Domino’s Is Known For Its Pizza, But Here’s Where Most Of Its Money Comes From

The business model maximizes profit at every step of the process. Domino’s Is Known For Its Pizza, But Here’s Where Most Of Its Money Comes From Shutterstock

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Whether you love its reasonably priced pies or not, there’s no escaping the cultural impact of Domino’s Pizza. It’s got a whopping 20,000 global locations — the highest number of any pizza company on the planet.

But just because it’s slinging a lot of pizzas everyday doesn’t mean that sales are the brand’s biggest source of revenue. If you want to know why Domino’s remains so financially successful, you’ll need to take a closer look at its unique business model.

Monetizing the supply chain

The vast majority (roughly 99%) of all Domino’s locations are franchises, which means the company doesn’t own them directly but is still able to cash in on the income of the franchisees who do.

Much of that income stems from Domino’s clever marketing of various supply chain necessities to their franchise locations. Not only is it much simpler for franchisees to procure supplies and delivery options directly from Domino’s, but the company also offers profit sharing for those who do.

Through this innovative partnership with thousands of franchises, roughly 60% of the corporation’s revenue currently comes from its supply chain operation.

And franchise owners seem pretty happy with the arrangement, too. Domino’s currently has an impressive 99% retention rate when contract renewal times comes around.

Thinking outside the (pizza) box

While Domino’s has been able to come up with a savvy business model that maintains a corporate profit margin despite selling dirt-cheap pizza, it’s not the only fast-food chain with a lucrative plan for profits that doesn’t require selling food directly to customers.

McDonald’s might be the most notable example. The corporation has spent decades buying up real estate around the world and charging franchisees rent for using it.

Thus far this year, nearly two-thirds of its revenue has come from its real estate holdings.

Chris Agee
Chris Agee December 22nd, 2023
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