DPZ 10-K & 10-Q changes, risk factors and insider trading

In the U.S., we compete primarily against regional and independent or local companies as well as national chains Pizza Hut®, Papa John’s® and Little Caesars Pizza®. as well as regional, independent and local establishments. Internationally, we compete primarily with Pizza Hut®, Papa John’s® and country-specific national, regional and independent or local companies. We have and may continue to experience increased competition from existing or new companies in the delivery and carryout pizza categories, in addition to competition from order and delivery aggregators and other players both in the pizza category and more broadly, that may create further pressures to grow our business in order to maintain our market share. Competition for both customers and drivers from these order and delivery aggregators and other food delivery services has substantially increased as order and delivery aggregators have grown in size and scale.scale and have diversified the food offerings available for delivery. Additionally, we face competition from supermarkets and meal kit and food delivery providers, with the improvementproliferation of prepared food and meal kit offerings, expansion in meal delivery platforms and services and the trend towards convergence in grocery, deli, retail and restaurant services.

macroeconomic changes, disposable purchasing power and demographic trends; and currency fluctuations and geopolitical considerations related to international operations.

We compete within the food service market and the QSR market not only for customers, but also for management and employees, including store team members, drivers and qualified franchisees, as well as suitable real estate sites. WeComparable store sales remain important in the restaurant industry and ourthe franchiseesQSR havepizza faced at times a competitive labor market in recent years,category, which causedhas ushistorically andgrown our franchisees, in certain cases, to make operational changes and delay store openings, which could ultimately impact our growth and competitive position. While the Company sawon an increaseannual inbasis, salesmay innot certaingrow markets,as includingquickly as other categories within the U.S.,food atservice timesindustry. in recent years, including higher sales related to heightened reliance on delivery and carryout businesses, futureFuture sales are not possible to estimate, and it is unclear what future sales will be. Our success is also dependent in large part upon our ability to maintain and enhance the goodwill and reputation of our brand, our customers’ connection to our brand, and a positive relationship with our franchisees and the communities in which we and our franchisees operate.

securing required U.S. or foreign governmental permits, licenses and approvals; and general economic and business conditions, including increases in food costs, build costs and labor costs or pressured consumer spending, which could impact profitability and demand for new stores.

The opening of additional franchise stores also depends, in part, upon the availability of suitable prospective franchisees who meet our criteria, the ability of these franchisees to attract and retain qualified personnel and their desire to open new stores and ability to operate those stores effectively. Our failure to add new stores or closures of existing stores would impact global retail sales and adversely affect our ability to increase revenues and operating income. Additionally, our growth strategy and the success of new stores depend in large part on the availability of suitable store sites and leases. We and our franchisees are currently planning to expand our U.S. and international operations in many of the markets where we currently operate and in select new markets. This may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated. Operations in new markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local economic and market conditions. In addition, we expect to continue our strategy of building additional stores in markets and regions where we have existing stores, a strategy we refer to as “fortressing,” which may negatively impact sales at existing stores. This strategy could also result in store closures if executed too rapidly, as seen in certain international markets in recent years. Therefore, as we continue to expand, we or our franchisees may not experience the anticipated store-level profitability or gross margins we expect,margins, our results of operations may be negatively impacted, and our stock price may decline. Our net store growth figures could also be impacted by higher closure rates. Additionally, we have an equity investment in DPC Dash Ltd (“DPC Dash”), as further discussed elsewhere in this report. Through its subsidiaries, DPC Dash serves as the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. These types of investments are inherently risky. If DPC Dash does not succeed or is unable to successfully execute its growth strategy, we could lose some or all of our investment value.

Another component of our growth strategy also involves our ongoing participation on the third-party order aggregator marketplace. This avenue for sales may ultimately prove to be unsuccessful and sales or the potential size of this opportunity may not meet our expectations. Our presence on the order aggregator marketplace also introduces us to additional risks and uncertainties including the risk that orders on this marketplace may not have the same level of store-level profitability as orders through our owned channels. Our operating results and stock price may be adversely affected if we are not successful on order aggregator platforms.

In recent years, there have been and may continue to be significant increases in food costs and labor costs, which have impacted and could further impact our profitability and that of our franchisees and which could impact the opening of new U.S. and international franchised stores, lead to store closuresclosures, negatively impact sales and adversely affect our operating results. Economic conditions, including the inflationary and cost pressures seen in recent years, may also impact the discretionary purchasing power of our customers, especially customers with less disposable income or for whom discretionary spending represents a smaller portion of their disposable income, resulting in decreased demand for our products. Matters having a broad global economic impact may also significantly impact particular costs, such as the impact of geopolitical conflict on our and our international master franchisees’ transportation and energy costs. Health epidemics or pandemics have in the past and may in the future impact macroeconomic conditions, consumer behavior, labor availability and supply chain management, as well as local operations in impacted markets.

Labor shortages and increased turnover rates for our team members and those of our franchisees in recentpast years have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain team members and could negatively affect our and our franchisees’ ability to efficiently operate our respective businesses and result in a negative impact on service and customer experience.

Factors such as inflation, increased food costs, increased labor and employee health and benefit costs, increased rent costs, increased transportation costs, increased insurance costs and increased energy costs may adversely affect our operating costs and profitability and those of our franchisees and could result in menu price increases, which could impact consumer demand. An economic environment characterized by high unemployment, high interest rates, cautious consumer spending, or changes in consumer practices due to a possible recession could also impact consumer spending or demand and our operating results. Most of the factors affecting costs are beyond our control and, in many cases, we may not be able to pass along these increased costs to our customers or franchisees and to the extent we were to raise menu prices to offset these costs, could result in decreased consumer demand, sales and profitability.

Additionally, while we strive to engage in a competitive bidding process for our ingredients, because certain of these ingredients, including meat products, may only be available from a limited number of vendors, we may not always be able to do so effectively. Furthermore, if we need to seek new suppliers, including as a result of expiration of existing supply agreements, we may be subject to pricing or other terms less favorable to us than those reflected in our current supply arrangements. Labor costs are largely a function of the minimum wage for a majority of our and our franchisees’ store personnel and certain supply chain center personnel and, generally, are also a function of the availability of labor. In addition to the increases in labor costs described above, several jurisdictions in which we and our franchisees operateoperate, including California, have recently approved minimum wage increases. Federal, state and local proposals that increase minimum wage requirements or mandate other employee matters could, to the extent implemented, materially increase laborlabor, compliance and other costs. As more jurisdictions implement minimum wage increases, we expect that labor costs will continue to increase. For example, labor and regulatory compliance costs could be adversely impacted as a result of California Assembly Bill No. 1228 (AB 1228), which raised the minimum wage for employees of restaurants that are part of a national fast food chain effective April 1, 2024. TheThese increased labor costs at Company-owned and franchised restaurants in California could impact their profitability and the desire to open new stores or renew the franchise agreements for existing stores and result in additional price increases, which could impact demand for our products or lead to operational changes. Further, thisthese billchanges could prompt similar legislation in other states or localities. The advent of legislation aimed at predictive scheduling may impact labor for our stores and our franchisees’ stores. Additionally, while we only have a small number of unionized employees in our international operations, certain employees of other companies in our industry have recently become unionized in the U.S. If a significant portion of our or our franchisees’ employees were to become unionized, our and our franchisees’ labor costs could increase and our business could be negatively affected by other union requirements that increase costs, disrupt our business, reduce flexibility and impact employee culture. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived. Labor costs and food costs, including cheese, generally represent approximately 55% to 65% of the sales at a typical Company-owned store.

We and our franchisees are dependent on frequent deliveries of food products that meet our specifications as well as adequate supply of store equipment. We have single suppliers or a limited number of suppliers for certain of our ingredients, including pizza cheese and meat toppings. While we believe there are adequate reserve quantities and potential alternative suppliers, shortages, interruptions, or disruptions in the supply of food products and store equipment caused by increased demand, capacity constraints, expiration of existing agreements, problems in production or distribution, product recalls, financial or other difficulties of suppliers, inclement weather or other conditions could adversely affect the availability, quality and cost of ingredients and equipment. We have in the past experienced disruptions within our supply chain resulting from, among other things, capacity, volume, systems, staffing andstaffing, operational challenges and center interruptions and may experience such supply chain disruptions again in the future, which could materially and adversely affect our business and operational results. Additionally, the effects of climate change could increase the frequency and duration of weather impacts on our operations and could adversely affect our operating results.

Food service businesses are affected by changes in consumer tastes, international, national, regional and local economic conditions, marketing, advertising, pricingpricing, dietary and demographic trends. For instance, if prevailing regulatory guidance, health or dietary preferences cause consumers to avoid pizza and other products we offer in favor of foods that are perceived as healthier, or consumers shift away from delivery or carryout food, our business and operating results would be harmed. Moreover, because we are primarily dependent on a single product, if consumer demand for pizza should decrease, our business would suffer more than if we had a more diversified menu and the QSR pizza category may also not grow as quickly as other categories within the food service industry. Consumer preferences and demand for certain foods including pizza could also shift as a result of the increased use of prescription weight-loss therapies, including GLP-1 agonists and other related drugs. The preferences of customers also may change as a result of advances in technology or alternative delivery methods or channels as well as geopolitical considerations. If we are not able to respond to these changes, or our competitors respond to these changes more effectively than us, our operating results could be adversely affected.

Reports, whether true or not, of product contamination, food-borne illnesses and injuries caused by food tampering have in the past severely injured the reputations and operating results of participants in the QSR market and could in the future as well. These events could occur both at the store and supply chain center levels. If such an event were to occur, we may not be able to respond to it quickly and effectively. The potential for acts of terrorismdisruptions affecting our global food supply also exists and, if such an event occurs, could have a negative impact on us and could severely hurt sales and profits. In addition, our reputation is an important asset; as a result, anything that damages our reputation could immediately and severely affect our sales and profits. Further, a boycott or other campaign critical of us, whether domestic or international, through social media or otherwise, could negatively impact our brand’s reputation and, consequently, sales. Media reports of product contamination, illnesses and injuries, whether accurate or not, could force some stores to close or otherwise reduce sales at such stores. Moreover, as further described below, social media and the rise of artificial intelligence-generated content has dramatically increased the rate at which negative publicity, including as it relates to food-borne illness, can be disseminated before there is any meaningful opportunity to respond to or address an issue. Even reports of food-borne illnesses or food tampering occurring solely at the restaurants of competitors could, by resulting in negative publicity about the restaurant industry in general, adversely affect us on a local, regional, national or international basis. Our international operations expose us to further risk as our master franchisees are responsible for obtaining their own supply of food and equipment, subject to their compliance with our quality standards. A decrease in sales due to these health concerns, any negative publicity or as a result of the closure of any Domino’s stores stemming from these matters could adversely affect our results of operations.

In the U.S., we operate 22 regional dough manufacturing and supply chain centers, two thin crust manufacturing facilities and one vegetable processing center to our U.S. and certain international stores. We also operate five dough manufacturing and supply chain centers in Canada. We plan to continue investing in supply chain productivity initiatives in the future. Our U.S. dough manufacturing and supply chain centers service all of our Company-owned and substantially all of our U.S. franchise stores. Any prolonged disruption in the operations of any of these facilities, whether due to technical, systems, operational or labor difficulties, destruction or damage to the facility, real estate issues, limited capacity or other reasons, or our failure to successfully increase capacity and open new centers, have in the past and in the future could adversely affect our business and operating results.

legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws;

increases in anti-American sentiment and the identification of Domino’s as an American brand, including those seen as a result of theglobal geopolitical tensions in the Middle East and further escalations and the impact thereof; and political and economic instability and uncertainty around the world and related geopolitical risk.

Additionally, an increase in tariffs, such as the tariffs announced on February 1, 2025 on imports to the United States from Canada and Mexico, and any similar or retaliatory tariffs or trade policies,policies could disrupt and increase the costs of our supply chains and those of our master franchisees in relation to certain products that we and they source internationally.

Our earnings and business growth strategystrategies depend on the success of our franchisees, and we may be harmed by actions taken by our franchisees, or employees of our franchisees, which are outside of our control.

As of December 29,28, 2024,2025, we had 751754 independent U.S. franchisees operating 6,7226,924 U.S. franchise stores. As of that same date, 2224 of these franchisees each owned and operated more than 50 U.S. stores, including our largest U.S. franchisee who owned and operated 158160 stores, and the average U.S. franchisee owned and operated approximately nine stores. Our international master franchisees are generally responsible for the development of significantly more stores than our U.S. franchisees. As a result, our international operations are more closely tied to the success of a smaller number of franchisees than our U.S. operations. As of December 29,28, 2024,2025, our largest international master franchisee operated 3,7413,524 stores in 12 international markets, which accounted for approximately 26%24% of our total international store count. Our U.S. and international franchisees may not operate their franchises successfully. If one or more of our key franchisees were to be unsuccessful, become insolvent or otherwise were unable or unwilling to pay us our royalties or other amounts owed, our business and results of operations would be adversely affected.

If we were to be unable or fail to recognize, respond to and effectively manage the accelerated impact of social media and/or generative artificial intelligence (“AI”) or become the subject of a boycott, our business could be adversely impacted.

The use of social media platforms and other consumer-oriented technologiestechnologies, including generative AI, has increased the speed and accessibility of information dissemination and given users the ability to more effectively organize collective actions such as boycotts and other brand-damaging behaviors. Negative publicity related to our brand, products, operations, or stores or related to our operations or actions by our executives, team members or franchisees and their team members or others perceived to be associated with our brand could harm our business, brand, reputation, marketing partners, financial condition and results of operations, regardless of the accuracy of such negative publicity. Failure to use or respond to social media campaigns effectively could lead to a decline in brand value and revenue.

We have been routinely named a Leading National Advertiser by Advertising Age and our success depends in part on continued effective advertising. Each Domino’s store located in the U.S. is obligated to contribute 6.0% of its sales to DNAF, which uses such fees for national advertising in addition to contributions for local market-level advertising. We currently anticipate that this 6.0% obligation will remain in place for the foreseeable future, though the actual contribution rate could be lower in certain instances due to certain incentives and waivers. From March 27, 2023 through March 24, 2024, the Company effectuated a temporary reduction of 0.25% to its standard 6.0% advertising contribution. While additional funds for advertising in the past have been provided by us, our franchisees and other third parties, none of these additional funds are legally required. The lack of continued financial support for advertising activities or a limitation on our ability to advertise certain offers could significantly curtail our marketing efforts, which may in turn affect our business and our operating results.

The primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationships with customers, franchisees and employees, private data exposure, including payment card or other financial data, public relationspublicity impact and regulatory fines. In addition to maintaining insurance coverage to address cyber incidents, we have also implemented processes, procedures and controls to help mitigate these risks. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by others, including by our service providers and these measures, as well as our increased awareness of the risk of a cyber incident, do not guarantee that our reputation and financial results will not be materially and adversely affected by such an incident. Our business continuation or disaster recovery programs may not be sufficient to mitigate the harm that could result from such disaster or disruption, and insurance and other safeguards may only partially reimburse us for our losses, if at all. ArtificialThe intelligencecontinued (“rise in AI”) technologies may intensify our cybersecurity risks.

We depend on the performance of suppliers, aggregatorsaggregators, service providers and other third parties in our business operations. Third-party business processes we utilize include information technology, gift card authorization and processing, payment processing, benefits, and other accounting and business services. The failure of our suppliers, aggregatorsaggregators, service providers and other third parties to maintain adequate controls or comply with our expectations and standards could have a material adverse effect on our business. Our and our franchisees’ operations depend upon our ability and the ability of franchisees, third-party service providers and the service providers of those third parties (as well as franchisees’ third-party service providers and the service providers of those third parties) to protect computer equipment and systems against damage from theft, fire, power loss, telecommunications failure and other catastrophic or unanticipated events, as well as internal and external security incidents, viruses, denial-of-service attacks, phishing attacks, ransomware attacks and other intentional or unintentional disruptions. The rapid evolution and continued increased adoption of AI technologies amplifies these concerns.

A significant portion of our retail sales depends on the continuing operation of our information technology and communications systems, including DOM OS, our online and mobile ordering platforms and our credit card processing systems. The failure of these systems to operate effectively, stemming from maintenance problems, upgrading or transitioning to new platforms, a compromise in our security or other unanticipated problems has at times in the past and in the future could result in interruptions to or delays in our and our franchisees’ operations, and some of our systems are not fully redundant. The occurrence of a natural disaster, intentional sabotage or other unanticipated problems could result in lengthy interruptions in service. Increases in remoteRemote working could also exacerbate certain risks to our business, including an increased risk of cyber incidents and improper dissemination of personal or confidential information.

We also maintain important internal Company data, such as personally identifiable information about our employees and franchisees and information relating to our operations. In addition, more than 85% of our U.S. retail sales in 20242025 were derived from digital channels, primarily through our online ordering website and mobile applications, where customers enter personally identifiable information that we retain. Our use and retention of personally identifiable information is regulated by foreign, federal and state laws and regulations, as well as by certain third-party agreements. For example, the State of California has adopted the California Privacy Rights Act of 2020, an amendment to the California Consumer Privacy Act, and severalnumerous other states have adopted similar comprehensive data protection laws, which may require companies to change their practices for handling of personal data, including allowing consumers to request that we delete certain personal data. In addition, the State of New York promulgated the New York SHIELD Act, like laws in several other states, which imposes obligations on businesses to implement physical, administrative and technical security measures to protect personal data. As privacy and information security laws and regulations change, we may incur additional costs to ensure that we are in compliance with those laws and regulations, and our current and future planned uses of personal and other data may be adversely affected by future adopted privacy and information security laws, regulations and rulings. If our security and information systems are compromised or if we, our employees or franchisees fail to comply with these laws, regulations or contract terms, or to successfully implement processes related to requirements, laws and regulations governing cyber incidents, it could require us to notify customers, employees or other groups. This could result in adverse publicity, loss of sales and cash flows, increased fees payable to third parties and fines, penalties or remediation and other costs that could adversely affect our reputation, business and results of operations. Any other material disruption or other adverse event affecting one or more of our digital ordering platforms, including, for instance, power loss, technological or systems failures, user error or cyber-attacks, could similarly result in adverse publicity, loss of sales and cash flows and other costs, which could in turn materially and adversely affect our reputation, business and results of operations.

litigation involving franchisees, including litigation involving us or litigation involving a third-party directed at a franchisee, which could impede the ability of a defendant-franchisee to make its royalty payments and divert our resources regardless of whether the allegations in such litigation are valid or whether we are liable; and those relating to the general reliance of a franchised store business on its franchisees, both domestic and international, and the nature of franchisees in general, including the successful operations and retention of franchisees (especially including our top-performing franchisees) in the future or our ability to attract, retain, and motivate sufficient numbers of franchisees of the same caliber in the future as well as our ability to maintain a positive and constructive relationship with our franchisees.

For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities. We are 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. We are generally responsible for between $500,000$2.0 million and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities, depending on policy year and line of coverage. Total insurance limits under these retention programs vary depending upon the period 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. These insurance policies may not be adequate to protect us from liabilities that we incur in our business. In addition, in the future our insurance premiums may increase, and we may not be able to obtain similar levels of insurance on reasonable terms, or at all. Any such inadequacy of, or inability to obtain insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

Increasingly, inIn addition to the importance of their financial performance, companies are beingoften judged by their performance on a variety of environmental, social and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance. MajorA number of institutional investors have publicly emphasized the importance of such ESG matters to their investment decisions. We have established significant commitments on greenhouse gas emissions and in October 2024 our near-term and net zero targets were approved by the Science Based Targets initiative (SBTi). We have established a commitment to achieve our near-term targets by 2032 and achieve net zero carbon emissions by 2050. Execution of these strategies and achievement of these goals are subject to risks and uncertainties, many of which are outside of our control and may prove to be more costly than we anticipate. These risks and uncertainties include, but are not limited to, our ability to execute our strategies and achieve our goals within the currently projected costs and the expected timeframes; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments; the success of our collaboration with franchisees and other third parties; and the actions of competitors and competitive pressures. There is no assurance that we will be able to successfully execute our strategies and achieve our goals. Failure to achieve our goals could damage our reputation and customer, investor and other stakeholder relationships and have an adverse effect on our business, results of operations and financial condition, as well as on our stock price. There also has been increased political focus, including by U.S. and foreign governmental authorities, on environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water usage; there has also been pushback to certain ESG initiatives in recent years which could also have an adverse effect in the event we were to become a target of pushback or subject to additional regulatory measures. Legislative, regulatory or other efforts to combat climate change or other ESG concerns could also result in new or more stringent forms of oversight and expanding mandatory and voluntary reporting, diligence and disclosure, which could increase costs, bring additional focus and further impact our business, results of operations and financial condition. Any failure or perceived failure by us to manage ESG issues successfully could have a material adverse effect on our reputation and on our business, results of operations, financial condition or stock price.

Further, our 2021 and 20222025 Variable Funding Notes bear interest at fluctuating interest rates that in certain circumstances is based on a forward-looking term rate based on the Secured Overnight Financing Rate (“Term SOFR”). There can be no assurance that the Federal Reserve Bank of New York (the “New York Fed”) will continue the publication of Term SOFR, and if the New York Fed discontinues the publication of Term SOFR, interest payments on our 2021 Variable Funding Notes and 20222025 Variable Funding Notes would need to be calculated using a different index, or alter the manner in which Term SOFR is calculated. As a result, our interest expense could increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.

During the term following issuance, the outstanding senior notes will accrue interest in accordance with the terms of the debt agreements. Additionally, as of December 28, 2025, our seniorfixed rate notes havehad original scheduled principal payments of $1.18 billion in 2025, $39.3$49.3 million in 2026, $1.31$1.34 billion in 2027, $817.9$836.4 million in 2028, $631.0$647.8 million in 2029, $10.0$495.0 million in 20302030, and $912.5$927.5 million in 2031.2031 and $470.0 million in 2032.

If we are unable to refinance or repay amounts under the securitized debt prior to the expiration of the term, our cash flow would be directed to the repayment of the securitized debt which would become due and payable on an accelerated schedule, and, other than technology fees and a weekly management fee sufficient to cover certain general and administrativeoperating expenses, would not be available for operating our business. No assurance can be given that any refinancing or additional financing will be possible when needed or that we will be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the financial and capital markets and other factors beyond our control. There can be no assurance that market conditions will be favorable at the times that we require new or additional financing. The indenture governing the securitized debt will restrict the cash flow from the entities subject to the securitization to any of our other entities and upon the occurrence of certain events, cash flow would be further restricted. In the event that a rapid amortization event occurs under the indenture (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of its term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business.

In addition, class action lawsuits have been filed, and may continue to be filed, against various QSRs alleging, among other things, that QSRs have failed to disclose the health risks associated with certain foods and that QSR marketing practices have encouraged obesity. State attorney general offices or other regulators have initiated and may in the future initiate investigations or enforcement actions against us. In addition to decreasing our sales and profitability and diverting our management resources, adverse publicity resulting from such allegations may materially and adversely affect us and our brand, regardless of whether such allegations are valid or whether we are liable, and could result in a substantial settlement, fine, penalty or judgment against us. Further, we may be subject to employee, franchisee and other claims in the future based on claims of, among other things, discrimination, harassment, working and safety conditions, wrongful termination and wage, expense reimbursement, rest break and meal break issues, including claims relating to minimum wage and overtime compensation. We and our international master franchisees have been and continue to be subject to these types of claims. If one or more of these claims were to be successful or if there is a significant increase in the number of these claims or if we receive significant negative publicity, our business, financial condition and operating results could be harmed.

the preparation, sale and labeling of food as well as nutrition;

It is uncertain how the policy priorities and initiatives of the newcurrent administration may impact the federal laws and regulations to which we are subject, and we are not able to predict the impact such changes may have on our business.

We and our franchisees face various regulatory and legislative efforts to enforce employment laws, such as efforts to categorize franchisors as the co-employers or joint employers of their franchisees’ employees or to aggregate individual franchised businesses and classify them as large employers for minimum wage or other employment-related purposes. In October 2023, the National Labor Relations Board (“NLRB”) adopted a final rule with a new and broader standard grounded in common law agency principles for determining when two or more otherwise unrelated employers may be found to be a joint employer of the same employees under the National Labor Relations Act (the “NLRA”). While the NLRB’s final rule was vacated in April 2024, returning the law to the NLRB’s prior rule that entities can be considered joint employers if they process and actually exercise “substantial direct and immediate control,” if a broader rule is ultimately enacted or adopted by the NLRB or other government agencies and/or applied generally to franchise relationships, it could cause us to be liable or held responsible for unfair labor practices and other violations of our franchisees and subject us to other liabilities, and require us to conduct collective bargaining negotiations regarding employees of totally separate, independent employers, most notably our franchisees. In such event, our operating expenses may increase as a result of required modifications to our business practices, increased litigation, governmental investigations or proceedings, administrative enforcement actions, fines and civil liability. Additionally, based upon the outcome and application of recent legal proceedings in federal court in California involving the California wage and hour laws in another franchise system, franchisors may be subject to claims that their franchisees should be treated as employees and not as independent contractors under the wage and hour laws of that state and, potentially, certain other states and localities with similar wage and hour laws. The California legislature has enacted a statute known as Assembly Bill 5 (AB-5), which went into effect on January 1, 2020.2020, AB-5codified requiresthe “gigABC economytest” for determining whether a worker is an employee or an independent contractor, increasing the likelihood that workers to be reclassified as employees instead of independent contractors. However, depending upon the application of AB-5, franchisors in certain industries couldwill be deemed toemployees berather coveredthan byindependent the statute,contractors in whichCalifornia. eventUnder AB-5, certain franchisees or their employees could be deemed employees of the franchisors. While active efforts to narrow the reach of AB-5 continue, a bill (SB 967), which was introduced specifically to exempt the relationship between a franchisor and franchisee from the scope of AB-5, was not successful in the legislature.

OnIn November 3, 2020, the California electorate approved propositionProposition 22, the effect of which is to exempt app-based transportation (ride shares) and delivery drivers from the application of AB-5 by treating these workers as independent contractors, rather than employees, provided certain conditions are met. The ballot measure does not affect how AB-5 applies to other businesses and workers. Given that misclassification claims have been successful against or applied to a franchisor under AB-5 and may be successful under similar state laws, a franchisor could be liable to its franchisees (and potentially their employees) based the rights and remedies available to employees under such laws and, thereafter, have to treat its franchisees (and their employees) as the franchisor’s employees under these laws.

We and our franchisees are subject to the Fair Labor Standards Act of 1938, as amended (the “FLSA”), which, along with the Family and Medical Leave Act, governs such matters as minimum wage and overtime requirements and other working conditions and various family leave mandates, as well as a variety of other laws enacted, or rules and regulations promulgated, by federal, state and local governmental authorities that govern these and other employment matters. We and our franchisees have experienced and expect further increases in payroll expenses as a result of government-mandated increases in the minimum wage, some specific to employees of national fast-food chains, which may be material, including as a result of California’sCalifornia ABAssembly Bill No. 1228. Enactment and enforcement of various federal, state and local laws, rules and regulations on immigration and labor organizations may adversely impact the availability and costs of labor for Domino’s and franchisees’ stores in a particular area or across the United States. In addition, third-party suppliers may be affected by higher minimum wage standards, which may increase the price of goods and services they supply to us. Such increased expenses may cause our franchisees to exit the business or cause us to reduce the number of Company-owned stores, or otherwise adversely affect the amount of royalty payments and license fees we receive. On January 12, 2020, the U.S. Department of Labor announced a final rule to update and clarify the definition of joint employer under the FLSA. Under the final rule, the general test for assessing whether a party can be deemed a joint employer would be based upon whether that party (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment; (iii) determines the employee’s rate and method of payment; and (iv) maintains the employee’s employment records. In the final rule, the Department of Labor describes instances in which joint employment would not be more or less likely to be found to exist under the FLSA, which, according to the Department of Labor, includes the relationships that exist under the typical franchise business model. This rule may reduce a franchisor’s risk of liability that currently exists under the joint employer standard now in effect under the FLSA (though ultimately, the facts specific to the franchisor-franchisee model at issue would be considered when determining liability). On July 29, 2021, the Department of Labor issued a final rule rescinding the 2020 rule. The Department of Labor may revert to the more expansive interpretation of joint employer that existed prior to the adoption of the 2020 rule and/or interpretations that could result in franchisors being held liable or responsible for FLSA violations by their franchisees. The rules of the Department of Labor are separate from the joint employer standard under the NLRA or, as described above, potential liability as a joint employer under the NLRA.

Laws targeting hidden fees and how businesses may advertise and/or market prices to consumers have been enacted in jurisdictions that include California and Minnesota, and these laws could impact our advertising, including advertising for our national offers.offers and could result in litigation. To the extent our advertising is negatively impacted, our business could be adversely affected.

Our annual and quarterly financial results,results and the perceptions thereof, including our sales and operating results, can vary significantly from quarter-to-quarter and year-to-year depending on various factors, many of which are beyond our control. These factors include, among other things:

our performance versus expectations of securities analysts or investors or against our guidance metricsmetrics, including a focus on comparable same store sales;

As a result, ourOur operational performance may decline quickly and significantly in response to changes in order patternspatterns, cost pressures, or rapid decreases in demand for our products. Any such decline may cause us and our franchisees to experience lower sales revenue. We anticipate that fluctuations in operating results will continue in the future, and such fluctuations may result in significant fluctuations or a significant decline in our stock price.

In this section, we discuss the results of our operations for the fiscal year ended December 28, 2025 compared to the fiscal year ended December 29, 2024. For a discussion of the fiscal year ended December 29, 2024 compared to the fiscal year ended December 31, 2023. For a discussion of the fiscal year ended December 31, 2023 compared to the fiscal year ended January 1, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31,29, 2023.2024.

Domino’s is the largest pizza company in the world with more than 21,30022,100 locations in over 90 markets around the world as of December 29,28, 2024,2025, and operates two distinct service models within its stores, with a significant business in both delivery and carryout. We are a highly recognized global brand, and we focus on value while serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores through both the delivery and carryout service models. We have been selling quality, affordable food to our customers since 1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. Over morethe thanpast 6065 years, we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.

Domino’s business model is straightforward: Domino’s stores handcraft and serve quality food at a competitive price, with easy ordering access and efficient service, enhanced by our technological innovations. We also have a global agreement with Uber Technologies, Inc. to allow customers to order Domino’s products through their marketplace. Our hand-tossed dough is made fresh and distributed to stores around the world by us and our franchisees.

Domino’s generates revenues and earnings by charging royalties and fees to our franchisees. Royalties are ongoing percent-of-sales fees for use of the Domino’s® brand marks. We also generate revenues and earnings by selling food and other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling foodfood, and equipmentto a lesser extent, other products to those sub-franchisees, as well as by running pizza stores. We believe that everyone in the system can benefit from the franchise model, including the end consumer, who can purchase Domino’s menu items for themselves and their family conveniently and economically.

Domino’s business model can yield strong returns for our franchise owners and our Company-owned stores. It can also yield significant cash flows to us, through consistent franchise royalty and supply chain revenue streams, all within an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We actively monitor both of these metrics, as they directly impact our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues.

We record long-lived assets, including property, plant and equipment and capitalized software, at cost. For acquisitions of franchise operations, we estimate the fair values of the assets and liabilities acquired based on physical inspection of assets, historical experience and other information available to us regarding the acquisition. We depreciate and amortize long-lived assets using useful lives determined by us based on historical experience and other information available to us. We evaluate thelong-lived potentialassets, including property, plant, equipment and finite-lived intangible assets, for impairment of long-lived assets at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Our periodic evaluation is based on various analyses,analyses including, on an annual basis,including the projection of undiscounted cash flows. If we determine that the carrying amount of an asset (or asset group) may not be recoverable, we compare 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, we perform related impairment tests on an operating market basis, which we have 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, we estimate the fair value of the asset. 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.

For Company-owned stores, we perform related impairment tests on an operating market basis, which we have 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, we estimate the fair value of the asset. 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. We have not made any significant changes in the methodology used to project the future market cash flows of Company-owned stores during the years presented. Same store sales fluctuations and the rates at which operating costs will fluctuate in the future are key factors in determining projected cash flows used to evaluate recoverability of the related assets. If our same store sales significantly decline or if operating costs increase and we are unable to recover these costs, the carrying value of our Company-owned stores, by market, may not be recoverable and we may be required to recognize an impairment charge. There were no triggering events in 2024, 2023 or 2022, and accordingly, we did not record any impairment losses on long-lived assets in 2024, 2023 and 2022.

For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities. We are 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. We are generally responsible for up to between $500,000$2.0 million and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities, depending on policy year and line of coverage. The relatedCasualty insurance reserves are based on undiscounted independent actuarial estimates,estimates. whichThese estimates are based on historical information alongand withon certain assumptions about future events. There is inherent uncertainty in the ultimate cost for known claims under our insurance coverages, and for incidents that have occurred that will be subject to a claim, but have yet to be reported to us. 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.

Excluding the negative impact of foreign currency, Domino’s experienced global retail sales growth during 2024,2025, driven by same store sales growth and net store growth in both our U.S. and international businesses. These factors, as well as gross margin dollar improvement within supply chain driven primarily by procurement productivity,chain, also contributed to an increase in income from operations. Overall, we believe our global retail sales growth, excluding foreign currency impact, marketing initiatives, operations and emphasis on technology have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.

U.S. same store sales increased 3.2%3.0% during 2024,2025, rolling over an increase in U.S. same store sales of 1.6%3.2% in 2023.2024. The increase in U.S. same store sales was primarily driven by both higher orderscustomer resultingtransaction fromcounts and higher average ticket, each driven in part by the launch of our Domino’sParmesan RewardsStuffed loyaltyCrust programpizza. andMultiple otherwindows nationalof offers,our as“Best wellDeal asEver” frompromotion Uber’salso orderdrove aggregationhigher marketplace.customer transaction counts during 2025. International same store sales (excluding foreign currency impact) increased 1.6%1.9% during 2024,2025, rolling over an increase in international same store sales (excluding foreign currency impact) of 1.7%1.6% in 2023.2024. The increase in international same store sales was attributable to higher customer transaction counts, as well as a slightly higher average ticket per transaction.counts.

Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food andand, to a lesser extent, other products from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores. Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.

Consolidated revenues increased $227.1$233.6 million, or 5.1%,5.0%, in 20242025 primarily due primarily to higher supply chain revenues, higher globalU.S. franchise advertising revenues and higher U.S. franchise royalties and fees and higher advertising revenues.fees. The increase in supply chain revenues was primarily attributable to higher order volumes,volumes as well asand an increase in the Company’sour food basket pricing to stores.stores, Globalbut these increases were partially offset by a shift in the relative mix of products we sell and the transition of our equipment and supplies business to a third-party supplier in 2024. The increases in U.S. franchise advertising revenues and U.S. franchise royalties and fees increasedwere driven primarily by same store sales growth and net store growth. U.S. franchise advertising revenues also increased as a result of highera samedecrease store sales and net store growth, and U.S. franchisein advertising revenuesincentives increased primarily as a result ofand the increase in the advertising contribution rate, higher same store sales and net store growth.rate. These changes in revenues are described in more detail below.

Revenues from U.S. Company-owned store operations increaseddecreased $17.7$18.7 million, or 4.7%,4.8%, in 20242025 primarily duedriven toby the refranchising of the Maryland market in May 2025, but this decrease was partially offset by higher same store sales and net store growth.sales.

Revenues from U.S. franchise advertising increased $36.7$49.6 million, or 7.7%,9.7%, in 20242025 primarily due to a decrease in advertising incentives, higher same store salessales, andan increase in the average number of U.S. franchised stores open during the period resulting from net store growth,growth as well asand the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75% which began in the second quarter of 2023.5.75%.

Supply chain revenues increased $130.8$143.7 million, or 4.8%,5.1%, in 20242025 due primarily to higher order volumes, as well as an increase in our food basket pricing to stores.stores and higher order volumes. These increases were partially offset by a shift in the relative mix of products we sell,sell as well asand the transition of our equipment and supplies business to a third-party supplier.supplier in 2024. Our food basket pricing to stores increased 1.4%3.5% during 2024,2025, which resulted in an estimated $34$142 million increase in supply chain revenues. The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year. We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.

International Franchise Royalties and Fee RevenuesFees

Revenues from international franchise royalties and fees increased $8.6$20.0 million, or 2.8%,6.3%, in 20242025 primarily due primarilyto toan increase in the average number of international franchised stores open during the period resulting from net store growth and higher same store sales growth (excluding foreign currency impact),. butThese thisincreases increase waswere partially offset by the negative impact of changes in foreign currency exchange rates of approximately $5.8$0.6 million in 2024.2025. The impact of changes in foreign currency exchange rates on international franchise royalty revenues, a statistical measure utilized by management, is calculated as the difference in international franchise royalty revenues resulting from translating current year local currency results to U.S. dollars at current year exchange rates as compared to prior year exchange rates. We believe this measure is important to understanding Company performance given the significant variability in international franchise royalty revenues that can be driven by changes in foreign currency exchange rates.

Consolidated cost of sales consists 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 insurance expense.other. Consolidated gross margin (which we define as revenues less cost of sales) increased $121.1$125.1 million, or 7.0%,6.8%, in 20242025 due primarily to higher globalU.S. franchise advertising, royalties and fees revenues, as well as gross margin dollar growth within supply chain,chain discussed below.herein. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin. We generally update our supply chain gross margin structure on an annual basis. However, as food basket prices fluctuate, revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate, and further, cost of sales, gross margins and gross margin percentages for our U.S. Company-owned stores also fluctuate.

AsConsolidated gross margin as a percentage of revenues, the consolidated gross marginrevenues increased 0.7 percentage points to 40.0% in 2025 from 39.3% in 2024 from 38.6% in 2023.2024. U.S. Company-owned store gross margin increaseddecreased 0.32.4 percentage points in 2024,2025 and supply chain gross margin increased 0.90.4 percentage points in 2024.2025. Changes in the significant components of gross margin are described in more detail below.

U.S. Company-owned store gross margin (which does not include certain store-level costs such as royalties and advertising) increaseddecreased $4.4$12.4 million, or 7.2%,18.8%, in 2024.2025. As a percentage of store revenues, U.S. Company-owned store gross margin increaseddecreased 0.32.4 percentage points in 2024.2025. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Food costs decreasedincreased 0.10.9 percentage points to 29.0%29.9% in 2024.2025 driven by the increase in the food basket pricing to stores.

Food costs decreased 1.10.4 percentage points to 71.3%70.9% in 20242025 driven primarily by procurement productivity.productivity, Thepartially offset by the increase in the commoditycost costs withinof our food basket sold to stores partially offset this improvement.basket.

Labor costs increaseddecreased 0.10.3 percentage points to 9.2%8.9% in 20242025 due primarily to higher wagesales ratesleverage inand ourlabor supply chain centers in 2024.efficiency.

U.S. franchise advertising expenses increased $36.7$49.6 million, or 7.7%,9.7%, in 2024,2025, consistent with the increase in U.S. franchise advertising revenuesrevenues, as discussed above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.

Other (Expense) Income

Other expense was $2.5 million in 2025, while other income was $22.1 million and $17.7 million in 20242024, and 2023, respectively,each representing the net realized and unrealized losses and gains on our investment in DPC Dash. The recorded amount of our investment is based on the active exchange quoted price for the equity security. Additional information related to our investment in DPC Dash is included in Note 1 and Note 4 to our consolidated financial statements.

Interest expense, net, decreasedincreased $5.9$2.2 million, or 3.2%,1.3%, in 20242025, drivendue byto higherlower interest income earned on our cash equivalents in 2024.equivalents. Our weighted average borrowing rate was 3.8% in both 20242025 and 2023.2024.

Provision for income taxes increased $4.7$30.6 million, or 3.5%,22.2%, in 20242025 due to a higher effective tax rate, as well as an increase in income before the provision for income taxes, partially offset by a lower effective tax rate.taxes. The effective tax rate decreasedincreased to 19.1%21.9% during 2024,2025, as compared to 20.4%19.1% in 2023.2024. The lowerincrease in the effective tax rate in 2024 was driven by a 2.62.7 percentage point favorableunfavorable change in the impact of excess tax benefits from equity-based compensation, which is recorded as a reduction to the provision for income taxes. Lower foreign derived intangible income deductions partially offset the decrease in the effective tax rate.

U.S. stores Segment Income increased $44.4$10.0 million, or 8.5%,1.8%, in 2024,2025, primarily due to higher U.S. franchise royalties and fees revenues,revenues as welldiscussed asabove, but this increase was partially offset by the $4.4 million increasedecrease in U.S. Company-owned store gross margin, eachmargin as discussed above.above, as well as a shift in the relative mix of labor cost associated with internally developed software. U.S. franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on U.S. stores Segment Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized and had no impact on U.S. stores Segment Income.

Supply chain Segment Income increased $35.2$39.5 million, or 14.3%,14.1%, in 2024,2025, primarily due to the $38.2 million increase in supply chain gross margin,margin as discussed above.

International franchise Segment Income increased $1.1$27.9 million, or 0.4%,10.7%, in 2024,2025, primarily due to higher international franchise royalties and fees revenues,revenues as discussed above. In addition, lower general and administrative expenses also contributed to the increase in international franchise Segment Income in 2025. The decrease in general and administrative expenses primarily related to our Worldwide Rally in the second quarter of 2024, which did not reoccur in 2025 as discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Income. The increase in international franchise Segment Income was partially offset by travel expenses for our Worldwide Rally that takes place every two years.

Historically, our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities resulting in efficient deployment of working capital. We generally collect our receivables within three weeks from the date of the related sale and we generally experience multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits variations in our working capital requirements. As of December 29,28, 2024,2025, we had negative working capital totalingof $904.4$134.4 million, which primarily included $1.14 billion of current portion of long-term debt associated with our 2018 7.5-Year Notes and 2015 Ten-Year Notes (each as defined below) for each of which the anticipated repayment date is October 2025. Our working capital amount excludesexcluding restricted cash and cash equivalents of $195.4$216.1 million, advertising fund assets, restricted of $103.4$117.5 million and advertising fund liabilities of $101.6$115.4 million. Working capital includes total unrestricted cash and cash equivalents of $186.1$125.7 million.

Our primary sources of liquidity are cash flows from operations and availability of borrowings under our variable funding notes. During 2024,2025, we experienced globalan increase in both U.S. and international retail sales growth, (excluding foreign currency impact,impact). inAdditionally, both our U.S. and international businesses.businesses grew store counts during 2025. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have twoa variable funding note facilities.facility. TheOur facilitiesSeries include2025-1 ourVariable 2022Funding Senior Secured Notes, Class A-1 Notes (the “2025 Variable Funding Notes (defined below”), which allows for advances of up to $120.0 million, as well as our 2021 Variable Funding Notes (defined below), which allows for advances of up to $200.0$320.0 million and issuance of certain other credit instruments, including letters of credit (the 2021 Variable Funding Notes and the 2022 Variable Funding Notes, the “2022 and 2021 Variable Funding Notes”).credit. The letters of credit primarily relate to our casualty insurance programs and certain supply chain center leases.programs. As of December 29,28, 2024,2025, we had no outstanding borrowings and $120.0$263.6 million of available borrowing capacity under our 2022 Variable Funding Notes. As of December 29, 2024, we had no outstanding borrowings and $143.6 million of available borrowing capacity under our 20212025 Variable Funding Notes, net of letters of credit issued of $56.4 million.

(Unaudited; tabular amounts in millions, except percentages and store data) The 2026 and 2025 firstsecond quarters referenced herein represent the twelve-week periods ended MarchJune 22,14, 2026 and MarchJune 23,15, 2025, respectively. The 2026 and 2025 two fiscal quarters referenced herein represent the twenty-four-week periods ended June 14, 2026 and June 15, 2025, respectively. In this section, we discuss the results of our operations for the firstsecond quarter and two fiscal quarters of 2026 as compared to the firstsecond quarter and two fiscal quarters of 2025.

Domino’s is the largest pizza company in the world,world with more than 22,30022,500 locations in over 90 markets around the world as of MarchJune 22,14, 2026, and operates two distinct service models within its stores, with a significant business in both delivery and carryout. We are a highly recognized global brand, and we focus on value while serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores through both the delivery and carryout service models. We have been selling quality, affordable food to our customers since 1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. For more than 65 years, we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.

We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of MarchJune 22,14, 2026. Franchising enables an individual to be a business owner and maintain control over all employment-related matters and pricing decisions, while also benefiting from the strength of the Domino’s global brand and operating system with limited capital investment by us.

Domino’s generates revenues and earnings by charging royalties and fees to our franchisees. Royalties are ongoing percent-of-sales fees for use of the Domino’s® brand marks. We also generate revenues and earnings by selling foodfood, and, to a lesser extent, other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling foodfood, and,and to a lesser extent, other products to those sub-franchisees, as well as by running pizza stores. We believe that everyone in the system can benefit from the franchise model, including the end consumer, who can purchase Domino’s menu items for themselves and their family conveniently and economically.

Domino’s business model can yield strong returns for our franchise owners and theour Company.Company-owned stores. It can also yield significant cash flows to us, through consistent franchise royalty and supply chain revenue streams, all within an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We actively monitor both of these metrics, as they directly impact our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues.

FirstSecond Quarter of 2026 Highlights

MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 3.4%3.0% as compared to the firstsecond quarter of 2025. U.S. retail sales increased 2.8%1.9% and international retail sales, excluding foreign currency impact, increased 4.0%4.1% as compared to the firstsecond quarter of 2025. Same store sales increased 0.9%0.1% in our U.S. stores and declined 0.4%0.1% in our international stores (excluding foreign currency impact).

MORE Stores: Global net store growth of 180,209 stores, including 1926 net store openings in the U.S. and 161183 net store openings internationally.

Excluding the positive impact of foreign currency, Domino’s experienced global retail sales growth during the firstsecond quarter and two fiscal quarters of 2026, driven by same store sales growth in the U.S. and net store growth during the trailing four quarters in both our U.S. and international businesses. These factors, as well as gross margin dollar improvement within supply chain and a pre-tax realized gain on the sale of our fully depreciated corporate aircraft, also contributed to an increase in income from operations. Overall, we believe our global retail sales growth, excluding foreign currency impact, marketing initiatives, operations and emphasis on technology have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.

Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales. We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand, and we believe theyit areis indicative of the financial health of our franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. As a result, sales by Domino’s franchisees have a direct effect on our profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues. The amounts below are presented in millions of U.S. dollars.

Global retail sales growth, excluding foreign currency impact,impact is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales growth, excluding foreign currency impactimpact, is calculated as the change of international local currency global retail sales against the comparable period of the prior year. Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth.

U.S. same store sales increased 0.9%0.1% in the firstsecond quarter of 2026, rolling over aan declineincrease in U.S. same store sales of 0.5%3.4% in the firstsecond quarter of 2025. TheU.S. same store sales increased 0.5% in the two fiscal quarters of 2026, rolling over an increase in U.S. same store sales wasof 1.4% in the two fiscal quarters of 2025. The increases in U.S. same store sales in both the second quarter and two fiscal quarters of 2026 were driven by both higher average ticket and higher customer transaction counts.counts, offset by lower average ticket. International same store sales (excluding foreign currency impact) declined 0.4%0.1% in the firstsecond quarter of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 3.7%2.4% in the firstsecond quarter of 2025. International same store sales (excluding foreign currency impact) declined 0.2% in the two fiscal quarters of 2026, rolling over an increase in international same store sales (excluding foreign currency impact) of 3.0% in the two fiscal quarters of 2025.

Net Store Growth Activity

Consolidated revenues increased $38.5$49.3 million, or 3.5%,4.3%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025, and consolidated revenues increased $87.8 million, or 3.9%, in the two fiscal quarters of 2026 as compared to the two fiscal quarters of 2025, primarily due to higher supply chain revenues and higher global franchise royalties and advertising revenues. The increaseincreases in supply chain revenues waswere primarily attributable to higher order volumes, as well as an increase in our food basket pricing to stores and higher order volumes, but these increases were partially offset by a shift in the relative mix of products we sell.stores. The increases in U.S. franchise royalties and fees and U.S. franchise advertising revenues were driven primarily by net store growth during the trailing four quarters and higher same store sales.quarters. International franchise royalties increased primarily dueas toa result of net store growth during the trailing four quarters, as well as the positive impact of foreign currency exchange rates on international franchise royalty revenues. These increases were partially offset by lower U.S. Company-owned store revenues as a result of $3.6the million,refranchising asof wellcertain asof netour U.S. Company-owned store growthmarkets duringin the trailingsecond fourquarters quarters.of 2026 and 2025. These changes in revenues are described in more detail below.

Revenues from U.S. Company-owned store operations decreased $9.5$10.6 million, or 10.4%,11.5%, in the firstsecond quarter of 20262026, primarilyand drivendecreased by$20.1 million, or 10.9%, in the two fiscal quarters of 2026, each as a result of the refranchising of thecertain Marylandof marketour U.S. Company-owned store markets in Maythe second quarters of 2026 and 2025. ThisThese decreasedecreases waswere partially offset by higher same store sales.

U.S. Company-owned same store sales increased 1.5%2.1% in the firstsecond quarter of 2026 and declinedincreased 2.9%2.6% in the firstsecond quarter of 2025. U.S. Company-owned same store sales increased 3.3% in the two fiscal quarters of 2026 and declined 0.2% in the two fiscal quarters of 2025.

Revenues from U.S. franchise royalties and fees increased $7.0$7.9 million, or 4.6%,5.1%, in the firstsecond quarter of 20262026, and increased $14.9 million, or 4.9%, in the two fiscal quarters of 2026, primarily due to an increase in the average number of U.S. franchised stores open during the period resulting from net store growthgrowth. andTo a lesser extent, higher same store sales.sales contributed to the increase in U.S. franchise royalties and fees revenues in the two fiscal quarters of 2026.

U.S. franchise same store sales were flat in the second quarter of 2026 and increased 3.4% in the second quarter of 2025. U.S. franchise same store sales increased 0.8%0.4% in the firsttwo quarterfiscal quarters of 2026 and declinedincreased 0.4%1.5% in the firsttwo quarterfiscal quarters of 2025.

Revenues from U.S. franchise advertising increased $6.6$2.7 million, or 5.3%,2.0%, in the firstsecond quarter of 20262026, and increased $9.3 million, or 3.6%, in the two fiscal quarters of 2026, primarily due to an increase in the average number of U.S. franchised stores open during the period resulting from net store growth,growth. To a lesser extent, a decrease in advertising incentives and higher same store sales.sales contributed to the increase in U.S. franchise advertising revenues in the two fiscal quarters of 2026.

Supply chain revenues increased $29.0$44.6 million, or 4.3%,6.5%, in the firstsecond quarter of 20262026, and increased $73.7 million, or 5.4%, in the two fiscal quarters of 2026, primarily due to higher order volumes, as well as an increase in our food basket pricing to stores and higher order volumes, but these increases were partially offset by a shift in the relative mix of products we sell.stores. Our food basket pricing to stores increased 2.6%2.2% in the firstsecond quarter of 2026 and increased 2.4% in the two fiscal quarters of 2026, which resulted in an estimated $16$19 million increase in supply chain revenues.revenues in the second quarter of 2026, and an estimated $35 million increase in the two fiscal quarters of 2026. The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year. We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.

Revenues from international franchise royalties and fees increased $5.4$4.7 million, or 7.2%,6.0%, in the firstsecond quarter of 20262026, and increased $10.1 million, or 6.6% in the two fiscal quarters of 2026, primarily due to the positive impact of changes in foreign currency exchange rates of approximately $3.6 million, as well as an increase in the average number of international franchised stores open during the period resulting from net store growth.growth, Theseas increaseswell wereas partiallythe offsetpositive byimpact aof declinechanges in international same store sales (excluding foreign currency impact)exchange rates of approximately $1.1 million in the firstsecond quarter of 2026 and $4.7 million in the two fiscal quarters of 2026. The impact of changes in foreign currency exchange rates on international franchise royalty revenues, a statistical measure utilized by management, is calculated as the difference in international franchise royalty revenues resulting from translating current year local currency results to U.S. dollars at current year exchange rates as compared to prior year exchange rates. We believe this measure is important to understanding Company performance given the significant variability in international franchise royalty revenues that can be driven by changes in foreign currency exchange rates.

International franchise same store sales declined 0.4%0.1% in the firstsecond quarter of 2026 and increased 3.7%2.4% in the firstsecond quarter of 2025, each excluding the impact of foreign currency exchange rates. International franchise same store sales declined 0.2% in the two fiscal quarters of 2026 and increased 3.0% in the two fiscal quarters of 2025, each excluding the impact of foreign currency exchange rates.

Consolidated cost of sales consists 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) and insurance expense. Consolidated gross margin (which we define as revenues less cost of sales) increased $21.4$17.3 million, or 4.8%,3.7%, in the firstsecond quarter of 2026, primarilyand increased $38.6 million, or 4.3%, in the two fiscal quarters of 2026, due primarily to higher global franchise royalties and advertisingroyalty revenues (as discussed above),above, as well as gross margin dollar growth within supply chain, discussed below. These increases were partially offset by lower U.S. Company-owned store gross margins, discussed below. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin. Additionally, as food basket prices fluctuate, revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate, and further, cost of sales, gross margins and gross margin percentages for our U.S. Company-owned stores also fluctuate.

As a percentage of revenues, consolidated gross margin increaseddecreased 0.60.3 percentage points to 40.4%40.0% in the firstsecond quarter of 2026 from 39.8%40.3% in the firstsecond quarter of 2025. Consolidated gross margin, as a percentage of revenues, increased 0.1 percentage points to 40.2% in the two fiscal quarters of 2026 from 40.1% in the two fiscal quarters of 2025. U.S. Company-owned store gross margin decreased 3.84.2 and 4.0 percentage points in the firstsecond quarter and two fiscal quarters of 2026, andrespectively. supplySupply chain gross margin increased 0.60.2 and 0.4 percentage points in the firstsecond quarter and two fiscal quarters of 2026.2026, respectively. Changes in the significant components of gross margin are described in more detail below.

U.S. Company-owned store gross margin (which does not include certain store-level costs such as royalties and advertising) decreased $4.6$5.1 million, or 31.6%,35.3%, in the firstsecond quarter of 2026 and decreased $9.8 million, or 33.4%, in the two fiscal quarters of 2026. As a percentage of store revenues, U.S. Company-owned store gross margin decreased 3.84.2 percentage points in the firstsecond quarter of 2026 and decreased 4.0 percentage points in the two fiscal quarters of 2026. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Food costs increased 0.8 percentage points to 30.3% in the second quarter of 2026 and increased 0.7 percentage points to 30.4%30.3% in the firsttwo quarterfiscal quarters of 2026, each driven by the increaseincreases in the food basket pricing to stores.

Labor costs increased 1.31.0 percentage point to 30.9% in the second quarter of 2026 and increased 1.2 percentage points to 33.2%32.1% in the firsttwo quarterfiscal quarters of 2026, dueeach todriven by higher wage rates.

Higher insurance costs drovecontributed to the remaining decreasedecreases in U.S. Company-owned store gross margin as a percentage of revenues in the firstrespective quarter of 2026.periods.

Supply chain gross margin increased $7.0 million, or 9.0%,8.7%, in the firstsecond quarter of 2026, and increased $14.1 million, or 8.9%, in the two fiscal quarters of 2026. As a percentage of supply chain revenues, supply chain gross margin increased 0.60.2 and 0.4 percentage points in the firstsecond quarter and two fiscal quarters of 2026.2026, respectively. These changes in gross margin as a percentage of revenues are discussed in additional detail below.

Food costs decreased 0.40.8 percentage points to 70.0%70.2% in the firstsecond quarter of 2026 and decreased 0.6 percentage points to 70.1% in the two fiscal quarters of 2026, driven primarily by procurement productivity, partially offset by the increase in the cost of our food basket.

Labor costs were 9.2%flat at 8.7% in both the firstsecond quarter of 2026 and 2025.decreased 0.1 percentage points to 8.9% in the two fiscal quarters of 2026.

General and administrative expenses increased $2.3$7.8 million, or 2.1%,7.2%, in the firstsecond quarter of 2026 primarily due to expenses related to our Worldwide Rally in the second quarter of 2026 that takes place every two years. General and administrative expenses increased $10.1 million, or 4.7%, in the two fiscal quarters of 2026 primarily due to expenses related to our Worldwide Rally, which takes place every two years, in the second quarter of 2026, primarilyas duediscussed toabove, as well as higher professional fees and computer expenses.expenses, Thesebut these increases were partially offset by approximately $5 million in severance expenses associated with an organizational realignment that took place in the first quarter of 2025 that did not reoccur in 2026.

U.S. franchise advertising expenses increased $6.6$2.7 million, or 5.3%,2.0%, in the firstsecond quarter of 2026, and increased $9.3 million, or 3.6%, in the two fiscal quarters of 2026, consistent with the increase in U.S. franchise advertising revenues, as discussed above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.

Interest expense, net increased $2.1$3.6 million, or 5.0%,8.9%, in the firstsecond quarter of 2026, drivenand increased $5.7 million, or 6.9%, in the two fiscal quarters of 2026, primarily driven by lower interest income on our cash equivalents.

Our weighted average borrowing rate increased to 3.9% in each of the firstsecond quarterquarters and two fiscal quarters of 2026 from 3.8% in the firstsecond quarterquarters and two fiscal quarters of 2025.

Provision for income taxes decreasedincreased $2.0$2.3 million, or 4.7%,6.2%, in the firstsecond quarter of 2026 due to lowerhigher income before provision for income taxes.taxes and a higher effective tax rate. The effective tax rate increased to 22.6%22.5% during the firstsecond quarter of 2026 as compared to 22.3%22.1% in the firstsecond quarter of 2025.2025, driven primarily by a 0.4 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation.

Supply chain Segment Adjusted Income from Operations increased $1.9$11.7 million, or 3.0%,18.1%, in the firstsecond quarter of 2026, and increased $13.6 million, or 10.6%, in the two fiscal quarters of 2026, primarily due to the $7.0 million increase in supply chain gross margin in the second quarter of 2026 and the $14.1 million increase in supply chain gross margin in the two fiscal quarters of 2026, each as discussed above.

International franchise Segment Adjusted Income from Operations increased $5.8$2.9 million, or 9.1%,4.4%, in the firstsecond quarter of 2026, and increased $8.7 million, or 6.7%, in the two fiscal quarters of 2026, each driven primarily due toby higher international franchise royalties and fees revenues, as discussed above. These increases were partially offset by higher general and administrative expenses in both the second quarter and two fiscal quarters of 2026, primarily related to our Worldwide Rally in the second quarter of 2026, as discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Adjusted Income from Operations.

Historically, our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities resulting in efficient deployment of working capital. We generally collect our receivables within three weeks from the date of the related sale and we generally experience multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits variations in our working capital requirements. As of MarchJune 22,14, 2026, we had working capital of $171.0$127.3 million, excluding restricted cash and cash equivalents of $183.6$187.9 million, advertising fund assets, restricted, of $115.8$119.4 million and advertising fund liabilities of $113.4$117.8 million. Working capital includes total unrestricted cash and cash equivalents of $232.9$164.8 million.

Our primary sources of liquidity are cash flows from operations and availability of borrowings under our variable funding notes. During the firstsecond quarter and two fiscal quarters of 2026, we experienced an increase in both U.S. and international retail sales (excluding foreign currency impact). Additionally, both our U.S. and international businesses grew store counts during the firstsecond quarter and two fiscal quarters of 2026. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have a variable funding note facility. Our Series 2025-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2025 Variable Funding Notes”), allows for advances of up to $320.0 million and issuance of certain other credit instruments, including letters of credit. The letters of credit primarily relate to our casualty insurance programs. As of MarchJune 22,14, 2026, we had no outstanding borrowings and $263.6 million of available borrowing capacity under our 2025 Variable Funding Notes, net of letters of credit issued of $56.4 million.

As of MarchJune 22,14, 2026, we had $133.7$138.0 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $49.7 million of restricted cash equivalents held in a three-month interest reserve as required by the relatedindenture governing the securitized debt agreements and $0.2 million of other restricted cash for a total of $183.6$187.9 million of restricted cash and cash equivalents. As of MarchJune 22,14, 2026, we also held $82.8$94.1 million of advertising fund restricted cash and cash equivalents which can only be used for activities that promote the Domino’s brand.

As of MarchJune 22,14, 2026, we had approximately $4.88 billion of long-term debt. As of MarchJune 22,14, 2026, our fixed rate notes from the recapitalization and refinancing transactions we completed in 2025, 2021, 2019, 2018 and 2017 had original scheduled principal payments of $49.3 million in 2026, $1.34 billion in 2027, $836.4 million in 2028, $647.8 million in 2029, $495.0 million in 2030, $927.5 million in 2031 and $470.0 million in 2032. However, in accordance with our debt agreements, the payment of principal on the 2025 Five-Year Notes and the 2025 Seven-Year 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 our debt agreements, the payment of principal on the 2021 7.5-Year Notes, 2021 Ten-Year Notes, 2019 Ten-Year 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 firstsecond quarter of 2026 and the fourth quarter of 2025, we 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 condensed consolidated balance sheet as of MarchJune 22,14, 2026 and December 28, 2025.

Cash provided by operating activities decreased $17.1$14.3 million in the firsttwo quarterfiscal quarters of 2026, primarily as a result of the negative impact of changes in operating assets and liabilities and restricted advertising fund assets and liabilities. The negative impact of changes in operating assets and liabilities of $33.5$19.2 million primarily related to the timing of payments on accounts payable and accrued liabilities in the firsttwo quarterfiscal quarters of 2026 as compared to the firsttwo quarterfiscal quarters of 2025. ThisAdditionally, increasethe $16.5 million negative impact of changes in restricted advertising fund assets and liabilities in the two fiscal quarters of 2026 as compared to the two fiscal quarters of 2025 was a result of the timing and amount of payments for advertising activities. These decreases were partially offset by higher net income, excluding non-cash adjustments. Net income decreased $9.8$5.2 million,million; however, this decreaseincrease was more than offset by the positive impact of non-cash adjustments of $26.8$26.6 million (primarily representing the changes in the pre-taxtotal net realized and unrealized losses and gains associated with the remeasurement of ourthe Company’s investment in DPC DashDash, provision (benefit) for deferred income taxes and the pre-tax realized gain associated with the sale of our fully depreciated corporate aircraft), resulting in an overall increase to cash provided by operating activities in the firsttwo quarterfiscal quarters of 2026 as compared to the firsttwo quarterfiscal quarters of 2025 of $17.0$21.4 million.