Domino's Pizza (DPZ) Q3 2026: U.S. Store Target Cut to 125–150

Domino's Pizza (DPZ) cut its 2026 U.S. store opening target in its third-quarter 2026 results, released on October 13, 2026, for the 12 weeks ended September 6. Profit grew faster than sales, but the outlook for U.S. store openings and same-store sales was lowered [1][2]. Coming into the quarter, the open questions were whether U.S. average ticket would stop falling, whether the company could open about 175 net U.S. stores this year, whether supply chain margin would keep improving, and whether international same-store sales would turn positive. U.S. same-store sales rose only 0.3% as average ticket kept falling; the U.S. store target was cut to 125–150; supply chain gross margin rose to 12.2%; and international same-store sales grew 0.2%, with the full-year view lowered to roughly flat [1][2]. Overall, revenue growth now leans more on new stores and profit growth leans more on the supply chain, while pressure on franchisee profits has started to slow openings.

Domino's is the world's largest pizza company, and franchisees run the vast majority of its stores; of 7,257 U.S. stores, only 187 are company-owned [1]. The company charges U.S. franchisees a royalty of 5.5% of sales [3] and sells dough and ingredients to franchisees in the U.S. and Canada. Third-quarter operating income was $241.8 million, up 8.3% [4].

U.S. store opening target cut to 125–150

Domino's lowered its 2026 U.S. net store growth target from about 175 to 125–150, saying lower franchisee profitability had slowed development pipelines, while closures remained in the single digits [2]. The U.S. added 26 net stores in the third quarter, with 28 openings and 2 closings, for 71 net stores over the first three quarters [1]. Under the new target, the fourth quarter needs 54 to 79 net openings.

Company-owned store data show that store-level profitability is still declining. Third-quarter company-owned store gross margin was 12.0%, down 4.3 percentage points from a year earlier, as labor, food and insurance costs all rose [1]. There is no official data on franchisees' own profits.

Slower openings will weigh on revenue over the coming quarters. U.S. franchise royalties rose 5.4% in the quarter, mainly from newly opened stores [1]. Opening roughly 25 to 50 fewer stores this year would reduce the contribution of new stores to 2027 royalties and supply chain volumes. That weakens the earlier view that franchisee pressure was only short-lived.

Orders up, average ticket down for a second quarter

U.S. same-store sales rose just 0.3% in the third quarter: transaction counts increased, while average ticket declined for a second consecutive quarter, against a high prior-year comparison of 5.2% growth [1].

Management's explanation for the weaker ticket has changed. In the second quarter, the company blamed a product line that did not resonate with customers; this quarter, it said consumers under budget pressure are buying fewer items per order [2]. Average ticket kept falling after the second-half switch to a stuffed-crust value offer, so the view that this was a fixable product misstep now has little support. The company expects full-year U.S. same-store sales growth in the low single digits, toward the low end, and the new product The Domino has been on sale too briefly to show results [2]. U.S. stores segment adjusted operating income rose 3.1%, slower than the company overall [1].

International recovery pushed to 2027

International royalty growth still comes mainly from new stores. International same-store sales, excluding currency, rose 0.2% in the third quarter, and net store growth was 149, down from 183 in the second quarter; international royalties were $83.7 million, up about 6.8% excluding currency [1].

The company lowered its 2026 international same-store sales outlook from low-single-digit growth to roughly flat, mainly because of pressure at its largest master franchisee, Domino's Pizza Enterprises (DPE), which it does not expect to improve meaningfully until 2027 [2]. DPE accounts for about 24% of international stores [5]. The CEO said Domino's would be open to bringing in other operators in specific markets if DPE cannot deliver results [2].

Procurement gains lift supply chain profit

The supply chain was the largest source of profit growth this quarter. Gross margin rose from 11.3% to 12.2%, which the company attributed mainly to procurement productivity [4]; food costs fell to 70.4% of revenue, higher fuel costs offset part of the gain, and segment adjusted operating income rose 19.6% [1].

Order volume supports the improvement. After adjusting for the scope shift from refranchised company stores, supply chain revenue grew about 5.8%, ahead of the 2.2% food basket price increase, leaving about 3.6 percentage points from order volume and mix [1]. Higher order counts help the supply chain even as franchisees absorb a lower average ticket; if the company gives margin back to franchisees, part of this gain could reverse.

Conclusion

The third-quarter report weakens the revenue growth outlook, but profit conversion remains strong, with the increase in operating income coming mainly from the supply chain and royalties from stores already open [4]. Free cash flow for the first three quarters was $459.8 million, down 7.2%, mainly because of the timing of advertising payments [4]. The company expects to refinance about $1.32 billion of notes with an anticipated repayment date of July 2027 at higher interest rates [1]. The next questions are whether U.S. openings meet the fourth-quarter target, whether average ticket stabilizes, whether supply chain gains continue, and whether the roughly 800 international store target is met.

Sources

[1] DPZ 10-Q filed 2026-10-13, 2026-10-13, Domino's Pizza Form 10-Q quarterly report, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001286681&type=10-Q [2] DPZ 3Q26 earnings call 2026-10-13 · Drillr summary, 2026-10-13, third-quarter earnings call summary (Drillr), https://ir.dominos.com/ [3] DPZ 10-K filed 2026-02-23 · U.S. franchise agreements, 2026-02-23, Domino's Pizza Form 10-K annual report, https://www.sec.gov/Archives/edgar/data/1286681/000119312526062321/ [4] DPZ 8-K filed 2026-10-13, 2026-10-13, Domino's Pizza Form 8-K earnings release, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001286681&type=8-K [5] DPZ 10-K filed 2026-02-23 · largest franchisee, 2026-02-23, Domino's Pizza Form 10-K annual report, https://www.sec.gov/Archives/edgar/data/1286681/000119312526062321/