Domino’s stock growth is one of the fastest even compared to the fast growing tech industry having grown more than 1,300 percent
Domino’s Pizza went from being an underperforming company in a very traditional industry with a bad core product to an inspiring, once-in-an-industry example of flawless brand awareness, product development, and marketing.
Here is an interesting article about their growth and how its been growing like a startup by focusing on the core values of convenience, reliability and speed.
Worldwide, on average, three million pizzas are sold by Domino’s every day.
One of the most important parts of their success is how they used technology. By 2014, the largest department at the Domino’s headquarters was the IT department.
They were the first company to set up online pizza ordering, and also set up status tracking of the application.
They also had a powerful “30 minutes or it’s free” delivery guarantee.
Domino’s Franchise Model
More than 95% of Domino’s franchisees in the U.S. started off as part-time pizza makers or delivery drivers. Domino’s prides itself in building excellence around its team members and franchisees. Much of Domino’s success has come from is franchise business model, which is an internally based franchise system.
The standard franchise agreement assigns an exclusive area of primary responsibility to each store. The franchised stores are required to pay a 5.5% royalty on sales, apart from certain technology-related fees. Sometimes, Domino’s can offer certain incentives to particular stores and lower the royalty rate for them.
Domino’s Pizza receives royalties and fees (28% of fiscal 2018 sales) from franchisees as well as revenue from supply chain operations (57%), covering ingredients, equipment and supplies. The company also operates its own stores in the U.S., which contributes to 15% of total sales compared with 44% at Papa Jonh’s. At Urbem, we highly prefer a large franchisee base – what is better than using others’ money to grow your business?
Unlike an “old-fashioned” franchise model, Domino’s Pizza controls the supply chain on top of its franchising operations, which encourages a more cohesive economic tie between the franchisor and its franchisees. A franchise contract renewal rate of 99% (in the U.S. in fiscal 2018) strongly indicates the robustness of the partnership. Although it is not involved in the real estate business like McDonald’s, Domino’s Pizza “owns” an online space that generates traffics of more than 23 million active users (as of Q3 2019) and contributes to over 65% of its U.S. sales. This is how Domino’s Pizza brings the restaurant franchise model to the next level – one store offering two businesses (i.e. delivery and carryout) with low initial capital expenditures, smaller space requirements and same-store-sales growth potential.
More information about how it works here.
Domino’s Franchise Financials
Usually the franchisee’s are from within. At the moment, single-store franchises are granted only for franchisors who have recent experience as a successful manager or supervisor of a store for at least 12 months.
Domino’s Pizza offers franchises for a fee of $25,000, though the total initial investment ranges from $119,950 to $461,700. The franchise agreement lasts for 10 years and is renewable, and the royalty fee is 5.5%. Franchisees should have at least $75,000 in liquid cash available.
While how much Domino’s franchise owners make definitely varies from location to location, Glassdoor reports an annual salary range between $107,000 to $116,000 can be expected. In addition to a very comfortable salary, franchise owners get great benefits, like a 401k and insurance.
Meanwhile, according to Franchise Help, more than half of franchise owners own more than one store, which means a much larger salary. Based on the average take-home for a franchise owner, it is quite possible to open additional stores after saving the equivalent of one year’s salary. And, as owners pay down any loans, profits can really take off resulting in as much as seven-figure income (via Small Business).
Owning the supply chain is also important.
Read More: https://www.mashed.com/208193/how-much-dominos-pizza-franchise-owners-really-make-per-year/
More about financials here.
