Global pizza giant Domino’s Pizza expects competitors including Papa Johns and Pizza Hut to shut additional stores, as aggressive discounting strategies continue to erode franchisee profitability across the sector.
Speaking during the company’s latest earnings call, Russell Weiner, CEO, Domino’s Pizza, said rival brands are facing mounting financial strain as they rely on steep promotions to drive traffic, a model he suggested is increasingly unsustainable at the store level.
Pizza Hut’s parent, Yum! Brands, is closing around 250 underperforming restaurants in the first half of 2026, while Papa Johns is targeting roughly 200 closures this year as part of a broader plan to shut 300 locations by 2027.
Weiner indicated that further closures are likely as franchisees struggle to maintain margins under heavy promotional pressure. “As competitors continue to push steep discounts, more franchisees will see profitability issues,” he said, pointing to a widening gap between Domino’s unit economics and those of its rivals.
The company also emphasised that its value-led strategy is designed to protect franchisee profitability rather than dilute it. Domino’s franchisees generated average annual sales exceeding $1.3 million per store, significantly higher than the roughly $500,000 annual volumes seen at many underperforming competitor locations now being closed.
Weiner also highlighted Domino’s larger advertising spend and scale advantages, arguing these allow the brand to sustain promotional activity without undermining margins, an advantage smaller or weaker systems may struggle to replicate.
Despite reporting modest same-store sales growth of 0.9% in the U.S. for the first quarter, Domino’s said it continues to gain market share and expects to benefit from competitor retrenchment.
Weiner reiterated that store closures across rival systems, typically lower-volume units, could create incremental demand opportunities for Domino’s, particularly in delivery-heavy markets where proximity and scale drive order capture.
Franchise Implications
For franchise operators, the divergence underscores a broader shift in the quick-service restaurant sector: value-led growth is increasingly dependent on operational efficiency and scale economics, rather than pricing alone.
As discount-driven strategies compress margins, weaker units across legacy systems are expected to exit, potentially accelerating consolidation within the global pizza franchise landscape.
