Global Doughmination: Breaking Down Domino's Pizza

In 2009, Domino's publicly admitted its pizza tasted like cardboard. What followed wasn't just a new recipe, but a reinvention of the entire company into a tech-forward logistics machine that just so happens to be a pizza chain. From a single store in Michigan in the 1960s to over 21,000 worldwide, Domino's has mastered franchising, supply chain control, and delivery innovation like few others. It may not be the best pizza in the world, but everything else is delivered to perfection.

• Founder-led for decades: Tom Monaghan took over a single pizza shop in 1960 and spent nearly four decades turning it from a college side gig into a global pizza empire.

• Lasting lessons: After nearly going bankrupt from overexpansion, Monaghan rebuilt Domino's with a disciplined franchise system focused on consistency, strong operators, and tighter control.

• Master franchises: Domino's international operations are primarily run by master franchisees who own regional rights, allowing the company to scale globally while maintaining local agility.

• Turnaround: After years of stagnation, Domino's reignited its business by overhauling its pizza, sharpening its brand, and reinventing itself as a tech-driven, vertically integrated logistics powerhouse with a renewed engine for growth.

• Delivery aggregators: In 2023, Domino's began rolling out on third-party platforms, starting with Uber Eats and later DoorDash by 2025, marking a major strategic shift from its in-house control.

Our story begins with a man named Dominick DeVarti. He was an ambitious World War II veteran who, among other things, worked in construction, operated three pizzerias, and once ran for mayor of Ann Arbor. While DeVarti sounds like the kind of entrepreneur you'd expect to lead a success story, his role here is limited. His only lasting contribution was the name he gave his stores and the one he eventually sold.

That store, a DomiNick's pizzeria in Ypsilanti, Michigan, changed hands in 1960 when it was purchased for $900 by two brothers: Tom and James Monaghan. The future of their pizza endeavor looked anything but assured, and it was clearly a side gig for the pair. Tom hoped it would help pay for college, while James continued to work as a mailman. At just 23 and 21 years old, with no business or restaurant experience, the odds weren't exactly in their favor.

But, thankfully for this story, they (naively) jumped straight in.

In hindsight, the early days were rougher than they probably expected. The store wasn't turning a profit, and the brothers were stretched thin trying to balance school, mail routes, and the demands of running a restaurant. Within a year, James had had enough and wanted out. Tom, out of college by then, wasn't ready to give up and bought out his brother's share of the business for the price of the Volkswagen Beetle they used to make deliveries.

With full ownership came full responsibility. Alone at the helm, Tom found himself facing long days, tough calls, and the constant challenge of making ends meet. But over the course of two hectic nights, a few small decisions quietly reshaped his entire approach to business:

That lesson stuck. Over the next few years, Tom opened a second store, then a third. But when it came time to grow beyond that, he hit a naming roadblock as DeVarti wouldn't allow him to use “DomiNick's” as he expanded. So he changed it just slightly, and with that, Domino's Pizza was born.

Around this time, Monaghan also began shaping the brand. With three locations up and running, he came up with a simple but clever logo: a domino with three dots, each representing one store. The idea was that he could just add a dot for every new location, similar to how the U.S. flag added stars for every new state. The logo, which now is an iconic symbol, is also a reflection of how modest Monaghan's ambitions were back then. He wasn't imagining a future with hundreds, let alone thousands, of stores.

A standard domino tile with twelve dots wouldn't have been enough to get through the 1960s. After replicating the early success of the original stores, Monaghan launched the first franchise in 1967, and within just a few years, Domino's had grown from fewer than a dozen locations to more than 40. He was following the playbook pioneered by other fast-growing fast food chains like McDonald's and KFC (now owned by Yum! Brands), and it worked.

But the momentum didn't last. The early 1970s brought serious trouble, as Monaghan learned firsthand the risks of expanding too aggressively. He had failed to lay the necessary groundwork at each store, specifically, ensuring that franchisees were equipped to replicate the model and uphold the standards that made the original stores such successes.

Domino's came dangerously close to bankruptcy during those years, but through tough decisions such as cutting ties with some franchisees, restructuring debt, and slowly regaining control, the company clawed its way back to profitability. However, the experience left deep scars on Monaghan, who from that point on, completely redesigned the franchise model with far more discipline. The system he built in the aftermath would become Domino's core operating engine and arguably its greatest long-term advantage to this day. More on this shortly.

Although Monaghan and his Domino's had come close to collapse, it was never the pizza recipe or the operations within his control that had been the faulting errors. With some invaluable lessons in mind, Monaghan prepared for a new phase of expansion.

One of the key moves during this new phase was a focus on delivery, something that Monaghan believed could become Domino's defining advantage. In 1973, that belief turned into a promise: the 30-minute guarantee. If your pizza didn't arrive within 30 minutes, you get it for free.

From a marketing perspective, it was a stroke of genius. Customers had never heard of something like it before and were instantly tempted to order hoping that the pizza would arrive “late” and with that, be free. But its indirect impact on the organization may have mattered even more. In effect, the guarantee sparked a system-wide push for operational consistency, as every store had to become faster, leaner, and more disciplined to deliver on the promise. It may not have been a calculated strategy, but it turned out to be an extremely effective nudge.

An innovation from a few years earlier helped reinforce this commitment. Monaghan had redesigned the pizza box to solve a specific problem: heat and structure during transport. The result was a corrugated cardboard box – insulated, vented, and stackable – that kept pizzas warm without letting them get soggy or crushed. While it supported Domino's growing delivery ambitions, it also quickly became the industry standard and closely resembles the box still used by most pizzerias today.

Strengthened by a redesigned franchise structure, focused marketing, and tighter operational systems, Domino's reached 200 stores by 1978. In just a few years, it had gone from the brink of bankruptcy to becoming a serious national player.

Domino's modern pizza box: insulated, vented, and stackable.

Domino's modern pizza box: insulated, vented, and stackable.

1983 saw Domino's arrive at two major milestones: the company opened its 1,000th store, but perhaps more significantly, launched its first international location, in Canada. What followed the stores across its northern border was a rapid wave of global expansion, launching in the UK, other European markets, and eventually as far east as Japan.

Although the concept had been built for the American market, Monaghan had refined the business to the point where it basically functioned as a guaranteed blueprint of success. And when it came to the product itself, the appetite for fast-food pizza was far from uniquely American.

The 1990s brought continued growth in existing markets and steady entry into new ones, and by 1995, Domino's had reached 1,000 international locations. The following year, it opened its first store in India, a market that proved to be an ideal fit for the Domino's concept. Since 2014, India has been Domino's largest international market, now home to more than 2,000 stores.

Domino's global store expansion since its IPO in 2004.

Domino's global store expansion since its IPO in 2004.

As of 2025, Domino's is the world's largest pizza company, with over 21,500 locations across more than 90 markets. Since 2012, its international store count has surpassed its U.S. footprint, and that momentum has continued. Today, roughly 14,500 of its stores are in international markets, while around 7,000 are located in the U.S.

Domino's international expansion follows a tightly defined structure refined over decades. Domino's Pizza sets the global direction, selecting new markets, approving regional partners, and maintaining brand standards, while local execution is primarily handed off to what are known as master franchisees. In short, these are regional operators that are given exclusive rights to build and run Domino's operations within a specific territory. These partners take on responsibility for store expansion, operations, and market adaptation within their assigned regions.

A key part of Domino's expansion is its store placement strategy, known internally as fortressing. Rather than spreading stores thin across wide areas to boost reach, Domino's clusters them tightly in high-density regions to maximize visibility, reduce delivery times, and crowd out competitors. If you live in an urban area, you've likely noticed this firsthand. The proximity of stores isn't a coincidence. It's the result of deliberate planning, carried out by franchisees with oversight from Domino's corporate team.

A slide from Domino's 2023 Investor Day, showing the benefits of its fortressing strategy.

A slide from Domino's 2023 Investor Day, showing the benefits of its fortressing strategy.

While Domino's national rise in the 20th century was directly shaped by Monaghan, its global expansion is rooted in the franchise system he helped build. Before we get into Domino's leadership transitions, IPO, and what the company looks like today, let's pause and give this part its due. By digging into that system, we'll see how Domino's was able to scale so far, so fast, and so successfully.

Early on, Tom Monaghan realized that franchising was the path to scale his pizza business. While running his small chain of stores, he drew inspiration from two of the most influential franchisers of all time:

However, the concept of franchising wasn't new, and companies like Coca-Cola and PepsiCo had long used it successfully to scale their bottling networks. But in the fast-food world, Ray Kroc and McDonald's set the gold standard. By enforcing strict operational guidelines and maintaining centralized control, Kroc built a national hamburger chain of over 1,000 stores within a decade.

The advantages of the franchise model are well established, shifting both risk and reward from the corporate franchisor to the local franchisee. Rather than relying on salaried managers, it gives operators direct ownership and incentives aligned with the brand's success.

Franchisees take on the financial and operational responsibility, such as investments, hiring, and daily execution, but gain the upside of excess returns and the autonomy to run their own business. When those incentives are paired with an established global brand and a finely tuned operating system, franchising becomes a powerful engine for growth.

In fact, besides the aforementioned models, most major fast-food chains, including Taco Bell (owned by Yum! Brands), Burger King (owned by RBI), Subway, and Dunkin' Donuts, are also built on franchising and stand as clear success stories of the model. Domino's direct competitors in the U.S. pizza market have followed the same path: Pizza Hut (owned by Yum! Brands), Papa John's, and Little Caesars are all franchise-driven businesses. As these cases illustrate, it's nearly impossible to scale at this pace or operate across so many markets without leveraging the franchise model.

Much has changed since Monaghan launched his first franchises in the late 1960s, but the structure remains at the core of Domino's business. As of 2025, 99% of its stores worldwide are owned and operated by independent franchisees. The remaining 1% are run directly by Domino's Pizza and are located in the U.S. These stores serve a critical role for the company by providing it with firsthand insight into operations, acting as training hubs for future franchisees, and serving as testing grounds for new technologies and operational improvements.

The Domino's franchise structure covering the 99% varies distinctly between its U.S. and international businesses. In the U.S., Domino's uses a standard franchise model: local franchisees operate the stores, while corporate retains control over branding, menus, national marketing, and operational standards. A few international markets, including Canada and South Korea, follow the same structure and are directly under the Domino's Pizza umbrella.

But in eight of its ten largest international markets (by store count), Domino's uses the system we briefly mentioned previously: the master franchise model. This approach introduces an additional layer between Domino's and the local stores, so instead of managing franchisees directly, Domino's grants a single entity exclusive rights to operate within a specific country or region. These master franchisees function with the same level of autonomy that Domino's retains in the U.S., and Domino's holds no significant ownership in any of them.

The master franchise concept isn't unique to Domino's. Global brands like Coca-Cola use similar models, partnering with independent bottlers that hold exclusive rights to produce and distribute across regions. While Domino's master franchisees operate broader retail systems, the core idea is the same: empower local partners to scale the brand efficiently.

Domino's first master franchise agreements date back to the early 1990s, when it entered the U.K., Ireland, and Australia. Since then, it has signed agreements with over 46 master franchisees around the world. Today, the vast majority of Domino's international stores are operated under this structure, with partners holding both franchise and distribution rights across countries or entire regions.

Some of these entities focus on a single market, while others, like Domino's Pizza Enterprises, oversee operations across more than ten countries and multiple continents. Seven of Domino's master franchisees are publicly traded companies, some exclusively focused on Domino's, others operating additional fast food brands as well.

Master franchisees follow Domino's core operating model and standards but retain considerable autonomy, controlling their own menus (within brand guidelines), are responsible for their localized marketing campaigns, and also for the sourcing of supplies from approved vendors that meet Domino's quality requirements. Pricing is also adjusted to fit local market dynamics.

Although autonomous in much of their day-to-day operations, Domino's continues to support its master franchisees through dedicated operational teams, data and analytics resources, and marketing insights. This ensures consistency in execution and brand alignment, even across its highly diverse markets.

Crucially, the autonomy granted to master franchisees, combined with their required understanding of local culture, customer behavior, and regulatory environments, results in offerings tailored to each market. That localization is most visible in the difference in menus. Walk into a Domino's in India, and you'll likely find specials including paneer tikka-stuffed garlic bread or a tandoori paneer pizza. Or at the local Domino's in Japan, where you can order a teriyaki pizza and customize it with seaweed flakes.

This blend of global brand standards and regional flexibility is a major reason Domino's thrives in international markets. India's success is due not only to strong local demand for pizza but also to the performance of its franchise partner, Jubilant FoodWorks, which has adapted and executed the Domino's model with perfect precision.

So, how does Domino's select its franchisees? The process of identifying, selecting, and onboarding is critical, and as Tom Monaghan learned early on, the success depends largely on how well the operators execute the Domino's concept.

For its directly franchised U.S. stores, Domino's uses a structured and experience-driven approach. Most prospective franchisees begin by managing an existing store before enrolling in Domino's Franchise Management School. Today, over 170 individuals are in that pipeline. The expectations that candidates are schooled through are, in fact, a direct result of the catastrophic years in the early 1970s when its lack of standards nearly put the company in bankruptcy.

Currently, Domino's works with over 750 independent franchisees across its +6,700 U.S franchised stores. More than 20 of these partners operate over 50 locations each, and the largest runs more than 150. On average, a U.S. franchisee owns nine stores and has been in the system for over 15 years. These franchisees are typically granted exclusive rights to operate their stores for 10 years, with renewal options.

Selecting master franchisees is an even more scrutinized process, given the broader responsibilities and strategic impact. These partners don't just run stores, but they effectively operate as Domino's does in the U.S., overseeing everything from market development to sub-franchising. That includes managing operations, setting local strategy, and driving growth across entire regions. As such, Domino's looks for candidates with deep local market expertise, including real estate access, operational scale, cultural understanding, and strong financial backing.

Once selected, master franchisees sign comprehensive agreements that typically grant exclusive rights to develop and sub-franchise stores over 10-year terms, with options to renew. These agreements often include the right to operate supply chain centers as well. In return, partners must meet specific financial and store growth targets.

While expectations are high, Domino's provides extensive support in training, operational systems, and strategic guidance to help master franchisees set up an infrastructure and succeed. As you'll see throughout this article, it's that operational model that underpins Domino's ability to scale globally with consistency.

The strength of Domino's system is matched by the strength of its store-level economics, refined over decades to reinforce one another. All of its franchisees pay Domino's royalty fees in exchange for access to its brand, recipes, supply chain (in the U.S. and Canada), and operational support. While the structure differs between domestic and international markets, the underlying model is consistent: Domino's provides the playbook, and franchisees fund and operate the stores.

In the U.S., franchisees pay an average royalty of 5.5% on sales, a technology fee currently set at $0.355 per transaction, and are also required to contribute to regional and national marketing funds. They also cover all capital expenditures, including store build-outs, leases, equipment, inventory, and insurance.

Internationally, master franchisees pay an initial fee when signing their agreements, along with a per-store fee when opening new locations. In addition, and most importantly, they pay an average royalty of around 3% on sales, though the rate can vary slightly by market depending on negotiated terms and local incentives. Like their U.S. counterparts, they also pay technology-related fees.

We'll explore the broader financial structure of Domino's Pizza in more detail later, but for now, it's worth emphasizing the cost-efficiency of this model. To illustrate: in the U.S., the average startup cost for a Domino's store is estimated at around $400,000. In 2024, the average franchisee-run store earned $162,000 in profit, resulting in a payback period of less than three years and strong cash flow beyond that point. While the absolute figures differ across regions, the relative economics remain similar, making the Domino's franchise model both attractive and replicable.

The dynamic of low capital intensity for Domino's, reasonable upfront costs for franchisees, and strong unit-level economics creates a powerful platform for rapid expansion. Many franchisees grow from a single store into multi-unit operators, reinvesting in new locations as cash flows support further growth. Much like its pizza operation, Domino's franchise model is built for scale. The system is standardized, reliable, and easy to replicate.

Now that we're halfway through the article, take a moment to appreciate the scale of Domino's global pizza empire. Since you started reading, the company has already served up around 50,000 pizzas across the world – 900 every second.

Now, back to where we left off. As the 1980s gave way to the 1990s, Domino's was thriving. Franchising was scaling rapidly, master franchise agreements were taking shape, and Domino's had become the U.S. market leader.

Despite the momentum, Tom Monaghan was preparing to leave his pizza career behind. In an effort to show potential acquirers that the business could operate without him, Monaghan stepped back temporarily. But his plan didn't hold as the performance that followed was disappointing, and therefore, the interest from potential buyers was underwhelming. Pizza Hut launched its own delivery service and overtook Domino's market lead, while competitors like Little Caesars and Papa John's also advanced their positions.

After about two years watching his exit plan unravel, Monaghan returned. Back at the helm, he led a push to modernize the business. For years, Domino's had relied almost exclusively on its original hand-tossed pizza, but now it began expanding its menu, adding breadsticks, deep dish, thin crust, flavored crusts, and buffalo wings.

The updates signaled a willingness to adapt and reinvent itself as consumer preferences were changing. At the same time, the company ramped up international expansion, accelerating its move toward master franchising and began scaling more efficiently and consistently than it had recently.

Once these changes were in place and performance had stabilized, Monaghan finally felt ready to leave, and this time for good. In 1998, after nearly four decades of ownership and leadership, he sold almost his entire stake (more than 90%) to a group of private equity firms led by Bain Capital and stepped down as CEO.

As is often the case with private equity ownership, Bain's strategy with Domino's focused on driving operational improvement and financial discipline. And after a few years, with new leadership and significant progress in streamlining operations, upgrading store-level performance, and enhancing the supply chain, Domino's was better positioned for growth. Taking the company public became the natural next step in realizing that value.

On July 13, 2004, Domino's completed its IPO, closing the first day with a market cap just shy of $1 billion. At the time, it had clawed its way back to the leading position in the U.S. and was operating in over 50 countries, with roughly 7,500 stores worldwide.

But the fast food chain's growth didn't take off like it had hoped. In its first five years as a public company, its progress was mixed. On the one hand, its global operations, through its master franchisees, were doing quite well and had increased its sales by over 75%. However, its domestic operations were clearly struggling, with its U.S. sales decreasing. In November 2008, amid the financial crisis, Domino's stock bottomed out below $3, down more than 80% from its IPO and representing a market cap of less than $200 million.

Domino's team took a hard look at the business and its pizza. They did not like what they saw and knew they had to change.

During the years that had gone by, the company had long been attempting to create buzz with new products and advertising campaigns to attract new customers. But now, instead, they shifted focus to improving the pizza for existing customers. And what better way to do that than starting by asking these people the simple question: “What do you think of our pizza?”

While Domino's had likely sensed something was off, given years of flat domestic growth, the results from its focus group testing delivered a much-needed wake-up call.

“The crust tastes like cardboard”, “the sauce tastes like ketchup”, and it being “the worst excuse for pizza I've ever had” were just some of the critiques that came its way. Domino's was still generating billions in annual U.S. sales, but with reviews like these, it was no mystery why growth had stalled.

From that introspection came the blueprint for a dramatic shift: a product and brand overhaul. These became the two pillars of the Pizza Turnaround campaign. First came the most obvious fix, reformulating the pizza itself. The team tested countless dough recipes, experimented with tomato sauces, and tried new cheese blends. On the other side of all that trial and error came a freshly crafted pizza that, at the very least, the team believed was far better than the one it was replacing.

Once they were confident it could be consistently replicated across the U.S. store network, they turned to the second and arguably harder part of the turnaround: the brand. As the focus group made clear, Domino's reputation was in rough shape. The chain had never positioned itself by offering the best pizza you'd ever eaten, but around consistency, convenience, and satisfaction at a fair price. Still, if the widespread perception was that the product tasted like cardboard, all those things didn't matter. Changing the pizza wasn't enough – they had to change how people thought about Domino's.

Leading this effort was company president Patrick Doyle, a long-time Domino's executive who had joined in 1997 and risen through the ranks. From marketing to head of international, to president of U.S. operations, and then company president.

In a 2023 interview, Doyle reflected on the challenge they faced. Domino's had done all of this testing and completely reformulated the recipe, but now, “How do we communicate this to ensure that the message breaks through?”

The answer came in the form of a bold marketing reinvention. In late 2009, Domino's launched a video campaign that did something few brands ever dared: it owned the criticism, openly and directly.

The 4-minute-long video featured then-president Patrick Doyle, product managers, marketers, and chefs who had worked on the pizza for years. Together, they confronted the customer feedback head-on. “The crust tastes like cardboard,” they repeated aloud, before showing how the team had worked “days, nights, and weekends” to overhaul the recipe, proving they had listened and responded.

In early 2010, Doyle officially stepped into the CEO role, and the rebranding continued. Domino's had regained confidence in its pizza, and it showed. By leaning into transparency and embracing vulnerability, the company sparked widespread buzz from the media and the public, which began transforming into renewed trust as more and more people came back to try its new, improved pizza recipe.

One of the campaign's standout moments was a digital billboard in Times Square that streamed unfiltered customer comments in real-time, fully opening up its feedback channels with the praise, criticism, and everything in between that came with it.

In the midst of this transformation, Domino's also dropped the “Pizza” from its brand name and logo, subtly but forcefully signaling that the brand was strong enough to stand on its own.

Domino's transparent marketing campaign on billboards at Times Square.

Domino's transparent marketing campaign on billboards at Times Square.

Following its successful turnaround, Domino's shifted focus to another crucial lever: increasing the availability of its pizza. By developing the order experience, the company aimed to lower the barriers to placing an order, especially as a younger, digitally native generation increasingly became the core customer base.

Domino's had offered online ordering since 2007, but the launch of its iPhone app in 2011, followed by an Android version in early 2012, marked a major shift. Around the same time, the company introduced the “Easy Order” feature, letting customers save their favorite pizza combinations and reorder them with a single tap. Soon after, Domino's pushed into emerging platforms, enabling orders via Amazon Alexa, Google Home, Apple Watch, and even Facebook Messenger, where sending a pizza-emoji placed an order.

By the mid-2010s, digital ordering had become Domino's largest order channel, and while it of course was a reflection of shifting consumer behavior, it was also a testament to Domino's ability to meet customers wherever they were, and on whatever device they were using. In many ways, this focus was a continuation of a strategy that began decades earlier. Back in the 1970s, Tom Monaghan had built Domino's around convenience, launching the now-famous 30-minute guarantee and pioneering the modern pizza box. As said, Domino's was never trying to make the best pizza in the world, but it was striving to be the most consistent, efficient, and accessible.

This mindset and philosophy have remained with Domino's throughout its history, but it can only deliver results if there's a strong demand for the product. With the demand reignited in the 2010s, the company clearly doubled down on its innovation focus. During this period, Domino's began bringing more of its development in-house and started reshaping its workforce. By the late 2010s, half of the 800 employees at its headquarters were working in its software and data analytics departments.

As then-CMO and now CEO of the company, Russell Weiner put it in 2014: “internally, it's not uncommon to hear the brand referred to as a technology company that just happens to sell pizzas.” (Fast Company, 2014).

This investment went far beyond app interfaces. It enabled smarter store placement, optimized delivery routes, and drove data-backed decisions around promotions and menu items, all designed to make Domino's the most efficient pizza operation in the world. As you know now, the shift towards online has not stopped since those years. This has contributed to bringing approximately 85% of Domino's U.S. orders to its online channels as of 2024.

These years also saw some physical innovation. In 2015, Domino's introduced the DXP, its own custom-built delivery car, equipped with a warming oven and optimized for pizza transport. Combined with GPS tracking and continuous UX refinement, Domino's kept pushing the boundaries of operational efficiency.

When Patrick Doyle eventually stepped down as CEO in 2018, he could look back at a turnaround that could not have gone better. Its pizza tasted better, its brand had moved far beyond its cardboard reputation, and it had completely transformed its digital and delivery infrastructure.

Just as Monaghan had known half a century earlier, most of Domino's convenience-seeking customers didn't want to dine in. A direct result of this is that most of its locations have, throughout time, been designed primarily for carryout and delivery. This has allowed the chain to keep its stores considerably smaller compared to other fast-food chains, where customers expect to be able to sit down.

Most U.S. locations are compact and built for off-premise orders, typically offering only a small pickup area, and is the main reason for the earlier-mentioned $400,000 startup costs. In its international markets, dine-in options are more common, with customers' preferences varying.

While delivery and carryout volumes are now about equal, the company has long maintained full control of the order and delivery experience. That control reflected the broader belief that owning the combined service was key to delivering consistent quality. Only recently has Domino's started integrating with third-party delivery platforms – a shift we'll revisit soon.

Domino's operational backbone is its supply chain. Refined throughout the decades and quietly powering the brand's promise of quality, consistency, and scalability, without compromising the final product delivered to customers day after day. At Bernstein's 40th Annual Strategic Decisions Conference, in 2024, Domino's CEO, Russell Weiner, was reminded about his previous remark that Domino's was a “technology company that just happens to sell pizzas”, and when asked where the company's competitive advantage lies today, he replied:

Since its early days, Domino's has operated on a centralized supply chain model. Its success has long hinged on its standardized store blueprint and streamlined pizza preparation process built for replication at scale.

In North America, that system is vast, consisting of several operations ensuring consistency in product quality and operational efficiency across the franchise network. Domino's supply network includes 22 regional dough manufacturing and supply chain centers, two thin crust production facilities in the U.S., several more in Canada, and a vegetable processing plant. Along with these internal operations, the company also relies on long-established partnerships with suppliers for key ingredients such as cheese and meats.

According to its 2024 annual report, substantially all of its U.S. stores and most of its Canadian stores utilize the supply chain. Not because they have to, but because it is the most efficient, cost-effective, and convenient alternative for them. To encourage franchisees to do so, Domino's offers a profit-sharing incentive, where franchisees who purchase all of their food and supplies through Domino's network receive 50% of the pre-tax profits generated by those centers.

For franchisees, the centralized supply model reduces sourcing complexity and helps ensure quality and consistency, while also providing the added benefit of shared upside. For Domino's, it's a worthwhile tradeoff to keep stores aligned with its standards and streamline operations across the chain. Though the supply chain is a major revenue driver for Domino's, accounting for around 60% of total revenue, it comes with a gross margin of 10%. This is kept low to maintain healthy economics for franchisees and drive system-wide adoption of its internal network, and allows each store to pass value down to the customers.

To transport supplies, Domino's leases a fleet of more than 1,000 tractors and trailers. The stores these ingredients arrive at are just like the ingredients themselves, the product of decades of optimization. Inside those stores, Domino's uses a globally standardized workflow known as the “circle of operations.” Once an order comes in, it enters a tightly choreographed loop: prep, bake (typically 6-7 minutes), slice, box, and out the door. Every in-store handoff is timed to minimize delay, with each step seamlessly coordinated so drivers arrive just as the pizza hits the cut table.

A key part of this system is DOM OS, Domino's internal platform that connects these steps and supports store teams with helpful data and coordination tools. Importantly, this “circle” is nearly identical at Domino's stores around the world. That consistency makes it easier to roll out new tools globally, ensures staff training stays tight, and helps every market reach the same performance standards.

In its international markets, while they can't access Domino's supply chain network, many of its master franchisees and their sub-franchise networks operate their own vertically integrated supply chain systems, closely modeled on Domino's North American approach. These master franchisees are responsible for overseeing ingredient sourcing, food preparation standards, and delivery logistics within their regions. While operations may vary by market, Domino's works closely with them to ensure that ingredient quality, food safety, and operational consistency align with the global brand standards.

Where possible, franchisees are encouraged to replicate Domino's centralized logistics model, including regional dough manufacturing and distribution hubs. In some cases, Domino's assists master franchisees in setting up or optimizing these systems, sharing best practices from its own U.S. supply chain experience.

It's hard to remember a time when the streets of big cities weren't flooded with delivery aggregators, streamlining the ordering process and offering cheap, fast delivery to your door. What began in the early 2010s accelerated sharply during the pandemic, as nearly every hungry consumer and opportunistic restaurant (or chain) connected to platforms like DoorDash, Uber Eats, Foodora (owned by Delivery Hero), Deliveroo, Grubhub (owned by Just Eat Takeaway.com), and more.

These aggregators didn't just intensify competition among pizza chains; they broadened the battlefield to include every type of food. Pizza had long been one of the most convenient takeaway foods, but many other categories, once largely dine-in focused, were suddenly just as accessible. So while the shift opened up new opportunities to grow volume, it made the competition fiercer than ever.

Partnering with aggregators brings clear benefits as restaurants gain access to millions of browsing users. But the tradeoff is steep as these platforms take a significant cut of each sale, and if you hand over the full service, it means giving up control of the delivery experience. For Domino's, that posed a unique challenge. As its history has shown, owning the full journey from order to delivery has been central to its operational edge and a pillar of its identity for over half a century.

To embrace aggregators would require a fundamental operational shift, forcing Domino's to reevaluate systems into which it had poured decades of investment, systems fine-tuned for in-house integration and delivery optimization. The transition wouldn't just be hard, it would require a major overhaul of its infrastructure and philosophy.

For years, Domino's remained firmly opposed to working with third-party platforms in its U.S. market. Meanwhile, competitors like Pizza Hut, Papa John's, and Little Caesars were already live on delivery apps early in the pandemic. Holding tightly to its in-house model in a radically shifting industry may have helped protect its brand in the short term, but failing to adapt could have led to long-term damage.

While Domino's held its ground at home, it quietly began testing aggregator partnerships abroad. By the late 2010s, many of its international franchises had rolled out deals with local platforms. These trials included both order placement and delivery fulfillment, allowing Domino's to evaluate structures, refine terms, and compare channel performance. In hindsight, it was clear Domino's was laying the groundwork for a coordinated shift.

After studying the trends and observing its international markets, Domino's ultimately chose to launch where demand was waiting. In July 2023, the company announced a global agreement with Uber, making Uber Eats and its Postmates platform the exclusive third-party delivery partners for Domino's in the U.S.

Customers could now order Domino's through the Uber Eats app, but crucially for Domino's, the agreement stipulated that the deliveries would still be fulfilled by its own drivers. Internationally, the deal gave master franchisees the option to join under the same global framework, designed to align branding, data sharing, and economics across markets.

By the end of 2024, Domino's reported that the Uber Eats integration had met expectations, contributing to 3% of its U.S. sales in the fourth quarter, in line with its stated target. At first glance, one might think it was channel cannibalization, simply shifting orders from the Domino's app to Uber Eats. But the overlap was surprisingly small: only about 35% of customers overlapped between channels. Going forward, Domino's will no longer break out aggregator-specific sales, but it will all be included under its broader delivery category.

Given that the U.S. pizza delivery market is estimated at $5 billion and Domino's holds roughly a one-third share, the incremental opportunity is sizable to say the least:

With the door to aggregators open, Domino's began preparing to partner with all major players. In its Q2 2024 earnings call, Russell Weiner confirmed the plan that Domino's expected to be live on all major platforms within three years.

The next major move came in April 2025, with the announcement of a new partnership. This time with DoorDash, the largest delivery aggregator in the U.S, with plans to expand the agreement to also include Canada later in the year. Similar to the Uber Eats arrangement, Domino's retained full control over the delivery. In the Q1 2025 earnings call, shortly after the DoorDash news, Russell Weiner addressed expectations:

Importantly, Domino's continues to invest in its own digital ecosystem, which for many of its loyal customers remains the preferred channel for several reasons. The app offers better value, exclusive deals, and access to its loyalty program. And for Domino's, orders placed through this channel are more margin-friendly, as they don't incur third-party commission fees.

With Domino's now present on third-party delivery platforms, the brand is ensuring it meets customers wherever they are. Whether someone wants to order through Domino's own app, a delivery aggregator, or even via phone, the channel should never be a barrier. From its earliest days under Monaghan, convenience has always been the company's cornerstone.

Affordability has always played a complementary role to that convenience. While not aiming to be the absolute cheapest option on the market, Domino's has historically positioned itself as a low-priced chain. Over the decades, it has leaned heavily on limited-time offers and everyday low-price carryout deals, like the $5.99 Mix & Match and $7.99 large one-topping carryout. As explained earlier, in its international markets, its master franchisees adjust pricing based on local market conditions.

With the story and structure in place, let's turn to how Domino's franchise model translates into financial performance. The design of that model, and the way it shapes store-level operations and capital efficiency, remains not only the foundation of Domino's success but also its clearest growth lever going forward. The model has drawn the attention of Warren Buffett's Berkshire Hathaway, which has become a notable shareholder in recent years.

The franchising financial model of Domino's Pizza is, as mentioned earlier, primarily fueled by royalty payments collected from its franchisees. Despite having more than twice as many stores internationally, Domino's collects roughly twice as much in royalties from its U.S. franchises. That's partly because U.S. stores tend to generate more revenue per unit, but also because they pay higher royalty rates (5.5% vs. ~3%) due to their direct franchise agreements versus the master franchise structure used overseas.

While the bulk of the company's revenue (over 60% in recent years) comes from its vertically integrated supply chain operations, this segment operates at low gross margins and contributes relatively little to operating income. In this context, it's important to keep in mind that supply chain profits are partly shared with franchisees. Domino's has explicitly stated that this segment is designed to support franchisee success, not to maximize margin extraction. Instead, the royalty fees, which make up a smaller share of Domino's total revenue (approximately 20% in 2024), contribute to the majority of its operating income.

Domino's royalty revenue expansion from its U.S. and international franchises.

Domino's royalty revenue expansion from its U.S. and international franchises.

As mentioned earlier, Domino's U.S. transaction mix is now roughly evenly split between delivery and carryout. But notably, carryout is growing faster, increasing its 2024 same-store sales by 6.2% vs 1.1% for delivery. While delivery still drives higher average order values, carryout offers a more attractive margin profile, making it a strategically important growth lever for the company across its global franchises.

This growth is amplified by Domino's fortressing strategy, which clusters stores more densely within a given market. Although fortressing also benefits by shortening delivery times for its drivers, its main purpose is to boost carryout by placing stores closer to customers, shortening the pickup distance. So while increased store density dilutes same-store sales somewhat, the store profitability improves, which, all in all, is a positive tradeoff for Domino's. Russell Weiner emphasized this dynamic during the Q1 2024 earnings call:

The cycle of incremental volume, strong store economics, and fast payback is exactly what fuels Domino's expansion. With average payback periods of less than three years, franchisees are incentivized to reinvest and open additional locations. This creates a self-reinforcing flywheel of unit growth and scale efficiency.

The store economics and profitability are the foundation upon which Domino's can target global expansion with such a high growth rate. At its Investor Day in December 2023, it outlined new store growth targets in its Hungry for More initiative. The plan calls for net expansion of 1,100 stores annually through 2028, with about 85% of that growth expected to come from international markets. This would take its global store count to 26,200. Although net store growth came in lower than expected during 2024, dragged down by a high number of closures in markets like Japan and France, the company has reiterated that its short-term guidance through 2028 remains unchanged.

In Domino's Q1 2025 earnings call, CFO Sandeep Reddy noted that the “closures should be mostly behind us as we get into 2026.” That said, closures are an inevitable part of any global franchise's evolution and expansion. In Domino's case, some reflect strategy, such as portfolio optimization or market repositioning, while others are straightforward market exits, like its recent departure from Russia.

Coming back to the net store growth, the company has expressed that it sees the international long-term runway as “immense”. Beyond its 2028 target of over 18,500 international stores, the company sees a long-term potential of operating more than 40,000 locations outside of the U.S. (while also increasing its domestic stores from 7,000 to more than 8,500).

The Indian market is a good representation of the international momentum and opportunity. As noted earlier, India is the company's largest international market, with +2,000 stores and is targeting 3,000 stores already by 2028. Another fast-growing market is China, where the number of Domino's stores has surged from fewer than 400 in 2021 to over 1,000, making it the company's third-largest international market. Both India and China are expected to remain major contributors to Domino's global growth in the years ahead.

Since there are very few capital requirements associated with Domino's asset-light, franchise-driven model, the company consistently generates strong and predictable free cash flow. Following its turnaround in 2009, the company spent several years reinvesting heavily to become the tech-centered, delivery-optimized brand it is today. These investments focused not only on digital ordering and proprietary logistics systems but also on expanding and modernizing its vertically integrated supply chain infrastructure to support the rapid franchise growth.

In recent years, as much of that infrastructure build-out has matured, capital expenditures have declined. Therefore, Domino's has been able to increase returned capital to shareholders through regular dividends and substantial share repurchases.

While Domino's revenue mix is weighted toward lower-margin supply chain sales, the real story is in its royalty fee growth and what that has led to in terms of operating leverage and consistent bottom-line expansion. With limited reinvestment needs and increasingly efficient operations, Domino's has turned its cash generation into a powerful engine for shareholder value creation.

The result? It speaks for itself:

Domino's EPS growth alongside years of steady buybacks.

Domino's EPS growth alongside years of steady buybacks.

Remember that Domino's stock traded below $3 in 2008, with a market cap below $200 million? Today, it's worth over $15 billion and has completed one of the most impressive corporate turnarounds in recent times. The strategy was simple but powerful. Domino's transformed its product and brand, invested in a vertically integrated supply chain, doubled down on tech, and scaled through its disciplined, standardized franchise model.

As I write this conclusion, I'm in the last slices of a Domino's pepperoni pizza, ordered through the app, picked up in-store. I'll be honest: it's not the best pizza I've ever had. But it was done on time, it's exactly what I expected, and it cost me less than most fast food meals. And that's the whole point.