Q3 FY26 · Ended Sep 6, 2026 · View SEC filing
A small fee line equals most of the profit
U.S. royalties are 14.0% of revenue yet equal 68.5% of income from operations, since they carry no cost of sales.
For investorsWhat the royalty engine depends on from here
For foundersThe two-income franchisor: fees on the brand, margin on the supplies
U.S. royalties are 14.0% of revenue yet equal 68.5% of income from operations, since they carry no cost of sales.
U.S. franchise royalties and fees were $165.6M this quarter, 14.0% of revenue of $1.19B, against income from operations of $241.8M. The filing states that franchise revenues "do not have a cost of sales component", so changes in these revenues "have a disproportionate effect" on segment profit.1
International franchise royalties and fees added $83.7M, equal to 34.6% of income from operations, and rose 6.56% on the year, faster than total revenue at 3.36%.1
AnalysisCombined, the U.S. and international royalty lines exceed income from operations. This compares two lines; it is not a margin, since royalties still carry part of general and administrative cost. It shows where the profit sits: in fees on stores the company does not own.
Global retail sales rose 3.2% while existing U.S. stores barely grew, so openings, not higher sales per store, drove the quarter.
Global retail sales excluding currency rose 3.2%. U.S. same store sales rose 0.3%, rolling over 5.2% a year earlier, and international same store sales rose 0.2% against 1.7%. The filing credits "net store growth during the trailing four quarters".1
The quarter added 175 net stores: 26 in the U.S. and 149 internationally. In the U.S., same store sales rose on "higher customer transaction counts, partially offset by lower average ticket."1
AnalysisRoyalties follow the store count, so growth now depends on franchisees continuing to open units. That holds while a new store pays back its owner's investment; a lower average ticket and a 2.2% higher food basket price to stores are the pressures on that payback.
Gross profit rose with revenue while overhead barely moved, so income from operations grew 8.34% on revenue up 3.36%.
General and administrative expense was $105.7M against $105.1M a year earlier, 8.92% of revenue, down 0.24 points. Gross margin rose 3.58% to $476.4M. Income from operations reached $241.8M, 20.39% of revenue, up 0.94 points.1
The filing attributes the gross margin gain to higher global royalty revenue and to supply chain, where food costs fell as a share of sales through "procurement productivity" and labor costs fell on "higher sales leverage and labor efficiency", partly offset by higher fuel costs for delivery.1
Part of the 7.06% rise in supply chain revenue is price: the filing names "an increase in our food basket pricing to stores" of 2.2% alongside higher order volumes, so not all of that growth is volume.1
AnalysisOver the three quarters to date, overhead grew faster, which the filing ties to the company's biennial Worldwide Rally and higher computer expenses. A flat overhead quarter is partly timing, not necessarily a new run rate.
Growth, profitability and cash over the years, where Domino's stands among its peers, and where its profit is made.
How the model works, where every $100 of revenue goes against the industry, and how long the company took to scale.
Ten years of filings where the company has them, each against its peers.
Growth against margin in each company's latest full year; the size of a dot is its revenue. Hover a dot to read it, click to open it.
Domino's, FY2025: revenue +5.0% on the year, operating margin 19.3%. Triangles sit beyond the axes; their figures are in the tooltip.
The mechanisms behind the numbers. Pick one to read it.
Franchisees put up the capital for each store, carry its labor and lease, and pay Domino's a percentage of their sales for the brand, the ordering technology and the operating system. That revenue has no cost of sales attached, so each added store's royalty falls almost straight to operating profit.
What needs scale, what a startup can take, and how to test itDomino's, Q3 FY2026, to operating profit: $20 of every $100 is left. Its widest gap from the industry is operating margin: 20.4% of revenue against a median of 13.9%.
Each line as a share of revenue: the band holds the middle half of the Consumer Discretionary companies covered that report the line, the tick is their median, the dot is Domino's.
Revenue grew 3.5x from FY2009 to FY2025, first doubling in 9 years (FY2018). The pins mark each doubling of the first year shown.
Every figure is computed from the companies' own filings. Peers are the Consumer Discretionary companies covered, each from its latest report, which is not a market and not a market share. A description of the business, never a view on its shares.
Revenue went from $1.4B in FY2009 to $4.9B in FY2025, the operating margin from 13.5% to 19.3%, over 16 years.
Q3 FY2026: free cash flow of $146.2M against net income of $152.2M in the quarter.
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Each breakdown the filing reports, as shares of revenue, for every period it restates.
Segment Information - Financial Information by Operating Segment (Detail). The filing restates this breakdown for 1 period.
Click a member to isolate it across the years shown.
Margins, cash and growth for the period, each with what it was computed from.
Every breakdown the filing reports for the period, with each item's share.
| Supply Chain | $746.2M | 62.9% |
| U.S. Stores | $355.7M | 30.0% |
| International Franchise | $83.7M | 7.1% |
Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-10-13
| Supply Chain | $764.8M | 64.5% |
| U.S. franchise royalties and fees | $165.6M | 14.0% |
| U.S. franchise advertising | $128.7M | 10.9% |
| International franchise royalties and fees | $83.7M | 7.1% |
| U.S. Company-owned stores | $61.4M | 5.2% |
| Supply chain - intersegment revenues | -$18.6M | -1.6% |
Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-10-13
The cost lines beneath operating income, each as a share of revenue, then the operating result.
Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.
| Cost line | Q3 FY2026 | Of revenue | Source |
|---|---|---|---|
| Cost of sales | $709.2M | 59.8% | Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-10-13 |
| Income from operations | $241.8M | 20.4% | Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-13 |
From the text of the filing rather than its statements, each with the sentence that states it.
Our food basket pricing to stores increased 2.2% in the third quarter of 2026
Global net store growth of 175 stores, including 26 net store openings in the U.S. and 149 net store openings internationally.
Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.2% compared to the third quarter of 2025.
Global net store growth of 175 stores, including 26 net store openings in the U.S. and 149 net store openings internationally.
U.S. retail sales increased 2.1% and international retail sales, excluding foreign currency impact, increased 4.3% compared to the third quarter of 2025.
International same store sales (excluding foreign currency impact) increased 0.2% in the third quarter of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 1.7% in the third quarter of 2025.
U.S. Company-owned same store sales increased 1.0% in the third quarter of 2026 and increased 3.4% in the third quarter of 2025.
U.S. franchise same store sales increased 0.3% in the third quarter of 2026 and increased 5.3% in the third quarter of 2025.
Global net store growth of 175 stores, including 26 net store openings in the U.S. and 149 net store openings internationally.
U.S. retail sales increased 2.1% and international retail sales, excluding foreign currency impact, increased 4.3% compared to the third quarter of 2025.
U.S. same store sales increased 0.3% in the third quarter of 2026, rolling over an increase in U.S. same store sales of 5.2% in the third quarter of 2025.
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Year to date, as a quarterly filing reports it.
| Line | Q3 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Net income | $152.2M | $139.3M | +9.2% | Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-13 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Refranchising gain (shown as a deduction) | (-$206.0K) | $0 | Source10-Q, dpz:RefranchisingGains, as reported in the 10-Q filed 2026-10-13 | |
| Gain on sale of assets (shown as a deduction) | ($0) | $0 | Source10-Q, us-gaap:GainLossOnSaleOfOtherAssets, as reported in the 10-Q filed 2026-10-13 | |
| Statement of Cash Flows | ||||
| Cash and cash equivalents, end of period | $229.0M | $139.7M | +64% | Source10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-13 |
| Restricted cash and cash equivalents, end of period | $168.0M | $202.5M | -17% | Source10-Q, us-gaap:RestrictedCashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-13 |
| Cash and cash equivalents included in advertising fund assets, restricted, end of period | $71.4M | $109.6M | -35% | Source10-Q, dpz:CashAndCashEquivalentsIncludedInRestrictedAdvertisingFundAssets, as reported in the 10-Q filed 2026-10-13 |
| Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period | $468.4M | $451.9M | +3.7% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-13 |
Owners fund each new store's build and lease, so Domino's spends little capital while its royalty base grows.
Capital expenditure was $21.8M this quarter, 1.84% of revenue. In the last full fiscal year it was $120.6M against revenue of $4.94B, or 2.44%. Operating cash flow was 1.10 times net income.1
The filing describes an "asset-light model": franchising lets an owner run a store backed by the brand and operating system "with limited capital investment by us", while royalties are "ongoing percent-of-sales fees."1
AnalysisThe advantage holds as long as the brand, ordering technology and supply system make a Domino's unit worth more to an operator than an independent shop. The filing does not report franchisee returns, so this part is analysis.
Domino's takes a royalty on each sale and a margin on the dough and food it supplies to the stores.
Supply chain revenue was $746.2M, 62.93% of revenue, and rose 7.06% on "higher order volumes, as well as an increase in our food basket pricing to stores." The supply chain serves substantially all U.S. franchised stores and certain international ones.1
AnalysisOn its own the supply business is thin-margin, but it keeps the product consistent across thousands of independent operators and gives the company a weekly view of what each store buys. It also means reported revenue rises with food prices, which franchisees bear.
Interest expense equals 19.1% of income from operations, and the company expects to refinance older notes at higher rates.
Interest expense rose 2.7% to $46.2M while interest income fell 49.09% to $2.1M. The filing attributes the change to lower interest income on cash equivalents and a higher weighted average borrowing rate.1
Two older series of securitized notes reach their anticipated repayment date next year and are classified as current. The company expects to refinance them "at higher interest rates." If they are not repaid or refinanced in time, additional interest accrues and securitized cash flows, other than a weekly management fee, go to repaying the debt.1
The notes carry a debt service coverage covenant; if certain covenants are not met, the notes "may become due and payable on an accelerated schedule."1
AnalysisOperating income covers interest several times over today. The pressure is gradual: each refinancing at a higher rate would take a larger share of operating income unless store growth lifts profit faster.
Royalties and supply orders both depend on franchisees opening stores while existing stores' sales are nearly flat and tickets fall.
The filing states that sales by franchisees "have a direct effect on our profitability": royalties, U.S. advertising fees and supply chain revenue all follow franchise retail sales. U.S. franchise same store sales rose 0.3%, with a lower average ticket.1
Food basket pricing to stores rose 2.2%. At the company's own stores, the filing reports a narrower gross margin, with food costs up on basket pricing, labor costs up on "higher wage rates" and higher insurance costs.1
AnalysisCompany stores are a small window on what franchisees face: rising food, wage and insurance costs against a lower ticket. If those squeeze franchise store returns, the first sign would be slower net openings, which would reach royalties within a few quarters.
Member research on this company.
What Domino's's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
AnalysisThis quarter's profit growth rests on stores being added rather than stores selling more. That holds as long as new franchise stores pay back their owners' investment. With U.S. same store sales at 0.3% and a lower average ticket, the question is whether franchisees keep committing capital to new units. A slowdown in net openings would reach royalties within a few quarters.
AnalysisSupply chain margin gains came from procurement and labor efficiency while food basket pricing to stores rose 2.2%. For the segment's profit to keep outgrowing its revenue, the efficiency has to continue and franchisees have to absorb higher basket prices while their average ticket is falling. Franchisee store economics are the constraint on both the supply margin and the royalty.
AnalysisInterest expense already absorbs 19.1% of income from operations. Two older series of securitized notes reach their anticipated repayment date next year and are classified as current, and the company expects to refinance them "at higher interest rates." What would have to be true for profit growth to continue is that store growth lifts operating income faster than the added interest.
AnalysisInternational is where the stores are being added: 149 of the 175 net openings. Its royalties are earned in local currencies and reported in dollars, and its same store sales rose only 0.2%. International royalty growth of 6.56% therefore depends on the pace of openings abroad and on exchange rates more than on existing stores selling more.
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Business Lens describes Domino's from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.
