If interest rate remains high, how does then domino buy back share? Do they stop buying back share or what do they do?

No, they do not stop buying back shares. In fact, in early 2026, Domino's authorized a massive new $1 billion share repurchase program and increased their dividend by over 14%.

However, a high interest rate environment does change the mechanics of how they fund these buybacks. When borrowing money is no longer virtually free, Domino's cannot simply pile on cheap debt to buy back stock. Instead, they adapt their strategy in three specific ways:

1. Shifting from Debt-Funded to Cash-Funded Buybacks

In the 2010s (an era of near-zero interest rates), Domino's relied heavily on issuing debt to fund their buybacks. Today, they rely far more on organic Free Cash Flow (FCF).

Because of their asset-light franchise model, Domino's generates hundreds of millions in free cash flow every year. By driving massive transaction volume through promotions (like the $9.99 deal), their operating income and free cash flow surge. They take this operational cash—rather than borrowed cash—and funnel it directly into buying back shares.

2. The "Securitization Shield" Keeps Rates Manageable

Even when general interest rates are high, Domino's debt is cheaper than that of a standard corporation.

Because they use Whole Business Securitization—backing their bonds with ultra-reliable franchise royalty streams—the bond market views Domino's debt as incredibly safe. This means that even in a high-rate environment, Domino's can still refinance its maturing debt at relatively favorable, fixed rates. They are somewhat insulated from the punishing interest rates that standard corporate borrowers face.

3. Adjusting the Leverage Target

Domino's operates with a target "Leverage Ratio" (Total Debt divided by EBITDA).

• When interest rates are low, they max out this ratio (taking on more debt) to aggressively shrink their share count.
• When interest rates are high, they allow this ratio to drift down slightly. They won't take on new expensive debt just to buy shares; instead, they simply refinance their old debt when it comes due and use their operating profits for the buybacks.

The Bottom Line

High interest rates remove the "easy money" steroid from Domino's buyback machine, but they do not break the machine itself. The strategy simply pivots: instead of using cheap debt to manufacture Earnings Per Share (EPS) growth, they have to rely on their actual pizza operations—selling high volumes of pizza to generate the cash required to keep retiring shares.