In an effort to combat underwhelming profits, Domino's will be closing up to seventy stores worldwide and streamlining its operations.
In an announcement made on the ASX earlier this week, Dominos has announced it will be closing over 70 stores worldwide. Australia’s Domino’s Pizza Enterprises (DMP) owns the franchise rights for branches across Australia, New Zealand, France, Belgium, the Netherlands, Denmark and Monaco.
According to the announcement, Domino’s has ‘taken steps to deliver material, near-term, cost savings, improving efficiency and building a stronger foundation for future growth.’ To achieve savings up to $30 million, Domino’s will be closing its 27 Denmark stores, expected to save $12 million a year, as well as a wordwide total of 65-70 underperforming corporate-owned store closures. Domino’s will also be optimising the corporate store network and streamlining operations.
Optimising the corporate store network will include reducing the current corporate store network of 913 stores by 15-20 percent, through closing underperforming stores and accelerating the refranchising of corporate store in ‘turnaround’. Approximately 65-70 underperforming stores (less than 2 percent. of the Global network) open for some time but not expected to reach sustainable levels of sales or profitability in the near term, will close. Domino’s will also partner with experienced franchisees to franchise 70-75 corporate stores that are in ‘turnaround’, expected to deliver annualised savings of $16m-20 million.
Group CEO & Managing Director Don Meij said: “Any inefficiency is a burden on the system as a whole; streamlining our business allows our franchisees to focus on delivering the best possible customer experience, growing sales and profitability, and expanding their business.
“The decisions of today will immediately deliver a stronger business and improve efficiencies for the long-term. As these initiatives are completed and deliver savings, we intend to reinvest approximately one third of these savings to stores, as we reinvest in the franchise network base.
“This is the right time for us to redesign for future growth; we are taking deliberate action to bring more focus to our business, removing distractions and maximising the benefits of our global reach and scale.”
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