Highlights

  • Domino’s reported FY26 network sales of AUD 3.87 billion, down 6.8%, including the impact of store closures.
  • Underlying EBIT increased 1.0% to AUD 200.1 million despite a 4.1% decline in same-store sales.
  • Average Franchise partner profitability improved 11.3% to AUD 105,700 EBITDA per store on a rolling 12-month basis.
  • Free Cash Flow reached AUD 164.1 million, while net Debt fell by AUD 227.8 million and net Leverage declined to 1.86 times.

Domino’s Pizza Enterprises Limited (ASX:DMP) entered FY27 with a different operating foundation after spending FY26 reshaping its global franchise system around better store economics, lower costs and a healthier balance sheet.

The company operates Domino’s master franchise businesses across Australia, New Zealand and several European and Asian markets. Its model relies heavily on franchise partners, meaning restaurant-level profitability is important to the sustainability of the wider network. Healthy store Economics can support reinvestment, customer service, Marketing and future store development.

The group’s 26 August 2026 full-year results were therefore notable not simply for headline sales trends, but for the progress made in improving franchise partner returns and financial flexibility. Management described FY26 as a reset year, with FY27 now shifting toward rebuilding profitable customer and order growth.

FY26 Reset

Domino’s reported FY26 network sales of AUD 3.87 billion, representing a 6.8% decline from FY25. Same-store sales decreased 4.1%, reflecting softer order volumes, network changes and the company’s deliberate move away from broad, high-discount promotional activity.

Despite the sales decline, underlying EBIT increased 1.0% to AUD 200.1 million. Underlying NPAT also improved 4.0% to AUD 121.6 million.

The Earnings outcome reflected benefits from the operating reset, including lower costs and stronger contributions from parts of Europe and Asia.

Domino’s actioned approximately AUD 67 million of annualised cost savings, with AUD 35.3 million realised during FY26. This helped the group absorb lower sales while maintaining earnings growth.

The company also declared a final unfranked dividend of 32.5 cents per share, representing an increase of 51.2% compared with the prior corresponding period.

Franchise Economics

Improving franchise partner profitability has been at the centre of Domino’s strategic reset.

Average rolling 12-month franchise store EBITDA increased 11.3% to AUD 105,700 per store. Average store EBITDA Margin improved from 7.1% to 7.9%.

Management attributed the improvement to factors including clearer pricing, higher average ticket values, lower food and packaging costs, tighter operating controls and simplification.

The company has set a longer-term benchmark of approximately AUD 130,000 in average global franchise partner EBITDA.

That target matters because franchise partners typically need attractive economics to justify Investment in additional stores, refurbishments, staff and local marketing. Stronger unit-level returns may therefore help create a better platform for sustainable network expansion over time.

Australia has already shown comparatively better economics, with average franchise store EBITDA above the global average during FY26.

Value Strategy

Domino’s reset has involved reducing dependence on aggressive vouchers and broad discounting.

While that strategy supported store profitability, it also contributed to lower order counts as some customers had become accustomed to heavily discounted offers.

The company has been testing a simpler pricing model in Western Australia, combining set menu pricing with a low delivery fee. According to the FY26 update, franchise partner EBITDA under the trial grew by more than 30% for five consecutive months, while carry-out sales increased compared with the prior year.

The experience provides an important lesson for FY27. Domino’s needs to communicate value clearly enough to attract customers without returning to promotional activity that weakens franchise partner economics.

Management’s approach therefore centres on more relevant offers, simplified menus, stronger meal propositions and improved digital and customer relationship management capabilities.

A separate June 2026 development saw Domino’s announce a new Australian beverage Partnership with Coca-Cola Europacific Partners, scheduled to take effect from 14 September 2026. The arrangement is intended to broaden beverage choice and support bundled meal offerings across the Australian network.

Balance Sheet

Financial strengthening was another major feature of FY26.

Free cash flow increased by AUD 116.6 million to AUD 164.1 million. Domino’s reduced net debt by AUD 227.8 million during the year, bringing net leverage down to 1.86 times from 2.57 times.

That brought leverage below the company’s target of 2.0 times and provides greater flexibility entering FY27.

A healthier Balance Sheet can allow Domino’s to invest selectively in digital platforms, customer experience, store productivity and network development without placing the same pressure on financial gearing.

The company has also refreshed its Leadership structure. Andrew Gregory was appointed Group Chief Executive Officer and Managing Director in August 2026, giving the Business a permanent chief executive as it transitions from the reset phase toward growth.

FY27 Focus

The central priority for FY27 is rebuilding profitable order growth without reversing improvements in franchise partner economics.

Management has acknowledged that global order volumes remain below desired levels. The challenge is therefore to attract customers more frequently while maintaining improved margins.

Digital execution will remain important. Online ordering, customer relationship management and targeted offers can help Domino’s personalise promotions and reduce reliance on blanket discounting.

Store productivity, procurement efficiencies and menu innovation are also expected to contribute to the longer-term franchise profitability target.

For investors, several indicators will be worth monitoring: same-store sales, order volumes, franchise EBITDA, margins, cash generation and progress in key international markets.

Final Takeaway

Domino’s Pizza Enterprises’ FY26 result reflected a deliberate trade-off between short-term sales volumes and stronger franchise economics.

Network sales declined 6.8% to AUD 3.87 billion and same-store sales fell 4.1%, but underlying EBIT increased to AUD 200.1 million, franchise partner profitability improved 11.3% and free cash flow reached AUD 164.1 million.

For Domino’s Pizza Enterprises (ASX:DMP), FY27 represents the next stage of the turnaround. The focus is shifting from stabilising economics toward rebuilding profitable customer demand.

How effectively the company combines clearer value, digital engagement, better store execution and disciplined costs while preserving franchise partner returns will be central to assessing progress.