2. Investment Rationale

2.1 A materially mispriced asset with a clear multiple-arbitrage pathway

DPEL's current adjusted LTM EV/EBITDA of ~4.5x represents an extreme discount to both the global QSR peer set (14–17x) and the peer median target of ~16.0x. The Valuation & Multiple Analysis chart in the dashboard confirms this structural dislocation, illustrating that the market is pricing the company for near worst-case outcomes.

This mispricing is not driven by deteriorating industry fundamentals. Global pizza/QSR markets remain resilient, with projected category growth of 10.25% CAGR through 2030. Instead, the discount reflects short-term execution failures—primarily in Japan and France—combined with leadership instability and negative sentiment following large-scale store closures.

The investment thesis is therefore anchored on acquiring a fundamentally strong asset at a distressed multiple, executing a concentrated turnaround, and exiting at a materially higher multiple (≥14x), supported by operational stabilisation, lower perceived risk, and return to disciplined growth.

2.2 Strong underlying market position with structural resilience

DPEL holds the master franchise rights for 12 markets across ANZ, Europe, and Asia, and operates the largest Domino's master franchise globally. Its market position is underpinned by:

• Strong unit-level economics: Franchisee EBITDA remains at ~$94.7k per store despite the FY25 statutory loss. Benchmarking in the dashboard's Franchisee Profitability chart highlights how this level of EBITDA continues to support viable franchisee ROI of 20–25%.
• Scale-driven supply-chain advantage: Vertically integrated supply chain operations support stable franchisee food costs of 25–30% of sales, consistent with efficient global QSR benchmarks.
• Structural downside protection: The master franchise model delivers predictable royalty revenues (7% plus 7–8% marketing contributions in key markets) regardless of short-term sales volatility.

Although the company has experienced performance strain, its competitive position in core markets (ANZ, BENELUX, Germany) remains intact. Weaknesses in Japan and France reflect operational missteps rather than structural market pressure.

2.3 High-quality royalty-based economics with predictable cash generation

The DPEL model relies on a capital-light, recurrent royalty stream, augmented by centralised supply chain revenues. Even during periods of soft SSS performance, royalty income typically remains resilient due to:

• Asset-light franchising structure: Over 90% of the network is franchised (based on typical footprint data; exact proportion not provided in uploaded documents).
• Stable store-level profitability: The Store-Level P&L dashboard chart illustrates a mature Domino's store generating a 10–12% EBITDA margin at ~A$1.1m sales, aligning with global pizza QSR norms.
• Predictable cost base: The enterprise has already embedded significant FY25 restructuring costs ($162.3m of pre-tax significant items), meaning the forward run-rate EBIT and cashflow profile should normalise as cost reductions flow through.

The combination of resilient royalty income, improving cost structure, and decreasing volatility from one-off impairments creates favourable conditions for financial de-risking and deleveraging over the first 24 months of ownership.

2.4 Digital leadership as a competitive moat

Domino's is widely recognised as a global digital leader in QSR, with digital sales penetration exceeding 80% in many markets, as shown in the Digital Adoption & Channel Mix dashboard charts.

Digital strengths include:

• High-frequency digital ordering: Digital transactions drive higher ticket sizes and lower error rates, supporting franchisee margin expansion.
• Best-in-class loyalty ecosystem: The global Domino's Rewards programme has added millions of members following its revamp, materially increasing visit frequency and profit uplift for franchisees (US data referenced; exact DPEL loyalty figures not disclosed in provided files).
• Automated delivery and kitchen systems: Technology investments (routing optimisation, POS automation, demand forecasting) support structural labour efficiencies—an essential lever in a wage-inflation environment.

Digital leadership supports both top-line resilience and margin enhancement, strengthening the value-creation case while also increasing buyer appetite at exit (strategics increasingly prioritise digitally mature assets).

2.5 Compelling growth potential in Japan and selected European markets

The company's largest markets—Japan and France—currently suppress overall group EBITDA. However, these are also the most attractive contributors to potential uplift:

Japan (largest market, deepest discount)

• Over-expansion led to the closure of 172 stores (20% of network).
• Post-closure performance is demonstrating early signs of stabilisation (but full-quarter data not yet available).
• The price architecture reset and menu simplification provide the foundation for rapid franchisee margin recovery.

France

• Menu complexity and high discounting led to sustained underperformance.
• Store closures (20–30 planned in FY25) are concentrated in structurally unviable locations.
• BENELUX and Germany continue to outperform, demonstrating that European unit economics are recoverable with tighter operational control.

The Regional Performance dashboard charts highlight the divergence between high-performing and turnaround markets. Bringing Japan and France to breakeven contribution unlocks the majority of the EV uplift required to justify a midpoint exit multiple.

2.6 Significant operational improvement opportunity

Multiple streams of operational inefficiency create a clear value-creation runway:

• Overhead rationalisation
  FY25 included $16.5m of streamlining costs and the transition to shared service centres in Malaysia and Poland. Run-rate savings will appear progressively from FY26 onwards (quantification requires additional data).
• Network optimisation
  312 store closures globally (233 Japan, balance Europe and Asia) corrected years of footprint inflation. This rationalisation is a major reset moment and a key pillar of the forward value-creation programme.
• Supply chain and cost leadership
  A full supply chain review has identified improvement pathways with benefits expected in FY26+. Given Domino's large volumes and vertically integrated model, supply chain efficiency is one of the largest EBITDA leverage points in the value-creation plan.

2.7 Attractive deleveraging profile post operational reset

Management has reiterated its commitment to maintaining net leverage below 2.0x EBITDA. With:

• run-rate cost savings still to flow;
• impairment-driven balance-sheet clean-up completed in FY25; and
• stable royalty income;

DPEL carries a credible deleveraging pathway once the Japan/France stabilisation is underway. This supports the investment case by reducing financing risk and increasing exit-multiple confidence.

2.8 Alignment with Bain Capital's value-creation capabilities

The investment rationale aligns directly with Bain's repeatable model:

The CEO, CFO, and regional leadership transitions create a natural entry point for a PE owner with operational discipline and governance expertise.

2.9 Platform optionality and long-term strategic positioning

Beyond the core turnaround:

• Digital leadership positions DPEL strongly against aggregator substitution risk.
• Targeted expansion in high-performing markets (Germany, Netherlands) remains credible once unit economics stabilise.
• The Domino's global brand continues to offer multi-year resilience.
• Strategic buyers (RBI, Inspire Brands, global franchise platforms) increasingly prioritise digital QSR assets.

3. Business Overview

3.1 Company background

Domino's Pizza Enterprises Limited (DPEL / DMP) is the largest Domino's master franchisee globally, operating across 12 markets covering Australia, New Zealand, Japan, Taiwan, Singapore, Malaysia, Cambodia, France, Germany, Belgium, The Netherlands, and Luxembourg. Headquartered in Queensland, Australia, the company holds permanent master franchise rights and operates a predominantly franchised network of ~4,152 stores as at FY25 following a major strategic network optimisation programme (312 closures) used to reset the economic base of the business.

The organisation operates through a hybrid functional–regional structure. Core enterprise functions (Finance, IT, Supply Chain, Legal, Digital, Transformation) are centralised, while market operations are executed through three regional divisions (ANZ, Europe, Asia). This structure aligns to the operational requirements of managing both diverse consumer markets and a highly standardised global system mandated by Domino's International.

DPEL experienced significant operational turbulence in FY24–FY25, including:

• Overexpansion and footprint instability, especially in Japan;
• Senior leadership turnover, including the Group CEO, former Group CEO, Group CFO, and ANZ CEO;
• Large-scale impairments and store optimisation, totalling 312 closures;
• Ongoing litigation risk, including the sizeable Speed Rabbit Pizza (SRP) claim in France (€279m) and the ANZ wage underpayment class action, both without provisions booked.

Despite this, the company retains resilient underlying fundamentals: a strong digital capability, robust supply-chain economics, and high historical franchisee profitability.

3.2 Revenue model

DPEL operates a diversified revenue model aligned to the classical Domino's master-franchise structure, consisting of four core streams: royalties, supply chain, corporate store operations, and digital/ancillary revenue.

Royalties (Primary Revenue Driver)

Royalty income is the dominant revenue source across all regions, representing a stable and recurring cashflow stream. Typical Domino's franchise fees include ~7% royalties and ~7–8% marketing levies in ANZ, broadly consistent with franchise disclosure data. Royalties scale directly with gross sales, not margins, providing downside protection even during contractionary periods.

Supply-chain and commissary economics

DPEL operates a vertically integrated supply chain covering dough production, ingredient procurement, distribution, and logistics. This model ensures:

• predictable food cost ratios (25–30% of sales) that remain competitive with global QSR benchmarks;
• stable gross margins for franchisees;
• system-wide standardisation of quality and cost inputs.

Supply chain contribution is a significant profit driver and is reinforced by centralised procurement scale.

Corporate store revenue

Corporate stores represent a minority share of total network units (exact proportion not disclosed in provided files). These stores function as testbeds for:

• menu innovation;
• operational prototypes (delivery models, POS systems, automation tools);
• new store formats.

However, underperformance in Japanese corporate stores has previously dragged EBIT, reinforcing the strategic refranchising rationale.

Digital and ancillary revenue streams

DPEL benefits from best-in-class digital penetration, with digital channels accounting for >80% of sales in many markets (global Domino's figures; specific DPEL split not fully disclosed). Revenue is influenced by:

• loyalty programme participation and promotional cadence;
• conversion and upsell performance on mobile/web;
• app-driven repeat order behaviour.

Digital ordering also materially reduces labour requirements at store level, indirectly supporting franchisee margin expansion.

3.3 Organisational structure

DPEL's organisational structure reflects a complex global QSR enterprise with high dependency on operational consistency, technology leadership, and region-specific adaptation.

Senior management and governance

The enterprise is led by a Group Executive Leadership Team reporting to a shareholder-elected Board. Key roles include:

• Group CEO (vacant in FY25 during transition);
• Group CFO (recently changed);
• Group CTO (Matthias Hansen);
• Group CDO (Jeff Garton);
• Group Chief Transformation Officer (Julianne Dickson);
• Group CMO and regional CEOs for ANZ, Europe, and Asia;

This leadership architecture demonstrates a strategic emphasis on digital capability, transformation management, and improving operational efficiency.

However, the organisation is experiencing acute leadership instability: multiple senior departures occurred in FY25 including the Group CEO, former Group CEO, Group CFO, and ANZ CEO. This represents a key execution risk, especially for multi-year turnaround programmes.

Regional operating units

DPEL operates through three primary regional divisions:

ANZ Division – The operational and cultural centre of the enterprise, with the strongest unit economics and innovation leadership. ANZ generated its highest franchisee profitability in three years and acts as the platform for global product and digital innovation.

Asia Division – Japan is the largest individual market but also the most volatile. FY25 saw 172 store closures, representing ~20% of the market footprint, signalling necessary retrenchment. Southeast Asian markets continue disciplined growth (Malaysia, Singapore, Cambodia).

Europe Division – A dual-speed region with strong performance in BENELUX and Germany but significant underperformance in France, where 20–30 closures are underway. The region is a mix of growth markets and restructuring markets.

Technology and delivery operations

Digital capability is a core competitive advantage. DPEL separates the CTO (infrastructure, core systems) and CDO (digital product, customer platforms) roles—an intentional design to accelerate e-commerce innovation without creating bottlenecks in enterprise technology delivery.

Technology is central to:

• order flow automation;
• delivery routing and capacity optimisation;
• loyalty and personalisation engines;
• labour efficiency improvements;
• supply chain visibility and forecasting.

3.4 Summary of recent strategic initiatives and performance resets

Store optimisation programme (FY25)

DPEL executed a sweeping reset of its global footprint, closing 312 stores across Japan, France, Denmark, and other markets to stabilise unit economics and address historical overexpansion. This restructuring resulted in ~$162.3m in significant costs and write-downs but materially improved the quality of the network base going forward.

Shared service and overhead restructuring

The company relocated elements of its finance and operations support to shared service centres in Malaysia and Poland, incurring $16.5m in restructuring costs and expecting run-rate savings from FY26 onwards.

Supply chain and systems transformation

A formal supply chain review identified cost-efficiency opportunities, and DPEL deployed a new centralised finance and supply chain SaaS platform intended to unify operational processes and improve multi-market standardisation.

Franchisee profitability restoration

Following years of cost inflation, management prioritised restoring unit-level profitability. In ANZ, franchisee EBITDA reached its highest level in three years due to improved pricing, better labour management, and enhanced procurement efficiencies.

Digital innovation and loyalty uplift

Digital product development continues at pace, including enhancements to the mobile app, targeted offers, and loyalty programme improvements. These innovations support higher repeat order frequency and better customer retention (supported by comparable Domino's global data; detailed DPEL loyalty metrics not disclosed).

Litigation and compliance exposure

Two material unresolved exposures—SRP (France) and the ANZ wage underpayment class action—remain unprovisioned and introduce valuation and deal-structuring complexity. The company has engaged governance structures (IBC, interim leadership) to provide oversight during ongoing legal, operational, and cultural transition.

4. Financial Performance

4.1 Historical performance

DPEL's historical financial trajectory reflects a shift from long-running, high-growth expansion to a period of operational correction beginning FY24–FY25. This inflection was driven by overexpansion, inflationary cost pressures, and operational misalignment in Japan and France.

Revenue and system sales

System sales across the network remained resilient despite store closures and SSS deterioration in key markets. Store-level demand held up in stable markets such as ANZ, BENELUX, and Germany, while Japan and France saw contraction. The SSSG and Regional Performance dashboard charts show divergence between stabilising and deteriorating markets, reinforcing the multi-speed nature of the portfolio.

EBITDA and EBIT

EBITDA performance has deteriorated due to four factors:

• Store rationalisation impacts: 312 closures delivering a large one-off reduction in revenue contribution.
• Inflationary cost base: Labour and food cost pressure across FY23–FY25 compressed margins, especially for franchisees in high-wage ANZ and high-rent European markets.
• Japan operational missteps: Aggressive discounting and insufficient local cost controls materially reduced profitability.
• Significant items in FY25: $162.3m of restructuring charges, impairments, and write-downs associated with the supply chain review, store closures, and transition to shared services centres.

Despite these pressures, underlying franchisee EBITDA per store remained at ~$94.7k, reflective of a still-viable unit economic base.

Net profit

FY25 statutory NPAT was a loss of ($3.7m) driven by:

• Impairments;
• Restructuring;
• store closures;
• litigation costs;
• transformation program expenses.

This statutory loss masks a stabilising underlying operating trajectory visible in several regions and does not fully reflect forward run-rate profitability post-optimisation.

4.2 Profitability drivers

Royalty margin stability

Royalty income remains structurally robust due to its direct relationship with top-line sales rather than profitability, providing a smoothing effect during operational downturns. Typical royalty fees of ~7% plus marketing levies of ~7–8% support a predictable cash inflow across all markets.

Store-level profitability

The Store-Level P&L dashboard chart shows mature stores generating 10–12% EBITDA margins at ~A$1.1m AUV. Margin profiles remain consistent with global pizza QSR norms. Key margin determinants:

• labour cost efficiency;
• food cost stability (25–30%);
• occupancy costs;
• local pricing architecture.

Japan and France experienced significant store-level margin deterioration due to discounting, complexity creep, and operational inefficiency. Conversely, ANZ and BENELUX achieved improved profitability through stronger pricing discipline and labour optimisation.

Commodity and labour cost exposure

Labour remains one of the most material cost exposures, particularly in ANZ where wage inflation has consistently exceeded CPI. Food cost inflation (cheese, proteins, wheat) materially impacted FY23–FY24, but conditions began easing modestly in late FY24, aiding the FY25 ANZ profitability recovery.

Corporate store performance

Corporate stores have historically underperformed franchise stores and generated disproportionate EBITDA drag, particularly in Japan. Refranchising and closure programmes are central to restoring margin health. Exact corporate-vs-franchise store counts are not available in uploaded documents.

4.3 Cash-flow profile

Free cash flow

FCF has been volatile due to high restructuring cash outlays in FY25 and elevated investment in digital transformation and supply chain systems.

Operating cashflow remains fundamentally supported by the asset-light franchise model, but FY25 cash conversion was distorted by:

• restructuring charges;
• Impairments;
• restructuring of finance and supply chain systems;
• store closure and severance costs.

Capital expenditure

Capex comprises:

• corporate store capex (fit-outs and refurbishments);
• commissary and supply chain upgrades;
• digital and technology enhancements.

The shift to a leaner network is expected to reduce maintenance capex over the medium term due to the removal of subscale assets. Capex by region and total capital intensity were not disclosed in provided files.

Working capital

Working capital requirements fluctuate across supply chain cycles but benefit from:

• negative working capital characteristics of franchising;
• consistent franchisee payment flows;
• predictable ingredient procurement run-rates.

Cash repatriation and FX exposure

DPEL operates in multiple currencies, with meaningful exposure to JPY and EUR. JPY volatility is particularly impactful given the size of the Japanese market. FX movements influence both repatriated cashflows and group-level reported earnings. Specific FX sensitivities and hedging profile are not disclosed in the provided documents.

4.4 Forecast and Bain view

Bain base case (3–5 years)

Built on operational stabilisation, network normalisation, and margin recovery:

• Japan and France return to breakeven-to-positive EBIT contributions within 24 months.
• Franchisee EBITDA exceeds $100k+ in all major markets, restoring reinvestment appetite.
• Supply chain improvements deliver 100–150bps of margin expansion (range indicative; specific quantification unavailable).
• Digital ordering penetration continues rising, reducing labour intensity and increasing average order value.
• Deleveraging below 2.0x EBITDA remains credible per management guidance.

Bain downside case

Assumes prolonged underperformance in Japan and France:

• Japan SSSG remains negative for 24–36 months.
• Franchisee profitability stagnates around $90–100k.
• Store closures continue in France (beyond the 20–30 planned).
• EBITDA fails to re-rate, and valuation remains anchored at 5–6x EV/EBITDA.
• Litigation outcomes materially impact cashflows.

Bain upside case

Assumes disciplined pricing, cost-out success, and faster regional recovery:

• Japan returns to positive SSSG within 4–6 quarters.
• Franchisee profitability surpasses $130k (historical target level).
• Europe stabilises, with France returning to low single-digit EBITDA margins.
• Digital innovation outperforms peers, increasing order frequency materially.
• Exit multiple of 14x–16x becomes credible.

Sensitivity analysis

The primary sensitivities include:

• ANZ unit economics – high wage exposure but strong price power.
• Japan recovery trajectory – the largest single determinant of group earnings volatility.
• Commodity cost shocks – dairy and wheat being the key drivers.
• Wage inflation – especially in ANZ and France.
• Litigation outcomes – SRP (€279m) and ANZ payroll class action remain unprovisioned, introducing high-variance downside scenarios.

Full sensitivity quantification requires financial statement granularity and multi-year forecasts that were not provided in the uploaded files.

5. Commercial due diligence

5.1 Market attractiveness

Segment size and growth

Pizza is one of the most resilient categories in global QSR, driven by low price points, high family penetration, and strong digital compatibility. The Bain acquisition thesis identifies a 10.25% CAGR forecast for the global Pizza & Pasta QSR segment through 2030, indicating sustained consumer demand tailwinds.

Across DPEL's 12 markets, macro conditions remain supportive:

• ANZ continues to exhibit stable QSR growth despite inflationary pressure and shifting value sensitivity.
• Europe presents mixed dynamics—BENELUX and Germany are structurally attractive markets with favourable demographics and high delivery adoption; France is challenged by softer demand and discount-driven price elasticity.
• Japan remains one of the most underpenetrated Western QSR markets but exhibits significant volatility due to competitive discounting and delivery-heavy cost structures.

Delivery vs carry-out dynamics

Delivery continues to gain share globally, amplified by lifestyle changes, aggregator adoption, and app-driven ordering. Domino's differentiates itself with proprietary delivery and routing systems, which reduce cost per delivery compared to third-party platforms.

In multiple markets, delivery now accounts for a majority of QSR pizza revenue (supported by global Domino's data; exact DPEL delivery/carry-out split not disclosed in uploaded files).

DPEL has strategic advantage as:

• delivery fulfilment is vertically integrated;
• pricing can be controlled independent of aggregator fees;
• routing optimisation reduces delivery labour intensity.

Consumer behaviour and digital order penetration

Digital ordering is the dominant channel. In many DPEL markets, 80%+ of orders are digital (mobile, web, or automated ordering systems), as reflected in the Digital Mix & Adoption dashboard charts. This places Domino's ahead of most QSR peers.

Digital penetration advantages include:

• higher order accuracy;
• elevated ticket sizes (due to upsell automation);
• reduced store labour requirements;
• improved customer loyalty and retention.

Conclusion – Market attractiveness

The QSR pizza sector remains fundamentally attractive with stable to growing demand, strong digital adoption, and long-term resilience across economic cycles. DPEL's current downturn reflects operational misalignment, not structural market decline.

5.2 Competitive positioning

Market share

Domino's holds leading or top-three market share positions in nearly all DPEL territories. Strengths include:

• unmatched delivery density and routing capability;
• strong brand recognition;
• digital leadership across ordering and loyalty;
• broad franchisee footprint.

Weaknesses have emerged in two markets:

• Japan – heightened price competition and discount wars;
• France – heavy local competition and operational inconsistency.

Market share by region is not disclosed in the provided documents, although qualitative evidence indicates leadership in ANZ and BENELUX, and varied performance in Japan and France.

Value positioning and pricing

Domino's historically competes on "affordable convenience" rather than high-end quality. However:

• Japan introduced extended discounting that trained customers into lower price-per-order behaviour.
• France experienced promotional overuse and menu complexity, eroding margin and brand clarity.

The dashboard's Pricing Architecture and Regional Gross Margin Benchmarks charts illustrate how competitive pricing dynamics vary materially across markets.

Domino's value proposition remains strong in digitally mature markets; repositioning is required in Japan and France to restore sustainable ticket size and frequency.

Comparison with key competitors

DPEL competes against:

• Local pizza chains (varies by market).
• Aggregator-led virtual brands (growing rapidly).
• Major QSR players (McDonald's, KFC, Hungry Jack's, etc.).
• Online meal marketplaces (Uber Eats, DoorDash, Deliveroo).

Competitor dynamics by region:

• ANZ – Domino's remains the delivery category leader.
• Europe – Germany and BENELUX show strong competitive advantage; France faces intense local competition.
• Japan – Pizza Hut, Pizza-La, and aggressive local entrants apply pricing pressure.

Domino's continues to outperform peers on digital product quality and delivery capability, supported by scale and unified systems.

Delivery-app substitution risk

Restaurants globally face a structural risk from aggregator penetration. Domino's is less exposed than most QSR brands because:

• Most orders are placed through Domino's owned channels.
• Delivery fleet is entirely owned and controlled.
• Aggregators remain a minor part of consumer ordering behaviour in pizza relative to other QSR formats.

Thus, substitution risk exists but is lower relative to burgers, chicken, or café formats.

5.3 Consumer insights

Brand strength

Domino's enjoys strong brand awareness in every DPEL market. Brand strength has historically been driven by:

• value positioning;
• speed of delivery;
• consistent menu format;
• heavy digital engagement;
• loyalty programme adoption.

However, brand favourability has slipped in Japan and France due to discounting fatigue, weakened customer experience, and reduced consistency.

Customer satisfaction and repeat behaviour

Global Domino's data indicates loyalty programme members exhibit:

• higher frequency;
• larger average basket;
• higher lifetime value.

DPEL reflects these trends but does not publish detailed NPS or repeat-order data in the provided sources.

The Digital & Loyalty Engagement dashboard charts highlight strong loyalty conversion and channel dominance, consistent with digital leaders in global QSR.

Menu innovation and service levels

Domino's core menu is simple, but:

• Japan added operational complexity that diluted execution;
• France added menu expansion that increased prep time and reduced consistency;
• ANZ maintained disciplined menu breadth, supporting improved FY25 performance.

Service levels remain a differentiator in delivery markets where routing optimisation and labour scheduling drive speed performance.

Consumer behaviour trends

Key behavioural trends influencing commercial outlook include:

• rising sensitivity to price in ANZ and Europe;
• declining tolerance for long delivery windows;
• growing preference for app-based ordering and customisation;
• stronger consumer preference for value-conscious bundles.

These trends generally favour Domino's, provided discounting is disciplined.

5.4 Digital channel behaviour and loyalty programme performance

Digital performance remains one of DPEL's strongest commercial assets.

Digital leadership

Domino's experiences digital order penetration of 80–85% in many markets—significantly higher than the QSR average of ~65–75%.

The Digital Mix & Online Revenue dashboard charts reinforce the scale of digital engagement.

This translates to:

• higher accuracy;
• improved store productivity;
• personalised promotions at scale;
• defensibility against marketplace competitors.

Loyalty programme performance

Domino's global loyalty restructuring (2023) added 3 million new members, significantly increasing customer engagement and repeated orders. DPEL does not publish local loyalty KPIs, but given its digital maturity, similar trends are likely. Loyalty is a major growth lever for frequency uplift, particularly in Japan and Europe.

5.5 Overall commercial assessment

DPEL operates in structurally attractive markets with a resilient business model. Its commercial challenges stem from execution misalignment rather than demand deterioration. Strong digital equity, brand penetration, and delivery leadership provide a durable foundation for recovery.

The commercial thesis is supported by five conclusions:

1. Category attractiveness remains high, with robust long-term demand and strong digital alignment.
2. Domino's maintains competitive leadership in most markets, with temporary setbacks in Japan and France.
3. Digital and loyalty assets create persistent commercial advantages, directly linked to higher customer lifetime value.
4. Franchisee profitability remains viable, supporting network stability once operational issues are resolved.
5. Turnaround markets represent the largest value-creation opportunity, with France and Japan offering disproportionate EBITDA uplift potential.

6. Operational due diligence

6.1 Franchise system health

Franchisee economics

Franchisee profitability is a critical leading indicator of system health. Despite operational challenges, DPEL maintains average franchisee EBITDA of ~A$94.7k per store (FY25). This level supports viable reinvestment economics (20–25% cash ROI; 4–5-year payback period) and remains competitive with QSR benchmarks.

The dashboard's Franchisee Profitability chart shows:

• steady EBITDA improvements in ANZ;
• mixed performance in Europe (strong in BENELUX/Germany, weak in France);
• deep trough conditions in Japan.

Profitability dispersion

The system shows a widening distribution of outcomes, driven by:

• poor unit economics in turnaround markets;
• higher labour-intensity in Japan;
• territory-mapping failures that produced subscale stores (discussed below).

Markets with strong density (ANZ, BENELUX) continue to exhibit healthy margins and more predictable cash generation.

Franchisee morale and churn

FY24–FY25 saw elevated stress on franchisees due to:

• inflationary cost pressures;
• pricing misalignment;
• inconsistent support from leadership during transitions;
• structural complexity in certain regions.

Several franchisees in Japan have experienced materially negative store economics post-discounting strategy. Exact churn and buyback rates were not disclosed in uploaded documents.

Territory planning and footprint integrity

One of the most consequential operational flaws identified is the failure in territory planning, driven by reliance on outdated demographic and census data in Australia and other markets. This structural flaw contributed directly to:

• Overexpansion;
• Cannibalisation;
• unviable locations;
• subsequent closures (312 stores in FY25).

This represents a critical operational root-cause issue now being systematically corrected through the Store Optimisation Programme and deployment of modern location intelligence tools (e.g., MapInfo).

Overall assessment – Franchise health

Despite major structural issues, the franchise system retains strong long-term viability provided reinvestment appetite is restored through normalised profitability, disciplined growth, and stabilising leadership.

6.2 Supply chain and commissaries

Cost structure and capacity

DPEL operates a vertically integrated supply chain (dough manufacturing, ingredient procurement, logistics), which is a core competitive advantage.

Key features include:

• Stable food cost ratios of 25–30% of sales.
• Economies of scale across procurement and production.
• Centralised quality control across 12 markets.

Supply chain improvements were a major focus in FY25, including a full review that identified multiple cost-efficiency opportunities now being implemented.

Supply chain resilience

The supply chain model exhibits strong resilience characteristics:

• multiple commissaries per region;
• consistent food safety compliance;
• standardised ingredient sourcing.

However:

• capacity and utilisation data by commissary were not disclosed;
• the degree of automation varies by region, with Europe generally more automated than Asia (not quantified in files).

Supply chain transformation

FY25 included heavy investment in:

• new finance and supply chain systems;
• integration of procurement and logistics under a centralised model;
• preparatory system changes ahead of store rationalisation.

The restructuring led to $16.5m in transformation costs, with savings starting in FY26+.

Overall assessment – Supply chain

A strong, scalable asset but under pressure during the turnaround. Long-term competitive advantage remains intact and is likely to improve as cost-out and system integration mature.

6.3 Delivery logistics

Labour model

DPEL predominantly uses an employee-based delivery model, with variations across markets (e.g., part-time labour in Japan and Europe). This has several advantages over aggregators:

• guaranteed service levels;
• internal routing optimisation;
• lower long-term delivery costs;
• higher brand control.

Cost exposure

Delivery labour is typically 20–25% of store sales in the P&L structure. In high-wage markets (ANZ, parts of Europe), labour cost increases have compressed franchisee margins significantly.

Delivery vehicle model

Vehicle mix is region-specific:

• scooters dominate Asia;
• e-bikes and mopeds are common in Europe;
• cars remain material in ANZ

Each model presents different cost, maintenance, and safety implications. Fleet composition and cost breakdown were not provided in the uploaded documents.

Operational efficiency

Domino's maintains a strategic advantage in delivery speed and density due to its routing optimisation systems and store network density in ANZ and BENELUX.

The dashboard's Delivery Efficiency & Cost Drivers charts highlight the relationship between order density and delivery labour productivity.

Driver availability risks

Labour availability has been a persistent operational challenge across food delivery markets globally. This is particularly acute in:

• urban Australia (competition for casual labour);
• Japan (standardised wage pressures);
• France (gig-economy competition).

Overall assessment – Delivery logistics

A major competitive strength—so long as labour intensity is managed and routing algorithms remain ahead of market standards.

6.4 Technology and digital infrastructure

Ordering platforms

Domino's is widely recognised as a digital innovation leader. DPEL's owned channels account for 80%+ of orders in several markets (supported by global data; exact country splits not disclosed).

The ordering stack includes:

• web and app ordering flows;
• automated upsell and customisation systems;
• AI-driven demand forecasting;
• integrated POS (PULSE) across all markets.

The Digital Performance dashboard charts show strong platform adoption and high repeat-order behaviour.

Loyalty systems

The revamped global loyalty programme has driven millions of new member sign-ups, materially increasing engagement. DPEL-specific loyalty metrics were not provided, but digital uplift trends align with global outcomes.

Data and analytics capabilities

Domino's global ecosystem provides:

• real-time sales data;
• customer-level insight;
• delivery optimisation tools;
• centralised forecasting.

However, DPEL's integration maturity varies by region due to differing legacy infrastructure.

Cybersecurity posture

No specific data was provided on cybersecurity readiness. Given DPEL's digital dependency, independent cybersecurity diligence is mandatory (data gap flagged).

Technology leadership structure

DPEL has separated CTO (core systems) and CDO (digital product) roles—an intentional design to prevent bottlenecks between infrastructure and customer-facing innovation.

This is a distinctive operational strength compared with many QSR peers.

Overall assessment – Technology

A major competitive moat and a core component of future value creation. Systems modernisation remains ongoing; integration maturity varies regionally but trajectory is positive.

6.5 Summary of operational assessment

Strengths

• Highly defensible digital platform and delivery capability.
• Strong vertical supply chain with stable food economics.
• Mature operational playbook in ANZ, BENELUX, and Germany.
• Broad franchisee profitability still intact.
• Clear advantage versus aggregator-dependent QSR peers.

Weaknesses

• Major execution failures in Japan and France.
• Historical territory planning deficiencies causing network instability.
• Labour intensity creating structural margin pressure.
• Leadership turnover reducing operational consistency.
• Legacy systems fragmentation across regions.

Implications for the deal

• Operational complexity increases underwriting uncertainty—particularly around Japan recovery speed.
• With strong PE ownership and disciplined transformation, operational misalignment is fixable.
• The operational platform provides clear pathways for a multi-year value creation programme anchored in cost-out, turnaround, and digital scale.

ESG assessment

7.1 Labour law compliance (Australia/NZ and other regions)

Wage compliance and workforce exposure

DPEL faces a significant ongoing ANZ wage underpayment class action, with judgement reserved and no provision recognised in FY25 financials. This represents the most material ESG and financial risk in the portfolio, with potential implications for:

• back-pay liabilities;
• civil penalties;
• reputational damage;
• regulatory oversight obligations;
• future labour governance requirements.

Labour is one of the largest cost components (20–25% of store sales) in the unit-level P&L. As such, compliance failures may reflect structural issues in award interpretation, franchise labour governance, or rostering accuracy.

Franchise system labour monitoring

DPEL relies on franchisees for the majority of employment relationships. This model increases compliance complexity because:

• franchisees vary in HR/administrative maturity;
• monitoring is decentralised;
• DPEL has limited direct control over workplace practices.

Domino's has a history of regulatory scrutiny in wage compliance (Australia), though specific multi-year audit outcomes were not included in the provided documents.

Assessment

ESG risk level: High

• Material legal exposure (pending judgement).
• Structural compliance vulnerability due to decentralised labour management.

Mitigation potential: High

• Shared services and system integration (FY25 initiatives) will support more consistent workplace compliance.
• PE ownership can impose stricter operational governance, HR systems integration, and franchise audit frameworks.

7.2 Delivery safety and workforce conditions

Delivery model

DPEL primarily uses employee-based delivery fleets across markets, with substantial variation (cars in ANZ, mopeds/e-bikes in Europe, scooters in Asia). This has ESG implications in:

• road safety;
• worker protections;
• vehicle maintenance standards;
• protective equipment usage;
• fatigue monitoring.

Safety posture

No safety incidents or external regulatory actions were disclosed in the uploaded materials (data gap), but the operational model presents inherent risk exposure typical of delivery-focused QSR systems.

Aggregator exposure

Unlike many QSR peers, DPEL has lower reliance on third-party gig-economy platforms, reducing exposure to:

• vulnerable worker debates;
• contractor reclassification risks;
• ethical sourcing of labour.

Assessment

ESG risk level: Medium

Safety exposure is intrinsic but more controllable than aggregator-based systems. Operational uplift (routing optimisation, labour scheduling, vehicle condition) can materially reduce risk.

7.3 Sustainability (packaging, energy, waste, emissions)

The uploaded files contain no quantitative sustainability disclosures (e.g., emissions, energy use, packaging reduction, waste-recovery targets).

We therefore assess based on sector norms and operational footprint.

Environmental footprint characteristics

Domino's QSR operations contribute primarily through:

• electricity consumption (ovens, refrigeration);
• packaging waste (pizza boxes, containers);
• vehicle emissions (delivery fleet);
• food waste across commissaries and stores.

Given the scale of DPEL's delivery fleet and large multiregional commissary operations, environmental footprint is meaningful but manageable.

Packaging and waste

Global Domino's has made commitments toward recyclable packaging, but no DPEL-specific commitments were provided.

Vehicle electrification

Electrification of delivery fleets is emerging in Europe (e-bikes, e-mopeds), but data for DPEL was not present.

Assessment

ESG risk level: Medium

• Evidence base is insufficient for a formal rating.
• Environmental footprint is a manageable operational area, but lack of public targets or reporting increases diligence scope.

7.4 Regulatory risks in Europe and Japan

Europe

Key exposures:

• Potential outcome of the €279m Speed Rabbit Pizza (SRP) claim in France (commercial + compliance risks).
• Labour regulation changes in France and parts of Europe may raise compliance requirements.
• Delivery vehicle regulation (e.g., emissions, operating hours) varies by EU state and may increase capex requirements.

Japan

• Wage and labour intensity pressures.
• Safety and roadworthiness regulations for delivery scooters.
• Increased scrutiny on foreign franchisors following high-profile labour investigations in other sectors.

Assessment

ESG risk level: Medium–High

• Legal claims in France and labour exposure in ANZ significantly elevate risk.
• Japan's operational complexity and regulatory opacity increase diligence needs.

7.5 Governance and corporate conduct

Leadership transitions and governance continuity

FY25 saw concurrent departures of the:

• Group CEO;
• former Group CEO;
• Group CFO;
• ANZ CEO.

Leadership instability introduces ESG governance concerns, including:

• inadequate oversight during historical overexpansion;
• gaps in risk management;
• inconsistent operational execution.

The Independent Board Committee (IBC) is operating during the transition, providing temporary governance stability.

Franchise governance

The largest governance gap identified is the failure in territory planning, driven by reliance on outdated census data and ineffective site selection protocols, resulting in:

• network cannibalisation;
• subscale locations;
• major corrective closures (312 stores).

This represents a breakdown in data governance, operational governance, and strategic oversight.

Assessment

ESG risk level: High

Although correctable, governance failures have directly harmed financial performance and must be addressed through improved data governance, executive accountability, and operational controls.

7.6 Overall ESG profile and implications for investment

Summary rating

Implications for Bain underwriting

• Legal risk must be quantified before exclusivity – The ANZ class action and SRP claim represent major downside variance.
• Labour governance uplift is required immediately post-close – A unified compliance operating model and mandatory franchise audit framework are essential.
• Governance reset forms part of the value-creation plan – Strengthening the Board, stabilising leadership, and rebuilding data governance are foundational.
• ESG improvement is integral to operational turnaround – Delivery fleet safety, wage compliance, and predictable workforce conditions are tied directly to brand strength and SSS recovery.
• Exit readiness depends on ESG maturity – Strategic buyers and IPO markets increasingly require demonstrable ESG alignment—particularly in labour governance and supply chain transparency.

8. Value creation plan

Overview

The value-creation strategy for DPEL is a three-year operational and commercial transformation designed to stabilise the core, restore franchisee profitability, repair structurally impaired markets (Japan, France), and shift the company from distressed trading multiples (~4.5x EBITDA) to a normalised range (14x–16x) at exit.

The plan combines immediate corrective actions (0–12 months), structural improvements (12–24 months), and scalable growth levers (24+ months), anchored in the operating model strengths of the Domino's brand and Bain's repeatable transformation methodology.

8.1 Operational improvements

Restore franchisee unit economics to >A$100k EBITDA per store

Franchisee profitability (~A$94.7k) is the primary determinant of network stability and reinvestment appetite. The plan targets a step-change to A$100–130k per store, historically the level correlated with accelerated store development.

Key levers:

• labour productivity gains through advanced scheduling, automation, and higher digital ordering rates;
• food-cost optimisation via renegotiated procurement and process standardisation;
• disciplined pricing architecture to repair margins without demand destruction;
• store-level cost benchmarking to identify low-performing operators.

This is supported by the Unit Economics & Store-Level P&L dashboards clearly indicating margin recovery pathways.

Territory rationalisation and precision expansion

The root-cause analysis shows that DPEL's network instability was driven by a failure in territory planning, including outdated census data for location selection and inadequate spatial modelling.

The plan includes:

• full geospatial remapping of all territories using real-time demographic data;
• re-weighting of catchment scoring models;
• disciplined refusal of franchise applications in marginal territories;
• development of store archetypes matched to micro-market density profiles.

Outcome: eliminate cannibalisation, prevent recurrence of loss-making sites, and enable higher-density delivery routing.

Supply chain optimisation and cost reduction

FY25 revealed material optimisation potential across the vertically integrated supply chain. The Bain plan targets:

• 100–150bps margin expansion (indicative; full cost base not disclosed) through procurement consolidation and SKU rationalisation;
• automation investments in key commissaries in Europe and ANZ;
• routing optimisation between commissaries and stores;
• integration of new supply-chain systems deployed in FY25.

Projected impact: meaningful and recurring EBITDA uplift while maintaining high-quality standards.

Refranchising and corporate-store performance reset

Corporate stores, particularly in Japan, have underperformed and created disproportionate earnings drag.

Plan includes:

• accelerated refranchising of corporate stores to experienced multi-unit operators;
• targeted closure of subscale stores not captured in FY25 optimisation;
• operational uplift in remaining corporate units through menu simplification, labour optimisation, and delivery efficiency improvements.

Outcome: improved ROIC, lower corporate overhead burden, and restored margin stability.

8.2 Growth acceleration

Japan turnaround as the primary value driver

Japan is the largest source of EBITDA underperformance but also the most powerful lever for re-rating.

Strategic focus:

• repair price architecture to reduce discount dependency;
• simplify menus to reduce preparation time and labour intensity;
• restore delivery efficiency through density-based scheduling and routing;
• optimise store footprint post-closure (172 stores removed in FY25).

Success case impact: Japan returns to positive SSSG and contributes meaningfully to group EBITDA, unlocking the largest driver of exit multiple expansion.

European stabilisation and targeted expansion

BENELUX and Germany remain structurally attractive markets. France requires a multi-step turnaround:

• 20–30 store closures of chronically underperforming outlets;
• menu simplification;
• tighter labour model control;
• improved supply chain routing and commissary utilisation.

Once stabilised, selective expansion resumes in:

• Germany (high density, strong digital adoption);
• The Netherlands and Belgium (top-tier franchisee profitability).

Dashboard data confirms strong comparative performance for core European markets, underpinning a selective growth thesis.

Digital and loyalty growth

Digital penetration (>80% in multiple regions) is a strategic moat. Growth levers include:

• personalised offers through loyalty data;
• A/B-tested upsell pathways;
• accelerated rollout of app-based ordering enhancements;
• targeted reactivation campaigns for lapsed customers.

These initiatives directly improve frequency and ticket size and reduce customer-acquisition cost.

8.3 Portfolio shaping

Rationalisation of underperforming assets

Beyond FY25's 312 closures, further refinement is required.

The plan targets:

• identification and closure of remaining subscale sites (particularly in Japan and France);
• refranchising where operators lack capability to meet performance thresholds;
• focusing capital allocation on high-return micro-markets.

Outcome: a smaller but higher-quality asset base with significantly better unit economics.

Strategic shape of the network

• Prioritise growth in ANZ (stable, profitable, digitally mature).
• Accelerate densification in Germany and BENELUX.
• Consolidate and stabilise Japan and France before re-expansion.
• Evaluate market-by-market footprint efficiency using Bain's territory economic model.

This creates a higher-return, lower-volatility global portfolio.

8.4 Technology enhancements

Delivery-route optimisation and labour efficiency

Domino's routing algorithms are globally recognised, but regional deployment varies. The plan invests in:

• next-generation routing models;
• AI-driven capacity forecasting;
• dynamic driver allocation;
• automated scheduling tools.

Impact: Reduced labour cost per order, improved delivery times, and strengthened competitive differentiation.

Kitchen automation and store productivity

Automation is a multi-year lever delivering labour efficiency and consistency:

• automated dough prep;
• ingredient dispensing systems;
• predictive make-line staffing tools;
• order batching systems.

Outcome: consistency, reduced labour intensity, and better throughput at peak demand periods.

Personalisation and digital upsell engines

Advanced analytics and loyalty integration enable:

• precise offers;
• cohort-based retention strategies;
• improved conversion along checkout flows.

This is critical for margin repair, particularly in Japan and France where ticket sizes declined.

8.5 Expected outcomes and valuation impact

Combined, these measures support a credible transition from distressed multiples (~4.5x) to a standardised QSR franchise valuation (14x–16x) at exit.

8.6 Requirements for successful execution

• CEO appointment and leadership stabilisation (critical precondition).
• Enhanced labour governance model and franchise audit framework.
• Dedicated Bain operating partner embedded in Japan and France.
• Real-time performance dashboards for store-level economics.
• Strengthened data governance and territory modelling discipline.
• Tight capital allocation to markets with proven density economics.

9. Management assessment

9.1 Capability and experience of senior leadership

Executive team structure

DPEL is led by a Group Executive Leadership Team with responsibility for enterprise-wide strategy, digital capability, supply chain operations, transformation, and regional execution. Key positions include:

• Group CEO – role vacant in FY25 following the unexpected departure of the CEO and former CEO.
• Group CFO – also changed during FY25.
• Group CTO (Matthias Hansen) – responsible for core technology infrastructure and systems.
• Group CDO (Jeff Garton) – leads digital product innovation and e-commerce channels.
• Group Chief Transformation Officer (Julianne Dickson) – leads structural reform programmes and the FY25–FY27 operational reset.
• Regional CEOs – ANZ, Europe, and Asia, managing performance across 12 markets.

The explicit separation of CTO and CDO roles demonstrates a sophisticated architectural decision to prevent technical debt from slowing digital product development—a structural strength within the management design.

Management bench strength

Across Finance, Digital, Transformation, and Supply Chain, management capability is generally high and experienced in multi-market QSR operations. However, significant organisational churn and legacy execution issues signal gaps in alignment, governance, and strategic coherence.

Assessment: Strong competence in operational domains, but strategic leadership and organisational stability have weakened materially.

9.2 Leadership stability and succession risks

CEO & CFO turnover

FY25 saw simultaneous departures of:

• Group CEO
• Former Group CEO
• Group CFO
• ANZ CEO

This represents a critical destabilising event in a period already marked by operational inconsistency, network restructuring, and litigation exposure.

Regional leadership stability

Regional CEOs in Europe and Asia have remained in place but have been managing unprecedented disruption (e.g., 172 store closures in Japan; rationalisation in France).

The scale of change—store closures, impairments, cost transformation—has created operational strain on leadership teams, increasing the risk of burnout and strategic drift.

Governance oversight

The Independent Board Committee (IBC) was activated during leadership transition, providing interim governance. However, the historic failure in territory planning (use of outdated census data; weak controls; site selection errors) reflects systemic governance gaps at both management and Board levels.

Succession planning

No publicly disclosed succession pipeline or internal CEO successor was identified in the provided documents. This absence elevates risk, particularly for an asset undergoing a turnaround.

Assessment: Leadership instability is a material execution risk and a top-three condition for proceeding with the transaction.

9.3 Alignment and incentive structures

Incentive misalignment and cultural challenges

Historical overexpansion—particularly in Japan—indicates that incentives may have been tied too heavily to store count growth rather than sustainable unit economics. Subsequent closures (312 stores) highlight the consequences of a misaligned growth incentive system.

Franchisee alignment

Franchisees remain financially aligned at the unit-economics level, and profitability has begun to improve in ANZ and select European markets. However:

• prolonged margin pressure;
• inconsistent head-office communication;
• operational instability in Japan;

have weakened morale and reinvestment appetite.

Executive incentives

Specific executive incentive disclosures were not included in the uploaded documents. For a turnaround, Bain would typically require:

• EBITDA-linked long-term incentives;
• market-specific performance metrics;
• clawback mechanisms relating to compliance breaches;
• C-suite performance measurement tied to unit economics, not footprint expansion.

Assessment: Alignment structures require redesign as part of the transformation.

9.4 Cultural health

Operational and cultural fragmentation

Due to the global footprint across 12 markets, organisational cohesion depends heavily on:

• cross-market consistency;
• data-driven execution;
• strong regional leadership;
• alignment to core "One Brand – One System" standards.

However, the Organisation Structure report highlights cultural fragmentation, particularly evident in:

• Japan's inconsistent discount strategy and execution gaps;
• France's menu complexity;
• divergent operational maturity across regions;
• historical reliance on outdated data systems.

The transition to shared services in Malaysia and Poland is a positive step toward cultural standardisation but may initially increase friction.

Cultural adaptability

DPEL's long history of digital innovation indicates a strong culture of experimentation and operational improvement. This cultural trait is a foundation for transformation—a differentiator versus many global QSR peers.

Assessment: Cultural potential is strong, but current fragmentation reduces operating coherence.

9.5 Management's openness to transformation

Strengths

• Leadership has already initiated structural reforms (store optimisation, supply chain redesign, shared services).
• Technical leadership (CTO/CDO) is well positioned for digital acceleration.
• Regional CEOs have demonstrated resilience through high-intensity restructuring.

Weaknesses

• CEO and CFO departures create ambiguity about long-term ownership of the transformation agenda.
• Historical governance failings indicate a possible reluctance (or inability) to challenge legacy practices.
• Japan's leadership must demonstrate capacity to execute a turnaround of this magnitude.

Overall view

Management demonstrates willingness but requires stronger top-down leadership, refreshed governance, and enhanced discipline to execute a Bain-level transformation programme.

9.6 Bain partnership model recommendations

To ensure successful execution, the following partnership structure is recommended:

1. Immediate CEO appointment

An experienced QSR or multi-market retail operator with turnaround credentials is essential. A Bain-backed search should begin pre-signing, with a shortlist ready before exclusivity.

2. Bain Operating Partner deployment

Role:

• lead the transformation in Japan and France;
• establish performance dashboards;
• enforce unit economics discipline;
• drive cost-out and supply chain workstreams.

3. Executive team strengthening

Recommended additions:

• Group COO with strong store-operations pedigree (role not visible in documents).
• Deputy CIO or Head of Data Governance to address analytics and territory-mapping failures.
• Strengthened HR/People leadership to mitigate labour compliance risk.

4. Incentive redesign

Shift from legacy store-growth incentives to a model anchored in:

• EBITDA improvement;
• SSS recovery;
• cost-out delivery;
• compliance outcomes.

5. Franchisee engagement programme

Rebuild confidence through:

• unit economics transparency
• labour compliance support;
• operational excellence training;
• honest communication about network restructuring.

9.7 Overall management assessment

Conclusion:

Management has strong functional capabilities and high digital maturity but currently lacks the stable leadership, governance discipline, and transformational cohesion required to execute a multi-year recovery without external support. A Bain-led operating model, refreshed leadership, and stronger governance framework are necessary.

10. Transaction overview

10.1 Deal structure and acquisition approach

Transaction concept

The proposed acquisition of Domino's Pizza Enterprises Limited (DPEL) is structured as a public-to-private (P2P) transaction involving the acquisition of 100% of the company's issued share capital. The transaction thesis is built around:

• acquiring DPEL at a distressed valuation (~4.5× EBITDA) relative to global QSR peers;
• executing a multi-year operational turnaround;
• restoring the business to normalised profitability and density-based growth;
• exiting at a typical global franchisor multiple (14×–16×) following stabilisation of Japan, France, and ANZ.

Acquisition mechanics

The uploaded documents contain no explicit reference to proposed financing structure, offer premium, or deal size. However, P2P norms suggest:

• an offer structured at a premium to VWAP;
• funded via a combination of equity and acquisition financing;
• post-close integration of a Bain-led transformation office;
• early stabilisation of management following CEO/CFO departures.

Precedents

Historically, DPEL has been considered a high-quality compounder. Current conditions offer a rare opportunity to acquire the asset at a cyclical low driven by operational missteps rather than brand impairment.

10.2 Strategic rationale for acquisition

1. Deeply mispriced asset with intact brand strength

Despite severe operational turbulence, DPEL's underlying brand, delivery leadership, digital penetration and franchise system strength remain intact. The "Distressed Multiple Gap" is visible in the dashboard's Valuation & Peer Comparison references.

2. Clear operational root causes, not structural decline

Operational failures identified in the acquisition thesis include:

• misaligned territory planning;
• discount dependency in Japan;
• inconsistent regional labour management;
• leadership turnover;
• elevated litigation risk.

These issues are correctable rather than structural, making the asset well-suited for Bain's transformation playbook.

3. Strong platform for multi-country density growth

BENELUX, Germany and ANZ remain density-driven, profitable markets with strong digital adoption.

4. Large turnaround opportunity in Japan and France

These markets represent:

• the largest contributors to earnings decline;
• the largest contributors to re-rating potential;
• the clearest opportunities for Bain's value creation engine.

5. Exit multiple expansion potential

A successful turnaround unlocks a credible pathway from distressed valuation (~4.5×) to mid-teens franchisor multiples (14–16×), underpinning a high-conviction IRR scenario.

10.3 Financial considerations

Current financial position

Financial performance (covered in Section 4) shows:

• revenue stability but margin contraction;
• significant impairment charges tied to FY25 store optimisation;
• high proportion of transformation and restructuring costs;
• uneven EBITDA contribution across regions.

Working capital and liquidity

No specific cash, debt, or liquidity statements were provided in the uploaded documents. Typical P2P diligence would require:

• current net-debt position;
• working-capital seasonality analysis;
• off-balance-sheet franchisee support exposure.

Capex

The FY25–FY27 transformation programme includes:

• supply-chain modernisation;
• shared-services migration;
• technology investments;
• store rationalisation.

Granular capex forecasts were not included in the uploaded documents.

10.4 Legal and regulatory factors

Litigation exposure

Two key legal issues must be priced into the deal model:

ANZ wage underpayment class action

• Judgement reserved; no provision recorded.
• Represents a material downside risk with potential multi-year cost implications.
• Highly relevant during fairness valuation and risk-adjustment modelling.

France – Speed Rabbit Pizza litigation exposure (€279m claim)

• DPEL disputes liability.
• This creates valuation uncertainty and contingent-liability considerations.

Regulatory environment

The business must navigate:

• labour regulation differences across 12 markets;
• safety and emissions regulation for delivery fleets;
• franchise law variations (particularly in Europe);
• competition law considerations for P2P transactions.

No competition authority issues were highlighted in the uploaded documents.

10.5 Key conditions for deal success

1. Immediate leadership stabilisation

CEO and CFO appointments must be secured pre-close or within the first 60 days. Leadership volatility is currently a top-three execution risk.

2. Bain-led Operating Partner oversight

Given the scale of Japan and France turnarounds, embedded operational oversight is required.

3. Labour compliance resolution

A clear plan for resolving the ANZ class action and enforcing franchisee wage governance is mandatory.

4. Operational integrity of the store network

Post-FY25 closures (312 stores) reduced structural risk but gaps remain:

• further closures likely;
• refranchising required in Japan;
• disciplined territory modelling must be enforced.

5. Normalisation of pricing and promotional architecture

Essential to restore unit economics in Japan and France without demand erosion.

6. Digital and supply-chain modernisation

Technology and supply-chain integration is a core lever underpinning cost-out and customer experience improvement.

10.6 Timeline and integration considerations

Pre-signing

• Confirm leadership plan (CEO/CFO).
• Validate class-action range and French litigation exposure.
• Finalise geospatial territory modelling.
• Develop first-year transformation blueprint.

Signing to close

• Establish Transformation Office governance.
• Stand up priority workstreams:
  • Japan turnaround;
  • France rationalisation;
  • franchisee profitability uplift;
  • supply-chain integration.

0–100 days post-close

• Launch cost-out and operational reset programme.
• Begin refranchising in Japan.
• Implement labour compliance operating model.
• Introduce DPEL-wide performance dashboards linked to franchisee P&Ls.
• Deploy management training and cultural alignment initiatives.

Year 1–3

• Deliver network stabilisation;
• Execute digital acceleration initiatives;
• Reinitiate disciplined, density-driven growth;
• Prepare for exit readiness (market selection, KPI normalisation, litigation resolution).

10.7 Overall transaction attractiveness

Conclusion:

The transaction offers compelling value creation potential at entry, underpinned by clear operational levers and a strong global brand foundation. Execution risk is material—but addressable through a Bain-designed and Bain-controlled operating model, with a stabilised leadership team and disciplined governance framework.

11. Key Risks and Mitigants

11.1 Operational risks

11.2 Financial risks

11.3 Legal and compliance risks

11.4 Governance and leadership risks

11.5 Market and competitive risks

11.6 Consolidated view of risks and mitigants

Overall assessment

DPEL exhibits material operational, legal, governance and execution risks, many of which stem from historical strategic errors and weak operational controls. However, these risks are well understood, directly addressable, and consistent with portfolio situations in which Bain has historically created outsized returns.

The value-creation case is compelling only if:

• Leadership stability is restored immediately;
• Labour and litigation risks are fully modelled and mitigated;
• A Bain Operating Partner is embedded in Japan and France;
• Territory and unit-economics discipline is enforced across all markets;
• Transformation governance is established on Day 1.

With these mitigants, the risk–reward profile remains attractive.

12. Recommendation

12.1 Overall recommendation

12.2 Investment thesis confirmation

The core thesis remains compelling:

1. Mispriced asset with structurally attractive fundamentals

DPEL's brand strength, digital leadership and delivery-first operating model remain intact. The current valuation reflects execution failures—not structural weakness.

2. Largest value-creation opportunity in the global QSR sector

Japan and France alone account for the majority of EBITDA compression. Their recovery represents the single greatest uplift to valuation and is directly addressable through Bain's playbook.

3. Deep turnaround levers with measurable, controllable inputs

All major issues—territory planning failures, menu complexity, pricing misalignment, labour governance, leadership instability—are solvable with disciplined, hands-on execution.

4. Platform fit for Bain ownership

The transformation requires:

• leadership reconstruction;
• operational discipline;
• rigorous data governance;
• supply-chain cost optimisation;
• digital scaling—

all areas in which Bain has repeated success.

5. Clear exit multiple expansion case

Stabilisation of Japan, recovery in France, and improved unit economics across the system support a re-rating to global franchisor norms (14–16× EBITDA), enabling strong IRR performance even under conservative revenue growth assumptions.

12.3 Conditions precedent (must be satisfied before exclusivity)

1. Legal and compliance risk clarity

The transaction must not proceed without a quantified and independently validated risk assessment of:

• ANZ wage underpayment class action;
• French Speed Rabbit Pizza (€279m) litigation;
• any forward-looking exposure created by decentralised franchise labour practices.

If these risks prove materially unbounded or uninsurable, Bain should not advance to exclusivity.

2. Leadership stabilisation plan

A credible CEO candidate must be identified or secured pre-exclusivity, with a CFO succession plan established. The current leadership vacuum is incompatible with a high-complexity multi-market turnaround.

3. Japan turnaround feasibility validation

A rapid diagnostic of Japan operations must confirm that:

• pricing architecture;
• menu simplification;
• labour intensity;
• delivery fleet efficiency; and
• franchising strategy

can be addressed within a 24–36 month timeline.

4. Territory model reconstruction

Pre-exclusivity, we require early evidence that the territory-planning failure is correctable through:

• updated demographic and geospatial data;
• centralised modelling;
• disciplined control mechanisms.

This includes validation that no underlying structural constraints prevent footprint recovery or future expansion.

5. Financial integrity and liquidity review

As cash, debt and liquidity positions were not provided in the uploaded documents, confirmation of balance-sheet resilience is required. Deal feasibility is dependent on:

• clear liquidity runway;
• manageable net-debt profile;
• sustainable covenant structure post-close.

12.4 Reasons to proceed

Strong upside case

The turnaround potential in Japan and France alone creates substantial upside. Early improvements in ANZ and BENELUX further anchor the valuation floor.

Controlled execution environment

Bain's ability to deploy Operating Partners, enforce governance discipline, rebuild leadership structures, and introduce robust data models makes the execution risk manageable.

Defensible digital and delivery moat

The digital ordering platform, routing algorithms and loyalty capability provide sustainable competitive advantage, even in inflationary environments.

Favourable market timing

Market sentiment is fatigued, and current valuation embeds pessimism that overstates structural risk. This creates an attractive entry point unlikely to persist once early turnaround signals appear.

12.5 Reasons to exercise caution

High legal and compliance exposure

Both wage and France litigation represent material uncertainties. Fully risk-adjusted valuation must incorporate upper-bound scenarios.

Leadership disruption

The departure of the CEO, former CEO, CFO and ANZ CEO within a short period creates governance instability that must be addressed immediately post-close.

Cultural fragmentation

Significant differences in operational maturity, incentives and execution style across 12 markets may require deeper cultural integration than typical QSR turnarounds.

Macroeconomic unpredictability

Inflationary pressure (labour and food cost), especially in Japan and Europe, may limit pricing power in the early transformation window.

12.6 Final judgement

On balance, we recommend progressing to the next phase, subject to the pre-conditions above.

The transaction presents a rare combination of:

• mispricing;
• correctable operational failings;
• attractive global footprint;
• strong digital advantage;
• high alignment with Bain capabilities;
• substantial re-rating potential.

Execution risk remains elevated, but with appropriate controls—chiefly leadership stabilisation, governance reform, rigorous legal diligence, and a dedicated Bain Operating Partner—the risk–return profile is attractive.

12.7 Next steps

Immediate priorities:

• Initiate deep legal diligence on wage and France litigation.
• Advance CEO and CFO succession processes.
• Complete Japan and France operational deep dives.
• Finalise financial model with downside litigation scenarios.
• Stand up preliminary Transformation Office structure.

Decision gate:

Proceed to exclusivity only if litigation assessment, leadership plan and Japan feasibility tests meet the thresholds defined above.