 2022. Casualty insurance reserves For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities.
Readers are cautioned not to place undue reliance on the forward-looking statements included in this Form 10-K or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements. 50
Readers are cautioned not to place undue reliance on the forward-looking statements included in this Form 10-K or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements. 51
When estimating these liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation. 35 Our methodology for determining our exposure has remained consistent throughout the years presented.
When estimating these liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation. 36 Our methodology for determining our exposure has remained consistent throughout the years presented.
Additional information related to the 2017 Recapitalization is included in Note 3 to our consolidated financial statements. 45 2015 Recapitalization On October 21, 2015, we completed the 2015 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
Additional information related to the 2017 Recapitalization is included in Note 3 to our consolidated financial statements. 46 2015 Recapitalization On October 21, 2015, we completed the 2015 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
Changes in international same store sales are reported on a constant dollar basis, which reflects changes in international local currency sales. Same store sales growth for transferred stores is reflected in their current classification. 2023 2022 2021 U.S.
Changes in international same store sales are reported on a constant dollar basis, which reflects changes in international local currency sales. Same store sales growth for transferred stores is reflected in their current classification. 2024 2023 2022 U.S.
We believe this measure is important to understanding Company performance because as our market basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.
We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.
The impact of inflation is described with respect to our market basket pricing to stores and our labor cost, in the discussion of supply chain revenues and U.S. Company-owned store and supply chain gross margins, above.
The impact of inflation is described with respect to our food basket pricing to stores and our labor cost, in the discussion of supply chain revenues and U.S. Company-owned store and supply chain gross margins, above.
Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We monitor both of these metrics very closely, as they directly impact our revenues and profits, and we strive to consistently increase both metrics.
Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We actively monitor both of these metrics, as they directly impact our revenues and profits, and we strive to consistently increase both metrics.
We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand and are indicative of the financial health of the franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada.
We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand, and we believe they are indicative of the financial health of our franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada.
As a result, sales by Domino’s franchisees have a direct effect on the Company’s profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues.
As a result, sales by Domino’s franchisees have a direct effect on our profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues.
The letters of credit primarily relate to our casualty insurance programs and certain supply chain center leases. As of December 31, 2023, we had no outstanding borrowings and $120.0 million of available borrowing capacity under our 2022 Variable Funding Notes.
The letters of credit primarily relate to our casualty insurance programs and certain supply chain center leases. As of December 29, 2024, we had no outstanding borrowings and $120.0 million of available borrowing capacity under our 2022 Variable Funding Notes.
For a discussion of the fiscal year ended January 1, 2023 compared to the fiscal year ended January 2, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023.
For a discussion of the fiscal year ended December 31, 2023 compared to the fiscal year ended January 1, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
We have not received any royalties and fees from the operations of the Russia market subsequent to the Russian invasion of Ukraine in February 2022. 38 Income Statement Data (tabular amounts in millions, except percentages) 2023 2022 2021 Revenues: U.S.
We have not received any royalties and fees from the operations of the Russia market subsequent to the Russian invasion of Ukraine in February 2022. 39 Income Statement Data (tabular amounts in millions, except percentages) 2024 2023 2022 Revenues: U.S.
We also had valuation allowances related to interest deductibility in separately filed states of $1.4 million and $1.5 million as of December 31, 2023 and January 1, 2023, respectively. We believe our remaining deferred tax assets will be realized.
We also had valuation allowances related to interest deductibility in separately filed states of $1.4 million and $1.4 million as of December 29, 2024 and December 31, 2023, respectively. We believe our remaining deferred tax assets will be realized.
However, in accordance with our debt agreements, the payment of principal on the outstanding senior notes may be suspended if our leverage ratio is less than or equal to 5.0x total debt, as defined, to adjusted EBITDA, as defined, and no catch-up provisions are applicable.
However, in accordance with our debt agreements, the payment of principal on the outstanding senior notes may be suspended if our Holdco Leverage Ratio is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing our securitized debt, and no catch-up provisions are applicable.
It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, with moderate capital expenditures. We have historically returned cash to shareholders through dividend payments and share repurchases. At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders.
It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, through an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders.
Changes in our current estimates due to unanticipated events could have a material impact on our financial condition and results of operations. 36 Fiscal 2023 Highlights • Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide) increased 5.4% as compared to 2022.
Changes in our current estimates due to unanticipated events could have a material impact on our financial condition and results of operations. 37 Fiscal 2024 Highlights • MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 5.9% as compared to 2023.
Additional information related to our investment in DPC Dash is included in Note 1 to our consolidated financial statements. Interest Expense, Net Interest expense, net, decreased $10.3 million, or 5.3%, in 2023 driven by higher interest income earned on our cash equivalents and restricted cash equivalents in 2023. Our weighted average borrowing rate was 3.8% in both 2023 and 2022.
Additional information related to our investment in DPC Dash is included in Note 1 and Note 4 to our consolidated financial statements. Interest Expense, Net Interest expense, net, decreased $5.9 million, or 3.2%, in 2024 driven by higher interest income earned on our cash equivalents in 2024. Our weighted average borrowing rate was 3.8% in both 2024 and 2023.
Item 7. Management' s Discussion and Analysis of Financial Condition and Results of Operations. Overview Our fiscal year typically includes 52 weeks, comprised of three twelve-week quarters and one sixteen-week quarter. In this section, we discuss the results of our operations for the fiscal year ended December 31, 2023 compared to the fiscal year ended January 1, 2023.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. Overview Our fiscal year typically includes 52 weeks, comprised of three twelve-week quarters and one sixteen-week quarter. In this section, we discuss the results of our operations for the fiscal year ended December 29, 2024 compared to the fiscal year ended December 31, 2023.
A 10% change in our casualty insurance liability at December 31, 2023 would have affected our income before provision for income taxes by approximately $5.6 million in 2023. We had accruals for casualty insurance reserves of $56.3 million and $57.6 million at December 31, 2023 and January 1, 2023, respectively. Income taxes The U.S.
A 10% change in our casualty insurance liability at December 29, 2024 would have affected our income before provision for income taxes by approximately $5.1 million in 2024. We had accruals for casualty insurance reserves of $50.7 million and $56.3 million at December 29, 2024 and December 31, 2023, respectively. Income taxes The U.S.
We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of December 31, 2023.
We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of December 29, 2024.
The market basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the market basket purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year.
The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year.
As of December 31, 2023, we also held $88.2 million of advertising fund restricted cash and cash equivalents which can only be used for activities that promote the Domino’s brand. 44 Long-Term Debt 2022 Variable Funding Notes On September 16, 2022, certain of our subsidiaries issued a new variable funding note facility which allows for advances of up to $120.0 million of Series 2022-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2022 Variable Funding Notes”).
As of December 29, 2024, we also held $80.9 million of advertising fund restricted cash and cash equivalents which can only be used for activities that promote the Domino’s brand. 45 Long-Term Debt 2022 Variable Funding Notes On September 16, 2022, certain of our subsidiaries issued a variable funding note facility which allows for advances of up to $120.0 million of Series 2022-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2022 Variable Funding Notes”).
Additional information related to the 2015 Recapitalization is included in Note 3 to our consolidated financial statements. 2021, 2019, 2018, 2017 and 2015 Notes The 2021 Notes, 2019 Notes, 2018 Notes, 2017 Notes and the 2015 Notes are collectively referred to as the “Notes.” The Notes have original scheduled principal payments of $51.5 million in 2024, $1.17 billion in 2025, $39.3 million in 2026, $1.31 billion in 2027, $811.5 million in 2028, $625.9 million in 2029, $10.0 million in 2030 and $905.0 million in 2031.
Additional information related to the 2015 Recapitalization is included in Note 3 to our consolidated financial statements. 2021, 2019, 2018, 2017 and 2015 Notes The 2021 Notes, 2019 Notes, 2018 Notes, 2017 Notes and the 2015 Notes are collectively referred to as the “Notes.” The Notes have original scheduled principal payments of $1.18 billion in 2025, $39.3 million in 2026, $1.31 billion in 2027, $817.9 million in 2028, $631.0 million in 2029, $10.0 million in 2030 and $912.5 million in 2031.
Including the impact of the Russia market, total global retail sales growth, excluding foreign currency impact, was 5.2% for fiscal 2023. 37 Same Store Sales Growth Same store sales growth is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance.
Including the impact of the Russia market, total global retail sales growth, excluding foreign currency impact, was 5.7%. 38 Same Store Sales Growth Same store sales growth is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance.
U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes. 41 Refranchising Loss/Gain During 2023, we refranchised one U.S.
U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.
Description of the Business Domino’s is the largest pizza company in the world with more than 20,500 locations in over 90 markets around the world as of December 31, 2023, and operates two distinct service models within its stores, with a significant business in both delivery and carryout.
Description of the Business Domino’s is the largest pizza company in the world with more than 21,300 locations in over 90 markets around the world as of December 29, 2024, and operates two distinct service models within its stores, with a significant business in both delivery and carryout.
The amounts below are presented in millions of U.S. dollars. 2023 2022 2021 U.S. stores $ 9,026.1 $ 8,751.7 $ 8,641.4 International stores 9,249.7 8,788.2 9,137.5 Total $ 18,275.8 $ 17,539.9 $ 17,779.0 Global Retail Sales Growth (excluding foreign currency impact) Global retail sales growth (excluding foreign currency impact) is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance.
The amounts below are presented in millions of U.S. dollars. 2024 2023 2022 U.S. stores $ 9,500.1 $ 9,026.1 $ 8,751.7 International stores 9,624.1 9,249.7 8,788.2 Total $ 19,124.2 $ 18,275.8 $ 17,539.9 Global Retail Sales Growth, Excluding Foreign Currency Impact Global retail sales growth, excluding foreign currency impact is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance.
Company-owned stores + 5.4% (2.6)% (3.6)% U.S. franchise stores + 1.4% (0.7)% + 3.9% U.S. stores + 1.6% (0.8)% + 3.5% International stores (excluding foreign currency impact) + 1.7% + 0.1% + 8.0% U.S. same store sales increased 1.6% during 2023, rolling over a decrease in U.S. same store sales of 0.8% in 2022.
Company-owned stores + 3.5% + 5.4% (2.6)% U.S. franchise stores + 3.2% + 1.4% (0.7)% U.S. stores + 3.2% + 1.6% (0.8)% International stores (excluding foreign currency impact) + 1.6% + 1.7% + 0.1% U.S. same store sales increased 3.2% during 2024, rolling over an increase in U.S. same store sales of 1.6% in 2023.
Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth. 2023 2022 2021 U.S. stores + 3.1% + 1.3% + 4.3% International stores (excluding foreign currency impact) (1) + 7.7% + 6.3% + 13.9% Total (excluding foreign currency impact) (2) + 5.4% + 3.9% + 8.9% (1) Fiscal 2023 figures exclude the impact of the Russia market.
Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth. 2024 2023 2022 U.S. stores + 5.3% + 3.1% + 1.3% International stores (excluding foreign currency impact) (1) + 6.5% + 7.7% + 6.3% Total (excluding foreign currency impact) (2) + 5.9% + 5.4% + 3.9% (1) 2024 fiscal year figure excludes the impact of the Russia market.
Federal statutory income tax rate was 21% in each of 2023, 2022 and 2021. Our Federal income tax provision calculated based on the Federal statutory rate was $137.0 million, $120.3 million and $131.4 million in 2023, 2022 and 2021, respectively.
Federal statutory income tax rate was 21% in each of 2024, 2023 and 2022. Our Federal income tax provision calculated based on the Federal statutory rate was $151.7 million, $137.0 million and $120.3 million in 2024, 2023 and 2022, respectively.
Additional information related to the 2019 Recapitalization is included in Note 3 to our consolidated financial statements. 2018 Recapitalization On April 24, 2018, we completed the 2018 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
Gross proceeds from the issuance of the 2019 Notes were $675.0 million. Additional information related to the 2019 Recapitalization is included in Note 3 to our consolidated financial statements. 2018 Recapitalization On April 24, 2018, we completed the 2018 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization.
These uses of cash were partially offset by proceeds from our failed sale leaseback transaction of $14.9 million and from the exercise of stock options of $8.7 million. Cash used in financing activities was $515.9 million in 2022.
These uses of cash were partially offset by proceeds from our failed sale leaseback transaction of $14.9 million and from the exercise of stock options of $8.7 million.
Company-owned stores $ 376.2 $ 445.8 $ 479.0 U.S. franchise royalties and fees 604.9 556.3 539.9 Supply chain 2,715.0 2,754.7 2,561.0 International franchise royalties and fees 310.1 295.0 298.0 U.S. franchise advertising 473.2 485.3 479.5 Total revenues 4,479.4 100.0 % 4,537.2 100.0 % 4,357.4 100.0 % Cost of sales: U.S.
Company-owned stores $ 393.9 $ 376.2 $ 445.8 U.S. franchise royalties and fees 638.2 604.9 556.3 Supply chain 2,845.8 2,715.0 2,754.7 International franchise royalties and fees 318.7 310.1 295.0 U.S. franchise advertising 509.9 473.2 485.3 Total revenues 4,706.4 100.0 % 4,479.4 100.0 % 4,537.2 100.0 % Cost of sales: U.S.
Subsequent to the end of fiscal 2023, on February 21, 2024, our Board of Directors authorized an additional share repurchase program to repurchase up to $1.0 billion of our common stock, in addition to the $141.3 million that was previously remaining for a total authorization of $1.14 billion for future share repurchases.
On February 21, 2024, our Board of Directors authorized an additional share repurchase program to repurchase up to $1.0 billion of our common stock, in addition to the $141.3 million that was previously remaining under our previous July 20, 2021 authorization for a total authorization of $1.14 billion for future share repurchases as of that date.
Restricted Cash As of December 31, 2023, we had $149.1 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $51.6 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash for a total of $200.9 million of restricted cash and cash equivalents.
Restricted Cash As of December 29, 2024, we had $144.0 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $51.2 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash for a total of $195.4 million of restricted cash and cash equivalents.
As of December 31, 2023 and January 1, 2023, we had total foreign tax credits of $16.8 million and $13.5 million, respectively, each of which were fully offset with a corresponding valuation allowance.
As of December 29, 2024 and December 31, 2023, we had total foreign tax credits of $21.0 million and $16.8 million, respectively, each of which were fully offset with a corresponding valuation allowance.
Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales.
We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales.
Company-owned stores 314.7 378.0 374.1 Supply chain 2,437.3 2,510.5 2,295.0 Total cost of sales 2,751.9 61.4 % 2,888.6 63.7 % 2,669.1 61.3 % Gross margin 1,727.4 38.6 % 1,648.6 36.3 % 1,688.2 38.7 % General and administrative 434.6 9.7 % 416.5 9.2 % 428.3 9.8 % U.S. franchise advertising 473.2 10.6 % 485.3 10.7 % 479.5 11.0 % Refranchising loss (gain) 0.1 — (21.2 ) (0.5 )% — — Income from operations 819.5 18.3 % 767.9 16.9 % 780.4 17.9 % Other income 17.7 0.4 % — 0.0 % 36.8 0.8 % Interest expense, net (184.8 ) (4.1 )% (195.1 ) (4.3 )% (191.5 ) (4.3 )% Income before provision for income taxes 652.4 14.6 % 572.8 12.6 % 625.7 14.4 % Provision for income taxes 133.3 3.0 % 120.6 2.6 % 115.2 2.7 % Net income $ 519.1 11.6 % $ 452.3 10.0 % $ 510.5 11.7 % 2023 compared to 2022 (tabular amounts in millions, except percentages) Revenues 2023 2022 U.S.
Company-owned stores 328.0 314.7 378.0 Supply chain 2,529.9 2,437.3 2,510.5 Total cost of sales 2,857.9 60.7 % 2,751.9 61.4 % 2,888.6 63.7 % Gross margin 1,848.5 39.3 % 1,727.4 38.6 % 1,648.6 36.3 % General and administrative 459.5 9.8 % 434.6 9.7 % 416.5 9.2 % U.S. franchise advertising 509.9 10.8 % 473.2 10.6 % 485.3 10.7 % Refranchising loss (gain) 0.2 0.0 % 0.1 0.0 % (21.2 ) (0.5 )% Income from operations 879.0 18.7 % 819.5 18.3 % 767.9 16.9 % Other income 22.1 0.5 % 17.7 0.4 % — 0.0 % Interest expense, net (178.8 ) (3.9 )% (184.8 ) (4.1 )% (195.1 ) (4.3 )% Income before provision for income taxes 722.2 15.3 % 652.4 14.6 % 572.8 12.6 % Provision for income taxes 138.0 2.9 % 133.3 3.0 % 120.6 2.6 % Net income $ 584.2 12.4 % $ 519.1 11.6 % $ 452.3 10.0 % 2024 compared to 2023 (tabular amounts in millions, except percentages) Revenues 2024 2023 U.S.
Global retail sales growth, excluding foreign currency impact, is calculated as the change of international local currency global retail sales against the comparable period of the prior year. Global retail sales growth, excluding foreign currency impact, in 2021 reflects the impact of the 53 rd week in 2020.
Global retail sales growth, excluding foreign currency impact, is calculated as the change of international local currency global retail sales against the comparable period of the prior year.
Additionally, we acquired 23 U.S. franchised stores from certain of our U.S. franchisees for $6.8 million. Financing Activities Cash used in financing activities was $476.4 million in 2023. We repurchased and retired $269.0 million in shares of our common stock under our Board of Directors-approved share repurchase program and we also made dividend payments to our shareholders of $169.8 million.
Cash used in financing activities was $476.4 million in 2023. We repurchased and retired $269.0 million in shares of our common stock under our Board of Directors-approved share repurchase program, and we also made dividend payments to our shareholders of $169.8 million.
Investments We hold a non-controlling interest in DPC Dash, our master franchisee in China that owns and operates Domino’s Pizza stores in that market. As of December 31, 2023 and January 1, 2023, the carrying amount of our investment in DPC Dash was $143.6 million and $125.8 million, respectively.
Investments We hold a non-controlling interest in DPC Dash, our master franchisee in China that owns and operates Domino’s Pizza stores in that market. As of December 29, 2024 and December 31, 2023, the fair value of our investment in DPC Dash was $82.7 million and $143.6 million, respectively.
We have presented our statistical measure of global retail sales growth, excluding foreign currency impact, for fiscal 2023 excluding the impact of the retail sales from the Russia market.
We have presented our statistical measure of global retail sales growth, excluding foreign currency impact for fiscal 2024 excluding the retail sales from the Russia market from the 2023 retail sales base. We believe the impact of the Russia market on our statistical measure of global retail sales growth, excluding foreign currency impact for the other periods presented was immaterial.
Company-owned stores $ 376.2 8.4 % $ 445.8 9.8 % U.S. franchise royalties and fees 604.9 13.5 % 556.3 12.3 % Supply chain 2,715.0 60.6 % 2,754.7 60.7 % International franchise royalties and fees 310.1 6.9 % 295.0 6.5 % U.S. franchise advertising 473.2 10.6 % 485.3 10.7 % Total revenues $ 4,479.4 100.0 % $ 4,537.2 100.0 % Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food, equipment and supplies from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores.
Company-owned stores $ 393.9 8.4 % $ 376.2 8.4 % U.S. franchise royalties and fees 638.2 13.6 % 604.9 13.5 % Supply chain 2,845.8 60.4 % 2,715.0 60.6 % International franchise royalties and fees 318.7 6.8 % 310.1 6.9 % U.S. franchise advertising 509.9 10.8 % 473.2 10.6 % Total revenues $ 4,706.4 100.0 % $ 4,479.4 100.0 % Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food and other products from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores.
Excluding the impact of changes in foreign currency exchange rates, international same store sales increased 1.7% in 2023 and increased 0.1% in 2022. 40 Cost of Sales / Gross Margin 2023 2022 Total revenues $ 4,479.4 100.0 % $ 4,537.2 100.0 % Total cost of sales 2,751.9 61.4 % 2,888.6 63.7 % Gross margin $ 1,727.4 38.6 % $ 1,648.6 36.3 % Consolidated cost of sales consists of U.S.
International franchise same store sales, excluding the impact of changes in foreign currency exchange rates, increased 1.6% in 2024 and increased 1.7% in 2023. 41 Cost of Sales / Gross Margin 2024 2023 Total revenues $ 4,706.4 100.0 % $ 4,479.4 100.0 % Total cost of sales 2,857.9 60.7 % 2,751.9 61.4 % Gross margin $ 1,848.5 39.3 % $ 1,727.4 38.6 % Consolidated cost of sales consists of U.S.
These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and equipment to those sub-franchisees, as well as by running pizza stores.
In our international markets, we generally grant geographical rights to the Domino’s Pizza ® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food and equipment to those sub-franchisees, as well as by running pizza stores.
These factors also contributed to an increase in income from operations. Overall, we believe our global retail sales growth (excluding foreign currency impact), emphasis on technology, operations and marketing initiatives, have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.
Overall, we believe our global retail sales growth, excluding foreign currency impact, marketing initiatives, operations and emphasis on technology have combined to strengthen our brand. These financial and statistical measures are described in additional detail below. Statistical Measures The tables below outline certain statistical measures we utilize to analyze our performance.
Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food, labor, delivery and occupancy costs.
Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food and labor costs, as well as other costs including delivery, occupancy costs (including rent, telephone, utilities and depreciation) and insurance expense.
Provision for Income Taxes Provision for income taxes increased $12.8 million, or 10.6%, in 2023 due to an increase in income before the provision for income taxes, partially offset by a lower effective tax rate. The effective tax rate decreased to 20.4% during 2023, as compared to 21.0% in 2022.
Provision for Income Taxes Provision for income taxes increased $4.7 million, or 3.5%, in 2024 due to an increase in income before the provision for income taxes, partially offset by a lower effective tax rate. The effective tax rate decreased to 19.1% during 2024, as compared to 20.4% in 2023.
Stores International Stores Total Store count at January 3, 2021 363 5,992 6,355 11,289 17,644 Openings 13 201 214 1,094 1,308 Closings (1 ) (8 ) (9 ) (95 ) (104 ) Store count at January 2, 2022 375 6,185 6,560 12,288 18,848 Openings 5 136 141 1,135 1,276 Closings (3 ) (12 ) (15 ) (229 ) (244 ) Transfers (91 ) 91 — — — Store count at January 1, 2023 286 6,400 6,686 13,194 19,880 Openings 4 174 178 892 1,070 Closings (1 ) (9 ) (10 ) (349 ) (359 ) Transfers (1 ) 1 — — — Store count at December 31, 2023 288 6,566 6,854 13,737 20,591 Russia Market On August 21, 2023, our master franchisee that owned and operated Domino’s Pizza ® stores in Russia announced its intent to file for bankruptcy with respect to the stores in that market.
Stores International Stores Total Store count at January 2, 2022 375 6,185 6,560 12,288 18,848 Openings 5 136 141 1,135 1,276 Closings (3 ) (12 ) (15 ) (229 ) (244 ) Transfers (91 ) 91 — — — Store count at January 1, 2023 286 6,400 6,686 13,194 19,880 Openings 4 174 178 892 1,070 Closings (1 ) (9 ) (10 ) (349 ) (359 ) Transfers (1 ) 1 — — — Store count at December 31, 2023 288 6,566 6,854 13,737 20,591 Openings 7 159 166 868 1,034 Closings (1 ) (5 ) (6 ) (253 ) (259 ) Transfers (2 ) 2 — — — Store count at December 29, 2024 292 6,722 7,014 14,352 21,366 Fiscal 2024 net store growth 6 154 160 615 775 Russia Market On August 21, 2023, our master franchisee that owned and operated Domino’s Pizza ® stores in Russia announced its intent to file for bankruptcy with respect to the stores in that market.
Capital Expenditures In the past three years, we have spent approximately $286.8 million on capital expenditures. In 2023, we spent $105.4 million on capital expenditures which primarily related to investments in our technology initiatives, supply chain centers and corporate store operations. We did not have any material commitments for capital expenditures as of December 31, 2023.
In 2024, we spent $112.9 million on capital expenditures which primarily related to investments in our technology initiatives, supply chain centers and corporate store operations. We did not have any material commitments for capital expenditures as of December 29, 2024.
Company-owned stores $ 376.2 25.9 % $ 445.8 30.0 % U.S. franchise royalties and fees 604.9 41.6 % 556.3 37.4 % U.S. franchise advertising 473.2 32.5 % 485.3 32.6 % Total U.S. stores revenues $ 1,454.3 100.0 % $ 1,487.4 100.0 % U.S. Company-owned Stores Revenues from U.S.
Stores 2024 2023 U.S. Company-owned stores $ 393.9 25.5 % $ 376.2 25.9 % U.S. franchise royalties and fees 638.2 41.4 % 604.9 41.6 % U.S. franchise advertising 509.9 33.1 % 473.2 32.5 % Total U.S. stores revenues $ 1,541.9 100.0 % $ 1,454.3 100.0 % U.S. Company-owned Stores Revenues from U.S.
As of December 31, 2023, the fair value of our investment in DPC Dash was based on the active exchange quoted price for the equity security of HK$61.95 per share.
The fair value of our investment in DPC Dash was based on the active exchange quoted price for the equity security of HK$79.25 per share as of December 29, 2024 and HK$61.95 per share as of December 31, 2023. We owned 8,101,019 and 18,101,019 ordinary shares as of December 29, 2024 and December 31, 2023, respectively.
Consolidated gross margin (which we define as revenues less cost of sales) increased $78.8 million, or 4.8%, in 2023 due primarily to higher global franchise royalty and fee revenues, as well as improved procurement productivity within supply chain. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin.
Consolidated gross margin (which we define as revenues less cost of sales) increased $121.1 million, or 7.0%, in 2024 due primarily to higher global franchise revenues, as well as gross margin dollar growth within supply chain, discussed below. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin.
As of December 31, 2023, we had no outstanding borrowings and $157.8 million of available borrowing capacity under our 2021 Variable Funding Notes, net of letters of credit issued of $42.2 million.
As of December 29, 2024, we had no outstanding borrowings and $143.6 million of available borrowing capacity under our 2021 Variable Funding Notes, net of letters of credit issued of $56.4 million.
Statistical Measures The tables below outline certain statistical measures we utilize to analyze our performance. This historical data is not necessarily indicative of results to be expected for any future period. Global Retail Sales Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance.
This historical data is not necessarily indicative of results to be expected for any future period. Global Retail Sales Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores.
International franchise royalties and fees revenues also increased as a result of net store growth and higher same store sales. These changes in revenues are described in more detail below. 39 U.S. Stores 2023 2022 U.S.
Global franchise royalties and fees increased primarily as a result of higher same store sales and net store growth, and U.S. franchise advertising revenues increased primarily as a result of the increase in the advertising contribution rate, higher same store sales and net store growth. These changes in revenues are described in more detail below. 40 U.S.
Sources and Uses of Cash The following table illustrates the main components of our cash flows: Fiscal Year Ended (In millions) December 31, 2023 January 1, 2023 Cash flows provided by (used in) Net cash provided by operating activities $ 590.9 $ 475.3 Net cash used in investing activities (106.9 ) (53.7 ) Net cash used in financing activities (476.4 ) (515.9 ) Effect of exchange rate changes on cash 0.3 (1.0 ) Change in cash and cash equivalents, restricted cash and cash equivalents $ 7.9 $ (95.3 ) Operating Activities Cash provided by operating activities increased $115.5 million in 2023 primarily due to the positive impact of changes in operating assets and liabilities of $93.5 million.
Sources and Uses of Cash The following table illustrates the main components of our cash flows: Fiscal Year Ended (In millions) December 29, 2024 December 31, 2023 Cash flows provided by (used in): Net cash provided by operating activities $ 624.9 $ 590.9 Net cash used in investing activities (31.2 ) (106.9 ) Net cash used in financing activities (532.2 ) (476.4 ) Effect of exchange rate changes on cash (2.2 ) 0.3 Change in cash and cash equivalents, restricted cash and cash equivalents $ 59.3 $ 7.9 Operating Activities Cash provided by operating activities increased $34.0 million in 2024 primarily as a result of higher net income, excluding non-cash operating activities and a positive change in advertising fund assets and liabilities, restricted.
The interest rate on the 2017 Floating Rate Notes was payable at a rate equal to LIBOR plus 125 basis points. Gross proceeds from the issuance of the 2017 Notes were $1.9 billion. The 2017 Floating Rate Notes and the 2017 Five-Year Notes were repaid in connection with the 2021 Recapitalization.
Gross proceeds from the issuance of the 2017 Notes were $1.9 billion. The 2017 Floating Rate Notes and the 2017 Five-Year Notes were repaid in connection with the 2021 Recapitalization.
U.S. franchise same store sales increased 1.4% in 2023 and declined 0.7% in 2022. U.S.
U.S. franchise same store sales increased 3.2% in 2024 and increased 1.4% in 2023. U.S.
Company-owned stores in 2023. Supply Chain Gross Margin 2023 2022 Revenues $ 2,715.0 100.0 % $ 2,754.7 100.0 % Cost of sales 2,437.3 89.8 % 2,510.5 91.1 % Supply chain gross margin $ 277.7 10.2 % $ 244.2 8.9 % Supply chain gross margin increased $33.5 million, or 13.7%, in 2023.
Supply Chain Gross Margin 2024 2023 Revenues $ 2,845.8 100.0 % $ 2,715.0 100.0 % Cost of sales 2,529.9 88.9 % 2,437.3 89.8 % Supply chain gross margin $ 315.9 11.1 % $ 277.7 10.2 % Supply chain gross margin increased $38.2 million, or 13.7%, in 2024.
The increase in U.S. same store sales in 2023 was attributable to a higher average ticket per transaction resulting from increases in menu and national offer pricing. International same store sales (excluding foreign currency impact) increased 1.7% during 2023, rolling over an increase in international same store sales (excluding foreign currency impact) of 0.1% in 2022.
International same store sales (excluding foreign currency impact) increased 1.6% during 2024, rolling over an increase in international same store sales (excluding foreign currency impact) of 1.7% in 2023. The increase in international same store sales was attributable to higher customer transaction counts, as well as a slightly higher average ticket per transaction.
Additionally, net income increased $66.9 million and non-cash adjustments decreased $9.7 million, resulting in an overall increase to cash provided by operating activities in 2023 as compared to 2022 of $57.2 million.
Net income increased $65.1 million and non-cash adjustments increased $17.5 million, resulting in an overall increase to cash provided by operating activities in 2024 as compared to 2023 of $82.6 million.
Gross proceeds from the issuance of the 2021 Notes were $1.85 billion. Concurrently, certain of our subsidiaries also issued a new variable funding note facility which allows for advances of up to $200.0 million of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit (the “2021 Variable Funding Notes”).
Additional information related to our 2022 Variable Funding Notes is included in Note 3 to our consolidated financial statements. 2021 Variable Funding Notes In connection with the 2021 Recapitalization, certain of our subsidiaries issued a variable funding note facility which allows for advances of up to $200.0 million of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit (the “2021 Variable Funding Notes”).
Other Income Other income was $17.7 million in 2023, representing the unrealized gains recorded on our investment in DPC Dash based on the active exchange quoted price for the equity security. We did not record any adjustments to the carrying amount in fiscal 2022.
Other Income Other income was $22.1 million and $17.7 million in 2024 and 2023, respectively, representing the net realized and unrealized gains on our investment in DPC Dash. The recorded amount of our investment is based on the active exchange quoted price for the equity security.
Including the impact of the Russia market, international stores retail sales growth, excluding foreign currency impact, was 7.3% for fiscal 2023. (2) Fiscal 2023 figures exclude the impact of the Russia market.
Including the impact of the Russia market, international stores retail sales growth, excluding foreign currency impact, was 6.1%. (2) 2024 fiscal year figure excludes the impact of the Russia market.
As of the fourth quarter of 2020, we had a leverage ratio of less than 5.0x, and accordingly, did not make the previously scheduled debt amortization payment beginning in the first quarter of 2021.
As of the end of each of the fiscal quarters in 2024, we had a Holdco Leverage Ratio of less than 5.0x, and accordingly, did not make the previously scheduled debt amortization payments for our outstanding notes beginning in the second quarter of 2024.
These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have two variable funding note facilities.
During 2024, we experienced global retail sales growth, excluding foreign currency impact, in both our U.S. and international businesses. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have two variable funding note facilities.
The positive impact of changes in operating assets and liabilities primarily related to the timing of payments on accrued liabilities, accounts payable and income taxes, as well as the timing and pricing of inventory in 2023 as compared to 2022.
These increases were partially offset by the negative impact of changes in operating assets and liabilities totaling $94.4 million, primarily related to the timing of payments on accrued liabilities, income taxes and accounts payable in 2024 as compared to 2023.
Net store growth is calculated by netting gross store openings with gross store closures during the period. Transfers between Company-owned stores and franchised stores are excluded from the calculation of net store growth. Net store growth during fiscal 2023 reflects the closure of the remaining 159 net stores in the Russia market. U.S. Company- owned Stores U.S.
Net Store Growth Net store growth is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Net store growth is calculated by netting gross store openings with gross store closures during the period. Transfers between Company-owned stores and franchised stores are excluded from the calculation of net store growth. U.S.
Stores U.S. stores Segment Income increased $82.4 million, or 18.8%, in 2023, primarily due to the change in allocation methodology for certain software development costs, as well as higher U.S. franchise royalties and fees revenues, each as discussed above. These increases were partially offset by the $6.3 million decrease in U.S. Company-owned store gross margin, as discussed above.
Stores U.S. stores Segment Income increased $44.4 million, or 8.5%, in 2024, primarily due to higher U.S. franchise royalties and fees revenues, as well as the $4.4 million increase in U.S. Company-owned store gross margin, each as discussed above.
Subsequent to the end of fiscal 2023, on February 21, 2024, our Board of Directors declared a quarterly dividend of $1.51 per common share payable on March 29, 2024 to shareholders of record at the close of business on March 15, 2024.
We paid dividends of $209.9 million, $169.8 million and $157.5 million in 2024, 2023 and 2022, respectively. Subsequent to the end of fiscal 2024, on February 19, 2025, our Board of Directors declared a quarterly dividend of $1.74 per common share payable on March 28, 2025 to shareholders of record at the close of business on March 14, 2025.
Royalties are ongoing percent-of-sales fees for use of the Domino’s ® brand marks. We also generate revenues and earnings by selling food, equipment and supplies to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the United States.
We also generate revenues and earnings by selling food and other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+2 added−0 removed7 unchanged
Biggest changeOur fixed-rate debt exposes the Company to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate. We are exposed to market risks from changes in food and commodity prices.
Biggest changeOur fixed-rate debt exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate.
Approximately 6.9% of our total revenues in 2023, 6.5% of our total revenues in 2022 and 6.8% of our total revenues in 2021 were derived from our international franchise segment, a majority of which were denominated in foreign currencies. We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars.
Approximately 6.8% of our total revenues in 2024, 6.9% of our total revenues in 2023 and 6.5% of our total revenues in 2022 were derived from our international franchise segment, a majority of which were denominated in foreign currencies. We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars.
In connection with the recapitalizations of our business, we have issued fixed rate notes and entered into variable funding notes, and, at December 31, 2023, we are exposed to interest rate risk on borrowings under our variable funding notes. As of December 31, 2023, we did not have any outstanding borrowings under our 2022 and 2021 Variable Funding Notes.
In connection with the recapitalizations of our business, we have issued fixed rate notes and entered into variable funding notes, and, at December 29, 2024, we are exposed to interest rate risk on borrowings under our variable funding notes. As of December 29, 2024, we did not have any outstanding borrowings under our 2022 and 2021 Variable Funding Notes.
We do not enter into financial instruments to manage this foreign currency exchange risk. A hypothetical 10% adverse change in the foreign currency rates for our international markets would have resulted in a negative impact on international franchise royalty and fee revenues of approximately $27.4 million in 2023. 51
We do not enter into financial instruments to manage this foreign currency exchange risk. A hypothetical 10% adverse change in the foreign currency rates for our international markets would have resulted in a negative impact on international franchise royalty and fee revenues of approximately $28.2 million in 2024. 52
Added
As of December 29, 2024, we had approximately $1.14 billion of debt classified as current associated with our 2018 7.5-Year Notes and 2015 Ten-Year Notes for which the anticipated repayment date is October 2025.
Added
We expect to refinance the 2018 7.5-Year Notes and 2015 Ten-Year Notes prior to the anticipated repayment date, and we expect, based upon current benchmark rates, to refinance those notes at higher interest rates. We are exposed to market risks from changes in food and commodity prices.