Domino's Pizza Enterprises faces potential market reallocation
- Domino's Pizza indicates it may reassign international markets run by Domino's Pizza Enterprises.
- Royalties are projected to rise from 2% to 3% as sales recovery extends to 2027.
- Rapid international expansion has pressured operations, prompting re-evaluations of underperforming markets.
Domino's Pizza Enterprises (ASX:DMP) may transfer control of selected international markets to alternate operators following performance warnings from its US franchisor.
The US master franchisor stated that the company's full sales recovery is now expected to extend until 2027.
"If DPE can be the owner of those markets, then great ... If it’s not right for them, then we’ll work with them to make sure that those markets can be successful in someone else's hands," said Domino's Pizza CEO Joe Jordan.
Barrenjoey analyst Tom Kierath indicated that royalty fees are expected to increase from 2% to 3% across international regions.
Following the announcement, the Domino's Pizza Enterprises share price was unchanged at $21.79.
The group currently operates 3,500 store locations across Australia, New Zealand, Japan, and European territories.
Management is presently negotiating terms regarding its master franchisee agreement for store operations throughout France.
