Domino's operates across three business segments: domestic stores, domestic supply chain, and international stores. The domestic supply chain segment operates 17 regional dough manufacturing and food supply centers. Domino's maintains long-term relationships with over half of its major suppliers, ensuring food safety and quality through audits and evaluations. As one of the largest purchasers of pizza-related products, Domino's is able to negotiate competitive prices from suppliers.

1. SUPPLY CHAIN OF DOMINO’S
Domino’s operates in three business segments:
• Domestic stores:- The domestic stores segment consists of the domestic
franchise operations, which oversee the network of 4,558 franchise stores
located in the contiguous United States, and the domestic Company-owned
store operations, which operate the network of 489 Company-owned stores
located in the contiguous United States;
• Domestic supply chain:- The domestic supply chain segment operates
17 regional dough manufacturing and food supply chain centers, one supply
chain center providing equipment and supplies to certain of the domestic
and international stores and one vegetable processing supply chain center;
and
• International:- The international segment oversees the network of 3,726
international franchise stores in more than 60 countries. The international
segment also distributes food to a limited number of markets from six dough
manufacturing and supply chain centers in Alaska, Hawaii and Canada (fthe).
Number of stores
Mexico 592
United Kingdom 512
Australia 412
South Korea 305
Canada 296
India 227
Japan 181
France 140
Taiwan 120
Turkey 106
The franchise program
As of December 28, 2008, the 4,558 domestic franchise stores Were owned
and operated by the 1,216 domestic franchisees. The success of the
franchise formula, which enables franchisees to benefit from the brand name
with a relatively low initial capital investment, has attracted a large number
of motivated entrepreneurs as franchisees. As of December 28, 2008, the
average domestic franchisee operated approximately three to fthe stores
and had been in the franchise system for tDomino’slve years. At the same
time, only six of the domestic franchisees operated more than 50 stores,
including the largest domestic franchisee, which operates 144 stores.
Third-party suppliers
Domino’s have maintained active relationships of 15 years or more with
more than half of the major suppliers. The suppliers are required to meet
strict quality standards to ensure food safety. Domino’s review and evaluate
the suppliers’ quality assurance programs through, among other actions, onsite
visits, third party audits and product evaluations to ensure compliance
with the standards. Domino’s believe that the length and quality of the
relationships with suppliers provides us with priority service and quality
products at competitive prices.
Domino’s believe that two factors have been critical to maintaining longlasting

2. relationships and keeping the purchasing costs low. First, Domino’s
are one of the largest domestic volume purchasers of pizza-related products
such as flthe, cheese, sauce and pizza boxes, which allows us to maximize
leverage with the suppliers when items are put out for bid on a scheduled
basis. Second, Domino’s use a combination of single-source and multi-source
procurement strategies. Each supply category is evaluated along a number
of criteria including value of purchasing leverage, consistency of quality and
reliability of supply to determine the appropriate number of suppliers.
Domino’s currently purchase the pizza cheese from a single supplier. In
2007, the Company entered into a new arrangement with this supplier.
Under this arrangement, the supplier agreed to provide an uninterrupted
supply of cheese and the Company agreed to a five year pricing period
during which it agreed to purchase all of its primary pizza cheese for the
Company’s United States stores from this supplier or, alternatively, pay to
the supplier an amount reflecting any benefit previously received by the
Company under the new pricing terms. The pricing schedule is directly
correlated to the CME block cheddar price. The majority of the meat toppings
come from a single supplier under a contract that began in July 2008 and
expires in July 2010. The Crunchy Thin Crust dough is currently sourced by
another single supplier pursuant to requirements contracts that expire in
2009. Domino’s have the right to terminate these arrangements for quality
failures and for uncured breaches. Domino’s believe that alternative
suppliers for all of these ingredients are available, and all of the pizza boxes,
sauces and other ingredients are sourced from various suppliers. While
Domino’s may incur additional costs if Domino’s are required to replace any
of the suppliers, Domino’s do not believe that such additional costs would
have a material adverse effect on the business. Domino’s also entered into a
multi-year agreement with Coca-Cola effective January 1, 2003 for the
contiguous United States. The contract provides for Coca-Cola to be the
exclusive beverage supplier and expires on the later of December 31, 2009
or such time as a minimum number of cases of Coca-Cola® products are
purchased by us. Domino’s continually evaluate each supply category to
determine the optimal sourcing strategy. It has not experienced any
significant shortages of supplies or any delays in receiving our food or
beverage inventories, restaurant supplies or products. The current economic
environment has created additional financial pressures for some of the
suppliers; however it does not currently anticipate disruptions in our
supplies. Prices charged by suppliers are subject to fluctuation, and
domino’s has historically been able to pass increased costs and savings on
to stores. It may periodically enter into financial instruments to manage the
risk from changes in commodity prices. Domino’s does not engage in
speculative transactions nor does it holds or issue financial instruments for
trading purposes.