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Domino's Pizza: Franchise segment
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 franchised restaurants. In addition, Domino's lias 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):
Company-Owned Restaurants | Franchised Restaurants | Supply Chain | |
Sales | $348 | $230 | $1,262 |
Cost of sales | 267 | 1,132 | |
General and administrative expenses* | 25 | 125 | 100 |
Invested assets** | 32 | 30 | 146 |
*Allocation to segments assumed
**Allocation between Company-Owned and Franchised assumed
- 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.
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Chapter 23 Solutions
Financial and Managerial Accounting - With CengageNow
- Panera Bread Company (PNRA) operates over 2,000 bakery-cafe locations throughout the United States and Canada and serves over 9 million customers per week. Paneras operations are divided into the following segments: Company-Operated Bakery-Cafes Franchised Bakery-Cafes Fresh Dough and Other Products The Fresh Dough and Other Products segment supplies fresh dough, produce, tuna, and other products to the company-operated and franchised cafes. Recent data (in millions) for each of these segments are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Which segment has the highest profit margin, investment turnover, and return on investment? Explain why. e. If franchised cafes are more profitable, why would Panera operate company- owned cafes? MAD 24-3 Analyze Papa Johns International, Inc.Obj. 6 Papa Johns International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45 countries. The company operates primarily as a franchisor with 4,353 franchised restaurants and 744 company-operated restaurants. Recent data (in millions) for the company-operated and North America franchised restaurants are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Analyze and interpret the results of (a), (b), and (c). MAD 24-4 Compare Panera Bread and Papa JohnsObj. 6 Compare Panera Bread (PNRA) and Papa Johns (PZZA) using your computations from MAD 24-2 and MAD 24-3.arrow_forwardPapa Johns International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45 countries. The company operates primarily as a franchisor with 4,353 franchised restaurants and 744 company-operated restaurants. Recent data (in millions) for the company-operated and North America franchised restaurants are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Analyze and interpret the results of (a), (b), and (c).arrow_forwardLeapin’ Larry’s Pre-Owned Cars has two divisions, Operations and Financing. Operations is responsible for selling Larry’s inventory as quickly as possible and purchasing cars for future sale. Financing Division takes loan applications and packages loans into pools and sells them in the financial markets. It also services the loans. Both divisions meet the requirements for segment disclosures under accounting rules. Operations Division had $74 million in sales last year. Costs, other than those charged by Financing Division, totaled $32 million. Financing Division earned revenues of $23 million from servicing loans and incurred outside costs of $24 million. In addition, Financing charged Operations $22 million for loan-related fees. Operations’s manager complained to Larry that Financing was charging twice the commercial rate for loan-related fees and that Operations would be better off sending its buyers to an outside lender. Financing's manager replied that although commercial…arrow_forward
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