PHOTO: Domino’s FILE
Domino’s Store Closures Spark Concerns for Australian Commercial Property Market
Over 200 Stores Shutting Down – What It Means for Retail Spaces
In a major shake-up, Domino’s Pizza Enterprises is closing more than 205 underperforming stores worldwide, including locations in Australia, raising concerns about the state of commercial property demand.
The decision, announced to the Australian share market, is part of a strategy review aimed at simplifying operations and closing stores that expanded rapidly during the Covid-fueled delivery boom.
What’s Behind the Domino’s Shutdowns?
Domino’s CEO Mark van Dyck confirmed that 172 closures will occur in Japan, with others shutting down in France and Australia.
🔴 Overexpansion: Many stores opened in 2020-21 when lockdowns caused a surge in takeaway demand.
🔴 Post-Pandemic Drop: Sales have since declined, and higher input costs are squeezing profits.
🔴 Retail Market Shift: The closures reflect broader struggles in the commercial property sector as demand for physical retail spaces changes.
How This Affects Australia’s Property Market
🏢 Vacant Retail Spaces: As Domino’s exits key locations, landlords may struggle to find new tenants, impacting shopping strips and mall operators.
📉 Retail Leasing Challenges: Higher rent costs and shifting consumer habits could make it harder for new businesses to fill these vacancies.
🏠 Impact on Commercial Investments: Investors in retail properties may see fluctuating rental yields as big brands reassess their footprints.
Will More Retailers Follow Suit?
Analysts suggest Domino’s decision is a logical move to cut losses, but it raises bigger questions about Australia’s retail property landscape.
📉 Recent trends show rising vacancy rates in key commercial hubs.
📈 Online ordering and food delivery dominance continue to change how businesses operate.
💰 Smaller food operators may benefit from prime locations becoming available.
What’s Next for Domino’s in Australia?
Despite store closures, Domino’s remains committed to key markets, with CEO Mark van Dyck saying:
“Some of our Covid-period expansion resulted in stores that simply weren’t optimal… removing them will strengthen our network.”
The company is focusing on long-term profitability, with an expected pre-tax net profit of $84M-$86M for 2024-25 and a 55.5-cent dividend for shareholders.
What It Means for Property Investors & Business Owners
🏠 Commercial landlords may need to rethink rental models as big-name tenants adjust.
🍕 Food businesses could take advantage of new leasing opportunities in prime areas.
📊 Retail property investors should watch market trends to navigate potential risks.
💬 Do you think more retail closures are coming? Share your thoughts in the comments!
SOURCE: THE DAILY MAIL