Question

ADM2 Domino's Pizza: Franchise segment return on investment Domino's Pizza, Inc. is the second-largest pizza chain in the world. In the United States, Domino's has 377 company-owned restaurants and 4,690 REAL WORLD franchised restaurants. In addition, Domino's has a supply chain that manufactures and delivers dough and other food products to all the domestic restaurants. Franchisees are required to purchase food products from the Domino's supply chain as part of their franchise agreement. Thus, in the United States, Domino's has three segments: Company-Owned Restaurants, Franchised Restaurants, and Supply Chain Operating data for these three segments in the United States are as follows (in millions): Franchised Restaurants Company-Owned Restaurants $348 267 25 Supply Chain $1.262 1.132 Sales Cost of sales General and administrative expenses * Invested assets $230 125 100 30 146 A. Determine the income from operations for each segment. B. Determine the profit margin for each segment. (Round percentages to one decimal place.) C. Determine the investment turnover for each segment. (Round to one decimal place.) D. Use the DuPont formula to determine the return on investment for each segment. (Round to nearest whole percent.) E. = Explain Domino's business model and how it is related to ROI in each segment.

Answer 1

A. Determine the income from operations from each segment as shown below: Franchise Supply Chain Company- Owned Details Restaurants Restaurants (S in millions) (S in millions) (S in millions) Sales [a] $348 $2301 $1.262 Cost of sales [b] $267) SO sol $1,132 General and administrative expenses [c] | $125 $100 Income from operations (a - b -c) $56 $105 $30 $25 B. Determine the profit margin for each segment as shown below: Details Company- Franchise Owned Supply Chain Restaurants Restaurants (S in millions) (S in millions) (S in millions) $348 $230 $1,262 $56 $105 $300 16.1% 45.7% 2.4% Sales [a] Income from operations [b] Profit margin [ ba]

Determine the investment turnover for each segment as shown below: Details Company- Franchise Owned Supply Chain Restaurants Restaurants (S in millions) (S in millions) (S in millions) $348 $230 $1.262 $320 $30 $146| 10.9 7.7 8.6 Sales [a] Invested assets [b] Investment turnover [a b] D. Determine the return on investment using DuPont formula as shown below: Details Company- Franchise Owned Supply Chain Restaurants Restaurants (S in millions) (S in millions) (S in millions) 16.1% 45.7% 2.4% 10.9 7.7 8.6 175% 352% 21% Profit margin [a] Investment turnover [b] Return on Investment [a b]