Domino's in dire straits
Leaked documents show more than half of all Domino's franchises are uneconomic.
When The Australian Financial Review reported last week that private equity vultures Bain Capital were pondering new and innovative ways to make money from the dumpster fire formerly known as Domino's Pizza Enterprises, the company's share price got a nice boost. But as yet, there is no takeover bid and worse still, the company's ability to rake in huge royalties and food supply margins is under threat.
Having inflated its profits for years by taking an ever-increasing share of franchise store profit margins, a significant number of the company's 829 Australian franchised stores are in deep financial difficulty.
Franchisees tell me that it is widely accepted among them that around a third of Domino's franchise stores are struggling to meet ATO tax instalments and are on distressed business payment plans for GST and employee superannuation obligations – a last resort of companies teetering on the edge of insolvency. Domino's disputes the one-third claim and says that a "significantly smaller" number of franchisees are on ATO payment plans.