DPZDomino's

You present the non-GAAP measure of EBITDA per store in your Annual Report to Security Holders. Please revise to include the disclosures required by Item 100(a) of Regulation G.

The Company supplementally advises the Staff that the estimated EBITDA per U.S. franchise store is a statistical measure that is not derived from any financial data contained in the Company’s financial statements. As a result, in accordance with Rule 101(a)(2) of Regulation G, the referenced metric is not within the definition of non-GAAP financial measures because it is not a numerical measure of the Company’s historical or future financial performance, financial position or cash flows and, further, it is a statistical measure calculated using exclusively operating measures or other measures

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(namely an internal Company estimate of estimated U.S. franchisee EBITDA based on unaudited results self-reported by U.S. franchise owners) that are not non-GAAP financial measures. The Company respectfully advises the Staff that, as noted above, estimated EBITDA per U.S. franchise store is not a numerical measure of the Company’s (registrant’s) historical or future financial performance, financial position or cash flows, but is rather an estimate of the average profitability of the Company’s U.S. franchise stores, an operating measure that reflects the general health of the Company’s U.S. franchise business.

In response to the Staff’s comment, in all future letters to shareholders or other public disclosures that contain this statistical measure, the Company will include additional detail clarifying the fact that this statistical measure is an internal Company estimate based on unaudited results self-reported by U.S. franchise owners.

I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please call me at (734)-930-3030.

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Please disclose the business reasons for changes between periods in each segment's ASC 280 profit measure and amounts in the Other column in Note 12 of your financial statements. In circumstances where there is more than one business reason for the change, please quantify the incremental impact of each individual business reason discussed on the overall change in the line item.

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Refer to Item 303(a)(3) of Regulation S-K and SEC Release No. 33-8350.

The Company acknowledges the Staff’s comment and respectfully advises the Staff that it will include in future filings with the Commission expanded disclosure of the business reasons for changes between periods in each segment’s ASC 280 profit measure. As disclosed in Note 12 of the 2019 Form 10-K, the Company evaluates the performance of its segments and allocates resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income.

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As will be further discussed in the Responses below, the Company’s chief operating decision maker evaluates the performance of its segments and allocates resources to them based on each segment’s respective Segment Income, not income from operations, and the Company’s chief operating decision maker does not review income from operations (inclusive of depreciation and amortization, losses and gains from sales/disposition of assets, non-cash equity-based compensation expense or recapitalization-related expenses) for each segment.

The Company historically has included in Management’s Discussion and Analysis of Financial Condition and Results of Operations a review of material fluctuations by financial statement line item (revenues, cost of sales and operating margin, general and administrative expenses, interest expense, net and provision for income taxes). The Company believes such disclosure is informative for investors who focus on top-line revenue growth and margins underlying the performance of the Company’s business. As such, the Company will continue to include such disclosure in future filings, and such discussion will be supplemented through expanded disclosure of changes in each segment’s Segment Income.

Below, for illustrative purposes, is the proposed disclosure the Company intends to include in future filings which is based on the Company’s 2019 financial results compared to its 2018 financial results as reported in the 2019 Form 10-K. This additional disclosure regarding the Company’s segment profit measure will be added immediately following the changes to the provision for income taxes and before the discussion of liquidity and capital resources on page 35.

Proposed Disclosure:

Segment Income. We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. Segment Income for each of our reportable segments is summarized in the table below. Other Segment Income primarily includes corporate administrative costs that are not allocable to an operating segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.

2019

2018

U.S. Stores

$

361.7

336.0

Supply Chain

199.8

176.7

International Franchise

187.3

174.7

Other

(36.7

)

(43.5

U.S. Stores. U.S. Stores Segment Income increased $25.7 million, or 7.6%, in 2019. U.S. Stores revenues increased

$8.0 million due to higher U.S. same store sales and an increase in the average number of U.S. franchised stores open during the year, which led to higher U.S. franchise advertising and royalties and fees revenues totaling $69.3 million.

These increases in revenues were partially offset by lower U.S. Company-owned stores revenues of $61.2 million resulting primarily from the 2019 Store Sale. Additionally, lower cost of sales in our U.S. Company-owned stores of

$52.0 million, resulting primarily from the 2019 Store Sale, also contributed to the increase in U.S. Stores Segment Income. This increase in U.S. Stores Segment Income was partially offset by higher U.S. franchise advertising expenses of

$32.3 million and increased investments in technological initiatives to support U.S. Stores technology.

Supply Chain. Supply Chain Segment

Income increased $23.1 million, or 13.1%, in 2019 due primarily to the $23.5 million increase in operating margin described above.

International Franchise. International Franchise Segment Income increased $12.6 million, or 7.2%, in 2019 due primarily to a $16.3 million increase in revenues resulting from an increase in the average number of international stores open during 2019 as well as higher same store sales. This increase in revenues was partially offset by higher investments in technological initiatives to support international franchise technology.

Other. Other Segment Income increased $6.8 million, or 15.6%, in 2019 due to higher corporate administrative costs allocated to our segments as compared to 2018. The increase in allocated costs in 2019 was due primarily to higher investments in technological initiatives to support technology for our U.S. and international franchise stores.

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Please disclose in greater detail the types of amounts included in the Other column of your segment reconciliation in arriving at the total for each segment profit measure. Please also provide the segment disclosures discussed in ASC 280-10-50-22(e) through (j) or tell us how you concluded they need not be provided.

As disclosed in Note 12 on page 71 of the 2019 Form 10-K, the Company has historically disclosed that “the

“Other” column as it relates to Segment Income and income from operations information below primarily includes corporate administrative costs.”

The Company acknowledges the Staff’s comment and respectfully advises the Staff that it will include the following expanded disclosures of the types of amounts included in the “Other” column in future filings with the Commission.

“The

“Other” column as it relates to Segment Income below primarily includes corporate administrative costs that

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are not allocable to an operating segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.”

With respect to the segment disclosures required in ASC 280-10-50-22(e) through (j), the Company respectfully advises the Staff that sections (g) and (i) are not applicable to the Company. With respect to the remaining sections, the Company has provided responses below:

ASC 280-10-50-22(e)-(j)

A public entity shall report a measure of profit or loss and total assets for each reportable segment. A public entity also shall disclose all of the following about each reportable segment if the specified amounts are included in the measure of segment profit or loss reviewed by the chief operating decision maker or are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss (see Example 3, Case B [paragraph 280-10-55-48]):

e. Depreciation, depletion, and amortization expense

ASC 280-10-55-12

Depreciation and Amortization Included in Segment Reports

The chief operating decision maker may evaluate the performance of its segments based on earnings before interest, taxes, depreciation, and amortization. (Emphasis added.)

The Company respectfully advises the Staff that depreciation and amortization expense are not included in the measure of Segment Income reviewed by the Company’s chief operating decision maker. Further, depreciation and amortization expense by segment are not regularly provided in the management reports provided to the Company’s chief operating decision maker (ASC 280-10-55-12). Depreciation and amortization expense are reflected within the total income from operations amount on the consolidated income statement of the management reports and are not broken out separately (in total or by segment). Accordingly, the Company has not disclosed depreciation and amortization expense by segment as they are (i) not included in the measure of Segment Income and (ii) not regularly reviewed or included in the management reports provided to the Company’s chief operating decision maker.

f. Unusual items as described in paragraph 220-20-45-1

ASC 220-20-45-1 Presentation of Unusual or Infrequently Occurring Items

A material event or transaction that an entity considers to be of an unusual nature or of a type that indicates infrequency of occurrence or both shall be reported as a separate component of income from continuing operations. The nature and financial effects of each event or transaction shall be presented as a separate component of income from continuing operations or, alternatively, disclosed in notes to financial statements. Gains or losses of a similar nature that are not individually material shall be aggregated. Such items shall not be reported on the face of the income statement net of income taxes. Similarly, the EPS effects of those items shall not be presented on the face of the income statement.

The reconciliation of total Segment Income to total income before provision for income taxes includes gains and losses from the sale and disposal of assets as well as certain recapitalization-related expenses. The Company respectfully advises the Staff that these amounts are not included in the measure of Segment

Income reviewed by the Company’s chief operating decision maker. Further, the Company does not allocate recapitalization-related expenses by segment, and accordingly, it is not regularly provided in the management reports provided to the

Company’s chief operating decision maker. The Company does not consider these amounts to be material. While gains and losses from sales of assets are attributable to the segments to which the underlying assets disposed relate, these amounts are not regularly provided in the management reports provided to the Company’s chief operating decision maker. The Company also does not consider these amounts to be material. Accordingly, the Company has not disclosed these amounts by segment as they are (i) not included in the measure of Segment Income and (ii) not regularly reviewed or included in the management reports provided to the Company’s chief operating decision maker.

h. Income tax expense or benefit

The

Company respectfully advises the Staff that income tax expense is not included in the measure of Segment Income reviewed by the Company’s chief operating decision maker. Further, the Company does not allocate income tax expense by segment, and accordingly, it is not regularly provided in the management reports provided to the Company’s chief operating decision maker. Accordingly, the Company has not disclosed income tax expense by segment as it is (i) not included in the measure of Segment Income and (ii) not regularly reviewed or included in the management reports provided to the Company’s chief operating decision maker.

j. Significant noncash items other than depreciation, depletion, and amortization expense.

The reconciliation of total Segment Income to total income before provision for income taxes includes noncash equity-based compensation expense. The

Company respectfully advises the Staff that these amounts are not included in the measure of Segment Income reviewed by the Company’s chief operating decision maker. Further, the Company does not allocate noncash equity-based compensation expense by segment, and accordingly, it is not regularly provided in the management reports provided to the Company’s chief operating decision maker. Accordingly, the Company has not disclosed noncash equity-based compensation expense by segment as it is (i) not included in the measure of Segment Income and (ii) not regularly reviewed or included in the management reports provided to the Company’s chief operating decision maker.

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Please tell us your basis for presenting two measures of each segment's profit (segment income and income from operations). Also, explain why the segment income measure is permitted to be disclosed, when the income from operations measure appears to be most consistent with GAAP. Refer to ASC 280-10-50-27 and 50-28.

The Company respectfully advises the Staff that as disclosed in Note 12 to the 2019 Form 10-K on page 71 of the 2019 Form 10-K, “the Company evaluates the performance of its segments and allocates resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income.”

ASC 280-10-50-27, 28

The amount of each segment item reported shall be the measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segment and assessing its performance.

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Adjustments and eliminations made in preparing a public entity’s general-purpose financial statements and allocations of revenues, expenses, and gains or losses shall be included in determining reported segment profit or loss only if they are included in the measure of the segment’s profit or loss that is used by the chief operating decision maker. (Emphasis added) Similarly, only those assets that are included in the measure of the segment’s assets that is used by the chief operating decision maker shall be reported for that segment. If amounts are allocated to reported segment profit or loss or assets, those amounts shall be allocated on a reasonable basis.

If the chief operating decision maker uses only one measure of a segment’s profit or loss (emphasis added) and only one measure of a segment’s assets in assessing segment performance and deciding how to allocate resources, segment profit or loss and assets shall be reported at those measures (emphasis added). If the chief operating decision maker uses more than one measure of a segment’s profit or loss and more than one measure of a segment’s assets, the reported measures shall be those that management believes are determined in accordance with the measurement principles most consistent with those used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

The Company respectfully advises the Staff that its chief operating decision maker evaluates the performance of its segments and allocates resources to them based on each segment’s respective Segment Income and not income from operations. As noted in Response to Comment 2, above, the Company’s chief operating decision maker does not review income from operations (inclusive of depreciation and amortization, losses and gains from sales/disposition of assets, non-cash equity-based compensation expense or recapitalization-related expenses) for each segment. These financial statement line items which are excluded from the Company’s measure of Segment Income are only included in total consolidated income from operations within the management reports regularly provided to the Company’s chief operating decision maker.

The Company respectfully advises the Staff that it has historically disclosed income from operations by segment within the Notes to the financial statements to provide additional information it thought may be useful in assisting investors in understanding the reconciliation of Segment Income to income before provision for income taxes, as income from operations is included in the reconciliation from total Segment Income to income before provision for income taxes as required under ASC 280-10-50-30.

ASC 280-10-50-30

A public entity shall provide reconciliations of all of the following:

a. The total of the reportable segments’ revenues to the public entity’s consolidated revenues (emphasis added).

b. The total of the reportable segments’ measures of profit or loss to the public entity’s consolidated income before income taxes (emphasis added) and discontinued operations. However, if a public entity allocates items such as income taxes to segments, the public entity may choose to reconcile the total of the segments’ measures of profit or loss to consolidated income after those items.

The Company has included the required reconciliation of total Segment Income to income before provision for income taxes, inclusive of depreciation and amortization, losses and gains on sale/disposal of assets, non-cash equity-based compensation expense, recapitalization-related expenses, interest income and interest expense.

However, in response to the Staff’s comment and to adhere to the guidance provided in ASC 280, the

Company will remove the disclosure of income from operations by segment from future filings with the Commission. The Company will continue to disclose total income from operations in the reconciliation from total Segment Income to income before provision for income taxes.

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I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please call me at (734) 930-3149.

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You mention that your emphasis on technology innovation helped you generate more than half of U.S. sales from digital channels in 2016, as well as reach an estimated $5.6 billion in global digital sales. Please provide additional detail to put this information in context by providing information regarding overall domestic and global sales.

Rest of the question

Further, please elaborate upon the digital channels in which your sales are made, making material distinctions between how those channels impact your business, as appropriate.

The Company supplementally advises the Staff that it believes that technology innovations have helped to generate global retail sales for the Domino’s

Pizza system by providing efficient and convenient ordering methods for its customers. As our technology platforms continue to expand and resonate with customers, we have seen increases in global retail sales through these technology platforms at

Domino’s Pizza restaurants around the globe. Retail sales from franchise stores are reported to the Company by its franchisees and are not included in Company revenues.

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Retail sales are generally reported and related royalties paid to the

Company based on a percentage of retail sales, as specified in the related standard franchise agreement (generally 5.5% of domestic franchise retail sales and, on average, 3.0% of international franchise retail sales). Retail sales from franchise stores generated through the Company’s technology platforms also result in digital transaction revenues to the Company.

In Fiscal 2016, global retail sales (which are total retail sales at Company-owned and franchise stores worldwide) totaled nearly $10.9 billion. The following table breaks down the Company’s Fiscal 2016 global retail sales between domestic and international as well as between digital and non-digital. Digital retail sales include retail sales from our online ordering website through both mobile (e.g. iPhone or Android app) and non-mobile (e.g. desktop computer) ordering channels. Non-digital retail sales include all other retail sales such as walk-ins and telephone call orders.

$ in billions, columns may not foot due to rounding

Retail

Sales

Digital

Non-Digital

Domestic

$

5.3

%

3.0

2.3

International

5.5

2.6

2.9

Total

10.9

100

5.6

5.2

As reflected in the above table, approximately 52% of global retail sales were from digital channels. The majority of digital orders are placed through our online ordering website or smartphone applications. The Company supplementally advises the Staff that there is no distinction among the various digital channels in terms of royalty and digital transaction revenues.

Specifically, the Company earns the same amount of royalty and digital transaction revenues regardless of the digital channel utilized by the customer.

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I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please call me at (734) 930-3205.

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Please describe the significant terms and provisions of the “Piece of the Pie” rewards program and the amounts recorded for 2015. Please tell us how you account for the program, and if material, your consideration of disclosing your accounting policy in the footnotes to your financial statements.

to

Comment 1:

The Company supplementally advises the Staff that the Company introduced its Piece of the Pie loyalty program in 2015. As part of the Piece of the Pie loyalty program, Domino’s Pizza customers in the United States may earn loyalty points for various reasons, primarily for making on-line purchases. For example, each time a participating customer places and pays for an on-line order with a ticket price of ten dollars ($10) or more, the customer will earn ten loyalty points.

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When that customer earns 60 points, he or she may redeem the points for a medium hand tossed or thin crust two-topping pizza. Each store in the United

States (both franchised and Company-owned) is responsible for fulfilling the orders placed through a redemption of loyalty points at that store, regardless of whether the loyalty points were earned at that store or another store.

Domino’s Pizza stores in the United States are primarily franchise-owned. As of January 3, 2016, there were 4,816 domestic franchise store locations and 384 domestic Company-owned store locations. Domino’s Pizza franchisees are independent business owners and their retail sales are not our revenues. Accordingly, loyalty retail sales at domestic franchise stores are franchisees’ revenues and fulfillment of loyalty orders are franchisees’ costs. The Company’s consolidated financial results only include accounting for loyalty retail sales at its domestic Company-owned store locations.

Based on the guidance within ASC 605, Revenue Recognition, the Company records revenue for the portion of domestic Company-owned store retail sales that relates to products purchased by the customer, and records deferred revenue for the portion of the domestic Company-owned store retail sales that relates to loyalty points earned. As loyalty points are redeemed, the Company recognizes the deferred revenue and the related expense to fulfill the order in its consolidated statement of income.

In fiscal 2015, the Company deferred approximately $1.3 million of its domestic Company-owned store revenues related to its Piece of the Pie loyalty program and recognized approximately $0.3 million in domestic Company-owned store revenues upon customers’ redemption of loyalty points, resulting in a net deferred revenue liability of approximately $1.0 million on the Company’s consolidated balance sheet as of January 3, 2016. This amount represented approximately 0.2% of domestic Company-owned store revenues and less than 0.1% of the

Company’s consolidated revenues for fiscal 2015. Additionally, this net deferred revenue liability amount represented less than 0.3% of current liabilities and less than 0.1% of total liabilities as of January 3, 2016.

Based on the foregoing, the Company determined that the amounts related to its Piece of the Pie loyalty program were not material to its fiscal 2015 consolidated financial statements and did not disclose the accounting policy for the Piece of the Pie loyalty program in the footnotes to its consolidated financial statements. The Company will continue to monitor the amounts associated with its

Piece of the Pie loyalty program to assess whether financial statement disclosure is warranted in future filings.

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We note your “Piece of the Pie” rewards program will now include an opportunity for eligible members to be entered into drawings with a chance to receive ten shares of your stock with no purchase necessary. Please tell us how you plan to account for this part of your program and the fees to be paid to Fidelity. Also please show us your proposed disclosure for the footnotes to your financial statements.

Rest of the question

Further, please separately address your accounting and proposed disclosure as it relates to #PieceofthePieContest.

The Company supplementally advises the Staff that its Piece of the Pie Contest, which was introduced in December 2016, includes an award of ten shares of

Company common stock to each of the 25 contest winners per month for a 12-month period, which will result in a maximum of 3,000 shares to be awarded to contest winners.

Rest of the answer

The Company estimates that the expense associated with this portion of the contest will be approximately $500,000 (based on current share prices for the Company’s common stock).

In order to account for this part of the

Piece of the Pie Contest, a consolidated subsidiary of the Company will record an expense (approximately $500,000) for the cost of such shares and will either provide Fidelity with the funds necessary to purchase the required number of shares of the

Company’s common stock on the open market or will provide Fidelity with the necessary number of newly-issued shares. However, it is not expected that the Company will issue new shares of its common stock as part of this program. Fidelity will then deposit the shares in the applicable contest winner’s brokerage account at Fidelity. The Company has not paid and does not expect to pay fees to Fidelity to administer this program. Based on the foregoing, the Company has determined that the amounts related to this portion of the contest will not be material to its consolidated financial statements and, therefore, does not intend to include footnote disclosures related to this portion of the contest in its consolidated financial statements.

Separately, the #PieceofthePieContest includes awarding each of 50 contest winners with $10,000 in cash. The expense associated with this portion of the contest is expected to be $500,000. In order to account for this portion of the contest, a consolidated subsidiary will record the $500,000 expense and the Company will provide each contest winner with a check for $10,000. Based on the foregoing, the Company has also determined that the amounts related to this portion of the contest will not be material to its consolidated financial statements and, therefore, does not intend to include footnote disclosures related to this portion of the contest in its consolidated financial statements.

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I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please call me at (734) 930-3205 or (586) 246-8598.

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