Cover Page
Cover Page - shares | 8 Months Ended | |
Sep. 10, 2023 | Oct. 05, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Central Index Key | 0001286681 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Document Period End Date | Sep. 10, 2023 | |
Entity Registrant Name | Domino’s Pizza, Inc. | |
Securities Act File Number | 001-32242 | |
Current Fiscal Year End Date | --01-01 | |
Entity Tax Identification Number | 38-2511577 | |
Entity Incorporation, State or Country Code | DE | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Address, Address Line One | 30 Frank Lloyd Wright Drive | |
Entity Address, City or Town | Ann Arbor | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48105 | |
City Area Code | 734 | |
Local Phone Number | 930-3030 | |
Trading Symbol | DPZ | |
Security Exchange Name | NYSE | |
Title of 12(b) Security | Common Stock | |
Entity Common Stock, Shares Outstanding | 34,880,983 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 10, 2023 | Jan. 01, 2023 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 80,879 | $ 60,356 | |
Restricted cash and cash equivalents | 202,307 | 191,289 | |
Accounts receivable, net | 249,995 | 257,492 | |
Inventories | 69,683 | 81,570 | |
Prepaid expenses and other | 41,257 | 37,287 | |
Advertising fund assets, restricted | 151,511 | 162,660 | |
Total current assets | 795,632 | 790,654 | |
Property, plant and equipment: | |||
Land and buildings | 105,721 | 105,659 | |
Leasehold and other improvements | 177,350 | 172,725 | |
Equipment | 353,536 | 333,787 | |
Construction in progress | 16,264 | 22,536 | |
Property, plant and equipment, Gross | 652,871 | 634,707 | |
Accumulated depreciation and amortization | (362,480) | (332,472) | |
Property, plant and equipment, net | 290,391 | 302,235 | |
Other assets: | |||
Operating lease right-of-use assets | 209,934 | 219,202 | |
Goodwill | 11,688 | 11,763 | |
Capitalized software, net | 125,235 | 108,354 | |
Investment in DPC Dash | 139,107 | 125,840 | |
Deferred income tax assets, net | 5,858 | 1,926 | |
Other assets | 41,619 | 42,247 | |
Total other assets | 533,441 | 509,332 | |
Total assets | 1,619,464 | 1,602,221 | |
Current liabilities: | |||
Current portion of long-term debt | 55,847 | 54,813 | |
Accounts payable | 101,058 | 89,715 | |
Operating lease liabilities | 38,645 | 34,877 | |
Insurance reserves | 29,791 | 31,435 | |
Dividends payable | 43,445 | 866 | |
Advertising fund liabilities | 147,335 | 157,909 | |
Other accrued liabilities | 146,820 | 167,006 | |
Total current liabilities | 562,941 | 536,621 | |
Long-term liabilities: | |||
Long-term debt, less current portion | 4,931,924 | 4,967,420 | |
Operating lease liabilities | 183,031 | 195,244 | |
Insurance reserves | 37,797 | 40,179 | |
Other accrued liabilities | 45,313 | 44,061 | |
Deferred income tax liabilities | 7,761 | ||
Total long-term liabilities | 5,198,065 | 5,254,665 | |
Stockholders' deficit | |||
Common stock | 349 | 354 | |
Additional paid-in capital | 959 | 9,693 | |
Retained deficit | (4,137,753) | (4,194,418) | |
Accumulated other comprehensive loss | (5,097) | (4,694) | |
Total stockholders' deficit | (4,141,542) | (4,189,065) | |
Total liabilities and stockholders' deficit | $ 1,619,464 | $ 1,602,221 | |
[1] The condensed consolidated balance sheet at January 1, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Revenues: | ||||
Revenue | $ 1,027,361 | $ 1,068,596 | $ 3,076,386 | $ 3,144,927 |
Cost of sales: | ||||
Cost of sales | 629,192 | 686,746 | 1,888,014 | 2,008,188 |
Gross margin | 398,169 | 381,850 | 1,188,372 | 1,136,739 |
General and administrative | 97,203 | 91,205 | 290,186 | 285,769 |
U.S. franchise advertising | 111,534 | 114,193 | 335,719 | 331,863 |
Refranchising loss | 0 | 0 | 149 | 0 |
Income from operations | 189,432 | 176,452 | 562,318 | 519,107 |
Other income | 28,231 | 0 | 13,267 | 0 |
Interest income | 2,707 | 833 | 7,635 | 1,101 |
Interest expense | (44,796) | (45,437) | (136,275) | (137,160) |
Income before provision for income taxes | 175,574 | 131,848 | 446,945 | 383,048 |
Provision for income taxes | 27,898 | 31,344 | 85,119 | 89,087 |
Net income | $ 147,676 | $ 100,504 | $ 361,826 | $ 293,961 |
Earnings per share: | ||||
Common stock - basic | $ 4.22 | $ 2.82 | $ 10.28 | $ 8.2 |
Common stock - diluted | $ 4.18 | $ 2.79 | $ 10.19 | $ 8.11 |
U.S. Stores [Member] | U.S. Company-owned stores [Member] | ||||
Revenues: | ||||
Revenue | $ 86,277 | $ 112,388 | $ 258,882 | $ 328,785 |
Cost of sales: | ||||
Cost of sales | 72,614 | 98,589 | 214,609 | 280,029 |
U.S. Stores [Member] | U.S. franchise stores [Member] | ||||
Revenues: | ||||
Revenue | 138,322 | 128,878 | 410,454 | 379,261 |
U.S. Stores [Member] | U.S. franchise advertising [Member] | ||||
Revenues: | ||||
Revenue | 111,534 | 114,193 | 335,719 | 331,863 |
Supply Chain [Member] | Supply Chain Center [Member] | ||||
Revenues: | ||||
Revenue | 618,086 | 646,082 | 1,858,023 | 1,902,215 |
Cost of sales: | ||||
Cost of sales | 556,578 | 588,157 | 1,673,405 | 1,728,159 |
International Franchise [Member] | International franchise royalties and fees [Member] | ||||
Revenues: | ||||
Revenue | $ 73,142 | $ 67,055 | $ 213,308 | $ 202,803 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ 147,676 | $ 100,504 | $ 361,826 | $ 293,961 |
Currency translation adjustment | (1,330) | 47 | (403) | (1,023) |
Comprehensive income | $ 146,346 | $ 100,551 | $ 361,423 | $ 292,938 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | ||
Cash flows from operating activities: | |||||
Net Income (Loss) | $ 147,676 | $ 100,504 | $ 361,826 | $ 293,961 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 18,268 | 18,933 | 54,999 | 56,026 | |
Refranchising loss | 0 | 0 | 149 | 0 | |
Loss on sale/disposal of assets | 145 | 27 | 547 | 475 | |
Amortization of debt issuance costs | 3,858 | 3,937 | |||
(Benefit) provision for deferred income taxes | (12,191) | 5,912 | |||
Non-cash equity-based compensation expense | 9,442 | 5,852 | 26,507 | 21,590 | |
Excess tax benefits from equity-based compensation | (2,973) | (907) | |||
Provision for losses on accounts and notes receivable | 1,342 | 2,870 | |||
Unrealized loss on investments | (13,267) | 0 | |||
Changes in operating assets and liabilities | 7,682 | (49,288) | |||
Changes in advertising fund assets and liabilities, restricted | (6,349) | (4,422) | |||
Net cash provided by operating activities | 422,130 | 330,154 | |||
Cash flows from investing activities: | |||||
Capital expenditures | (59,271) | (50,508) | |||
Purchases of franchise operations and other assets | 0 | (6,814) | |||
Other | (743) | (1,375) | |||
Net cash used in investing activities | (60,014) | (58,697) | |||
Cash flows from financing activities: | |||||
Proceeds from issuance of long-term debt | 0 | 120,000 | |||
Repayments of long-term debt and finance lease obligations | (41,349) | (41,441) | |||
Proceeds from exercise of stock options | 5,806 | 1,296 | |||
Purchases of common stock | (210,847) | (293,739) | |||
Tax payments for restricted stock upon vesting | (5,240) | (10,691) | |||
Payments of common stock dividends and equivalents | (85,564) | (79,689) | |||
Net cash used in financing activities | (337,194) | (304,264) | |||
Effect of exchange rate changes on cash | (304) | (611) | |||
Change in cash and cash equivalents, restricted cash and cash equivalents | 24,618 | (33,418) | |||
Cash and cash equivalents, beginning of period | 60,356 | [1] | 148,160 | ||
Restricted cash and cash equivalents, beginning of period | 191,289 | [1] | 180,579 | ||
Cash and cash equivalents included in advertising fund assets, restricted, beginning of period | 143,559 | 161,741 | |||
Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period | 395,204 | 490,480 | |||
Cash and cash equivalents, end of period | 80,879 | 114,776 | 80,879 | 114,776 | |
Restricted cash and cash equivalents, end of period | 202,307 | 184,564 | 202,307 | 184,564 | |
Cash and cash equivalents included in advertising fund assets, restricted, end of period | 136,636 | 157,722 | 136,636 | 157,722 | |
Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period | $ 419,822 | $ 457,062 | $ 419,822 | $ 457,062 | |
[1] The condensed consolidated balance sheet at January 1, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 147,676 | $ 100,504 | $ 361,826 | $ 293,961 |
Insider Trading Arrangements
Insider Trading Arrangements | 8 Months Ended |
Sep. 10, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation
Basis of Presentation | 8 Months Ended |
Sep. 10, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the consolidated financial statements and footnotes for the fiscal year ended January 1, 2023 included in the Company’s 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 23, 2023 (the “2022 Form 10-K”). In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair statement have been included. Operating results for the fiscal quarter and three fiscal quarters ended September 10, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 . |
Segment Information
Segment Information | 8 Months Ended |
Sep. 10, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | 2. Segment Information The following tables summarize revenues and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which the Company refers to as Segment Income, for each of its reportable segments. Intersegment revenues are comprised of sales of food, equipment and supplies from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income below primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs. Fiscal Quarters Ended September 10, 2023 and September 11, 2022 U.S. Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2023 $ 336,133 $ 643,728 $ 73,142 $ ( 25,642 ) $ — $ 1,027,361 2022 355,459 683,267 67,055 ( 37,185 ) — 1,068,596 Segment Income 2023 $ 120,351 $ 55,250 $ 61,495 N/A $ ( 19,809 ) $ 217,287 2022 100,529 49,892 53,762 N/A ( 2,919 ) 201,264 Three Fiscal Quarters Ended September 10, 2023 and September 11, 2022 U.S. Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2023 $ 1,005,055 $ 1,935,332 $ 213,308 $ ( 77,309 ) $ — $ 3,076,386 2022 1,039,909 2,008,526 202,803 ( 106,311 ) — 3,144,927 Segment Income 2023 $ 356,626 $ 163,791 $ 178,499 N/A $ ( 54,396 ) $ 644,520 2022 301,876 149,874 161,698 N/A ( 16,250 ) 597,198 In the first quarter of 2023, the Company changed its allocation methodology for certain costs which support certain internally developed software used across the Company’s franchise system. This allocation methodology change was implemented in order to reflect the way the chief operating decision maker allocates resources to the Company’s reportable segments and evaluates segment profitability, including the costs of internally developed software. The change in allocation methodology of certain software development costs resulted in an estimated increase in U.S. stores Segment Income of $ 15.9 million , an estimated increase in international franchise Segment Income of $ 2.0 million and an estimated decrease in other Segment Income of $ 17.9 million in the third quarter of 2023. The change in allocation methodology of certain software development costs resulted in an estimated increase in U.S. stores Segment Income of $ 41.8 million , an estimated increase in international franchise Segment Income of $ 5.9 million and an estimated decrease in other Segment Income of $ 47.7 million in the three fiscal quarters of 2023. The change in allocation methodology of certain software development costs had no impact on revenues, supply chain Segment Income or total Segment Income. The change in allocation methodology for certain software development costs is a prospective change and the comparative information has not been restated. The following table reconciles total Segment Income to consolidated income before provision for income taxes. Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Total Segment Income $ 217,287 $ 201,264 $ 644,520 $ 597,198 Depreciation and amortization ( 18,268 ) ( 18,933 ) ( 54,999 ) ( 56,026 ) Refranchising loss — — ( 149 ) — Loss on sale/disposal of assets ( 145 ) ( 27 ) ( 547 ) ( 475 ) Non-cash equity-based compensation expense ( 9,442 ) ( 5,852 ) ( 26,507 ) ( 21,590 ) Income from operations 189,432 176,452 562,318 519,107 Other income 28,231 — 13,267 — Interest income 2,707 833 7,635 1,101 Interest expense ( 44,796 ) ( 45,437 ) ( 136,275 ) ( 137,160 ) Income before provision for income taxes $ 175,574 $ 131,848 $ 446,945 $ 383,048 |
Earnings Per Share
Earnings Per Share | 8 Months Ended |
Sep. 10, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 3. Earnings Per Share Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Net income available to common stockholders - basic and diluted $ 147,676 $ 100,504 $ 361,826 $ 293,961 Basic weighted average number of shares 35,030,660 35,692,744 35,207,117 35,869,581 Earnings per share – basic $ 4.22 $ 2.82 $ 10.28 $ 8.20 Diluted weighted average number of shares 35,357,043 36,062,316 35,516,434 36,265,918 Earnings per share – diluted $ 4.18 $ 2.79 $ 10.19 $ 8.11 The denominators used in calculating diluted earnings per share for common stock for the fiscal quarters and three fiscal quarters each ended September 10, 2023 and September 11, 2022 do not include the following because the effect of including these shares would be anti-dilutive or because the performance targets for these awards had not yet been met: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Anti-dilutive shares underlying stock-based awards Stock options 207,218 116,641 228,747 117,328 Restricted stock awards and units 526 1,561 27,615 1,285 Performance condition not met Restricted stock awards and units 59,622 41,800 59,622 41,800 |
Stockholders' Deficit
Stockholders' Deficit | 8 Months Ended |
Sep. 10, 2023 | |
Federal Home Loan Banks [Abstract] | |
Stockholders' Deficit | 4. Stockholders’ Deficit The following table summarizes the changes in stockholders’ deficit for the third quarter of 2023. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at June 18, 2023 35,057,585 $ 351 $ 3,370 $ ( 4,166,520 ) $ ( 3,767 ) Net income — — — 147,676 — Dividends declared on common stock and equivalents 1.21 per share) — — — ( 42,493 ) — Issuance and cancellation of stock awards, net 4,142 — — — — Tax payments for restricted stock upon vesting ( 5,932 ) — ( 2,172 ) — — Purchases of common stock ( 229,860 ) ( 3 ) ( 14,435 ) ( 76,416 ) — Exercise of stock options 53,188 1 4,754 — — Non-cash equity-based compensation expense — — 9,442 — — Currency translation adjustment — — — — ( 1,330 ) Balance at September 10, 2023 34,879,123 $ 349 $ 959 $ ( 4,137,753 ) $ ( 5,097 ) The following table summarizes the changes in stockholders’ deficit for the three fiscal quarters of 2023. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 1, 2023 35,419,718 $ 354 $ 9,693 $ ( 4,194,418 ) $ ( 4,694 ) Net income — — — 361,826 — Dividends declared on common stock and equivalents 3.63 per share) — — — ( 128,143 ) — Issuance and cancellation of stock awards, net 32,715 — — — — Tax payments for restricted stock upon vesting ( 15,601 ) — ( 5,240 ) — — Purchases of common stock ( 622,405 ) ( 6 ) ( 35,806 ) ( 177,018 ) — Exercise of stock options 64,696 1 5,805 — — Non-cash equity-based compensation expense — — 26,507 — — Currency translation adjustment — — — — ( 403 ) Balance at September 10, 2023 34,879,123 $ 349 $ 959 $ ( 4,137,753 ) $ ( 5,097 ) Subsequent to the end of the third quarter of 2023, on October 10, 2023, the Company’s Board of Directors declared a $ 1.21 per share quarterly dividend on its outstanding common stock for shareholders of record as of December 15, 2023 to be paid on December 29, 2023. The following table summarizes the changes in stockholders’ deficit for the third quarter of 2022. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at June 19, 2022 35,899,646 $ 359 $ 3,589 $ ( 4,180,367 ) $ ( 3,890 ) Net income — — — 100,504 — Dividends declared on common stock and equivalents 1.10 per share) — — — ( 39,035 ) — Issuance and cancellation of stock awards, net 1,569 — — — — Tax payments for restricted stock upon vesting ( 20,787 ) — ( 7,925 ) ( 371 ) — Purchases of common stock ( 490,789 ) ( 5 ) ( 1,699 ) ( 194,374 ) — Exercise of stock options 8,573 — 770 — — Non-cash equity-based compensation expense — — 5,852 — — Currency translation adjustment — — — — 47 Balance at September 11, 2022 35,398,212 $ 354 $ 587 $ ( 4,313,643 ) $ ( 3,843 ) The following table summarizes the changes in stockholders’ deficit for the three fiscal quarters of 2022. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 2, 2022 36,138,273 $ 361 $ 840 $ ( 4,207,917 ) $ ( 2,820 ) Net income — — — 293,961 — Dividends declared on common stock and equivalents 3.30 per share) — — — ( 118,403 ) — Issuance and cancellation of stock awards, net 15,775 — — — — Tax payments for restricted stock upon vesting ( 26,612 ) — ( 10,320 ) ( 371 ) — Purchases of common stock ( 739,847 ) ( 7 ) ( 12,819 ) ( 280,913 ) — Exercise of stock options 10,623 — 1,296 — — Non-cash equity-based compensation expense — — 21,590 — — Currency translation adjustment — — — — ( 1,023 ) Balance at September 11, 2022 35,398,212 $ 354 $ 587 $ ( 4,313,643 ) $ ( 3,843 ) |
Fair Value Measurements
Fair Value Measurements | 8 Months Ended |
Sep. 10, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements Fair value measurements enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. Fair Value of Cash Equivalents and Marketable Securities The fair values of the Company’s cash equivalents and investments in marketable securities are based on quoted prices in active markets for identical assets. Fair Value of Investments The Company holds a non-controlling interest in DPC Dash Ltd (“DPC Dash”), the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. Prior to March 28, 2023, the Company’s investment in DPC Dash’s senior ordinary shares, which were not in-substance common stock, represented an equity investment without a readily determinable fair value and was recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments. On March 28, 2023, DPC Dash completed its initial public offering on the Hong Kong Exchange (HK: 1405), at which point the Company’s 18,101,019 DPC Dash senior ordinary shares automatically converted to DPC Dash ordinary shares pursuant to the terms of the investment. The Company is required to hold the DPC Dash ordinary shares for at least 360 days from the date of the initial public offering. Beginning in the second quarter of 2023, the Company accounts for its investment in DPC Dash as a trading security and records it at fair value at the end of each reporting period, with gains and losses recorded in other income or expense in its condensed consolidated statements of income. As of September 10, 2023 , the fair value of the Company’s investment in DPC Dash is based on the active exchange quoted price for the equity security of HK$ 60.25 per share. The Company recorded a positive adjustment to the carrying amount of its investment in DPC Dash of $ 28.2 million in the third quarter of 2023 and $ 13.3 million in the three fiscal quarters of 2023, respectively, with the gain recorded in other income in its condensed consolidated statements of income. As of January 1, 2023, the fair value of the Company’s investment in DPC Dash was not readily determinable and was categorized in Level 3 of the fair value hierarchy. The Company did not record any adjustments to the carrying amount of its investment in the first quarter of 2023 or the three fiscal quarters of 2022. The Company transferred its investment from Level 3 to Level 1 on March 28, 2023, concurrent with DPC Dash’s initial public offering. The following tables summarize the carrying amounts and fair values of certain assets at September 10, 2023 and January 1, 2023: At September 10, 2023 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 57,239 $ 57,239 $ — $ — Restricted cash equivalents 133,359 133,359 — — Investments in marketable securities 15,753 15,753 — — Advertising fund cash equivalents, restricted 114,704 114,704 — — Investment in DPC Dash 139,107 139,107 — — At January 1, 2023 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 23,779 $ 23,779 $ — $ — Restricted cash equivalents 117,212 117,212 — — Investments in marketable securities 13,395 13,395 — — Advertising fund cash equivalents, restricted 124,496 124,496 — — Investment in DPC Dash 125,840 — — 125,840 Fair Value of Debt The estimated fair values of the Company’s fixed rate notes are classified as Level 2 measurements, as the Company estimates the fair value amount by using available market information. The Company obtained quotes from two separate brokerage firms that are knowledgeable about the Company’s fixed rate notes and, at times, trade these notes. The Company also performed its own internal analysis based on the information gathered from public markets, including information on notes that are similar to those of the Company. However, considerable judgment is required to interpret market data to estimate fair value. Accordingly, the fair value estimates presented are not necessarily indicative of the amount that the Company or the debtholders could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values stated below. Management estimated the approximate fair values of the Company ’s 2015, 2017, 2018, 2019 and 2021 notes as follows: September 10, 2023 January 1, 2023 Principal Amount Fair Value Principal Amount Fair Value 2015 Ten-Year Notes $ 746,000 $ 715,414 $ 752,000 $ 717,408 2017 Ten-Year Notes 945,000 875,070 952,500 875,348 2018 7.5-Year Notes 404,813 385,382 408,000 385,968 2018 9.25-Year Notes 381,000 355,473 384,000 355,584 2019 Ten-Year Notes 651,375 567,999 656,438 564,536 2021 7.5-Year Notes 830,875 705,413 837,250 695,755 2021 Ten-Year Notes 977,500 798,618 985,000 792,925 The Company did not have any outstanding borrowings under its variable funding notes at September 10, 2023 or January 1, 2023 . |
Revenue Disclosures
Revenue Disclosures | 8 Months Ended |
Sep. 10, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Disclosures | 6. Revenue Disclosures Contract Liabilities Contract liabilities primarily consist of deferred franchise fees and deferred development fees. Deferred franchise fees and deferred development fees of $ 5.3 million and $ 5.5 million were included in current other accrued liabilities as of September 10, 2023 and January 1, 2023, respectively. Deferred franchise fees and deferred development fees of $ 20.7 million and $ 22.7 million were included in long-term other accrued liabilities as of September 10, 2023 and January 1, 2023, respectively. Changes in deferred franchise fees and deferred development fees for the three fiscal quarters of 2023 and the three fiscal quarters of 2022 were as follows: Three Fiscal Quarters Ended September 10, September 11, 2023 2022 Deferred franchise fees and deferred development fees, beginning of period $ 28,225 $ 29,694 Revenue recognized during the period ( 4,680 ) ( 4,688 ) New deferrals due to cash received and other 2,456 3,774 Deferred franchise fees and deferred development fees, end of period $ 26,001 $ 28,780 Advertising Fund Assets As of September 10, 2023, advertising fund assets, restricted of $ 151.5 million consisted of $ 136.6 million of cash and cash equivalents, $ 9.7 million of accounts receivable and $ 5.2 million of prepaid expenses. As of September 10, 2023, advertising fund cash and cash equivalents included $ 4.2 million of cash contributed from U.S. Company-owned stores that had not yet been expended. As of January 1, 2023, advertising fund assets, restricted of $ 162.7 million consisted of $ 143.6 million of cash and cash equivalents, $ 13.1 million of accounts receivable and $ 6.0 million of prepaid expenses. As of January 1, 2023, advertising fund cash and cash equivalents included $ 4.8 million of cash contributed from U.S. Company-owned stores that had not yet been expended. Change in Advertising Fund Contributions and Technology Fees Beginning in the second quarter of 2023 , as of March 27, 2023, Domino's National Advertising Fund Inc., the Company’s consolidated not-for-profit advertising subsidiary, effectuated a temporary reduction of 0.25 % to its standard 6.0 % advertising contribution, which is anticipated to be in effect for at least one year from the effective date. Concurrently, the Company also increased the U.S. digital per-transaction technology fees that are recognized as the related U.S. franchise retail sales occur by $ 0.08 to $ 0.395 for the same time period. Partnership with Uber Technologies, Inc. (Uber) During the third quarter of 2023, the Company entered into a new global agreement with Uber (NYSE:UBER) to allow customers to order Domino’s products through the Uber Eats and Postmates apps with delivery by the Company and its franchisees’ delivery experts. The Company expects the U.S. rollout of this agreement to be enabled by the end of fiscal 2023. |
Leases
Leases | 8 Months Ended |
Sep. 10, 2023 | |
Leases [Abstract] | |
Leases | 7. Leases The Company leases certain retail store and supply chain center locations, vehicles, equipment and its corporate headquarters with expiration dates through 2041. The components of operating and finance lease cost for the third quarter and three fiscal quarters of 2023 and the third quarter and three fiscal quarters of 2022 were as follows: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Operating lease cost $ 11,058 $ 11,302 $ 32,734 $ 32,366 Finance lease cost: Amortization of right-of-use assets 1,282 1,228 3,794 3,631 Interest on lease liabilities 1,010 1,086 3,008 2,922 Total finance lease cost $ 2,292 $ 2,314 $ 6,802 $ 6,553 Rent expense totaled $ 19.7 million and $ 58.8 million in the third quarter and three fiscal quarters of 2023, respectively. Rent expense totaled $ 17.5 million and $ 55.4 million in the third quarter and three fiscal quarters of 2022, respectively. Rent expense includes operating lease cost, as well as expense for non-lease components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Rent expense for certain short-term supply chain center tractor and trailer rentals was $ 1.4 million and $ 4.1 million in the third quarter and three fiscal quarters of 2023, respectively. Rent expense for certain short-term supply chain center tractor and trailer rentals was $ 1.3 million and $ 5.1 million in the third quarter and three fiscal quarters of 2022, respectively. Variable rent expense and rent expense for other short-term leases were immaterial in both the third quarter and three fiscal quarters of 2023 and 2022. Supplemental balance sheet information related to the Company’s finance leases as of September 10, 2023 and January 1, 2023 was as follows: September 10, January 1, 2023 2023 Land and buildings $ 83,854 $ 83,902 Equipment 3,941 1,606 Finance lease assets 87,795 85,508 Accumulated depreciation and amortization ( 22,382 ) ( 19,405 ) Finance lease assets, net $ 65,413 $ 66,103 Current portion of long-term debt $ 4,347 $ 3,313 Long-term debt , less current portion 70,157 70,886 Total principal payable on finance leases $ 74,504 $ 74,199 As of September 10, 2023 and January 1, 2023, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows: September 10, 2023 January 1, 2023 Operating Finance Operating Finance Leases Leases Leases Leases Weighted average remaining lease term 7 years 13 years 7 years 14 years Weighted average discount rate 4.0 % 6.0 % 3.9 % 6.0 % Supplemental cash flow information related to leases for the third quarter and three fiscal quarters of 2023 and the third quarter and three fiscal quarters of 2022 were as follows: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,798 $ 11,581 $ 31,889 $ 30,076 Operating cash flows from finance leases 1,010 1,086 3,008 2,922 Financing cash flows from finance leases 1,288 1,038 2,724 2,816 Right-of-use assets obtained in exchange for lease obligations: Operating leases 5,230 4,241 17,405 35,405 Finance leases 398 453 3,452 453 Maturities of lease liabilities as of September 10, 2023 were as follows: Operating Finance Leases Leases 2023 $ 15,320 $ 2,499 2024 45,493 8,738 2025 41,006 8,816 2026 38,893 9,425 2027 31,281 8,239 Thereafter 86,761 68,448 Total future minimum rental commitments 258,754 106,165 Less, amounts representing interest ( 37,078 ) ( 31,661 ) Total lease liabilities $ 221,676 $ 74,504 As of September 10, 2023, the Company had additional leases for certain supply chain real estate and certain supply chain and U.S. Company-owned store vehicles that had not yet commenced with estimated future minimum rental commitments of $ 40.5 million. These leases are expected to commence in 2023 and 2024 with lease terms of up to 11 years . These undiscounted amounts are not included in the table above. The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees was $ 20.0 million and $ 24.5 million as of September 10, 2023 and January 1, 2023 , respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues, expenses or liquidity. |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 8 Months Ended |
Sep. 10, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures of Cash Flow Information | 8. Supplemental Disclosures of Cash Flow Information The Company had non-cash investing activities related to accruals for capital expenditures of $ 4.7 million at September 10, 2023 and $ 6.9 million at January 1, 2023. As of September 10, 2023, the Company also had $ 2.0 million in non-cash financing activity related to accruals for excise taxes on share repurchases. |
Company-owned Store Transaction
Company-owned Store Transactions | 8 Months Ended |
Sep. 10, 2023 | |
Business Combinations [Abstract] | |
Company-owned Store Transactions | 9. Company-owned Store Transactions During the first quarter of 2023, the Company refranchised one U.S. Company-owned store for proceeds of less than $ 0.1 million. The pre-tax refranchising loss associated with the sale of the related assets and liabilities, including goodwill, was approximately $ 0.1 million and was recorded in refranchising loss in the Company’s condensed consolidated statements of income. During the first quarter of 2022, the Company purchased 23 U.S. franchised stores in Michigan from certain of the Company’s existing U.S. franchisees for $ 6.8 million, which included $ 4.0 million of intangibles, $ 1.7 million of equipment and leasehold improvements and $ 1.1 million of goodwill. |
New Accounting Pronouncements
New Accounting Pronouncements | 8 Months Ended |
Sep. 10, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | 10. New Accounting Pronouncements The Company has considered all new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and adopted the following accounting standards. Recently Adopted Accounting Standards Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, updated by ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) , which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. On May 15, 2023, certain of the Company’s subsidiaries executed an amendment to the Company’s 2021 variable funding notes to affect the transition from LIBOR to the Secured Overnight Financing Rate (“Term SOFR”), plus a spread adjustment. In connection with this contract amendment, the Company adopted ASU 2020-04 (as updated by ASU 2022-06) in the second quarter of 2023. The amendment to the Company’s 2021 variable funding notes and the adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) , which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual sale restrictions. ASU 2022-03 also requires disclosure of the fair value of equity securities subject to contractual sale restrictions, the nature and remaining duration of the restrictions and the circumstances that could cause a lapse in the restrictions. The Company’s investment in DPC Dash (Note 5) is subject to contractual restrictions that prohibit the Company from selling the security for 360 days following DPC Dash’s initial public offering. The Company early adopted ASU 2022-03 in the second quarter of 2023 and the adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements. |
Segment Information (Tables)
Segment Information (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Segment Reporting [Abstract] | |
Financial Information by Operating Segment | The following tables summarize revenues and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which the Company refers to as Segment Income, for each of its reportable segments. Intersegment revenues are comprised of sales of food, equipment and supplies from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income below primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs. Fiscal Quarters Ended September 10, 2023 and September 11, 2022 U.S. Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2023 $ 336,133 $ 643,728 $ 73,142 $ ( 25,642 ) $ — $ 1,027,361 2022 355,459 683,267 67,055 ( 37,185 ) — 1,068,596 Segment Income 2023 $ 120,351 $ 55,250 $ 61,495 N/A $ ( 19,809 ) $ 217,287 2022 100,529 49,892 53,762 N/A ( 2,919 ) 201,264 Three Fiscal Quarters Ended September 10, 2023 and September 11, 2022 U.S. Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2023 $ 1,005,055 $ 1,935,332 $ 213,308 $ ( 77,309 ) $ — $ 3,076,386 2022 1,039,909 2,008,526 202,803 ( 106,311 ) — 3,144,927 Segment Income 2023 $ 356,626 $ 163,791 $ 178,499 N/A $ ( 54,396 ) $ 644,520 2022 301,876 149,874 161,698 N/A ( 16,250 ) 597,198 In the first quarter of 2023, the Company changed its allocation methodology for certain costs which support certain internally |
Reconciliation of Total Segment Income to Consolidated Income Before Provision for Income Taxes | The following table reconciles total Segment Income to consolidated income before provision for income taxes. Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Total Segment Income $ 217,287 $ 201,264 $ 644,520 $ 597,198 Depreciation and amortization ( 18,268 ) ( 18,933 ) ( 54,999 ) ( 56,026 ) Refranchising loss — — ( 149 ) — Loss on sale/disposal of assets ( 145 ) ( 27 ) ( 547 ) ( 475 ) Non-cash equity-based compensation expense ( 9,442 ) ( 5,852 ) ( 26,507 ) ( 21,590 ) Income from operations 189,432 176,452 562,318 519,107 Other income 28,231 — 13,267 — Interest income 2,707 833 7,635 1,101 Interest expense ( 44,796 ) ( 45,437 ) ( 136,275 ) ( 137,160 ) Income before provision for income taxes $ 175,574 $ 131,848 $ 446,945 $ 383,048 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Net income available to common stockholders - basic and diluted $ 147,676 $ 100,504 $ 361,826 $ 293,961 Basic weighted average number of shares 35,030,660 35,692,744 35,207,117 35,869,581 Earnings per share – basic $ 4.22 $ 2.82 $ 10.28 $ 8.20 Diluted weighted average number of shares 35,357,043 36,062,316 35,516,434 36,265,918 Earnings per share – diluted $ 4.18 $ 2.79 $ 10.19 $ 8.11 |
Schedule of Denominators Used in Calculating Earning Per Common Share | The denominators used in calculating diluted earnings per share for common stock for the fiscal quarters and three fiscal quarters each ended September 10, 2023 and September 11, 2022 do not include the following because the effect of including these shares would be anti-dilutive or because the performance targets for these awards had not yet been met: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Anti-dilutive shares underlying stock-based awards Stock options 207,218 116,641 228,747 117,328 Restricted stock awards and units 526 1,561 27,615 1,285 Performance condition not met Restricted stock awards and units 59,622 41,800 59,622 41,800 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Federal Home Loan Banks [Abstract] | |
Changes in Stockholders' Deficit | The following table summarizes the changes in stockholders’ deficit for the third quarter of 2023. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at June 18, 2023 35,057,585 $ 351 $ 3,370 $ ( 4,166,520 ) $ ( 3,767 ) Net income — — — 147,676 — Dividends declared on common stock and equivalents 1.21 per share) — — — ( 42,493 ) — Issuance and cancellation of stock awards, net 4,142 — — — — Tax payments for restricted stock upon vesting ( 5,932 ) — ( 2,172 ) — — Purchases of common stock ( 229,860 ) ( 3 ) ( 14,435 ) ( 76,416 ) — Exercise of stock options 53,188 1 4,754 — — Non-cash equity-based compensation expense — — 9,442 — — Currency translation adjustment — — — — ( 1,330 ) Balance at September 10, 2023 34,879,123 $ 349 $ 959 $ ( 4,137,753 ) $ ( 5,097 ) The following table summarizes the changes in stockholders’ deficit for the three fiscal quarters of 2023. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 1, 2023 35,419,718 $ 354 $ 9,693 $ ( 4,194,418 ) $ ( 4,694 ) Net income — — — 361,826 — Dividends declared on common stock and equivalents 3.63 per share) — — — ( 128,143 ) — Issuance and cancellation of stock awards, net 32,715 — — — — Tax payments for restricted stock upon vesting ( 15,601 ) — ( 5,240 ) — — Purchases of common stock ( 622,405 ) ( 6 ) ( 35,806 ) ( 177,018 ) — Exercise of stock options 64,696 1 5,805 — — Non-cash equity-based compensation expense — — 26,507 — — Currency translation adjustment — — — — ( 403 ) Balance at September 10, 2023 34,879,123 $ 349 $ 959 $ ( 4,137,753 ) $ ( 5,097 ) The following table summarizes the changes in stockholders’ deficit for the third quarter of 2022. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at June 19, 2022 35,899,646 $ 359 $ 3,589 $ ( 4,180,367 ) $ ( 3,890 ) Net income — — — 100,504 — Dividends declared on common stock and equivalents 1.10 per share) — — — ( 39,035 ) — Issuance and cancellation of stock awards, net 1,569 — — — — Tax payments for restricted stock upon vesting ( 20,787 ) — ( 7,925 ) ( 371 ) — Purchases of common stock ( 490,789 ) ( 5 ) ( 1,699 ) ( 194,374 ) — Exercise of stock options 8,573 — 770 — — Non-cash equity-based compensation expense — — 5,852 — — Currency translation adjustment — — — — 47 Balance at September 11, 2022 35,398,212 $ 354 $ 587 $ ( 4,313,643 ) $ ( 3,843 ) The following table summarizes the changes in stockholders’ deficit for the three fiscal quarters of 2022. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 2, 2022 36,138,273 $ 361 $ 840 $ ( 4,207,917 ) $ ( 2,820 ) Net income — — — 293,961 — Dividends declared on common stock and equivalents 3.30 per share) — — — ( 118,403 ) — Issuance and cancellation of stock awards, net 15,775 — — — — Tax payments for restricted stock upon vesting ( 26,612 ) — ( 10,320 ) ( 371 ) — Purchases of common stock ( 739,847 ) ( 7 ) ( 12,819 ) ( 280,913 ) — Exercise of stock options 10,623 — 1,296 — — Non-cash equity-based compensation expense — — 21,590 — — Currency translation adjustment — — — — ( 1,023 ) Balance at September 11, 2022 35,398,212 $ 354 $ 587 $ ( 4,313,643 ) $ ( 3,843 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Fair Value Disclosures [Abstract] | |
Carrying Amounts and Fair Values of Certain Assets | The following tables summarize the carrying amounts and fair values of certain assets at September 10, 2023 and January 1, 2023: At September 10, 2023 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 57,239 $ 57,239 $ — $ — Restricted cash equivalents 133,359 133,359 — — Investments in marketable securities 15,753 15,753 — — Advertising fund cash equivalents, restricted 114,704 114,704 — — Investment in DPC Dash 139,107 139,107 — — At January 1, 2023 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 23,779 $ 23,779 $ — $ — Restricted cash equivalents 117,212 117,212 — — Investments in marketable securities 13,395 13,395 — — Advertising fund cash equivalents, restricted 124,496 124,496 — — Investment in DPC Dash 125,840 — — 125,840 |
Schedule of Estimated Fair Value | Management estimated the approximate fair values of the Company ’s 2015, 2017, 2018, 2019 and 2021 notes as follows: September 10, 2023 January 1, 2023 Principal Amount Fair Value Principal Amount Fair Value 2015 Ten-Year Notes $ 746,000 $ 715,414 $ 752,000 $ 717,408 2017 Ten-Year Notes 945,000 875,070 952,500 875,348 2018 7.5-Year Notes 404,813 385,382 408,000 385,968 2018 9.25-Year Notes 381,000 355,473 384,000 355,584 2019 Ten-Year Notes 651,375 567,999 656,438 564,536 2021 7.5-Year Notes 830,875 705,413 837,250 695,755 2021 Ten-Year Notes 977,500 798,618 985,000 792,925 |
Revenue Disclosures (Tables)
Revenue Disclosures (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Liabilities Consist of Deferred Franchise Fees and Deferred Development Fees | Changes in deferred franchise fees and deferred development fees for the three fiscal quarters of 2023 and the three fiscal quarters of 2022 were as follows: Three Fiscal Quarters Ended September 10, September 11, 2023 2022 Deferred franchise fees and deferred development fees, beginning of period $ 28,225 $ 29,694 Revenue recognized during the period ( 4,680 ) ( 4,688 ) New deferrals due to cash received and other 2,456 3,774 Deferred franchise fees and deferred development fees, end of period $ 26,001 $ 28,780 |
Leases (Tables)
Leases (Tables) | 8 Months Ended |
Sep. 10, 2023 | |
Leases [Abstract] | |
Components Of Operating And Finance Lease Cost | The components of operating and finance lease cost for the third quarter and three fiscal quarters of 2023 and the third quarter and three fiscal quarters of 2022 were as follows: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Operating lease cost $ 11,058 $ 11,302 $ 32,734 $ 32,366 Finance lease cost: Amortization of right-of-use assets 1,282 1,228 3,794 3,631 Interest on lease liabilities 1,010 1,086 3,008 2,922 Total finance lease cost $ 2,292 $ 2,314 $ 6,802 $ 6,553 |
Schedule of Supplemental Balance Sheet Information Related To Finance Leases | Supplemental balance sheet information related to the Company’s finance leases as of September 10, 2023 and January 1, 2023 was as follows: September 10, January 1, 2023 2023 Land and buildings $ 83,854 $ 83,902 Equipment 3,941 1,606 Finance lease assets 87,795 85,508 Accumulated depreciation and amortization ( 22,382 ) ( 19,405 ) Finance lease assets, net $ 65,413 $ 66,103 Current portion of long-term debt $ 4,347 $ 3,313 Long-term debt , less current portion 70,157 70,886 Total principal payable on finance leases $ 74,504 $ 74,199 As of September 10, 2023 and January 1, 2023, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows: September 10, 2023 January 1, 2023 Operating Finance Operating Finance Leases Leases Leases Leases Weighted average remaining lease term 7 years 13 years 7 years 14 years Weighted average discount rate 4.0 % 6.0 % 3.9 % 6.0 % |
Schedule Of Supplemental Cash Flow Information Related To Leases | Supplemental cash flow information related to leases for the third quarter and three fiscal quarters of 2023 and the third quarter and three fiscal quarters of 2022 were as follows: Fiscal Quarter Ended Three Fiscal Quarters Ended September 10, September 11, September 10, September 11, 2023 2022 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,798 $ 11,581 $ 31,889 $ 30,076 Operating cash flows from finance leases 1,010 1,086 3,008 2,922 Financing cash flows from finance leases 1,288 1,038 2,724 2,816 Right-of-use assets obtained in exchange for lease obligations: Operating leases 5,230 4,241 17,405 35,405 Finance leases 398 453 3,452 453 |
Schedule Of Maturities Of Operating And Finance Leases Liabilities | Maturities of lease liabilities as of September 10, 2023 were as follows: Operating Finance Leases Leases 2023 $ 15,320 $ 2,499 2024 45,493 8,738 2025 41,006 8,816 2026 38,893 9,425 2027 31,281 8,239 Thereafter 86,761 68,448 Total future minimum rental commitments 258,754 106,165 Less, amounts representing interest ( 37,078 ) ( 31,661 ) Total lease liabilities $ 221,676 $ 74,504 |
Segment Information - Financial
Segment Information - Financial Information by Operating Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 1,027,361 | $ 1,068,596 | $ 3,076,386 | $ 3,144,927 |
Segment Income | 217,287 | 201,264 | 644,520 | 597,198 |
Operating Segments [Member] | U.S. Stores [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 336,133 | 355,459 | 1,005,055 | 1,039,909 |
Segment Income | 120,351 | 100,529 | 356,626 | 301,876 |
Operating Segments [Member] | Supply Chain [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 643,728 | 683,267 | 1,935,332 | 2,008,526 |
Segment Income | 55,250 | 49,892 | 163,791 | 149,874 |
Operating Segments [Member] | International Franchise [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 73,142 | 67,055 | 213,308 | 202,803 |
Segment Income | 61,495 | 53,762 | 178,499 | 161,698 |
Intersegment Revenues [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (25,642) | (37,185) | (77,309) | (106,311) |
Segment Reconciling [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment Income | $ (19,809) | $ (2,919) | $ (54,396) | $ (16,250) |
Segment Information (Additional
Segment Information (Additional Information) (Details) - USD ($) $ in Millions | 3 Months Ended | 8 Months Ended |
Sep. 10, 2023 | Sep. 10, 2023 | |
Segment Reporting Information [Line Items] | ||
Increase Decrease in Segment Income | $ 17.9 | $ 47.7 |
U S Stores [Member] | ||
Segment Reporting Information [Line Items] | ||
Increase Decrease in Segment Income | 15.9 | 41.8 |
International Franchise [Member] | ||
Segment Reporting Information [Line Items] | ||
Increase Decrease in Segment Income | $ 2 | $ 5.9 |
Segment Information - Reconcili
Segment Information - Reconciliation of Total Segment Income to Consolidated Income Before Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Segment Reconciliation [Abstract] | ||||
Total Segment Income | $ 217,287 | $ 201,264 | $ 644,520 | $ 597,198 |
Depreciation and amortization | (18,268) | (18,933) | (54,999) | (56,026) |
Refranchising loss | 0 | 0 | 149 | 0 |
Loss on sale/disposal of assets | (145) | (27) | (547) | (475) |
Non-cash equity-based compensation expense | (9,442) | (5,852) | (26,507) | (21,590) |
Income from operations | 189,432 | 176,452 | 562,318 | 519,107 |
Other expense | 28,231 | 0 | 13,267 | 0 |
Interest income | 2,707 | 833 | 7,635 | 1,101 |
Interest expense | (44,796) | (45,437) | (136,275) | (137,160) |
Income before provision for income taxes | $ 175,574 | $ 131,848 | $ 446,945 | $ 383,048 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Computation of Basic and Diluted Earning per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Earnings Per Share [Abstract] | ||||
Net income available to common stockholders - basic and diluted | $ 147,676 | $ 100,504 | $ 361,826 | $ 293,961 |
Basic weighted average number of shares | 35,030,660 | 35,692,744 | 35,207,117 | 35,869,581 |
Earnings per share – basic | $ 4.22 | $ 2.82 | $ 10.28 | $ 8.2 |
Diluted weighted average number of shares | 35,357,043 | 36,062,316 | 35,516,434 | 36,265,918 |
Earnings per share - diluted | $ 4.18 | $ 2.79 | $ 10.19 | $ 8.11 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Denominators Used in Calculating Earning Per Common Share (Detail) - shares | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | 207,218 | 116,641 | 228,747 | 117,328 |
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | 526 | 1,561 | 27,615 | 1,285 |
Restricted Performance Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded from computation of earnings per share, amount unvested | 59,622 | 41,800 | 59,622 | 41,800 |
Stockholders' Deficit - Additio
Stockholders' Deficit - Additional Information (Detail) - $ / shares | 3 Months Ended | 8 Months Ended | |||
Oct. 10, 2023 | Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Dividends declared per share | $ 1.21 | $ 1.1 | $ 3.63 | $ 3.3 | |
Subsequent Event [Member] | |||||
Dividends declared per share | $ 1.21 |
Stockholders' Deficit (Detail)
Stockholders' Deficit (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | ||
Stockholders' Deficit [Line Items] | |||||
Balance | [1] | $ (4,189,065) | |||
Net income available to common stockholders - basic and diluted | $ 147,676 | $ 100,504 | 361,826 | $ 293,961 | |
Balance | $ (4,141,542) | $ (4,141,542) | |||
Common Stock [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Balance (in shares) | 35,057,585 | 35,899,646 | 35,419,718 | 36,138,273 | |
Balance | $ 351 | $ 359 | $ 354 | $ 361 | |
Issuance and cancellation of stock awards, net (in shares) | 4,142 | 1,569 | 32,715 | 15,775 | |
Tax payments for restricted stock upon vesting, (in shares) | (5,932) | (20,787) | (15,601) | (26,612) | |
Purchases of common stock, (in shares) | (229,860) | (490,789) | (622,405) | (739,847) | |
Purchases of common stock | $ (3) | $ (5) | $ (6) | $ (7) | |
Exercises of stock options, (in shares) | 53,188 | 8,573 | 64,696 | 10,623 | |
Exercises of stock options | $ 1 | $ 1 | |||
Balance (in shares) | 34,879,123 | 35,398,212 | 34,879,123 | 35,398,212 | |
Balance | $ 349 | $ 354 | $ 349 | $ 354 | |
Additional Paid-in Capital [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Balance | 3,370 | 3,589 | 9,693 | 840 | |
Tax payments for restricted stock upon vesting | (2,172) | (7,925) | (5,240) | (10,320) | |
Purchases of common stock | (14,435) | (1,699) | (35,806) | (12,819) | |
Exercises of stock options | 4,754 | 770 | 5,805 | 1,296 | |
Non-cash equity-based compensation expense | 9,442 | 5,852 | 26,507 | 21,590 | |
Balance | 959 | 587 | 959 | 587 | |
Retained Deficit [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Balance | (4,166,520) | (4,180,367) | (4,194,418) | (4,207,917) | |
Net income available to common stockholders - basic and diluted | 147,676 | 100,504 | 361,826 | 293,961 | |
Dividends declared on common stock and equivalents | (42,493) | (39,035) | (128,143) | (118,403) | |
Tax payments for restricted stock upon vesting | (371) | (371) | |||
Purchases of common stock | (76,416) | (194,374) | (177,018) | (280,913) | |
Balance | (4,137,753) | (4,313,643) | (4,137,753) | (4,313,643) | |
Accumulated Other Comprehensive Income (Loss) [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Balance | (3,767) | (3,890) | (4,694) | (2,820) | |
Currency translation adjustment | (1,330) | 47 | (403) | (1,023) | |
Balance | $ (5,097) | $ (3,843) | $ (5,097) | $ (3,843) | |
[1] The condensed consolidated balance sheet at January 1, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
Stockholders' Deficit (Parenthe
Stockholders' Deficit (Parenthetical) (Detail) - $ / shares | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Dividends declared per share | $ 1.21 | $ 1.1 | $ 3.63 | $ 3.3 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Mar. 28, 2023 | Sep. 10, 2023 | Sep. 11, 2022 | |
Unrealized loss on investments | $ 13,267 | $ 0 | ||
Dash Brands Ltd [Member] | ||||
Unrealized loss on investments | $ 28,200 | $ 13,300 | ||
initial public offering, per share | $ 60.25 | $ 60.25 | ||
senior ordinary shares into ordinary shares | 18,101,019 |
Carrying Amounts and Fair Value
Carrying Amounts and Fair Values of Certain Assets (Detail) - USD ($) $ in Thousands | Sep. 10, 2023 | Jan. 01, 2023 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents, carrying amount | $ 57,239 | $ 23,779 |
Restricted cash equivalents, carrying amount | 133,359 | 117,212 |
Investments in marketable securities, carrying amount | 15,753 | 13,395 |
Advertising fund cash equivalents, restricted, carrying amount | 114,704 | 124,496 |
Investments | 139,107 | 125,840 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents, carrying amount | 57,239 | 23,779 |
Restricted cash equivalents, carrying amount | 133,359 | 117,212 |
Investments in marketable securities, carrying amount | 15,753 | 13,395 |
Advertising fund cash equivalents, restricted, fair value | 114,704 | 124,496 |
Investments | $ 139,107 | |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments | $ 125,840 |
Schedule of Estimated Fair Valu
Schedule of Estimated Fair Value (Detail) - USD ($) $ in Thousands | Sep. 10, 2023 | Jan. 01, 2023 |
2015 Ten-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | $ 746,000 | $ 752,000 |
Fair Value | 715,414 | 717,408 |
2017 Ten-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 945,000 | 952,500 |
Fair Value | 875,070 | 875,348 |
2018 7.5-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 404,813 | 408,000 |
Fair Value | 385,382 | 385,968 |
2018 9.25-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 381,000 | 384,000 |
Fair Value | 355,473 | 355,584 |
2019 Ten-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 651,375 | 656,438 |
Fair Value | 567,999 | 564,536 |
2021 7.5-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 830,875 | 837,250 |
Fair Value | 705,413 | 695,755 |
2021 Ten-Year Notes [Member] | ||
Debt Instrument [Line Items] | ||
Principal Amount | 977,500 | 985,000 |
Fair Value | $ 798,618 | $ 792,925 |
Revenue Disclosures - Additiona
Revenue Disclosures - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Mar. 27, 2023 | Sep. 10, 2023 | Jan. 01, 2023 | |
Contract liability, current | $ 5,300 | $ 5,500 | ||
Contract liability, noncurrent | 20,700 | 22,700 | ||
Advertising fund assets, restricted | 151,511 | 162,660 | [1] | |
Temporary reduction | 0.25% | |||
Advertising contribution | 6% | |||
Minimum [Member] | ||||
Digital per transaction technology fees | $ 0.08 | |||
Maximum [Member] | ||||
Digital per transaction technology fees | $ 0.395 | |||
US Stores [Member] | Domestic Franchise [Member] | Cash, cash equivalents and investments [Member] | ||||
Advertising fund assets, restricted | 136,600 | 143,600 | ||
US Stores [Member] | Domestic Franchise [Member] | Accounts receivable [Member] | ||||
Advertising fund assets, restricted | 9,700 | 13,100 | ||
US Stores [Member] | Domestic Franchise [Member] | Prepaid expenses [Member] | ||||
Advertising fund assets, restricted | 5,200 | 6,000 | ||
US Stores [Member] | U.S. Company-owned stores [Member] | Cash, cash equivalents and investments [Member] | ||||
Cash contributed from Company-owned stores | $ 4,200 | $ 4,800 | ||
[1] The condensed consolidated balance sheet at January 1, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
Revenue Disclosures - Schedule
Revenue Disclosures - Schedule of Contract Liabilities Consist of Deferred Franchise Fees and Deferred Development Fees (Detail) - USD ($) $ in Thousands | 8 Months Ended | |
Sep. 10, 2023 | Sep. 11, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred franchise fees and deferred development fees, beginning of period | $ 28,225 | $ 29,694 |
Revenue recognized during the period | (4,680) | (4,688) |
New deferrals due to cash received and other | 2,456 | 3,774 |
Deferred franchise fees and deferred development fees, end of period | $ 26,001 | $ 28,780 |
Components of Operating and Fin
Components of Operating and Finance Lease Cost (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Operating lease cost | $ 11,058 | $ 11,302 | $ 32,734 | $ 32,366 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 1,282 | 1,228 | 3,794 | 3,631 |
Interest on lease liabilities | 1,010 | 1,086 | 3,008 | 2,922 |
Total finance lease cost | $ 2,292 | $ 2,314 | $ 6,802 | $ 6,553 |
Supplemental balance sheet info
Supplemental balance sheet information related to the Company's leases (Detail) - USD ($) $ in Thousands | Sep. 10, 2023 | Jan. 01, 2023 |
Land and buildings | $ 83,854 | $ 83,902 |
Equipment | 3,941 | 1,606 |
Finance lease assets | 87,795 | 85,508 |
Accumulated depreciation and amortization | (22,382) | (19,405) |
Finance lease assets, net | 65,413 | 66,103 |
Current portion of long-term debt | $ 4,347 | $ 3,313 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Long-Term Debt and Lease Obligation, Current | Long-Term Debt and Lease Obligation, Current |
Long-term debt, less current portion | $ 70,157 | $ 70,886 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-Term Debt and Lease Obligation | Long-Term Debt and Lease Obligation |
Total principal payable on finance leases | $ 74,504 | $ 74,199 |
Finance Lease, Weighted Average Remaining Lease Term | 13 years | 14 years |
Finance Lease, Weighted Average Discount Rate, Percent | 6% | 6% |
Operating Lease, Weighted Average Remaining Lease Term | 7 years | 7 years |
Operating Lease, Weighted Average Discount Rate, Percent | 4% | 3.90% |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information Related To Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ 11,798 | $ 11,581 | $ 31,889 | $ 30,076 |
Operating cash flows from finance leases | 1,010 | 1,086 | 3,008 | 2,922 |
Financing cash flows from finance leases | 1,288 | 1,038 | 2,724 | 2,816 |
Right-of-use assets obtained in exchange for lease obligations: | ||||
Operating leases | 5,230 | 4,241 | 17,405 | 35,405 |
Finance leases | $ 398 | $ 453 | $ 3,452 | $ 453 |
Maturities of Lease Liabilities
Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | Sep. 10, 2023 | Jan. 01, 2023 |
Leases [Abstract] | ||
2023 | $ 15,320 | |
2024 | 45,493 | |
2025 | 41,006 | |
2026 | 38,893 | |
2027 | 31,281 | |
Thereafter | 86,761 | |
Total future minimum rental commitments | 258,754 | |
Less – amounts representing interest | (37,078) | |
Total lease liabilities | 221,676 | |
2023 | 2,499 | |
2024 | 8,738 | |
2025 | 8,816 | |
2026 | 9,425 | |
2027 | 8,239 | |
Thereafter | 68,448 | |
Total future minimum rental commitments | 106,165 | |
Less – amounts representing interest | (31,661) | |
Total principal payable on finance leases | $ 74,504 | $ 74,199 |
Leases - Additional Information
Leases - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 8 Months Ended | |||
Sep. 10, 2023 | Sep. 11, 2022 | Sep. 10, 2023 | Sep. 11, 2022 | Jan. 01, 2023 | |
Rent Expense | $ 19.7 | $ 17.5 | $ 58.8 | $ 55.4 | |
Finance Lease | 1.4 | $ 1.3 | 4.1 | $ 5.1 | |
Lessee, operating lease, lease not yet commenced, future minimum rental commitments | 40.5 | 40.5 | |||
Potential future payments | $ 20 | $ 20 | $ 24.5 | ||
Operating Lease [Member] | |||||
Lease Term | 11 years | 11 years |
Supplemental Disclosures of C_2
Supplemental Disclosures of Cash Flow Information - Additional Information (Detail) - USD ($) $ in Millions | 8 Months Ended | 12 Months Ended |
Sep. 10, 2023 | Jan. 01, 2023 | |
Schedule of Cash Flow, Supplemental [Line Items] | ||
Capital expenditure accrual | $ 4.7 | $ 6.9 |
Accruals for excise taxes, non-cash financing activity | $ 2 |
Company-owned Store Transacti_2
Company-owned Store Transactions - Additional Information (Detail) - US Franchisee [Member] $ in Millions | 3 Months Ended | |
Mar. 26, 2023 USD ($) | Mar. 27, 2022 USD ($) Store | |
Business Acquisition [Line Items] | ||
Number of stores purchased | Store | 23 | |
Receipts from sale of franchisees | $ 0.1 | |
Reduction of goodwill related to sale of stores | $ 0.1 | |
Payments for purchase of franchisees | $ 6.8 | |
Value of intangibles purchased | 4 | |
Value of leasehold and other assets purchased | 1.7 | |
Value of goodwill purchased | $ 1.1 |