So far this year, the pizza chain Domino’s, led largely by its franchisees, has added 45 new locations in the U.S., and over the past 12 months operators have built 155 new shops.
In the process, they continued to do the one thing that Domino’s has done far better than any of its pizza brand contemporaries: Open new locations.
As of the end of 2024, the Ann Arbor, Michigan-based Domino’s has opened 888 locations. By comparison, rival Papa Johns opened 149, Little Caesars 71 and Pizza Hut has closed 749.
That unit growth has helped Domino’s widen its lead in the domestic, fast-food pizza market by another $2.5 billion over the past five years. The pizza market has had relatively little growth over that period—total sales by quick-service pizza chains have grown by $4.6 billion since 2019, or 17%.
Domino’s accounts for less than a third of the quick-service pizza market. But its growth since 2019 accounts for more than half of its growth.
Much of that growth is rooted in the chain’s decision years ago to “fortress” its domestic markets, building new restaurants in existing markets both to improve the quality of delivery and build more carryout.
While it hasn’t necessarily built delivery sales—third-party aggregators are taking more of that business—it has worked wonders to build carryout. Same-store sales from that business alone grew 5.8% in the second quarter, despite an economy generally unfriendly to fast-food chains of all sorts.
Consumers apparently will only go so far to pick up their pizza, while they are perfectly fine making someone else drive a longer distance.
It also helps that the company’s unit economics are strong. Domino’s has better average unit volumes than any of its primary competitors, at nearly $1.4 million.
As a rule, better unit economics encourage more growth. If a brand can generate strong unit economics and sustain them, it can continue to open more locations, whether it’s a company run brand or a franchise. Domino’s is a franchise, and its franchisees continue to open shops because they can make money when they do.
“The franchise system is measured by two things,” Domino’s CEO Russell Weiner told analysts this week. “One is the strength of the relationship, and I don’t think it’s ever been better between franchisee and franchisor, and then the unit economics.”
The pizza market remains a tough one overall, given the loss of delivery customers to third-party aggregators. Domino’s 1.5% delivery same-store sales growth, given its recent deal with the aggregator DoorDash, implies that it is getting less sales from its own channels. Carryout comes with smaller orders and a more budget-conscious consumer, which along with the growth of aggregator sales is slowly changing the business.
But even amid these challenges, the company’s unit economics and strong overall franchise system has helped it continue to grow even through these challenges, solidifying its hold on the market.