Domino’s Pizza puts brakes on ambitious, aggressive store roll out

Domino’s Pizza plans to shut 205 loss-making stores, mostly in Japan, as sales fall and says a strategy review is now underway with the pizza maker also cutting its interim dividend more than expected.

Domino’s Pizza plans to shut 205 loss-making stores, mostly in Japan, as sales fall and says a strategy review is now underway. Picture: David Clark

Domino’s Pizza has slammed the brake on its historic ambitious and aggressive store roll out strategy, announcing it would close 205 loss-making stores, 172 in its struggling Japan market, as it also looks to slice its interim dividend more than expected to preserve its balance sheet amid a challenging fast-food market.

The store shutdowns would trigger a near-$100m cost for Domino’s but generate cost savings for the group from the 2026 financial year.

In an unexpected trading update only three weeks out from its half-year results announcement, Domino’s also revealed same store sales had sunk 0.6 per cent for the first half and that its debt had blown out by $15m to $705.1m, although it advised it was still “comfortably below” banking covenant thresholds.

The ASX-listed Domino’s had built decades of success upon a rapid store rollout program as it pushed its pizza chain through Australia and Zealand suburbs and ventured into offshore markets across Europe and Asia.

However, the challenges of the last few years including inflation, new stores cannibalising sales from nearby established stores and a tough job convincing diners in Japan and France in particular to buy its pizza has sunk sales and earnings to now force Domino’s to rein in its store expansion. 

It has also announced a string of profit downgrades which has seen its share price dive by 25 per cent over the last 12 months, and down 46 per cent in the last five years.

That poor performance eventually saw the departure of its long-serving CEO Don Meij resign last year after serving for 22 years.

Now the growth company is slowing down. Domino’s on Friday said the store closures would mostly happen in the fourth quarter and deliver $15.5m in estimated annualised savings with a one-off cost of around $97m.

Domino’s is slamming the brakes on its aggressive store rollout strategy to close 205 stores. Picture: NCA NewsWire / Brenton Edwards

Japan has proved a difficult market for Domino’s to succeed in. In July last year Domino’s announced that following a review and after encountering a number of local challenges in the Japanese market it would close up 80 stores out of its network of 944 stores.

At the same time it said in France, long heralded by Domino’s management as a huge opportunity for the group, it would close up to 20 stores out of around 480 stores it currently has there.

However, Domino’s said it remains committed to the Japanese market but it needed to be more disciplined in its expansion.

In the trading update on Friday, Domino’s said its preliminary first-half same store sales fell 0.6 per cent.

It expects a statutory loss due to the cost of closing unprofitable stores.

Underlying profit before tax is expected to be $84m-$86m, within its guidance range. Net debt increased by $15m to $705.1m by the end of the December half.

The company said this is “comfortably below banking covenant thresholds.”

Domino’s plans to pay a 55.5c per share interim dividend, which is some way below Bloomberg consensus of 63.9c per share.

Domino’s preliminary same store sales for the first five weeks of the second half of 2025 rose 4.3 per cent, but the company notes that “Asia is currently benefiting from sales tailwinds due to the timing of seasonal celebrations”.

Recently appointed Domino’s chief executive Mark van Dyck said he had a mandate to “reshape the business” in the interests of customers, franchise owners and investors.

“When I started in this role three months ago I said we would move decisively to reshape our business for long-term success. Where change is required, we are acting quickly and transparently. Our priority remains clear – creating value for customers, franchise partners, and shareholders.”

A strategic review of the business will focus on two key areas across all markets - cost efficiency and strategic growth - to build on the growing global demand for fast food, pizza and Domino’s market-leading position.

This review will aim to simplify the store network and the cost base, identifying opportunities to buy better, and spend better, in areas including food, packaging and technology, with $18.6m of annualised network savings identified to date.

Growth initiatives will focus on developing a value creation plan, including refined market strategy, to drive sustainable long-term value across Domino’s global portfolio.

Originally published as Domino’s Pizza puts brakes on ambitious, aggressive store roll out