Domino’s Pizza Enterprises—controlled by fast food billionaire Jack Cowin—will shut 205 money-losing stores, most of which in Japan, to cut costs and boost earnings.
Domino’s Pizza Enterprises is closing about one-fifth of stores in Japan to boost profits.
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The company will incur A$97 million ($61 million) in one-off restructuring costs from the downsizing exercise, which will generate A$15.5 million in annualized network savings, the Brisbane, Australia-based company said.
Shares of Domino’s Pizza Enterprises—the largest franchisee of the American pizza chain outside of the U.S.—surged 21% in Sydney trading, after the company’s newly-minted CEO Mark van Dyck announced the closure.
Domino’s will close 172 stores in Japan, a fifth of its 944 outlets in that market, where a pandemic-era surge in consumer demand has waned and the company has struggled with high input costs. The move is part of a broad strategic review to boost profitability in places like Japan and France, the company said.
While Japan remains an attractive market with significant long-term upside, Van Dyck said “some of our COVID-period expansion resulted in stores that simply weren’t optimal based on our current customer proposition.”
Domino’s will be disciplined in expansion and prioritize high density prefectures to position existing and new stores, Van Dyck said.
The store closures in Japan, where Domino’s franchisee has the most number of outlets, will entail a one-off restructuring cost of A$62 million and generate boost EBIT by as much as A$12 million annually, according to the company.
Domino’s Pizza Enterprises has 3,733 stores across Europe and Asia. It is among the holdings of Cowin’s privately held Competitive Foods Australia, which also owns the local Burger King franchise.
Cowin, a Canadian who moved to Australia after a holiday to Sydney in 1968, has a net worth of $3.4 billion based on Forbes real-time data. He built his fortune from a KFC outlet he opened in Perth in 1969. Two years later, he secured the Burger King franchise that he owns up to now. He sold his KFC franchise to Australian restaurant operator Collins Food in 2013.
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