Domino’s FY25 Sales Slip 0.9% as Cost Savings Drive New Strategy

FY25 Financial Snapshot

Domino’s Pizza Enterprises Limited (ASX, DMP) closed FY25 with a stable yet slightly subdued financial performance. Network sales edged down by 0.9% to $4.15 billion, reflecting the impact of strategic store closures aimed at pruning underperforming locations. Earnings before interest and tax (EBIT) declined 4.6% to $198.1 million, while franchisee earnings before interest, tax, depreciation, and amortisation (EBITDA) remained steady at $94,700 per store on a rolling 12-month basis.

This performance signals a business in transition, holding its ground but facing headwinds in certain markets and operational areas.

Strategic Reset, Cost Efficiency and Growth Focus

Executive Chair Jack Cowin emphasised that Domino’s is concentrating on the fundamentals, quality food, fast service, and compelling value. The company is undertaking a comprehensive operational reset to simplify its business model, reduce costs, and reinvest savings into marketing and franchisee support. This approach aims to improve unit economics and drive sustainable same-store sales growth.

While the exact cost savings target remains undisclosed, the company plans to channel these efficiencies into enhanced franchise partner economics, increased media investment to stimulate sales, and improved digital capabilities to boost customer engagement and repeat orders.

Regional Performance, Mixed Signals

Domino’s reported solid results in Australia and New Zealand, with record profitability and the highest franchisee EBITDA in three years. A menu reduction program is underway to improve product quality and simplify operations, aiming to bolster franchisee returns.

In Asia, improvements in Taiwan and Southeast Asia were offset by challenges in Japan, where store closures have been completed to stabilise profitability. The company is shifting away from discount-heavy marketing toward building everyday value in this low-frequency market.

Europe presented a mixed picture, BENELUX showed positive same-store sales growth supported by new branding and digital marketing, Germany saw encouraging progress through national value campaigns, but France continues to face difficulties. New leadership in France is focused on simplifying the menu and enhancing value propositions to rebuild growth.

Capital Management and Dividend Policy

Domino’s is prioritising deleveraging and capital discipline, targeting a net debt to EBITDA ratio below 2.0x before reconsidering dividend increases. The dividend remains at 21.5 cents per share, unfranked, with the dividend reinvestment plan (DRP) retained but without underwriting. This cautious approach reflects the company’s commitment to strengthening its balance sheet while maintaining flexibility for future growth investments.

Looking Ahead

New store openings have slowed, reflecting current franchisee profitability levels below long-term targets. Management is focused on improving unit economics to support a sustainable pipeline of profitable new stores. The company’s strategic reset aims to deliver a better customer experience, stronger franchisee returns, and long-term shareholder value.

As Domino’s navigates this reset, investors will be watching closely for signs that cost savings and reinvestment efforts translate into renewed growth momentum across its diverse markets.