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

Domino’s new CEO has slammed the brakes on the supercharged growth of the last two decades to slash stores in Japan, conceding it grew too fast.

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

Domino’s new chief executive Mark van Dyck believes it still has huge opportunities in Japan, a $105bn fast-food market, but has conceded the pizza chain grew too fast there and opened too many stores in the same prefecture, with heavy discounting diminishing the quality of pizza in the eyes of diners.

Only three months into the role, Mr van Dyck has slammed the brakes on Domino’s breakneck expansion under its former CEO Don Meij, who took the Australia-based fast food business to Asia and Europe by buying and opening thousands of stores.

On Friday Mr van Dyck announced the closure of 205 loss-making stores, of which 172 will be in its struggling Japanese market.

The market welcomed the new, more disciplined approach to the former market darling once known for its high earnings growth and rocketing share price, sending Domino’s shares 21.3 per cent higher to $35.93.

Adding fuel to the buying frenzy on Friday was the ranking of Domino’s as the market’s fourth-most-shorted stock. As short-sellers raced to buy shares to cover their positions it pushed the share price even higher.

Analysts also cheered the new approach from Domino’s.

The update included the latest sales for the first half and the start to 2025, and while some regional sales were weaker they were better than analysts expected while a cut to its interim dividend also wasn’t as bad as some analysts had predicted.

Mr van Dyck said a more measured approach would be taken to opening stores in the same area, pricing would improve and sales on its online platforms accelerated.

“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,” Mr van Dyck said.

He admitted that Domino’s had opened too many stores in Japan, which now number around 944, and that some suburbs were saturated with stores that had led to cannibalisation of sales. While he refused to rule out a complete withdrawal from the Japanese market, Mr van Dyck did underline the huge opportunities in Japan for the Domino’s there. He said the Japanese fast food market was worth $105bn but pizza sales were only $2.2bn, with Japanese diners on average only eating pizza twice a year – well below other markets.

“Japan is an attractive market for quick service restaurants and pizza, with significant long-term upside for Domino’s,” Mr van Dyck said.

“Some of our Covid-period expansion resulted in stores that simply weren’t optimal based on our current customer proposition, and removing them will strengthen our network.

“We are committed to being disciplined in expansion – prioritising locations in high-density prefectures where we can drive incremental, profitable growth. To reach our potential, we are taking decisive action. We are also refining our value proposition and improving our pricing strategy to position existing and new stores for sustainable success.”

He also warned that aggressive and steep discounting ran the risk of diminishing the quality of Domino’s pizzas in the eyes of diners in Japan.

Domino’s said the store shutdowns would trigger a near-$100m cost for Domino’s but generate cost savings for the group of $15.5m from the 2026 financial year.

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 it was still “comfortably below” banking covenant thresholds. It forecast underlying profit before tax to be $84m-$86m, within its guidance range.

Domino’s plans to pay a 55.5c per share interim dividend, which was well ahead of some analyst forecasts. Domino’s is slated to issue its half-year results on February 25.

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

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 noted that “Asia is currently benefiting from sales tailwinds due to the timing of seasonal celebrations”.

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.

“We believe investors should view positively the company’s view towards restoring network health in Japan through store closures and focus on profitable growth,” said RBC Capital Markets analyst Michael Toner. “Additional store closures in Japan are logical given the ongoing challenges in the trading outlook and should go a way towards improving franchise profitability.”

Mr Toner said the first-half same-store sales growth was ahead of market consensus, with Asia disappointing investors but Europe better and Germany a bright spot for the pizza maker.

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