Domino\'s Pizza, Inc. is the second-largest pizza chain in the world. In the Uni

Question

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 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): $348 267 25 32 Supply Chain $1,262 1,132 100 146 $230 Sales Cost of Sales General and administrative expenses* Invested assets Allocation to segments assumed 125 30 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.)

Explanation / Answer

Calculate following :

company owned restaurants Franchised restaurants Supply chain Sales 348 230 1262 Cost of sales 267 1132 General and administrative expense 25 125 100 a) Income from operation 56 105 30 b) Profit margin 16.1% 105/230 = 45.7% 30/1262 = 2.4% c) Investment turnover 348/32 = 10.9 230/30 = 7.7 1262/146 = 8.6 d) ROI 16.1*10.9 = 175% 45.7%*7.7 = 352% 2.4*8.6 = 21%

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