The Domino’s Pizza empire is facing a significant shake-up as over 200 locations are slated for sudden closure. Domino’s Pizza Enterprises Ltd. (DPE), the largest master franchisee of the Domino’s brand, has announced the mass closure of underperforming stores as the company grapples with the financial strain of rapid expansion during the COVID-19 pandemic and shifting market dynamics. But where exactly are these closures happening? Read on to uncover the full story.
Denny’s store closures: Where and why?
DPE, owner of 18% of Domino’s stores, is closing 205 restaurants as part of a strategic effort to optimize its operations. In a company update last week, DPE confirmed that the majority—172 of these “loss-making” locations—are in Japan. The closures aim “to sharpen market focus and improve profitability” across its portfolio.
This decision follows an extensive operational review conducted by DPE to enhance long-term profitability and maximize shareholder value. Many of the affected stores were launched during the surge in demand brought on by the COVID-19 pandemic but have since struggled to maintain sales as consumer behavior shifted.
“When I started in this role three months ago, I said we would move decisively to reshape our business for long-term success,” said DPE Group CEO and Managing Director Mark van Dyck. “Where change is required, we are acting quickly and transparently. Our priority remains clear—creating value for customers, franchise partners, and shareholders.”
Is Domino’s pulling out of Japan?
Despite the recent wave of store closures in Japan—58 franchised and 114 corporate—Domino’s Pizza Enterprises (DPE) has no plans to exit the market entirely. Instead, the company is refocusing its strategy to strengthen its presence in key areas.
DPE stated it will “focus on prefectures where the company can leverage scale, brand strength, and operational efficiencies.” This strategic shift underscores its commitment to optimizing profitability rather than abandoning the Japanese market.
“Japan is an attractive market for quick-service restaurants and pizza, with significant long-term upside for Domino’s,” said van Dyck. “We are committed to being disciplined in expansion—prioritizing locations in high-density prefectures where we can drive incremental, profitable growth.”
Before the shutdowns: Investors take legal action against Domino’s
Domino’s Pizza is facing legal action after investors filed a lawsuit alleging misleading statements about store growth.
During a quarterly earnings call in July 2023, Domino’s CEO Russell Weiner announced a revised international net store growth target, reducing it by 175 to 275 stores. He attributed the adjustment “primarily as a result of challenges in both openings and closures faced by Domino’s Pizza Enterprises.” Just months later, shareholders accused the company of providing misleading guidance during Domino’s 2023 Investor Day, particularly regarding the financial struggles of DPE. The lawsuit claims the Ann Arbor, Mich.-based pizza chain made “materially false and misleading statements regarding the company’s business, operations, and prospects,” failing to disclose DPE’s significant difficulties with store openings and closures.
“Defendants made false and/or misleading statements and/or failed to disclose that DPE was experiencing significant challenges with respect to both new store openings and closures of existing stores,” the lawsuit states. “As a result, Domino’s was unlikely to meet its own previously issued long-term guidance for annual global net store growth; accordingly, Domino’s business and/or financial prospects were overstated.”
The lawsuit further alleges that it wasn’t until July 2024—when Domino’s released its second-quarter updates—that the company admitted it would fall short of its international store growth expectations and was “temporarily suspending its guidance.”
The ongoing lawsuit seeks to recover damages related to Domino’s stock purchases during the affected period.