The Domino’s Pizza empire is undergoing a major restructuring as more than 200 of its locations are set to shut down. Domino’s Pizza Enterprises Ltd. (DPE), the largest master franchisee of the Domino’s brand, announced that it will close a significant number of underperforming stores amid financial strain, following a rapid expansion during the COVID-19 pandemic and changing market conditions.
Where Are the Closures Happening?
DPE, which owns 18% of Domino’s locations, confirmed that 205 restaurants will be closed. Of these, 172 are located in Japan, representing the majority of the closures. The move is part of a broader strategy to streamline operations and improve profitability. DPE explained that the closures are aimed at sharpening the company’s market focus and optimizing its store portfolio.
The company’s decision follows an extensive operational review designed to improve long-term profitability and maximize shareholder value. Many of the affected stores were opened during the COVID-19 surge, but have struggled to maintain sales as consumer behavior shifted post-pandemic.
DPE Group CEO and Managing Director Mark van Dyck remarked, “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.”
Is Domino’s Exiting Japan?
Despite the wave of closures in Japan—58 franchised and 114 corporate stores—DPE has clarified that it does not plan to pull out of the Japanese market entirely. Instead, the company will refocus its efforts on key areas where it can leverage scale, brand strength, and operational efficiencies.
“We remain committed to Japan as an attractive market for quick-service restaurants and pizza, with significant long-term upside for Domino’s,” said van Dyck. “We are focusing on high-density prefectures where we can drive profitable growth.”
Legal Action and Investor Lawsuit
Domino’s Pizza is also facing legal challenges, with investors filing a lawsuit accusing the company of making misleading statements about its store growth prospects. During a quarterly earnings call in July 2023, Domino’s CEO Russell Weiner revised the company’s international store growth target downward by 175 to 275 stores. He attributed the change to challenges in both store openings and closures, but investors allege that the company failed to disclose the significant difficulties facing DPE.
The lawsuit claims that Domino’s made “false and misleading statements” about its business operations and prospects, overstating the company’s financial health and growth potential. Investors contend that the company did not reveal the struggles with store openings and closures until July 2024, when it admitted that it would fall short of its international growth targets and suspended its guidance.
The ongoing legal action seeks damages related to stock purchases made during the period of misrepresented guidance.
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