Domino’s announces Denmark exit

27 restaurants will be closed.

Domino’s Pizza Enterprises Ltd has announced the closure of 27 of its restaurants in Denmark and its Construction and Supply subsidiary in Australia as part of a series of cost-cutting measures.

According to the Group, exiting Denmark is expected to result in $20m to $26m of closure costs in FY223, delivering $12m in immediate earnings improvements

Domino’s also plans to reduce the size of its current corporate store network by 15% to 20%, closing down underperforming restaurants and accelerating the refranchising of corporate stores in ‘turnaround’. 

The group plans to close 65 to 70 restaurants, which make up more than 2% of its global network. Meanwhile, the brand said it will partner with experienced franchisees to franchise 70 to 75 corporate stores that are in ‘turnaround’.

Domino’s expects $50m to $55m in non-recurring costs from this corporate store network optimisation. The group expects the network optimisation to be completed by H1 2024 and deliver annualised savings of $16m to $20m.

Meanwhile, Domino’s expects restaurant openings in FY2024 will be below the medium-term outlook of 8-10%. Same Store Sales have improved through the Second Half. Despite the improving trend in Q4, Same Store Sales in FY2023 remain below the medium-term outlook of 3-6% annual growth.

Domino’s said there will be no changes planned to the long-term growth outlook for Domino’s network, of 7100 stores by 2033.

"We know pricing is an important part of the value equation for our customers, but so is the quality of the pizzas we deliver and the time in which they safely arrive. These are the answers to growing weekly sales volumes and improving unit economics in the short-term, with incremental orders having a significantly higher contribution margin for franchisees. Higher volumes will deliver higher profitability and margins for our franchisees. With the decisions announced today we have stronger foundations in place and are dedicated to working closely with them to deliver short and long-term opportunities,” Group CEO & Managing Director Don Meij said.