Dominos Pizza Inc is the secondlargest pizza chain in the wo

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.)

Solution

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%