Why Domino's is a dud in the Nordics

What happened to Domino's in Iceland, Sweden and Norway
What happened to Domino's in Iceland, Sweden and Norway

Iceland is a notoriously tough market for international restaurant chains to break into. Domino's has been the exception — the American pizza chain has 37.6% market share in Iceland's fast-food industry, according to Meniga, an Icelandic digital banking software vendor.

But that affinity doesn't extend to other Nordic countries. In Sweden and Norway, Domino's is struggling.

Domino's Pizza Group, the U.K.-based franchise of American chain Domino's Pizza Inc., operates restaurants in Iceland, Norway and Sweden. In October 2019, Domino's Pizza Group announced it would exit those countries. Norway and Sweden haven't been profitable markets for Domino's, and are in different stages of development.

High labor costs, weakening economic conditions in Northern Europe and growing competition for a small delivery market contributed to Domino's weak performance in those countries.

On a call with analysts, Domino's Pizza Group CEO David Wild said, "whilst these markets are attractive, we are not the best owners of the businesses."

Analysts say the future of Domino's in the Nordic countries is uncertain.

"Let's not forget, these are sort of sustained loss-making businesses," said Natasha Brilliant, head of small- and mid-cap equities at Citi Research. "They might not find a buyer for all of the markets, in which case they'll simply have to close them down."

Does Domino's have a future in the Nordic countries? Watch the video above to learn why the chain's expansion there didn't work.

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