filings.toolsItem 8. Financial Statements and Supplementary Data.
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Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Domino’s Pizza, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Domino’s Pizza, Inc. and its subsidiaries (the “Company”) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ deficit and of cash flows for each of the three years in the period ended December 28, 2025, including the related notes and schedule of condensed financial information as of December 28, 2025 and December 29, 2024 and for each of the three years in the period ended December 28, 2025 appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Casualty Insurance Reserves
As described in Note 1 to the consolidated financial statements, the Company has retention programs for workers’ compensation, general liability, and owned and non-owned automobile liabilities for certain periods prior to December 1998 and for periods after December 2001. As of December 28, 2025, the Company had accruals for these casualty insurance matters of $51.2 million. Casualty insurance reserves are based on undiscounted actuarial estimates. These estimates are based on historical information and on certain assumptions about future events. As disclosed by management, analyses of historical trends and actuarial valuation methods are utilized to estimate the ultimate claim costs for claims incurred as of the balance sheet date and for claims incurred but not yet reported. When estimating these liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation.
The principal considerations for our determination that performing procedures relating to the valuation of casualty insurance reserves is a critical audit matter are (i) the significant judgment by management when developing the casualty insurance reserves; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures relating to the actuarial valuation methods used to estimate the ultimate claim costs and in evaluating management's significant assumptions related to the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of casualty insurance reserves. These procedures also included, among others (i) reading the Company’s casualty insurance retention program documents and (ii) testing the completeness and accuracy of the underlying historical claims data used in the actuarial valuation methods. Professionals with specialized skill and knowledge were used to assist in testing management’s process for developing the casualty insurance reserves, including evaluating (i) the appropriateness of the actuarial valuation methods and (ii) the reasonableness of the significant assumptions related to the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 23, 2026
We have served as the Company’s auditor since 2002.
Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| December 28, | December 29, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 125,675 | $ | 186,126 | ||||
| Restricted cash and cash equivalents | 216,110 | 195,370 | ||||||
| Accounts receivable, net of reserves of $5,805 in 2025 and $5,834 in 2024 | 315,958 | 309,104 | ||||||
| Inventories | 79,189 | 70,919 | ||||||
| Prepaid expenses and other | 39,767 | 40,363 | ||||||
| Advertising fund assets, restricted | 117,502 | 103,396 | ||||||
| Total current assets | 894,201 | 905,278 | ||||||
| Property, plant and equipment: | ||||||||
| Land and buildings | 105,559 | 104,793 | ||||||
| Leasehold and other improvements | 193,673 | 191,718 | ||||||
| Equipment | 413,303 | 390,542 | ||||||
| Construction in progress | 46,184 | 22,717 | ||||||
| 758,719 | 709,770 | |||||||
| Accumulated depreciation and amortization | (434,697 | ) | (408,591 | ) | ||||
| Property, plant and equipment, net | 324,022 | 301,179 | ||||||
| Other assets: | ||||||||
| Operating lease right-of-use assets | 219,485 | 210,302 | ||||||
| Investments in marketable securities, restricted | 24,971 | 20,638 | ||||||
| Goodwill | 10,726 | 11,578 | ||||||
| Capitalized software, net of accumulated amortization of $201,120 in 2025 and $193,854 in 2024 | 159,256 | 155,025 | ||||||
| Investment in DPC Dash | 36,070 | 82,699 | ||||||
| Other assets | 25,627 | 26,882 | ||||||
| Deferred income tax assets, net | 22,101 | 23,432 | ||||||
| Total other assets | 498,236 | 530,556 | ||||||
| Total assets | $ | 1,716,459 | $ | 1,737,013 | ||||
| Liabilities and stockholders’ deficit | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 6,131 | $ | 1,149,679 | ||||
| Accounts payable | 135,029 | 85,898 | ||||||
| Accrued compensation | 53,204 | 58,203 | ||||||
| Accrued interest | 32,322 | 32,783 | ||||||
| Operating lease liabilities | 47,553 | 39,920 | ||||||
| Insurance reserves | 26,169 | 25,658 | ||||||
| Advertising fund liabilities | 115,412 | 101,567 | ||||||
| Other accrued liabilities | 125,801 | 118,754 | ||||||
| Total current liabilities | 541,621 | 1,612,462 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current portion | 4,810,683 | 3,825,659 | ||||||
| Operating lease liabilities | 183,917 | 181,983 | ||||||
| Insurance reserves | 32,959 | 33,229 | ||||||
| Other accrued liabilities | 48,421 | 45,971 | ||||||
| Total long-term liabilities | 5,075,980 | 4,086,842 | ||||||
| Total liabilities | 5,617,601 | 5,699,304 | ||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ deficit | ||||||||
| Common stock, par value $0.01 per share; 170,000,000 shares authorized;33,627,992 in 2025 and 34,281,927 in 2024 issued and outstanding | 336 | 343 | ||||||
| Preferred stock, par value $0.01 per share; 5,000,000 shares authorized, none issued | — | — | ||||||
| Additional paid-in capital | 1,910 | 1,272 | ||||||
| Retained deficit | (3,898,622 | ) | (3,956,474 | ) | ||||
| Accumulated other comprehensive loss | (4,766 | ) | (7,432 | ) | ||||
| Total stockholders’ deficit | (3,901,142 | ) | (3,962,291 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 1,716,459 | $ | 1,737,013 |
The accompanying notes are an integral part of these consolidated financial statements.
Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| For the Years Ended | ||||||||||||
| December 28, | December 29, | December 31, | ||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenues: | ||||||||||||
| U.S. Company-owned stores | $ | 375,153 | $ | 393,898 | $ | 376,180 | ||||||
| U.S. franchise royalties and fees | 677,114 | 638,193 | 604,897 | |||||||||
| Supply chain | 2,989,529 | 2,845,781 | 2,715,009 | |||||||||
| International franchise royalties and fees | 338,704 | 318,691 | 310,077 | |||||||||
| U.S. franchise advertising | 559,494 | 509,853 | 473,195 | |||||||||
| Total revenues | 4,939,994 | 4,706,416 | 4,479,358 | |||||||||
| Cost of sales: | ||||||||||||
| U.S. Company-owned stores | 321,646 | 327,986 | 314,673 | |||||||||
| Supply chain | 2,644,788 | 2,529,928 | 2,437,268 | |||||||||
| Total cost of sales | 2,966,434 | 2,857,914 | 2,751,941 | |||||||||
| Gross margin | 1,973,560 | 1,848,502 | 1,727,417 | |||||||||
| General and administrative | 464,120 | 459,492 | 434,554 | |||||||||
| U.S. franchise advertising | 559,494 | 509,853 | 473,195 | |||||||||
| Refranchising (gain) loss | (4,028 | ) | 158 | 149 | ||||||||
| Income from operations | 953,974 | 878,999 | 819,519 | |||||||||
| Other (expense) income | (2,544 | ) | 22,064 | 17,713 | ||||||||
| Interest income | 14,880 | 17,022 | 11,683 | |||||||||
| Interest expense | (195,972 | ) | (195,870 | ) | (196,475 | ) | ||||||
| Income before provision for income taxes | 770,338 | 722,215 | 652,440 | |||||||||
| Provision for income taxes | 168,634 | 138,045 | 133,322 | |||||||||
| Net income | $ | 601,704 | $ | 584,170 | $ | 519,118 | ||||||
| Earnings per share: | ||||||||||||
| Common Stock – basic | $ | 17.69 | $ | 16.83 | $ | 14.80 | ||||||
| Common Stock – diluted | $ | 17.57 | $ | 16.69 | $ | 14.66 |
The accompanying notes are an integral part of these consolidated financial statements.
Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
| For the Years Ended | ||||||||||||
| December 28, | December 29, | December 31, | ||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Net income | $ | 601,704 | $ | 584,170 | $ | 519,118 | ||||||
| Currency translation adjustment | 2,666 | (3,565 | ) | 827 | ||||||||
| Comprehensive income | $ | 604,370 | $ | 580,605 | $ | 519,945 |
The accompanying notes are an integral part of these consolidated financial statements.
Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands, except share and per share amounts)
| Accumulated | ||||||||||||||||||||
| Common Stock | Additional | Other | ||||||||||||||||||
| Paid-in | Retained | Comprehensive | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | ||||||||||||||||
| Balance at January 1, 2023 | 35,419,718 | $ | 354 | $ | 9,693 | $ | (4,194,418 | ) | $ | (4,694 | ) | |||||||||
| Net income | — | — | — | 519,118 | — | |||||||||||||||
| Dividends declared on common stock and equivalents ($4.84 per share) | — | — | — | (170,419 | ) | — | ||||||||||||||
| Issuance and cancellation of stock awards, net | 33,947 | — | — | — | — | |||||||||||||||
| Tax payments for restricted stock upon vesting | (16,038 | ) | — | (5,410 | ) | — | — | |||||||||||||
| Purchases of common stock | (789,977 | ) | (8 | ) | (47,651 | ) | (223,929 | ) | — | |||||||||||
| Exercises of stock options | 78,532 | 1 | 8,655 | — | — | |||||||||||||||
| Non-cash equity-based compensation expense | — | — | 37,514 | — | — | |||||||||||||||
| Currency translation adjustment | — | — | — | — | 827 | |||||||||||||||
| Balance at December 31, 2023 | 34,726,182 | 347 | 2,801 | (4,069,648 | ) | (3,867 | ) | |||||||||||||
| Net income | — | — | — | 584,170 | — | |||||||||||||||
| Dividends declared on common stock and equivalents ($6.04 per share) | — | — | — | (210,676 | ) | — | ||||||||||||||
| Issuance and cancellation of stock awards, net | 67,869 | 1 | — | — | — | |||||||||||||||
| Tax payments for restricted stock upon vesting | (24,306 | ) | — | (11,098 | ) | — | — | |||||||||||||
| Purchases of common stock | (758,242 | ) | (8 | ) | (69,707 | ) | (260,320 | ) | — | |||||||||||
| Exercises of stock options | 270,424 | 3 | 36,021 | — | — | |||||||||||||||
| Non-cash equity-based compensation expense | — | — | 43,255 | — | — | |||||||||||||||
| Currency translation adjustment | — | — | — | — | (3,565 | ) | ||||||||||||||
| Balance at December 29, 2024 | 34,281,927 | 343 | 1,272 | (3,956,474 | ) | (7,432 | ) | |||||||||||||
| Net income | — | — | — | 601,704 | — | |||||||||||||||
| Dividends declared on common stock and equivalents ($6.96 per share) | — | — | — | (237,330 | ) | — | ||||||||||||||
| Issuance and cancellation of stock awards, net | 79,668 | 1 | — | — | — | |||||||||||||||
| Tax payments for restricted stock upon vesting | (25,738 | ) | — | (11,360 | ) | — | — | |||||||||||||
| Purchases of common stock | (785,280 | ) | (8 | ) | (51,434 | ) | (306,522 | ) | — | |||||||||||
| Exercises of stock options | 77,415 | — | 18,792 | — | — | |||||||||||||||
| Non-cash equity-based compensation expense | — | — | 44,640 | — | — | |||||||||||||||
| Currency translation adjustment | — | — | — | — | 2,666 | |||||||||||||||
| Balance at December 28, 2025 | 33,627,992 | $ | 336 | $ | 1,910 | $ | (3,898,622 | ) | $ | (4,766 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the Years Ended | ||||||||||||
| December 28, | December 29, | December 31, | ||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 601,704 | $ | 584,170 | $ | 519,118 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 88,827 | 87,732 | 80,640 | |||||||||
| Refranchising (gain) loss | (4,028 | ) | 158 | 149 | ||||||||
| Loss on sale/disposal of assets | 1,855 | 1,527 | 1,299 | |||||||||
| Amortization of debt issuance costs | 5,748 | 5,298 | 5,535 | |||||||||
| Provision (benefit) for deferred income taxes | 1,288 | (9,117 | ) | (19,509 | ) | |||||||
| Non-cash equity-based compensation expense | 44,640 | 43,255 | 37,514 | |||||||||
| Excess tax benefits from equity-based compensation | (3,158 | ) | (22,241 | ) | (3,397 | ) | ||||||
| (Benefit) provision for losses on accounts and notes receivable | (109 | ) | 191 | 1,472 | ||||||||
| Unrealized and realized losses (gains) on investments, net | 2,544 | (22,064 | ) | (17,713 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (6,149 | ) | (27,353 | ) | (26,515 | ) | ||||||
| Inventories, prepaid expenses and other | (6,700 | ) | 6,651 | 160 | ||||||||
| Accounts payable and accrued liabilities | 53,637 | (10,218 | ) | 69,373 | ||||||||
| Insurance reserves | 536 | (5,557 | ) | (5,163 | ) | |||||||
| Operating lease assets and liabilities | 691 | (558 | ) | 632 | ||||||||
| Advertising fund assets and liabilities, restricted | 10,736 | (6,977 | ) | (52,731 | ) | |||||||
| Net cash provided by operating activities | 792,062 | 624,897 | 590,864 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (120,558 | ) | (112,885 | ) | (105,396 | ) | ||||||
| Sale of investments | 44,085 | 82,918 | — | |||||||||
| Proceeds from sale of assets | 8,558 | 74 | 161 | |||||||||
| Other | (2,275 | ) | (1,336 | ) | (1,682 | ) | ||||||
| Net cash used in investing activities | (70,190 | ) | (31,229 | ) | (106,917 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of long-term debt | 1,000,000 | — | 14,898 | |||||||||
| Repayments of long-term debt and finance lease obligations | (1,149,528 | ) | (17,647 | ) | (55,705 | ) | ||||||
| Proceeds from exercise of stock options | 18,792 | 36,024 | 8,656 | |||||||||
| Purchases of common stock | (357,697 | ) | (329,557 | ) | (269,025 | ) | ||||||
| Tax payments for restricted stock upon vesting | (11,360 | ) | (11,098 | ) | (5,410 | ) | ||||||
| Payments of common stock dividends and equivalents | (236,861 | ) | (209,945 | ) | (169,772 | ) | ||||||
| Cash paid for financing costs | (15,439 | ) | — | — | ||||||||
| Net cash used in financing activities | (752,093 | ) | (532,223 | ) | (476,358 | ) | ||||||
| Effect of exchange rate changes on cash | 1,782 | (2,154 | ) | 340 | ||||||||
| Change in cash and cash equivalents, restricted cash and cash equivalents | (28,439 | ) | 59,291 | 7,929 | ||||||||
| Cash and cash equivalents, beginning of period | 186,126 | 114,098 | 60,356 | |||||||||
| Restricted cash and cash equivalents, beginning of period | 195,370 | 200,870 | 191,289 | |||||||||
| Cash and cash equivalents included in advertising fund assets, restricted, beginning of period | 80,928 | 88,165 | 143,559 | |||||||||
| Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period | 462,424 | 403,133 | 395,204 | |||||||||
| Cash and cash equivalents, end of period | 125,675 | 186,126 | 114,098 | |||||||||
| Restricted cash and cash equivalents, end of period | 216,110 | 195,370 | 200,870 | |||||||||
| Cash and cash equivalents included in advertising fund assets, restricted, end of period | 92,200 | 80,928 | 88,165 | |||||||||
| Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period | $ | 433,985 | $ | 462,424 | $ | 403,133 |
The accompanying notes are an integral part of these consolidated financial statements.
Domino’s Pizza, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except percentages, share and per share amounts)
(1)
Description of Business and Summary of Significant Accounting Policies
Description of Business
Domino’s Pizza, Inc. (“DPI”), a Delaware corporation, conducts its operations and derives substantially all of its income from operations and cash provided by operating activities through its wholly-owned subsidiary, Domino’s, Inc. (“Domino’s”) and Domino’s wholly-owned subsidiary, Domino’s Pizza LLC. DPI and its wholly-owned subsidiaries (collectively, the “Company”) are primarily engaged in the following business activities: (i) retail sales of food through Company-owned Domino’s Pizza stores; (ii) sales of food and other products to franchised Domino’s Pizza stores through Company-owned supply chain centers in the U.S. and Canada; (iii) receipt of royalties, advertising contributions and fees from U.S. Domino’s Pizza franchisees; and (iv) receipt of royalties and fees from international Domino’s Pizza franchisees.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of DPI and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Fiscal Year
The Company’s fiscal year ends on the Sunday closest to December 31. The 2025 fiscal year ended on December 28, 2025, the 2024 fiscal year ended on December 29, 2024 and the 2023 fiscal year ended on December 31, 2023. The 2025, 2024 and 2023 fiscal years each consisted of fifty-two weeks.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less at the date of purchase. These investments are carried at cost, which approximates fair value.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents at December 28, 2025 included $165.8 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of the Company’s asset-backed securitization structure, $50.1 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash. As of December 28, 2025, the Company also held $92.2 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s Pizza brand.
Restricted cash and cash equivalents at December 29, 2024 included $144.0 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of the Company’s asset-backed securitization structure, $51.2 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash. As of December 29, 2024, the Company also held $80.9 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s Pizza brand.
Allowances for Credit Losses
The Company closely monitors accounts and notes receivable balances and estimates the allowance for credit losses. These estimates are based on historical collection experience and other factors, including those related to current market conditions and events. The Company’s allowances for accounts and notes receivable have not historically been material.
The Company also monitors its off-balance sheet exposures under its letters of credit (Note 3), lease guarantees (Note 5) and surety bonds. Total conditional commitments under surety bonds were $25.1 million at December 28, 2025 and $11.8 million at December 29, 2024. None of these arrangements has had or is likely to have a material effect on the Company’s results of operations, financial condition, revenues, expenses or liquidity.
Inventories
Inventories include food and other products and are valued at the lower of cost (on a first-in, first-out basis) or net realizable value.
Other Assets
Current and long-term other assets primarily include prepaid expenses such as insurance, taxes, deposits, notes receivable, software licenses, implementation costs for cloud-based computing arrangements, covenants not-to-compete and other intangible assets primarily arising from franchise acquisitions.
Other long-term assets included implementation costs for cloud-based computing arrangements (primarily related to certain enterprise systems and other infrastructure assets) of $16.2 million and $14.5 million, net of accumulated amortization of $14.5 million and $9.7 million as of December 28, 2025 and December 29, 2024, respectively. Amortization expense for implementation costs for cloud-based computing arrangements was $4.8 million, $3.5 million and $2.7 million in 2025, 2024 and 2023, respectively.
Property, Plant and Equipment
Additions to property, plant and equipment are recorded at cost. Repair and maintenance costs are expensed as incurred. Depreciation and amortization expense are recorded using the straight-line method over the estimated useful lives of the related assets.
Estimated useful lives are generally as follows (in years):
| Buildings | 20 | |
| Leasehold and other improvements | 5 – 15 | |
| Equipment | 3 – 15 |
Depreciation and amortization expense on property, plant and equipment was $54.2 million, $55.8 million and $52.4 million in 2025, 2024 and 2023, respectively.
Impairments of Long-Lived Assets
The Company evaluates long-lived assets, including property, plant, equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the Company determines that the carrying amount of an asset (or asset group) may not be recoverable, the Company compares the net carrying value of the asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. For Company-owned stores, the Company performs this evaluation on an operating market basis, which the Company has determined to be the lowest level for which identifiable cash flows are largely independent of other cash flows. If the carrying amount of a long-lived asset exceeds the amount of the expected future undiscounted cash flows of that asset, the Company estimates the fair value of the assets. If the carrying amount of the asset exceeds the estimated fair value of the asset, an impairment loss is recognized, and the asset is written down to its estimated fair value. The Company did not record any impairment losses on long-lived assets in 2025, 2024 and 2023.
Investments in Marketable Securities
Investments in marketable securities consist of investments in various mutual funds made by eligible individuals as part of the Company’s deferred compensation plan (Note 8). These investments are stated at aggregate fair value, are restricted and have been placed in a rabbi trust whereby the amounts are irrevocably set aside to fund the Company’s obligations under the deferred compensation plan. The Company classifies and accounts for these investments in marketable securities as trading securities.
Goodwill
The Company’s goodwill amounts primarily relate to franchise store acquisitions. The Company performs its required impairment tests in the fourth quarter of each fiscal year and did not recognize any goodwill impairment charges in 2025, 2024 and 2023.
Capitalized Software
Capitalized software is recorded at cost and includes purchased, internally-developed and externally-developed software used in the Company’s operations. Amortization expense is provided using the straight-line method over the estimated useful lives of the software, which range from one to fifteen years. Customer-facing software is typically amortized over a shorter useful life, while back office and corporate systems may have a longer useful life. Capitalized software and other intangible asset amortization expense was $34.6 million, $31.9 million and $28.2 million in 2025, 2024 and 2023, respectively.
As of December 28, 2025, scheduled amortization for capitalized software that had been placed in service as of December 28, 2025 is as follows in the table below. As of December 28, 2025, the Company also had $32.7 million of capitalized software that had not yet been placed in service.
| 2026 | $ | 27,334 | ||
| 2027 | 19,115 | |||
| 2028 | 13,858 | |||
| 2029 | 10,776 | |||
| 2030 | 10,772 | |||
| Thereafter | 44,739 | |||
| $ | 126,594 |
Investment in DPC Dash
The Company holds a non-controlling interest in DPC Dash Ltd (“DPC Dash”), the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. DPC Dash is listed on the Hong Kong Exchange (HK: 1405) and the Company accounts for its investment as a trading security and records it at fair value at the end of each reporting period, with gains and losses recorded in other income or expense in its consolidated statements of income. Refer to Note 4 for fair value disclosures related to the Company’s investment in DPC Dash.
Debt Issuance Costs
Debt issuance costs are recorded as a reduction to the Company’s debt balance and primarily include the expenses incurred by the Company as part of the 2025, 2021, 2019, 2018, and 2017 recapitalization and refinancing transactions (Note 3). Amortization is recorded on a straight-line basis (which is materially consistent with the effective interest method) over the expected terms of the respective debt instrument to which the costs relate and is included in interest expense. Debt issuance cost amortization expense was $5.7 million, $5.3 million and $5.5 million in 2025, 2024 and 2023, respectively.
Insurance Reserves
The Company has retention programs for workers’ compensation, general liability and owned and non-owned automobile liabilities for certain periods prior to December 1998 and for periods after December 2001. The Company is generally responsible for up to $1.0 million per occurrence under these retention programs for workers’ compensation and up to $2.0 million per occurrence under these retention programs for general liability, depending on policy year and line of coverage. The Company is also generally responsible for between $2.0 million and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities depending on the year. Total insurance limits under these retention programs vary depending on the year covered and range up to $112.5 million per occurrence for general liability and owned and non-owned automobile liabilities and up to the applicable statutory limits for workers’ compensation.
Casualty insurance reserves relating to the Company's retention programs are based on undiscounted actuarial estimates. These estimates are based on historical information and on certain assumptions about future events. Changes in assumptions for such factors as medical costs and legal actions, as well as changes in actual experience, could cause these estimates to change in the near term. The Company generally receives estimates of outstanding casualty insurance exposures from its independent actuary twice per year and differences between these estimated actuarial exposures and the Company’s recorded amounts are adjusted accordingly. The Company had reserves for these programs of $51.2 million and $50.7 million as of December 28, 2025 and December 29, 2024, respectively.
In addition, the Company maintains reserves for its share of employee health costs as part of the health care benefits offered to its employees. Reserves are based on undiscounted actuarial estimates based on underlying claims, including estimated claims incurred that have not yet been paid.
Contract Liabilities
Contract liabilities consist primarily of deferred franchise fees and deferred development fees. Deferred franchise fees and deferred development fees of $4.8 million and $5.1 million were included in current other accrued liabilities as of December 28, 2025 and December 29, 2024, respectively. Deferred franchise fees and deferred development fees of $12.5 million and $15.8 million were included in long-term other accrued liabilities as of December 28, 2025 and December 29, 2024, respectively.
Changes in deferred franchise fees and deferred development fees in 2025 and 2024 were as follows:
| Fiscal Year Ended | ||||||||
| December 28, 2025 | December 29, 2024 | |||||||
| Deferred franchise fees and deferred development fees, beginning of period | $ | 20,946 | $ | 25,195 | ||||
| Revenue recognized during the period | (6,121 | ) | (6,098 | ) | ||||
| New deferrals due to cash received and other | 2,493 | 1,849 | ||||||
| Deferred franchise fees and deferred development fees, end of period | $ | 17,318 | $ | 20,946 |
The Company expects to recognize revenue associated with deferred franchise fees and deferred development fees as follows in the table below. The Company has applied the sales-based royalty exemption which permits exclusion of variable consideration in the form of sales-based royalties from the disclosure of remaining performance obligations.
| 2026 | $ | 4,815 | ||
| 2027 | 3,574 | |||
| 2028 | 2,154 | |||
| 2029 | 1,831 | |||
| 2030 | 1,524 | |||
| Thereafter | 3,420 | |||
| $ | 17,318 |
Other Accrued Liabilities
Current and long-term other accrued liabilities primarily include accruals for income, sales, property and other taxes, legal reserves, operating expenses, dividends payable, deferred compensation, unredeemed gift cards and contract liabilities. The Company had $44.3 million and $42.6 million included in other current accrued liabilities related to unredeemed gift cards as of December 28, 2025 and December 29, 2024, respectively.
Foreign Currency Translation
The Company’s foreign entities use their local currency as the functional currency. For these entities, the Company translates net assets into U.S. dollars at year end exchange rates, while income and expense accounts are translated at average annual exchange rates. Currency translation adjustments are included in accumulated other comprehensive income (loss) and foreign currency transaction gains and losses are included in determining net income.
Revenue Recognition
U.S. Company-owned stores revenues are comprised of retail sales of food through Company-owned Domino’s Pizza stores located in the U.S. and are recognized when the items are delivered to or carried out by customers. Customer payments are generally due at the time of sale. Sales taxes related to these sales are collected from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated statements of income as revenue.
U.S. franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza franchisees with operations in the U.S. Each franchisee is generally required to pay a 5.5% royalty fee on sales. In certain instances, the Company will collect lower rates based on area development agreements, sales initiatives, store relocation incentives and new store incentives. Royalty revenues are based on a percentage of franchise retail sales and are recognized when the items are delivered to or carried out by franchisees’ customers. U.S. franchise fee revenue primarily relates to per-transaction technology fees that are recognized as the related sales occur and was $0.375 per digital transaction in fiscal 2025. Payments for U.S. royalties and fees are generally due within seven days of the prior week end date.
Supply chain revenues are primarily comprised of sales of food and other products to franchised Domino’s Pizza stores located in the U.S. and Canada. Revenues from the sale of food are recognized upon delivery of the food to franchisees and payments for food purchases are generally due within 30 days of the shipping date. The Company also offers profit sharing rebates and volume discounts to its franchisees. Obligations for profit sharing rebates are calculated based on actual results of its supply chain centers and are recognized as a reduction to revenue. Volume discounts are based on annual sales. The Company estimates the amount that will be earned and records a reduction to revenue throughout the year.
International franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza franchisees outside of the U.S. Royalty revenues are recognized when the items are delivered to or carried out by franchisees’ customers. Royalty rates vary among international markets and may also differ based on certain incentives and concessions and averaged approximately 3.0% in 2025. Franchise fees received from international franchisees are recognized as revenue on a straight-line basis over the term of each respective franchise store agreement, which is typically ten years. Development fees received from international master franchisees are also deferred when amounts are received and are recognized as revenue on a straight-line basis over the term of the respective master franchise agreement, which is typically ten years. International franchise fee revenues primarily relate to per-transaction technology fees that are recognized as the related sales occur. International franchise royalties and fees are invoiced at least quarterly, and payments are generally due within 60 days.
U.S. franchise advertising revenues are comprised of contributions from Domino’s Pizza franchisees with operations in the U.S. to the Domino’s National Advertising Fund Inc. (“DNAF”), the Company’s consolidated not-for-profit subsidiary that administers the Domino’s Pizza system’s national and market level advertising activities in the U.S. Each franchisee is generally required to contribute 6.0% of their retail sales to fund national marketing and advertising campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). These revenues are recognized when items are delivered to or carried out by franchisees’ customers. Payments for U.S. franchise advertising revenues are generally due within seven days of the prior week end date. Although these revenues are restricted to be used only for advertising and promotional activities to benefit franchised stores, the Company has determined there are not performance obligations associated with the franchise advertising contributions received by DNAF that are separate from the U.S. royalty payment stream and as a result, these franchise contributions and the related expenses are presented gross in the Company’s consolidated statements of income.
Disaggregation of Revenue
Current accounting standards require that companies disaggregate revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company has included its revenues disaggregated in its consolidated statements of income to satisfy this requirement.
Supply Chain Profit-Sharing Arrangements
The Company enters into profit-sharing arrangements with U.S. and Canadian franchisees that purchase all of their food from the Company’s supply chain centers. These profit-sharing arrangements generally offer Company-owned stores and participating franchisees 50% of the pre-tax profit from the Company’s supply chain center operations. Profit-sharing obligations are recorded as a reduction to supply chain revenues in the same period as the related revenues and costs are recorded, and were $193.0 million, $164.0 million and $138.7 million in 2025, 2024 and 2023, respectively.
Cost of Sales
Cost of sales consists primarily of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food and labor costs, as well as other costs including delivery, occupancy costs (including rent, telephone, utilities and depreciation), insurance expense and other.
General and Administrative
General and administrative expense consists primarily of labor cost (including variable performance-based compensation expense and non-cash equity-based compensation expense), depreciation and amortization, computer expenses, professional fees, travel and entertainment, rent, insurance expense and other corporate administrative costs.
Advertising
U.S. stores are generally required to contribute a percentage of retail sales to DNAF, as described in the revenue recognition section above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as DNAF is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand. U.S. franchise advertising costs expended by DNAF are included in U.S. franchise advertising expenses in the Company’s consolidated statements of income. Advertising costs funded by Company-owned stores are generally expensed as incurred and are included in general and administrative expense. Contributions from Company-owned stores that have not yet been expended are included in advertising fund assets, restricted on the Company’s consolidated balance sheets.
Advertising expense included $559.5 million, $509.9 million and $473.2 million of U.S. franchise advertising expense in 2025, 2024 and 2023, respectively. Advertising expense also included $32.3 million, $33.4 million and $33.5 million in 2025, 2024 and 2023, respectively, primarily related to advertising costs funded by U.S. Company-owned stores and other general marketing expenses which are included in general and administrative expense in the consolidated statements of income.
As of December 28, 2025, advertising fund assets, restricted of $117.5 million consisted of $92.2 million of cash and cash equivalents, $18.4 million of accounts receivable and $6.9 million of prepaid expenses. As of December 28, 2025, advertising fund cash and cash equivalents included $2.1 million of cash contributed from U.S. Company-owned stores that had not yet been expended.
As of December 29, 2024, advertising fund assets, restricted of $103.4 million consisted of $80.9 million of cash and cash equivalents, $14.3 million of accounts receivable and $8.2 million of prepaid expenses. As of December 29, 2024, advertising fund cash and cash equivalents included $1.8 million of cash contributed from U.S. Company-owned stores that had not yet been expended.
Leases
The Company leases certain retail store and supply chain center locations, vehicles, equipment and its corporate headquarters. The Company determines whether an arrangement is or contains a lease at contract inception. The majority of the Company’s leases are classified as operating leases, which are included in operating lease right-of-use assets and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt on the Company’s consolidated balance sheets.
Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise that option.
The Company estimates its incremental borrowing rate for each lease using a portfolio approach based on the respective weighted average term of the agreements. This estimation considers the market rates of the Company’s outstanding collateralized borrowings and interpolations of rates outside of the terms of the outstanding borrowings, including comparisons to comparable borrowings of similarly rated companies with longer term borrowings.
Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of sales or general and administrative expense. Amortization expense for finance leases is recognized on a straight-line basis over the lease term and is included in cost of sales or general and administrative expense. Interest expense for finance leases is recognized using the effective interest method. Variable lease payments that do not depend on a rate or index, payments associated with non-lease components and short-term rentals (leases with terms less than 12 months) are expensed as incurred.
Common Stock Dividends
The Company declared dividends of $237.3 million (or $6.96 per share) in 2025, $210.7 million (or $6.04 per share) in 2024 and $170.4 million (or $4.84 per share) in 2023. The Company paid dividends of $236.9 million, $209.9 million, and $169.8 million in 2025, 2024 and 2023, respectively.
Subsequent to the end of fiscal 2025, on February 18, 2026, the Company’s Board of Directors declared a quarterly dividend of $1.99 per common share payable on March 30, 2026 to shareholders of record at the close of business on March 13, 2026.
Stock Options and Other Equity-Based Compensation Arrangements
The cost of all of the Company’s stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated financial statements based on the estimated fair value of the awards (Note 9).
Earnings Per Share
The Company discloses two calculations of earnings per share (“EPS”): basic EPS and diluted EPS (Note 2). The numerator in calculating common stock basic and diluted EPS is consolidated net income. The denominator in calculating common stock basic EPS is the weighted average shares outstanding. The denominator in calculating common stock diluted EPS includes the additional dilutive effect of outstanding stock options, unvested restricted stock units and unvested performance-based restricted stock units.
Supplemental Disclosures of Cash Flow Information
Cash payments for interest and income taxes in 2025, 2024 and 2023 were as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Cash paid for interest on Notes (Note 3) | $ | 185,020 | $ | 184,996 | $ | 186,810 | ||||||
| Cash paid for income taxes, net of refunds | ||||||||||||
| Federal | $ | 103,500 | $ | 105,015 | $ | 89,017 | ||||||
| Aggregated state and local jurisdictions | 29,914 | 28,796 | 24,183 | |||||||||
| Foreign | 28,479 | 27,228 | 23,090 | |||||||||
| Net cash paid for income taxes | $ | 161,893 | $ | 161,039 | $ | 136,290 |
The Company had non-cash investing activities related to accruals for capital expenditures of $2.4 million, $3.1 million and $6.7 million at December 28, 2025, December 29, 2024 and December 31, 2023, respectively. The Company had non-cash financing activities related to accruals for excise taxes on share repurchases of $3.3 million, $3.0 million and $2.6 million at December 28, 2025, December 29, 2024 and December 31, 2023, respectively. The Company paid $3.0 million and $2.6 million in excise taxes on share repurchases in 2025 and 2024, respectively.
New Accounting Pronouncements
Recently Adopted Accounting Standards
The Company has considered all new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and adopted the following accounting standard.
Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosure on an annual basis, a tabular reconciliation, including both amount and percentage of specific categories of the effective tax rate reconciliation, including state and local income taxes (net of Federal taxes), foreign taxes, effects of changes in tax laws, regulations or rates enacted in the current period, effects of cross-border tax laws, tax credits, changes in valuation allowances, nontaxable and nondeductible items and changes in unrecognized tax benefits. Additional disclosures are required for certain items exceeding five percent of pre-tax income from continuing operations multiplied by the statutory income tax rate. The standard also requires disclosure of income taxes paid, net of refunds received, between Federal, state and foreign jurisdictions, including further disaggregation of those payments exceeding five percent of the total income taxes paid.
On December 28, 2025, the end of the 2025 fiscal year, the Company adopted ASU 2023-09 and included the relevant rate reconciliation disclosures within Note 7, Income Taxes, and included the relevant disclosures of income taxes paid in the table above*.* The Company has presented the disclosures on a retrospective basis for all periods presented in the consolidated financial statements.
Accounting Standards Not Yet Adopted
The Company has considered all new accounting standards issued by the FASB. The Company has not yet adopted the following standards:
ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires disclosure in the notes to the consolidated financial statements on an annual and interim basis, amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization for all expense captions presented on the face of the consolidated statements of income. The standard also requires a qualitative description of the amounts remaining in those expense captions that are not separately disaggregated. The standard also requires disclosure of the composition and amount of selling expenses.
ASU 2024-03 is effective for annual reporting fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, and early adoption is permitted. The standard may be adopted either prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), to modernize the accounting guidance for the costs to develop software for internal use. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new standard also supersedes the guidance related to costs incurred to develop a website.
ASU 2025-06 guidance is effective for annual periods beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects or on a retrospective basis. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(2)
Earnings per Share
The computation of basic and diluted earnings per common share for 2025, 2024 and 2023 is as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Net income available to common stockholders – basic and diluted | $ | 601,704 | $ | 584,170 | $ | 519,118 | ||||||
| Weighted average number of common shares | 34,007,071 | 34,707,298 | 35,081,779 | |||||||||
| Earnings per common share – basic | $ | 17.69 | $ | 16.83 | $ | 14.80 | ||||||
| Diluted weighted average number of common shares | 34,237,646 | 34,991,484 | 35,401,313 | |||||||||
| Earnings per common share – diluted | $ | 17.57 | $ | 16.69 | $ | 14.66 |
The denominators used in calculating diluted earnings per share for common stock for 2025, 2024 and 2023 do not include the following because the effect of including these shares would be anti-dilutive or because the performance targets for these awards had not yet been met:
| 2025 | 2024 | 2023 | ||||||||||
| Anti-dilutive shares underlying stock-based awards | ||||||||||||
| Stock options | 91,423 | 46,277 | 216,128 | |||||||||
| Restricted stock units | 659 | 4,223 | 7,060 | |||||||||
| Performance condition not met | ||||||||||||
| Restricted stock units | 19,022 | 23,430 | 44,750 |
(3)
Financing Arrangements
The 2025 Notes, 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Notes (each, as defined below) are collectively referred to as the “Notes.” The Company made payments of $1.14 billion, $12.9 million and $51.5 million in 2025, 2024 and 2023, respectively on its senior notes.
2025 Refinancing
On September 5, 2025 (the “closing date”), the Company completed a refinancing transaction (the “2025 Refinancing”) in which certain of the Company’s subsidiaries issued new notes pursuant to an asset-backed securitization. The notes consist of $500.0 million Series 2025-1 4.930% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated repayment date of July 2030 (the “2025 Five-Year Notes”) and $500.0 million Series 2025-1 5.217% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated repayment date of July 2032 (the “2025 Seven-Year Notes,” and collectively with the 2025 Five-Year Notes, the “2025 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. Gross proceeds from the issuance of the 2025 Notes were $1.00 billion.
The proceeds from the issuance of the 2025 Notes, as well as $160.0 million of the Company’s unrestricted cash and cash equivalents, were used to (i) repay the remaining $742.0 million in outstanding principal under the Company’s 2015 Ten-Year Notes and the remaining $402.7 million in outstanding principal under the Company’s 2018 7.5-Year Notes, (ii) prefund a portion of the interest payable on the 2025 Notes and (iii) pay transaction fees and expenses. During 2025 and in connection with the issuance of the 2025 Refinancing and the issuance of the 2025 Variable Funding Notes, the Company capitalized $15.4 million of debt issuance costs, which are being amortized into interest expense over the five and seven-year expected terms of the 2025 Notes.
2021 Recapitalization
On April 16, 2021, the Company completed a recapitalization transaction (the “2021 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $850.0 million Series 2021-1 2.662% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2021 7.5-Year Notes”) and $1.0 billion Series 2021-1 3.151% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 10 years (the “2021 Ten-Year Notes”, and, collectively with the 2021 7.5-Year Notes, the “2021 Notes”). Gross proceeds from the issuance of the 2021 Notes were $1.85 billion.
2019 Recapitalization
On November 19, 2019, the Company completed a recapitalization transaction (the “2019 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $675.0 million Series 2019-1 3.668% Fixed Rate Senior Secured Notes, Class A-2 with an anticipated term of 10 years (the “2019 Notes”). Gross proceeds from the issuance of the 2019 Notes were $675.0 million.
2018 Recapitalization
On April 24, 2018, the Company completed a recapitalization transaction (the “2018 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $425.0 million Series 2018-1 4.116% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2018 7.5-Year Notes”), and $400.0 million Series 2018-1 4.328% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 9.25 years (the “2018 9.25-Year Notes”). Gross proceeds from the issuance of the 2018 7.5-Year Notes and the 2018 9.25-Year Notes were $825.0 million. The 2018 7.5-Year Notes were repaid in connection with the 2025 Refinancing.
2017 Recapitalization
On July 24, 2017, the Company completed a recapitalization transaction (the “2017 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $300.0 million Series 2017-1 Floating Rate Senior Secured Notes, Class A-2-I with an anticipated term of five years (the “2017 Floating Rate Notes”), $600.0 million Series 2017-1 3.082% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of five years (the “2017 Five-Year Notes”) and $1.0 billion Series 2017-1 4.118% Fixed Rate Senior Secured Notes, Class A-2-III with an anticipated term of ten years (the “2017 Ten-Year Notes”). Gross proceeds from the issuance of the 2017 Floating Rate Notes, 2017 Five-Year Notes and 2017 Ten-Year Notes were $1.9 billion. The 2017 Floating Rate Notes and 2017 Five-Year Notes were repaid in connection with the 2021 Recapitalization.
Variable Funding Notes
Concurrent with the 2025 Refinancing, certain of the Company’s subsidiaries also issued a new variable funding note facility which allows for advances of up to $320.0 million of Series 2025-1 Variable Funding Senior Secured Notes, Class A-1 and certain other credit instruments, including letters of credit (the “2025 Variable Funding Notes”). The 2025 Variable Funding Notes were undrawn on the closing date. In connection with the issuance of the 2025 Variable Funding Notes, the Company’s previous $200.0 million Series 2021-1 and $120.0 million Series 2022-1 variable funding note facilities were canceled.
Interest on the 2025 Variable Funding Notes is payable at a rate equal to the Secured Overnight Financing Rate (“Term SOFR”) plus 150 basis points. The unused portion of the 2025 Variable Funding Notes is subject to a commitment fee of 50 basis points. It is anticipated that any amounts outstanding under the 2025 Variable Funding Notes will be repaid in full on or prior to July 2030, subject to two additional one-year extensions at the option of the Company, subject to certain conditions. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the 2025 Variable Funding Notes equal to 5% per annum.
As of December 28, 2025, the Company had no outstanding borrowings and $263.6 million of available borrowing capacity under its 2025 Variable Funding Notes, net of letters of credit issued of $56.4 million.
As of December 29, 2024, the Company had no outstanding borrowings and $120.0 million of available borrowing capacity under its Series 2022-1 variable funding note facility. As of December 29, 2024, the Company had no outstanding borrowings and $143.6 million of available borrowing capacity under its $200.0 million Series 2021-1 variable funding note facility, net of letters of credit issued of $56.4 million.
2025 Notes
The 2025 Five-Year Notes have original remaining scheduled principal payments of $5.0 million in each of 2026 through 2029 and $480.0 million in 2030. The 2025 Seven-Year Notes have original remaining scheduled principal payments of $5.0 million in each of 2026 through 2031 and $470.0 million in 2032. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2025 Notes is July 2055, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2025 Five-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2030, and the 2025 Seven-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2032. If the Company has not repaid or refinanced the 2025 Notes prior to the applicable anticipated repayment dates, additional interest of at least 5% per annum will accrue, as defined in the related agreements.
2021 Notes
The 2021 7.5-Year Notes have original remaining scheduled principal payments of $8.5 million in each of 2026 and 2027 and $809.6 million in 2028. The 2021 Ten-Year Notes have original remaining scheduled principal payments of $10.0 million in each of 2026 through 2030 and $922.5 million in 2031. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2021 Notes is April 2051, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2021 7.5-Year Notes will be repaid on or prior to the anticipated repayment date occurring in October 2028, and the 2021 Ten-Year Notes will be repaid on or prior to the anticipated repayment date occurring in April 2031. If the Company has not repaid or refinanced the 2021 Notes prior to the applicable anticipated repayment dates, additional interest of at least 5% per annum will accrue, as defined in the related agreements.
2019 Notes
The 2019 Notes have original remaining scheduled principal payments of $6.8 million in each of 2026 through 2028 and $627.8 million in 2029. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2019 Notes is October 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2019 Notes will be repaid on or prior to the anticipated repayment date occurring in October 2029. If the Company has not repaid or refinanced the 2019 Notes prior to the applicable anticipated repayment date, additional interest of at least 5% per annum will accrue, as defined in the related agreements.
2018 9.25-Year Notes
The 2018 9.25-Year Notes have original remaining scheduled principal payments of $4.0 million in 2026 and $375.0 million in 2027. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2018 9.25-Year Notes is July 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2018 9.25-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2027. If the Company has not repaid or refinanced the 2018 9.25-Year Notes prior to the applicable anticipated repayment dates, additional interest of at least 5% per annum will accrue, as defined in the related agreements.
2017 Ten-Year Notes
The 2017 Ten-Year Notes have original remaining scheduled principal payments of $10.0 million in 2026 and $930.0 million in 2027. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2017 Ten-Year Notes is October 2047, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2017 Ten-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2027. If the Company has not repaid or refinanced the 2017 Ten-Year Notes prior to the applicable anticipated repayment dates, additional interest of at least 5% per annum will accrue, as defined in the related agreements.
Guarantees and Covenants of the Notes
The Notes are guaranteed by certain subsidiaries of the Company and secured by an interest in certain assets of the Company as specified in the indenture governing the securitized debt, including franchise royalty income from all U.S. and international stores, U.S. supply chain income and intellectual property. The restrictions placed on the Company’s subsidiaries require that the Company’s principal and interest obligations have first priority and amounts are segregated weekly to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of weekly cash flow that exceeds the required weekly principal and interest reserve is generally remitted to the Company in the form of a dividend. However, once the required obligations are satisfied, there are no further restrictions, including payment of dividends, on the cash flows of the subsidiaries. If the Company has not repaid or refinanced the respective note series prior to the applicable anticipated repayment dates, additional interest of at least 5% per annum will accrue, and the Company’s cash flows other than a weekly management fee to cover certain operating expenses would be directed to the repayment of the securitized debt.
The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation. The covenant requires a minimum coverage ratio of 1.75x total debt service to Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt. The covenants, among other things, may limit the ability of certain of the Company’s subsidiaries to declare dividends, make loans or advances or enter into transactions with affiliates. In the event that certain covenants are not met, the Notes may become partially or fully due and payable on an accelerated schedule. In addition, the Company may voluntarily prepay, in part or in full, the Notes at any time, subject to certain make-whole interest obligations.
Leverage Ratio and Debt Classification
While the Notes are outstanding, scheduled payments of principal and interest are required to be made on a quarterly basis. In accordance with the Company’s debt agreements, the payment of principal on the 2025 Notes may be suspended if either the Holdco Leverage Ratio or Senior Leverage Ratio is less than or equal to 5.5x total debt to either Consolidated Adjusted EBITDA or Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. In accordance with the Company’s debt agreements, the payment of principal on the 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Ten-Year Notes may be suspended if the Holdco Leverage Ratio is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. As of the end of the fourth quarter of 2025 and the end of the fourth quarter of 2024, the Company satisfied the non-amortization tests for each respective series of notes, and accordingly, the outstanding principal amounts of the notes have been classified as long-term debt in the consolidated balance sheet as of December 28, 2025. As of December 29, 2024, current portion of long-term debt included the outstanding principal amounts under the 2015 Ten-Year Notes and the 2018 7.5-Year Notes for which the anticipated repayment date was October 2025.
Consolidated Long-Term Debt
At December 28, 2025 and December 29, 2024, consolidated long-term debt consisted of the following:
| December 28, 2025 | December 29, 2024 | |||||||
| 2015 Ten-Year Notes | $ | — | $ | 742,000 | ||||
| 2017 Ten-Year Notes | 940,000 | 940,000 | ||||||
| 2018 7.5-Year Notes | — | 402,688 | ||||||
| 2018 9.25-Year Notes | 379,000 | 379,000 | ||||||
| 2019 Ten-Year Notes | 648,000 | 648,000 | ||||||
| 2021 7.5-Year Notes | 826,625 | 826,625 | ||||||
| 2021 Ten-Year Notes | 972,500 | 972,500 | ||||||
| 2025 Five-Year Notes | 500,000 | — | ||||||
| 2025 Seven-Year Notes | 500,000 | — | ||||||
| Finance lease obligations | 62,008 | 66,058 | ||||||
| Financing obligation from sale leaseback | 14,693 | 14,788 | ||||||
| Debt issuance costs, net of accumulated amortization of $25.3 million in 2025 and $34.5 million in 2024 | (26,012 | ) | (16,321 | ) | ||||
| Total debt | 4,816,814 | 4,975,338 | ||||||
| Current portion of long-term debt | (6,131 | ) | (1,149,679 | ) | ||||
| Long-term debt, less current portion | $ | 4,810,683 | $ | 3,825,659 |
At December 28, 2025, maturities of long-term debt, finance leases and other financing obligations were as follows below and reflect the total amounts due for each of the Notes on their respective anticipated repayment dates assuming the non-amortization tests for each respective series of notes continues to be satisfied.
| 2026 | $ | 6,131 | ||
| 2027 | 1,324,384 | |||
| 2028 | 831,218 | |||
| 2029 | 652,958 | |||
| 2030 | 505,337 | |||
| Thereafter | 1,522,798 | |||
| $ | 4,842,826 |
(4)
Fair Value Measurements
Fair value measurements enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
Fair Value of Cash Equivalents and Marketable Securities
The fair values of the Company’s cash equivalents and investments in marketable securities are based on quoted prices in active markets for identical assets.
Fair Value of Investments
The Company holds a non-controlling interest in DPC Dash, the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. As of December 28, 2025 and December 29, 2024, the fair value of the Company’s investment in DPC Dash is based on the active exchange quoted price for the equity security (HK$71.90 per share as of December 28, 2025 and HK$79.25 per share as of December 29, 2024). The Company owned 3,901,019 and 8,101,019 ordinary shares as of December 28, 2025 and December 29, 2024, representing 3.0% and 6.2% of DPC Dash’s ordinary shares as of the respective dates. The Company sold 4,200,000 ordinary shares of its investment in DPC Dash in the second quarter of 2025 for net proceeds of $44.1 million. The Company sold 10,000,000 ordinary shares of its investment in DPC Dash in the fourth quarter of 2024 for net proceeds of $82.9 million.
The Company recorded a total net negative adjustment of $2.5 million in 2025, and total net positive adjustments to the net carrying amount of its investment in DPC Dash of $22.1 million and $17.7 million in 2024 and 2023, respectively, with the net realized and unrealized losses and gains recorded in other expense and other income in its consolidated statements of income.
The following table summarizes the carrying amounts and fair values of certain assets at December 28, 2025:
| At December 28, 2025 | ||||||||||||||||
| Fair Value Estimated Using | ||||||||||||||||
| Carrying | Level 1 | Level 2 | Level 3 | |||||||||||||
| Amount | Inputs | Inputs | Inputs | |||||||||||||
| Cash equivalents | $ | 54,306 | $ | 54,306 | $ | — | $ | — | ||||||||
| Restricted cash equivalents | 146,517 | 146,517 | — | — | ||||||||||||
| Investments in marketable securities | 24,971 | 24,971 | — | — | ||||||||||||
| Advertising fund cash equivalents, restricted | 65,604 | 65,604 | — | — | ||||||||||||
| Investment in DPC Dash | 36,070 | 36,070 | — | — |
The following table summarizes the carrying amounts and fair values of certain assets at December 29, 2024:
| At December 29, 2024 | ||||||||||||||||
| Fair Value Estimated Using | ||||||||||||||||
| Carrying | Level 1 | Level 2 | Level 3 | |||||||||||||
| Amount | Inputs | Inputs | Inputs | |||||||||||||
| Cash equivalents | $ | 127,074 | $ | 127,074 | $ | — | $ | — | ||||||||
| Restricted cash equivalents | 140,669 | 140,669 | — | — | ||||||||||||
| Investments in marketable securities | 20,638 | 20,638 | — | — | ||||||||||||
| Advertising fund cash equivalents, restricted | 70,350 | 70,350 | — | — | ||||||||||||
| Investment in DPC Dash | 82,699 | 82,699 | — | — |
Fair Value of Debt
The estimated fair values of the Company’s Notes (Note 3) are classified as Level 2 measurements, as the Company estimates the fair value amount by using available market information. The Company obtained quotes from two separate brokerage firms that are knowledgeable about the Company’s Notes and, at times, trade these Notes. The Company also performed its own internal analysis based on the information gathered from public markets, including information on notes that are similar to those of the Company. However, considerable judgment is required to interpret market data to estimate fair value. Accordingly, the fair value estimates presented are not necessarily indicative of the amount that the Company or the noteholders could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values stated below.
Management estimated the approximate fair values of the Notes as follows:
| December 28, 2025 | December 29, 2024 | |||||||||||||||
| Principal Amount | Fair Value | Principal Amount | Fair Value | |||||||||||||
| 2015 Ten-Year Notes | $ | — | — | $ | 742,000 | $ | 739,032 | |||||||||
| 2017 Ten-Year Notes | 940,000 | 934,360 | 940,000 | 915,560 | ||||||||||||
| 2018 7.5-Year Notes | — | — | 402,688 | 399,869 | ||||||||||||
| 2018 9.25-Year Notes | 379,000 | 377,863 | 379,000 | 370,662 | ||||||||||||
| 2019 Ten-Year Notes | 648,000 | 624,024 | 648,000 | 599,400 | ||||||||||||
| 2021 7.5-Year Notes | 826,625 | 785,294 | 826,625 | 750,576 | ||||||||||||
| 2021 Ten-Year Notes | 972,500 | 893,728 | 972,500 | 850,938 | ||||||||||||
| 2025 Five-Year Notes | 500,000 | 503,000 | — | — | ||||||||||||
| 2025 Seven-Year Notes | 500,000 | 506,000 | — | — |
The Company had no outstanding borrowings under its variable funding notes at December 28, 2025 or December 29, 2024.
(5)
Leases
The Company leases certain retail store and supply chain center locations, vehicles, equipment and its corporate headquarters with expiration dates through 2045.
The components of operating and finance lease cost for 2025, 2024 and 2023 were as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Operating lease cost | $ | 52,160 | $ | 50,058 | $ | 47,579 | ||||||
| Finance lease cost: | ||||||||||||
| Amortization of right-of-use assets | 5,385 | 5,644 | 5,545 | |||||||||
| Interest on lease liabilities | 3,673 | 4,090 | 4,340 | |||||||||
| Total finance lease cost | $ | 9,058 | $ | 9,734 | $ | 9,885 |
Rent expense totaled $95.9 million, $91.2 million and $85.6 million in 2025, 2024 and 2023, respectively. Rent expense includes operating lease cost, as well as expense for non-lease components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Rent expense for certain short-term supply chain center tractor and trailer rentals was $6.5 million, $7.5 million and $5.4 million in 2025, 2024 and 2023, respectively. Variable rent expense and rent expense for other short-term leases were immaterial for 2025, 2024 and 2023.
Supplemental balance sheet information related to the Company’s finance leases as of December 28, 2025 and December 29, 2024 was as follows:
| December 28, 2025 | December 29, 2024 | |||||||
| Land and buildings | $ | 80,457 | $ | 79,966 | ||||
| Equipment | 4,225 | 4,640 | ||||||
| Finance lease assets | 84,682 | 84,606 | ||||||
| Accumulated depreciation and amortization | (32,908 | ) | (28,148 | ) | ||||
| Finance lease assets, net | $ | 51,774 | $ | 56,458 | ||||
| Current portion of long-term debt | $ | 6,017 | $ | 4,895 | ||||
| Long-term debt, less current portion | 55,991 | 61,163 | ||||||
| Total principal payable on finance leases | $ | 62,008 | $ | 66,058 |
As of December 28, 2025 and December 29, 2024, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows:
| 2025 | 2024 | |||||||||||||||
| Operating | Finance | Operating | Finance | |||||||||||||
| Leases | Leases | Leases | Leases | |||||||||||||
| Weighted average remaining lease term | 6 years | 11 years | 7 years | 12 years | ||||||||||||
| Weighted average discount rate | 4.8 | % | 6.1 | % | 4.6 | % | 6.1 | % |
Supplemental cash flow information related to leases for 2025, 2024 and 2023 was as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||
| Operating cash flows from operating leases | $ | 51,552 | $ | 50,636 | $ | 46,936 | ||||||
| Operating cash flows from finance leases | 3,673 | 4,090 | 4,340 | |||||||||
| Financing cash flows from finance leases | 4,744 | 4,683 | 4,184 | |||||||||
| Cash paid for amounts included in the measurement of financing obligation from sale leaseback: | ||||||||||||
| Operating cash flows from sale leaseback | 1,186 | 1,293 | 201 | |||||||||
| Financing cash flows from sale leaseback | 96 | 89 | 21 | |||||||||
| Right-of-use assets obtained in exchange for new lease obligations: | ||||||||||||
| Operating leases | 55,511 | 53,076 | 34,313 | |||||||||
| Finance leases | 842 | 1,442 | 3,842 |
Maturities of lease liabilities as of December 28, 2025 were as follows:
| Operating | Finance | |||||||
| Leases | Leases | |||||||
| 2026 | $ | 57,778 | $ | 9,402 | ||||
| 2027 | 49,212 | 8,350 | ||||||
| 2028 | 41,316 | 7,277 | ||||||
| 2029 | 37,230 | 7,352 | ||||||
| 2030 | 26,756 | 7,399 | ||||||
| Thereafter | 59,108 | 43,416 | ||||||
| Total future minimum rental commitments | 271,400 | 83,196 | ||||||
| Less, amounts representing interest | (39,930 | ) | (21,188 | ) | ||||
| Total lease liabilities | $ | 231,470 | $ | 62,008 |
In the fourth quarter of 2023, a subsidiary of the Company entered into a purchase and sale agreement with a developer to sell one of the Company’s owned supply chain center buildings and the associated land for $14.9 million. Concurrently, a separate subsidiary of the Company entered into a lease agreement with the developer to construct a new supply chain center which includes both the existing building as well as an adjoined new construction on the adjacent properties owned by the developer.
The leaseback of the Company’s building on a standalone basis for the construction period plus the 20-year term using the discount rate implicit in the lease resulted in a finance lease classification, and therefore, the transaction was accounted for as a failed sale leaseback. The Company retained the existing land and buildings on its consolidated balance sheet which are included in property, plant and equipment and the Company continues to depreciate the building as if it owned it. The $14.9 million cash proceeds from the transaction was recorded as a financing obligation and is being amortized over the term of the financing agreement. As of December 28, 2025, $0.1 million is classified as current portion of long-term debt and $14.6 million is classified as long-term debt in the Company’s consolidated balance sheet. As of December 29, 2024, $0.1 million is classified as current portion of long-term debt and $14.7 million is classified as long-term debt in the Company’s consolidated balance sheet. The $119.5 million of future minimum rent payments associated with the new construction on a standalone basis is included in the disclosure for material leases not yet commenced, below.
As of December 28, 2025, in addition to the lease for the new supply chain construction on a standalone basis discussed above, the Company also had additional leases for certain supply chain real estate and certain supply chain vehicles that had not yet commenced. The total estimated future minimum rental commitments for all of these arrangements is $161.6 million. These leases are expected to commence in 2026 with lease terms of up to 20 years. These undiscounted amounts are not included in the table above.
The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees was $12.6 million and $12.8 million as of December 28, 2025 and December 29, 2024, respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues or expenses, capital expenditures or liquidity.
(6)
Commitments and Contingencies
The Company is a party to lawsuits, revenue agent reviews by taxing authorities and legal proceedings, of which the majority involve workers’ compensation, employment practices liability, general liability and automobile and franchisee claims arising in the ordinary course of business. The Company records legal fees associated with loss contingencies when they are probable and reasonably estimable. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is unpredictable. These matters could be decided unfavorably and could require the Company to pay damages or make other expenditures in amounts or a range of amounts that cannot be estimated with accuracy. However, the Company does not believe these matters, individually or in the aggregate, will have a material adverse effect on the business or financial condition of the Company, and the Company expects that the established accruals adequately provide for the estimated resolution of such claims.
(7)
Income Taxes
Income before provision for income taxes in 2025, 2024 and 2023 consisted of the following:
| 2025 | 2024 | 2023 | ||||||||||
| U.S. | $ | 753,085 | $ | 707,705 | $ | 640,255 | ||||||
| Foreign | 17,253 | 14,510 | 12,185 | |||||||||
| Income before provision for income taxes | $ | 770,338 | $ | 722,215 | $ | 652,440 |
The components of the Company’s provision for income taxes and the effective tax rate for 2025, 2024 and 2023 are summarized as follows in the table below. The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2025. The Company has included the relevant disclosures retrospectively for all periods presented in the consolidated financial statements.
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| U.S. Federal income tax provision, based on the statutory rate | $ | 161,771 | 21.0 | % | $ | 151,665 | 21.0 | % | $ | 137,012 | 21.0 | % | ||||||||||||
| State and local income taxes, net of related Federal income tax effects(1) | 23,501 | 3.1 | % | 22,546 | 3.1 | % | 19,473 | 3.0 | % | |||||||||||||||
| Foreign tax effects | 29,558 | 3.8 | % | 26,600 | 3.7 | % | 25,301 | 3.9 | % | |||||||||||||||
| Nontaxable or nondeductible items | 7,307 | 0.9 | % | 6,107 | 0.8 | % | 5,040 | 0.8 | % | |||||||||||||||
| Changes in valuation allowances | 4,142 | 0.5 | % | 3,918 | 0.5 | % | 3,334 | 0.5 | % | |||||||||||||||
| Changes in unrecognized tax benefits | (46 | ) | 0.0 | % | 616 | 0.1 | % | 16 | 0.0 | % | ||||||||||||||
| Effect of cross-border tax laws | ||||||||||||||||||||||||
| Foreign derived intangible income deduction | (16,800 | ) | (2.2 | )% | (16,380 | ) | (2.3 | )% | (17,850 | ) | (2.7 | )% | ||||||||||||
| Tax credits | ||||||||||||||||||||||||
| Foreign tax credits | (29,558 | ) | (3.8 | )% | (26,600 | ) | (3.7 | )% | (23,582 | ) | (3.6 | )% | ||||||||||||
| Other credits | (3,887 | ) | (0.5 | )% | (5,856 | ) | (0.8 | )% | (5,440 | ) | (0.8 | )% | ||||||||||||
| Other adjustments | ||||||||||||||||||||||||
| Excess tax benefits from equity-based compensation | (3,158 | ) | (0.4 | )% | (22,241 | ) | (3.1 | )% | (3,397 | ) | (0.5 | )% | ||||||||||||
| Other | (4,196 | ) | (0.5 | )% | (2,330 | ) | (0.2 | )% | (6,585 | ) | (1.2 | )% | ||||||||||||
| Provision for income taxes | $ | 168,634 | 21.9 | % | $ | 138,045 | 19.1 | % | $ | 133,322 | 20.4 | % |
| (1) | California, New York, Florida, Illinois, New Jersey, Minnesota and New York City made up the majority (greater than 50%) of this category in each of the years presented, with the addition of Oregon for 2025. |
Excess tax benefits from equity-based compensation activity resulted in a decrease in the Company’s provision for income taxes of $3.2 million, $22.2 million and $3.4 million in 2025, 2024 and 2023, respectively, primarily due to the recognition of excess tax benefits for options exercised and the vesting of equity awards.
The components of the 2025, 2024 and 2023 consolidated provision for income taxes were as follows:
| 2025 | 2024 | 2023 | ||||||||||
| Provision for Federal income taxes | ||||||||||||
| Current provision | $ | 107,796 | $ | 95,376 | $ | 100,287 | ||||||
| Deferred provision (benefit) | 1,503 | (8,816 | ) | (16,467 | ) | |||||||
| Total provision for Federal income taxes | 109,299 | 86,560 | 83,820 | |||||||||
| Provision for state and local income taxes | ||||||||||||
| Current provision | 29,992 | 25,186 | 27,243 | |||||||||
| Deferred benefit | (215 | ) | (301 | ) | (2,991 | ) | ||||||
| Total provision for state and local income taxes | 29,777 | 24,885 | 24,252 | |||||||||
| Provision for non-resident withholding and foreign income taxes | ||||||||||||
| Current provision | 29,558 | 26,600 | 25,301 | |||||||||
| Deferred benefit | — | — | (51 | ) | ||||||||
| Total provision for non-resident withholding and foreign income taxes | 29,558 | 26,600 | 25,250 | |||||||||
| Provision for income taxes | $ | 168,634 | $ | 138,045 | $ | 133,322 |
As of December 28, 2025 and December 29, 2024, the significant components of net deferred income taxes were as follows in the table below. Certain prior period disclosure amounts have been reclassified to conform to the current presentation.
| December 28, 2025 | December 29, 2024 | |||||||
| Deferred income tax assets | ||||||||
| Operating lease liabilities | $ | 56,880 | $ | 55,538 | ||||
| Foreign tax credit | 25,112 | 20,970 | ||||||
| Insurance reserves | 12,005 | 11,800 | ||||||
| Accrued compensation | 11,129 | 11,918 | ||||||
| Non-cash equity-based compensation expense | 9,803 | 10,354 | ||||||
| Contract liabilities | 7,065 | 6,760 | ||||||
| Accruals and reserves | 4,563 | 4,276 | ||||||
| Other | 6,847 | 4,385 | ||||||
| Deferred income tax assets before valuation allowance | 133,404 | 126,001 | ||||||
| Less, valuation allowance | (26,348 | ) | (22,359 | ) | ||||
| Deferred income tax assets, net | 107,056 | 103,642 | ||||||
| Deferred income tax liabilities | ||||||||
| Operating lease right-of-use assets | 53,935 | 52,684 | ||||||
| Capitalized software | 17,948 | 8,535 | ||||||
| Depreciation, amortization and asset basis differences | 9,585 | 9,103 | ||||||
| Unrealized gain on investments | 3,487 | 9,888 | ||||||
| Deferred income tax liabilities | 84,955 | 80,210 | ||||||
| Net deferred income taxes | $ | 22,101 | $ | 23,432 |
Realization of the Company’s deferred tax assets is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income. Although realization of the Company’s deferred tax assets is not assured, on an ongoing basis, management assesses whether it remains more likely than not the deferred tax assets will be realized.
As of December 28, 2025 and December 29, 2024, the Company had total foreign tax credits of $25.1 million and $21.0 million, respectively, which were fully offset with a corresponding valuation allowance. As of December 28, 2025 and December 29, 2024, the Company also had valuation allowances related to interest deductibility in separately filed states of $1.2 million and $1.4 million, respectively. Management believes the remaining deferred tax assets will be realized. For financial reporting purposes, the Company’s investment in foreign subsidiaries does not exceed its tax basis. Therefore, no deferred income taxes have been provided.
The Company recognizes the financial statement benefit of a tax position if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities widely understood administrative practices and precedents. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and recognizes penalties in income tax expense.
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 28, 2025, December 29, 2024 and December 31, 2023 is as follows:
| December 28, 2025 | December 29, 2024 | December 31, 2023 | ||||||||||
| Unrecognized tax benefits at beginning of period | $ | 4,534 | $ | 3,918 | $ | 3,902 | ||||||
| Additions for tax positions of current year | 649 | 1,039 | 961 | |||||||||
| Additions for tax positions of prior years | 193 | 241 | 503 | |||||||||
| Reductions for changes in prior year tax positions | — | — | (551 | ) | ||||||||
| Reductions for lapses of applicable statute of limitations | (888 | ) | (664 | ) | (897 | ) | ||||||
| Unrecognized tax benefits at end of period | $ | 4,488 | $ | 4,534 | $ | 3,918 |
As of December 28, 2025, the amount of unrecognized tax benefits was $4.5 million of which, if ultimately recognized, $4.5 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. As of December 28, 2025, the Company had $0.7 million of accrued interest and no accrued penalties.
As of December 29, 2024, the amount of unrecognized tax benefits was $4.5 million of which, if ultimately recognized, $4.5 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. As of December 29, 2024, the Company had $0.6 million of accrued interest and no accrued penalties.
There are currently no Internal Revenue Service audits in progress for the Company. The Company continues to be under examination by certain states. The Company’s Federal statute of limitation has expired for years prior to 2022, but it varies for state and foreign locations. The Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.
(8)
Employee Benefits
The Company has a retirement savings plan which qualifies under Internal Revenue Code Section 401(k). All employees of the Company who have completed 60 days of service and are at least 18 years of age are eligible to participate in the plan. The plan requires the Company to match 100% of the first 5% of each employee’s elective deferrals contributed on a per paycheck basis. The Company’s matching contributions are made in the form of cash and vest immediately. The expenses incurred for Company contributions to the plan were $14.2 million, $14.1 million and $12.5 million in 2025, 2024 and 2023, respectively.
The Company has established a non-qualified deferred compensation plan available for certain key employees. Under this self-funding plan, the participants may defer up to 50% of their base salary and up to 80% of their bonus compensation. The participants direct the investment of their deferred compensation within several investment funds. The Company is not required to contribute and did not contribute to this plan during 2025, 2024 and 2023.
The Company has an employee stock payroll deduction plan (the “ESPDP”). Under the ESPDP, eligible employees may deduct up to 15% of their eligible wages to purchase common stock at 85% of the market price of the stock on the purchase date. The ESPDP requires employees to hold their purchased common stock for at least one year. The Company purchases common stock on the open market for the ESPDP at the current market price. There were 17,487 shares, 15,935 shares and 18,439 shares of common stock in 2025, 2024 and 2023, respectively, purchased on the open market for participating employees at a weighted-average price of $456.21 in 2025, $450.59 in 2024 and $341.76 in 2023. The expenses incurred under the ESPDP were $1.2 million, $1.0 million, and $0.9 million in 2025, 2024 and 2023, respectively.
(9)
Equity Incentive Plans
The Company’s current equity incentive plan, named the Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”), benefits certain of the Company’s employees and members of the Company’s Board of Directors. As of December 28, 2025, the maximum number of shares that may be granted under the 2004 Equity Incentive Plan is 15,600,000 shares of voting common stock of which 2,004,315 shares were authorized for grant but have not been granted.
The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated statements of income based on the estimated fair value of the awards and is amortized over the requisite service period of each award. All non-cash equity-based compensation expense amounts are recorded in general and administrative expense. The Company accounts for forfeitures as they occur.
The Company recorded total non-cash equity-based compensation expense of $44.6 million, $43.3 million and $37.5 million in 2025, 2024 and 2023, respectively. The Company recorded a deferred tax benefit related to non-cash equity-based compensation expense of $6.1 million, $6.8 million and $6.3 million in 2025, 2024 and 2023, respectively.
Stock Options
As of December 28, 2025, the number of stock options granted and outstanding under the 2004 Equity Incentive Plan was 424,286 options. Stock options granted in fiscal 2016 through fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vested over four years from the date of grant, generally subject to the holder’s continued employment. Stock options granted after fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over three years from the date of grant, generally subject to the holder’s continued employment. Additionally, all stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated vesting upon the retirement of the holders that have achieved specific service and age requirements.
Stock option activity related to the 2004 Equity Incentive Plan is summarized as follows:
| Common Stock Options | ||||||||||||||||
| Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Life | Aggregate Intrinsic Value | |||||||||||||
| (Years) | (In thousands) | |||||||||||||||
| Stock options at January 1, 2023 | 672,142 | $ | 206.69 | |||||||||||||
| Stock options granted | 104,711 | 300.16 | ||||||||||||||
| Stock options forfeited or expired | (11,973 | ) | 351.89 | |||||||||||||
| Stock options exercised | (78,532 | ) | 110.22 | |||||||||||||
| Stock options at December 31, 2023 | 686,348 | $ | 229.45 | |||||||||||||
| Stock options granted | 46,098 | 443.90 | ||||||||||||||
| Stock options forfeited or expired | (3,728 | ) | 348.25 | |||||||||||||
| Stock options exercised | (270,424 | ) | 133.21 | |||||||||||||
| Stock options at December 29, 2024 | 458,294 | $ | 306.85 | |||||||||||||
| Stock options granted | 51,430 | 438.71 | ||||||||||||||
| Stock options forfeited or expired | (8,023 | ) | 374.94 | |||||||||||||
| Stock options exercised | (77,415 | ) | 242.76 | |||||||||||||
| Stock options at December 28, 2025 | 424,286 | $ | 333.24 | 5.4 | $ | 40,586 | ||||||||||
| Exercisable at December 28, 2025 | 321,280 | $ | 310.57 | 4.4 | $ | 37,225 |
The total intrinsic value of stock options exercised was $16.4 million, $93.5 million and $19.6 million in 2025, 2024 and 2023, respectively. Cash received from the exercise of stock options was $18.8 million, $36.0 million and $8.7 million in 2025, 2024 and 2023, respectively. The tax benefit realized from stock options exercised was $1.9 million, $20.8 million and $4.2 million in 2025, 2024 and 2023, respectively.
The Company recorded total non-cash equity-based compensation expense of $7.8 million, $6.7 million and $5.8 million in 2025, 2024 and 2023, respectively, related to stock option awards. As of December 28, 2025, there was $6.2 million of total unrecognized compensation cost related to unvested stock options granted under the 2004 Equity Incentive Plan which will be recognized on a straight-line basis over the related vesting period. This unrecognized compensation cost is expected to be recognized over a weighted average period of 1.7 years.
Management estimated the fair value of each option grant made during 2025, 2024 and 2023 as of the date of the grant using the Black-Scholes option pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The expected life is based on several factors, including, among other things, the vesting term and contractual term as well as historical experience. The expected volatility is based principally on the historical volatility of the Company’s share price. Option valuation models require the input of highly subjective assumptions and changes in assumptions can significantly affect the estimated fair value of the Company’s stock options.
The weighted average assumptions used in estimating the fair value of each stock option granted in 2025, 2024 and 2023 using the Black-Scholes option pricing method are presented in the following table:
| 2025 | 2024 | 2023 | ||||||||||
| Risk-free interest rate | 4.1 | % | 4.1 | % | 4.0 | % | ||||||
| Expected life | 5.25 years | 5.25 years | 5.25 years | |||||||||
| Expected volatility | 32.0 | % | 32.0 | % | 32.0 | % | ||||||
| Expected dividend yield | 1.6 | % | 1.4 | % | 1.6 | % | ||||||
| Weighted average fair value per stock option | $ | 134.99 | $ | 139.87 | $ | 91.25 |
Other Equity-Based Compensation Arrangements
The Company granted 3,480 units, 3,322 units and 4,553 units of restricted stock in 2025, 2024 and 2023, respectively, to members of its Board of Directors. Restricted stock units and awards granted to members of the Company’s Board of Directors were granted with a fair value equal to the market price of the Company’s common stock on the grant date and generally vest one year from the date of grant, generally subject to the director’s continued service. These awards also contain provisions for accelerated vesting upon the retirement eligibility of the holders that have achieved specified service and age requirements.
The Company granted 61,840 units, 64,272 units and 125,285 units of restricted stock in 2025, 2024 and 2023, respectively, to certain employees of the Company. These restricted stock units were granted with a fair value equal to the market price of the Company’s common stock on the grant date. These restricted stock units are generally separated into three tranches and have time-based vesting conditions with the last tranche of the award generally vesting three years from the grant date, generally subject to the holder’s continued employment. These awards generally also contain provisions for accelerated vesting upon the retirement of the holders that have achieved specified service and age requirements.
The Company granted 17,349 units, 17,670 units and 37,677 units of performance-based restricted stock units in 2025, 2024 and 2023, respectively, to certain employees of the Company. These restricted stock units were granted with a fair value equal to the market price of the Company’s common stock on the grant date, certain of which were adjusted for the estimated fair value of the market condition included in the award. These performance-based restricted stock units may vest three years from the date of grant, generally subject to the holder’s continued employment, and have time- and performance-based vesting conditions which provide for potential payouts of the target award amount between zero percent and two hundred percent, based on the Company’s three-year achievement as compared to the specified target performance conditions. Certain of the performance-based restricted stock units also include provisions for a potential modifier (upward or downward) based on the Company’s cumulative three-year common stock total shareholder return performance relative to that of a pre-established peer group. These awards contain provisions for full or partial vesting if the holder retires during the performance period, after achieving specified service and age requirements. For the awards with a market condition, Management estimated the fair value of each performance-based restricted stock unit using a Monte-Carlo simulation pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The Monte-Carlo simulation also includes assumptions for expected volatility based principally on the historical volatility of the Company’s share price, as well as the correlation of the Company’s share price as compared to that of the pre-established peer group.
The weighted average assumptions used in estimating the fair value of the performance-based restricted stock units granted in 2025, 2024 and 2023 that include a market condition using the Monte-Carlo simulation pricing method are presented in the following table:
| 2025 | 2024 | 2023 | ||||||||||
| Risk-free interest rate | 4.0 | % | 4.3 | % | 4.3 | % | ||||||
| Expected life | 2.81 years | 2.81 years | 2.80 years | |||||||||
| Expected volatility | 30.2 | % | 30.4 | % | 30.2 | % | ||||||
| Weighted average fair value per performance-based restricted stock unit | $ | 478.88 | $ | 479.39 | $ | 306.19 |
Activity related to restricted stock units and performance-based restricted stock units awarded under the 2004 Equity Incentive Plan is summarized as follows in the table below. The Company recorded total non-cash equity-based compensation expense of $36.8 million, $36.6 million and $31.7 million in 2025, 2024 and 2023, respectively, related to these restricted stock units and performance-based restricted stock units. As of December 28, 2025, there was $42.0 million of total unrecognized compensation cost related to these restricted stock units and performance-based restricted stock units. The unrecognized compensation cost related to restricted stock units and performance-based restricted stock units is expected to be recognized over a weighted average period of 2.0 years.
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Nonvested at January 1, 2023 | 145,644 | $ | 381.00 | |||||
| Shares granted | 167,515 | 315.51 | ||||||
| Shares forfeited | (9,799 | ) | 354.44 | |||||
| Shares vested | (54,225 | ) | 368.41 | |||||
| Nonvested at December 31, 2023 | 249,135 | $ | 341.86 | |||||
| Shares granted | 85,264 | 453.64 | ||||||
| Shares forfeited | (15,216 | ) | 362.18 | |||||
| Shares vested | (74,265 | ) | 356.22 | |||||
| Nonvested at December 29, 2024 | 244,918 | $ | 373.58 | |||||
| Shares granted | 82,669 | 450.71 | ||||||
| Shares forfeited | (20,346 | ) | 400.67 | |||||
| Shares vested | (79,668 | ) | 370.75 | |||||
| Nonvested at December 28, 2025 | 227,573 | $ | 404.05 |
(10)
Capital Structure
The Company’s share repurchase programs have historically been funded by excess operating cash flows, excess proceeds from the Company’s recapitalization transactions and borrowings under the Company’s variable funding notes. The Company’s policy is to recognize the difference between the purchase price and par value of the common stock in additional paid-in capital. In instances where there is no additional paid-in capital, the difference is recognized in retained deficit.
During 2025, 2024 and 2023, the Company repurchased 785,280 shares, 758,242 shares and 789,977 shares of the Company’s common stock for $354.7 million, $327.0 million and $269.0 million, respectively. As of December 28, 2025, the Company had $459.7 million remaining under the $1.0 billion share repurchase authorization approved by its Board of Directors on February 21, 2024 for repurchases of shares of the Company’s common stock.
As of December 28, 2025, authorized common stock consists of 160,000,000 voting shares and 10,000,000 non-voting shares. The share components of outstanding common stock at December 28, 2025 and December 29, 2024 were as follows:
| December 28, 2025 | December 29, 2024 | |||||||
| Voting | 33,624,795 | 34,278,732 | ||||||
| Non-Voting | 3,197 | 3,195 | ||||||
| Total Common Stock | 33,627,992 | 34,281,927 |
(11)
Segment Information
The Company has three reportable segments: (i) U.S. stores; (ii) supply chain; and (iii) international franchise.
The Company’s operations are organized by management on the combined basis of line of business and geography. The U.S. stores segment includes operations with respect to all franchised and Company-owned stores throughout the U.S. The supply chain segment primarily includes the distribution of food, and to a lesser extent, other products, from the Company’s supply chain center operations in the U.S. and Canada. Over 90% of the Company’s supply chain revenues are attributable to the U.S. The international franchise segment includes operations related to the Company’s franchising business in foreign markets. The accounting policies of the reportable segments are the same as those described in Note 1. The Company’s chief operating decision maker is its Chief Executive Officer, and he evaluates the performance of the Company’s segments and allocates resources to them based on revenues and earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. The Company’s chief operating decision maker uses Segment Income to determine future business objectives and targets and for long-range planning for the reportable segments, as well as to evaluate their operating performance.
The tables below summarize the financial information, including revenues, significant segment expenses, Segment Income and capital expenditures, concerning the Company’s reportable segments for fiscal years 2025, 2024 and 2023. Intersegment revenues are comprised of sales of food, and to a lesser extent, other products, from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based.
| Fiscal year ended December 28, 2025 | ||||||||||||||||
| U.S. Stores | Supply Chain | International Franchise | Total | |||||||||||||
| U.S. Company-owned stores | $ | 375,153 | $ | — | $ | — | $ | 375,153 | ||||||||
| U.S. franchise royalties and fees | 677,114 | — | — | 677,114 | ||||||||||||
| Supply chain | — | 3,106,047 | — | 3,106,047 | ||||||||||||
| Supply chain - intersegment revenues | — | (116,518 | ) | — | (116,518 | ) | ||||||||||
| International franchise royalties and fees | — | — | 338,704 | 338,704 | ||||||||||||
| U.S. franchise advertising | 559,494 | — | — | 559,494 | ||||||||||||
| Segment revenues | $ | 1,611,761 | $ | 2,989,529 | $ | 338,704 | $ | 4,939,994 | ||||||||
| Cost of sales - food | 112,116 | 2,118,166 | — | 2,230,282 | ||||||||||||
| Cost of sales - labor | 117,357 | 267,017 | — | 384,374 | ||||||||||||
| Cost of sales - other (1) | 80,849 | 219,143 | — | 299,992 | ||||||||||||
| U.S. franchise advertising | 559,494 | — | — | 559,494 | ||||||||||||
| General and administrative (2) | 166,596 | 65,133 | 50,159 | 281,888 | ||||||||||||
| Segment Income | $ | 575,349 | $ | 320,070 | $ | 288,545 | $ | 1,183,964 | ||||||||
| Segment capital expenditures (3) | $ | 9,928 | $ | 57,432 | $ | 144 | $ | 67,504 |
| Fiscal year ended December 29, 2024 | ||||||||||||||||
| U.S. Stores | Supply Chain | International Franchise | Total | |||||||||||||
| U.S. Company-owned stores | $ | 393,898 | $ | — | $ | — | $ | 393,898 | ||||||||
| U.S. franchise royalties and fees | 638,193 | — | — | 638,193 | ||||||||||||
| Supply chain | — | 2,966,953 | — | 2,966,953 | ||||||||||||
| Supply chain - intersegment revenues | — | (121,172 | ) | — | (121,172 | ) | ||||||||||
| International franchise royalties and fees | — | — | 318,691 | 318,691 | ||||||||||||
| U.S. franchise advertising | 509,853 | — | — | 509,853 | ||||||||||||
| Segment revenues | $ | 1,541,944 | $ | 2,845,781 | $ | 318,691 | $ | 4,706,416 | ||||||||
| Cost of sales - food | 114,220 | 2,027,816 | — | 2,142,036 | ||||||||||||
| Cost of sales - labor | 123,251 | 262,312 | — | 385,563 | ||||||||||||
| Cost of sales - other (1) | 78,197 | 202,694 | — | 280,891 | ||||||||||||
| U.S. franchise advertising | 509,853 | — | — | 509,853 | ||||||||||||
| General and administrative (2) | 151,030 | 72,348 | 58,029 | 281,407 | ||||||||||||
| Segment Income | $ | 565,393 | $ | 280,611 | $ | 260,662 | $ | 1,106,666 | ||||||||
| Segment capital expenditures (3) | $ | 10,959 | $ | 44,653 | $ | 33 | $ | 55,645 |
| Fiscal year ended December 31, 2023 | ||||||||||||||||
| U.S. Stores | Supply Chain | International Franchise | Total | |||||||||||||
| U.S. Company-owned stores | $ | 376,180 | $ | — | $ | — | $ | 376,180 | ||||||||
| U.S. franchise royalties and fees | 604,897 | — | — | 604,897 | ||||||||||||
| Supply chain | — | 2,829,224 | — | 2,829,224 | ||||||||||||
| Supply chain - intersegment revenues | — | (114,215 | ) | — | (114,215 | ) | ||||||||||
| International franchise royalties and fees | — | — | 310,077 | 310,077 | ||||||||||||
| U.S. franchise advertising | 473,195 | — | — | 473,195 | ||||||||||||
| Segment revenues | $ | 1,454,272 | $ | 2,715,009 | $ | 310,077 | $ | 4,479,358 | ||||||||
| Cost of sales - food | 109,554 | 1,964,500 | — | 2,074,054 | ||||||||||||
| Cost of sales - labor | 118,798 | 247,048 | — | 365,846 | ||||||||||||
| Cost of sales - other (1) | 75,457 | 192,794 | — | 268,251 | ||||||||||||
| U.S. franchise advertising | 473,195 | — | — | 473,195 | ||||||||||||
| General and administrative (2) | 156,291 | 65,237 | 50,469 | 271,997 | ||||||||||||
| Segment Income | $ | 520,977 | $ | 245,430 | $ | 259,608 | $ | 1,026,015 | ||||||||
| Segment capital expenditures (3) | $ | 11,942 | $ | 34,044 | $ | 93 | $ | 46,079 |
(1)
Cost of sales - other, includes delivery, occupancy costs (including rent, telephone and utilities), insurance expense and other. Depreciation and amortization is not included in the measurement of Segment Income.
(2)
General and administrative expense consists primarily of labor cost (including variable performance-based compensation expense), computer expenses, professional fees, travel and entertainment, rent, insurance expense and other. Depreciation and amortization, non-cash equity-based compensation expense and gains and losses from the sale of assets are not included in the measurement of Segment Income.
(3)
The Company also had $52.4 million, $53.7 million and $59.2 million of other capital expenditures not attributable to the reportable segments primarily representing capitalized software and other corporate capital expenditures in 2025, 2024 and 2023, respectively.
The following table reconciles total Segment Income to income before provision for income taxes:
| 2025 | 2024 | 2023 | ||||||||||
| Total Segment Income | $ | 1,183,964 | $ | 1,106,666 | $ | 1,026,015 | ||||||
| General and administrative - other (1) | (98,696 | ) | (94,995 | ) | (86,894 | ) | ||||||
| Depreciation and amortization | (88,827 | ) | (87,732 | ) | (80,640 | ) | ||||||
| Non-cash equity-based compensation expense | (44,640 | ) | (43,255 | ) | (37,514 | ) | ||||||
| Loss on sale/disposal of assets | (1,855 | ) | (1,527 | ) | (1,299 | ) | ||||||
| Refranchising gain (loss) | 4,028 | (158 | ) | (149 | ) | |||||||
| Income from operations | 953,974 | 878,999 | 819,519 | |||||||||
| Other (expense) income | (2,544 | ) | 22,064 | 17,713 | ||||||||
| Interest income | 14,880 | 17,022 | 11,683 | |||||||||
| Interest expense | (195,972 | ) | (195,870 | ) | (196,475 | ) | ||||||
| Income before provision for income taxes | $ | 770,338 | $ | 722,215 | $ | 652,440 |
(1)
Represents corporate administrative costs that have not been allocated to a reportable segment including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.
The Company’s chief operating decision maker is not regularly provided financial information related to the assets of the reportable segments, and he does not evaluate their performance or allocate resources to them based on assets. Therefore, total assets by reportable segment are not included in the Company’s segment disclosures.
(12)
Company-owned Store Transactions
During 2025, the Company refranchised 37 U.S. Company-owned stores, primarily in Maryland, for net proceeds of $8.6 million. The pre-tax refranchising gain associated with the sale of the related assets and liabilities, including a $1.4 million reduction in goodwill, was $4.0 million and was recorded in refranchising gain in the Company’s consolidated statements of income. Also during 2025, the Company purchased two U.S. franchised stores from one of the Company’s former U.S. franchisees. The Company recorded $0.3 million of intangibles, $0.1 million of equipment and leasehold improvements and $0.5 million of goodwill.
During 2024, the Company refranchised two U.S. Company-owned stores for proceeds of less than $0.1 million. The pre-tax refranchising loss associated with the sale of the related assets and liabilities, including goodwill, was approximately $0.2 million and was recorded in refranchising loss in the Company’s consolidated statements of income.
During 2023, the Company refranchised one U.S. Company-owned store for proceeds of less than $0.1 million. The pre-tax refranchising loss associated with the sale of the related assets and liabilities, including goodwill, was approximately $0.1 million and was recorded in refranchising loss in the Company’s consolidated statements of income.
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