DPZ - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 Domino’s Pizza Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Communications Relations. of EVP McIntyre, and Investor Tim Please sir. go ahead,

Tim McIntyre

year hello, Thank Katherine, our joining full the Thanks, fourth for and of call everyone. results you and the today quarter XXXX. about

Ritch Allison, call Chief Officer, Lawrence. Jeff feature Today's who Financial will be joined will by CEO,

this forward-looking primarily the be to any As morning’s event are kindly mode investor the throughout I and In refer the for in audience, the you that XX-K. others you the release, you Safe know that media all and our made, I Harbor so call. X-K unlikely this ask can statements members call is of the to in find listen-only statement

analysts We comments and CFO, will from Lawrence with Jeff from prepared questions. followed CEO start by then Ritch Allison

you to this yourself we As one that always morning. ask question part limit

turn And Lawrence. that, like with I'd over to Jeff it to

Jeff Lawrence

morning and Thank good you, everyone. Tim,

for solid quarter, In we as the global delivered continued fourth brand our shareholders. momentum our results positive

of XX lead to international the continued quarters of quarters XXX comps. We comparable industry positive broader with sales consecutive and straight positive restaurant U.S.

healthy to We a count at in nearly as new we global opened store continued increase XXX QX. our net also pace stores

resulting in prior an over $X.XX, QX year EPS operational strong increase XX.X% quarter, of diluted Our was primarily from results. the

favorable capital. $XXX interest we disclosed, of match long-term also locking rate recapitalization previously cost to As QX, which our completed million fixed our and in a in leverage a lowered increasing transaction our business growing

share $XXX million and returned nearly to during comprised We cash buybacks also shareholders QX dividends. of of

the quarter by dollar. global of and sales the compared X.X%. to global year currency Global Same-store lapping international was retail in of for impact of look pressured U.S. With sales year growth business X.X% grew that, as quarter higher This the and sales financial retail for a an foreign opened number same-store sales prior sales increase X.X% take grew at a results the of prior stronger negative same-store by both prior increase sales. X.X% grew retail X.X% When stores a rolling by during increase QX. X.X%. the average closer driven grew a excluding let's the our year for

X.X%, down our at owned lesser carry our U.S. Breaking out both was a up delivery driven company a was Both were stores continues comp to up comp, And U.S. ticket The particularly our our and X.X%. carry this franchise growth. while overall. grow to business extent in quarter the rate. and grow businesses continued by order outcome impressive to

positive food QX was the up demonstrating highly over in in and Our QX sequentially delivery resilience competitive comp delivery marketplace.

comp international by quarter and order for Our the ticket also driven growth. was both

front, XXX of in On XXX we store the net the closures. opened fourth unit openings U.S. count quarter five and stores consisting

XXX opened franchise division QX, we demonstrates and We industry. efforts store closures. units of the international net acceleration economics XX the during in stores enduring comprised of X,XXX partners and added new with the wall of XXXX combined our XXXX, which believe strength in four broad an the Our best restaurant XXX openings over

fourth existing from foreign XXXX. franchisees quarter disclosed second of the U.S. international quarter in partially $XXX,XXX currencies. certain and chain higher strengthening to also the an the currency market year were previously XX New from year, by franchise the sales partially primarily were corporate driven negative company These franchise during owned The global store revenues the against to Turning quarter changes increase revenues. revenues higher dollar rates drove by due revenues supply impact stores up international resulting for higher revenues, sale total which sales versus and in of offset was by increases lower prior York X.X% retail the exchange retail in prior royalty of offset the our to

percentage a was operating New X.X quarter primarily as year-over-year points margin, prior was impacted store margin positively to store the points our for and York the from margin owned by operating York of to and revenues year increased from XX.X% operating sale margin quarter on the revenues in the XX.X% while business. consolidated global percentage Moving chain our franchise up operating by sale. X.X company was year-over-year percentage Supply store down driven New higher

the on of and existing G&A G&A franchisees company store cost benefited in a million owned three approximately compared stores were the These compensation. prior offset pretax based performance by million $X by as higher approximately gain New sale partially the decreased quarter. sale was York to of to QX. decreases year $X

for percentage X.X year prior a percentage the Our reported from impact XX.X% was rate benefits tax positive up X.X the effective The compensation. in reported tax included point quarter quarter. tax the quarter equity-based on effective points from rate

We expect effective volatility equity-based in to continued rate benefits patch to tax our see compensation. related on

up, fourth it million prior When quarter. all up quarter net or our you the add year income XX.X% over was $XX.X

$X.XX a was EPS the was diluted prior increase. quarter which year, XX.X% $X.XX in fourth versus Our

adjusted diluted Our fourth which the quarter for increase was as prior XXXX recapitalization versus was transaction year. XX.X% our a $X.XX, EPS

breaks increase $X.XX down. that how Here's

XXXX resulting by from months negatively outstanding net $X.XX. balance impacted by higher over expense Lower a Higher recapitalization $X.XX. count repurchases us share interest debt share primarily primarily average resulting benefited diluted XX us resulting from the from past the

us rate most results benefited negatively tax by importantly, effective by impacted and us our $X.XX improved $X.XX. operating higher Our

the for full sales sales QX environment, more X.X%. few for retail competitive our X.X% from to a able second international same-store and global challenging In I U.S. grow the a year, on would our like to for holding grew grew constant, were when we highlights dynamic to division sales X% Transitioning XXXX. and same-store a financial for hit currencies

also XX,XXX opened store during our We globally XXXX.

healthy strong discipline cash growth improved our G&A investments diluted year-over-year and in free to growth led sales around generation. continued flow consistent Our and our EPS and

ability with the for while pleased critical business. to performance efficiencies continue We driving year, the investments our our fund strategic are including to throughout

Now turning to cash.

financial we of our over we free nearly of demonstrates by activities $XXX believe CapEx, flow. which that $X.X During cash net million is cash million, XX% day, operating billion. generated was more On full a flow our deducting cash generated After $X average for we than and XXXX cash performance. year model which free per in XXXX, provided outstanding free flow increase generated

completed $XXX of a in which transaction also a of new fixed interest recapitalization issuance million notes rate with XX-year We the QX, included pre-tax rate. X.XXX%

to We additional are locked low in very future. the debt as into pleased have well rate

allowed Our of strong generation transaction cash commitment free and from recapitalization long-term XXXX. cash to our proceeds continue net shareholders flow to during returning our us

per year, million full million X.X on average, the shares or $XXX approximately repurchased repurchased $XXX we For million retired QX. $XXX share including and for in

of additional we as in the have recapitalization. QX of from worth the shares net an We also repurchased XXXX exhausted $XX proceeds million

approximately a million our As reminder, share board under we $XXX now program. repurchase remaining have authorized

million fiscal to returned form $X.XX the QX. in year, quarterly For also that to of our were dividends, including two paid full million the $XX we shareholders totaling during dividend $XXX payments

not on XXXX On our per and generated also $X during million in per million we average, returned when cash have total. we add free share average, $XXX more only dividends than repurchases in to shareholders day day than but million have or together, more you flow, $X

previous dividend. per into yesterday declared share, that XXXX, As just the quarter's our quarterly $X.XX of XX% Directors over we of a an dividend pleased we increase of Board are move

it items mid-January. that would to you we Ritch, outlook turn Before I annual we remind communicated of like XXXX in to over the

foreign be everyone year. week estimate on remind currently would store XXXX royalty to U.S. currency like XX our projected We X% that within of be $X million. food I to is fiscal flat XXXX the system up impact could First as as compared that compared We XXXX a negative in will XXXX to the revenues to X% to basket levels.

CapEx as continue increase innovation. well We expect $XXX as investments chain capacity in to $XX the to range invest growth in million as million supply be we to of technological

our as performance our we our that on year. such million corporate $XXX expect range with full to continued expense are as our for plan as in be Keep in consistent We on down other year performance Overall, momentum and G&A other the that based fiscal of affects compensation can expense depending a quarter areas vary results mind or based and fourth expense as pleased solid XX G&A versus XXXX. store well things the million up to among $XXX week advertising. our variable

focused remain great forward value communities all will serve. we relentlessly driving our franchisees, and providing of customers, including on team the and the stakeholders We to brand shareholders members,

joining the call Ritch. to I'll today for and turn Thanks it over now

Ritch Allison

this Thanks us Jeff, and for thanks to all morning. of you joining

On things. the do call a to like this morning, few I'd

for First, XXXX. during some quarter XXXX in on our the international U.S. things both and total on I'll forward discuss as businesses. And we across and some focused that we're look then, of our our I'll the share into reflections performance

to take as that be Following happy some always, Q&A. we'll

our with as U.S. our for roadmap So let's with morning, this started get business. that

extremely during and demonstrated throughout franchisees, our just quarter, the am by passion U.S. the of I of commitment all proud but not XXXX. the

business with calls, competitive competitors focus we're a constraints unprecedented a we fought restaurant delivery. our associated and a XXXX profitable an group back running alignment It system year our As or where a acceleration that more as we marked against we discussed model. the was on than not as requirements of activity prior ever important new was of across bound believe by

While restaurant delivery we rapidly research, a of industry no in across variety landscape grew transactions. observable reviewed the as inflection we industry restaurant saw third-party

produced aggressively more benefited certainly occasions, delivery but players Now many some flat declining with who customer or incremental restaurant traffic. brands pursued

delivered and alignment focus of U.S. industry same-store consecutive as the our Domino's than grow year With faster we restaurant share meaningful the that a the category. and pace within We really through unified to consecutive shine took in of tenth a as positive at quarter backdrop, system sales continued pizza the XXth our and

sequential at slightly comp the orders And pleased the overall, the for retail for while also year, to increased XXXX. same-store X.X% account results. than U.S. was the I restaurant delivery During industry. versus for delivery sales and X% year, were improvement the in significantly our U.S. the faster order grew in QX the quarter see X.X% negative quarter,

throughout strong was the growth by and traffic. was Carryout year driven

basis also in total positive to across on the our system. order carryout contributor count and was U.S. in once a again was same-store Store the sales during U.S. Our significant positive X.X% XXXX growth retail X.X% a growth

franchisees in Our and year. businesses resulting their new invest for net continued the both to alike XXX existing new stores in

we the in quarter, X,XXX the During store passed milestone the also U.S. fourth

the than in we have XX growth U.S. remarkably the last look been of economics U.S. level we this stores the In over As XXXX, have the stores back we in closed repeat years fewer U.S. closed and XXX the that stores years across going Fewer one. five than total U.S. business. business. in to I'm also happens total over store And XXX Those kind stores opened in the level five last across low unit sustained closures. economics. our new in five with drove only XXXX last of closed strong years, net over a we

ended I'd program plus which the now a XX year. enrolled the highlights in store hit also corporate in like rate digital few members. We our share at our We have from in And ongoing XX% million business. a and million run urban XXXX database. in concentrated active digital XX year our more of with digital efforts. the to in We a reached in XX our final markets, run our sales sales over million of customers milestone rate a of U.S. XX% business, is period loyalty

Overall, strong of quarter we growth. a year by good sales evidenced the finished as top-line

its work to in have contribution in getting same-store traffic sequential sales order to the still fourth back overall showed quarter and of count consistent plenty to we the comps improvement based While mix. do

while we As was pressure headwinds pay delivery off as are outstanding strategy the back in on off. quarter, we grow business the that quarter our delivery our orders that to during does continued while to difficult see carryout appear that aggregator us continues appeared it to QX, level forecast, to to traffic in on look

brand a franchisees progress another happy hear get profitability year with and You we and will with to areas operators. for an that say me always with plenty imperfect said, of our our I'm strong are better. of But that work and in growth

us. to to a in areas ahead of business, U.S. focus XXXX look I for few like I'd the As highlight

continue to our going to we're fortress First, markets.

enterprise for growth. continued profitability position should and well wall to them four for strong Our continue franchisees

We and key as territories we continue and to territories. fortress see metrics for compare favorability them our to stores non-fortress our

more and lower costs, carryout incremental economics for our consistent drivers better faster see traffic. We delivery service, and

further in company to for in store overall continue markets to we growth. store owned drive including investment plan growth XXXX will where our accelerate our Fortressing

opened chain three a in in We're also opening supply We new XXXX. Winnipeg center in centers new January.

will Carolina South the Columbia, center in first the open half year. Our of

that and Edison the of open chain our Our existing second half Katy the and New Texas also thin center line to adding crust center will open we're in in is second supply XXXX. Jersey half to also a scheduled

ever some always of our and to mind QSR come position this pleased value of excited summer. news and as matters we continued Value's unquestioned than discipline for also segment. you value year navigate new this for look us menu landscape to current the pizza I'm know, as We're that leadership deliver top more the within through with and

up and our in more pizzas before. on Getting fresher, to ramping hotter, focus ever XXXX. our customers, We're service consistently than our

our Fortressing the position for zones, in through part and battle. will business very us is success This for delivery that's We're training, operators. priority a connection tighter doubling the only on help of XXXX. points with down but high communication me

for remain rolled and to it's in in and roll recently our get already the over use our half out to key us our technology in customers. oven investment has U.S. to will area in our been GPS continue to out pizzas also We technology out We'll operators stores our a XXXX. of help Innovation and stores.

seen have with really highlighting ad GPS fun that a running Business. we're may movie our the now Risky on You the technology take

also digital menu brings to personalization Pie the went Pass carryout name on technology our in Our and them air greeting boards. week. stores by this on earlier This customer is

if may this TV you've from have seen commercials, little Cheers week. You Norm watching been him, you've our if in a seen

progress related will delivery. to level also continued operate make areas our other taking curtain to behind technologies Dom efficiently. in store the order We talent and help that more autonomous

highlight estimate area the of you XXXX shared April, the our land with profitability. range more to but in on is you final per number And I the with shared Jeff that our in January. EBITDA Now high-end expect last earnings XXX,XXX level share to store you with now XXX,XXX Jeff we'll call focus want store in franchisee towards to January. the we

our strong that any their cost are in labor our on within are market level comparison The markets. while by industry, that of we franchisees and pleased remained we under profitability recognize intense cash the Fixed bring very above cash Now, unit wages returns some country. is to continue costs added above rents increase tight store right costs and and now continue of number continue such the a also pressure. other insurance as level to level minimum across -- to rise and pressure

and store to for our our these team at we My and enterprise I helping we level for efficiency and remain intensely just focused profitability franchisees recognize markets. the drive challenges are as on and corporate

fourth in all our quarter well happy full performance So with U.S. for I'm as the in as the all, year.

franchisee long to what We fundamentals, focused will on continue play remain the disciplined our game and we the decisions. will and making health matters,

business. we I'll move XX international meaningful retail sales and the performance growth the quarter. improvement driven of terrific now regions from three on business our sales for growth, the quarter to this first by a relative quarters to a unit positive positive order Same-store growth was of in XXXth our year. international consecutive remarkable run solid That's in year where had another in

the enjoy in reflect many openings level the XX international globe. add unit and We in on that closed you economics to full it's to a than almost terrific around number, full we store only for year, our quarter XXX XX,XXX a the our the net continue base XX,XXX XXX global Our closures U.S. stores for store markets XXX of brands. for year less when

Germany new great the three XX,XXX we Czech globally now in new important countries, highlights, and welcoming hit a Spain stores in Mexico, XXX our time passed markets now. first Russia. we I'd Domino's milestone XXXth opened XXX Canada, a to family. the market several store And teams we in in of XXX out for Republic to store France, and in key for few and some stores and opened each We give XXX Luxembourg these shout like to the milestones in in Bangladesh, the teams those our

in any net new market XXXX stores highlight Brazil. in Domino's to two in India XXXX. Brazil. had the an XXX with years emerging also total net the China grow delivered more in net surpassed we surpassed exceptional total new want outstanding XX year other during U.S. markets, in than XX in and outside and Among of more store XXX Japan that stores had markets, stores Japan India XX new I stores new our Both stores outstanding and breakout growth, net market in established China and our

South teams Netherlands Domino's Korea the France, and in Our anniversary their celebrated as XXth markets.

same-store our And the currency is foreign sound. in to while already opportunity our during new We're improvement we will outstanding international sales that help necessary excluding growth, XXXX X% to address healthy to that take and actively the partners for reverse shows heights. sales working retail fundamentally and certain softness the be continue same-store business recent in with very sales markets in our international, an business impact to

So global continue our help of the its sharing operators business I terrific corporate support full with the international combined group and to produce practice our that feel to potential. best confident reach results will desired

way proud one technology, including evolving to business, of of always aggressively a committed to to be In Domino's and a the way members collection proud stores franchisees number across continue of food, I'm owned fulfill the for in-store we franchisees to I'm an our operated continue neighborhoods. experience. of in dreams of Domino's business our with e-bikes, billion proud and vast aspects world. of a our digital of great store franchisee. is I'm offer opportunity to That's are homegrown as an global the ownership their and closing, by GPS, each all a the we with majority none. operate innovate brand $XX the now team way of their AI incredible passion around second respective

we've our commitment and between economics. don't you operating and have results, focus our delivers With disciplined model a long-term, that bottom growth record choose of as standing a top-line growth to long to and franchisee on both. of system the a Domino's line demonstrated track proud I'm profitable

And with your Jeff and that take happy to I'll be questions.

Operator

question Bittner from with Oppenheimer. Brian Instructions] [Operator you. First Thank comes

open. line Your is

Brian Bittner

When been I six a much look impressive it in when And you -- historically first tougher at quarter's the is quarters. you. your X.X% the consider comp the quarter this acceleration marks quarter, for fourth

the like You primarily the being you touched acceleration acceleration. more? a delivery that into competitive of the would from on loyalty up the as that marketing off Can out this change or anything acceleration call dive that and internally in little traffic. did traffic leveling you driver driving bit driven sequentially you improving incremental Was quarter Or externally? of the

Ritch Allison

It's Ritch. were a proactively things but the driven marketplace. it combination, more Really I the that think we in by do

as as a advertising look out activity I, the lot of So, certainly at first also there, on your side, still and aggregator I both, external digital. but promotion televisions we saw

these felt a and still to things bit, drive quite the here the business our certainly really were the discussed delivery we fourth quarter, resonated our while you like at QX, launched pressure insurance we When was So our an proactively to which customers. in leveled and that innovation intense. things think off relative in know, about there some I we program the did you that you with September We of when with garage.

a make customers as think brand a about when Domino's mistakes. we Our transparent accountability takes that is as and brand that

resonated campaign with this them. well So

light crust business. and outside the terrific variety in the We also that on carryout business and resonated of results also the the menu. drove were quarter carry that on And promoting our the bringing we have particular throughout to

of of effective. total, things markets As around well. a work about country the across didn't the in always, our that business program to with lot certain about that in late did going incremental was the also We promotional and I'm as a sales you lot some really but talked drive launching not transparent night be

overall So key now around in we've using a some the are more country. it but that dialed markets bit back selectively

how of the really we internally, staying but at in So there, of it'd kind a nicely look it, that's a Brian. I worked still lot External, quarter. things be pressure of lot flat, did

Brian Bittner

your that system aware benefits about Is small refranchising, your EBITDA fast basically of unique on quarter. grew growth Thank the that happened on, the the as flow the as was there a heavier any fourth but you. And product through quarter anything of? talked I twice sales should Jeff, in mostly you be that know in focus on growth gain else? or we lastly,

Jeff Lawrence

Yes.

free year New a G&A couple bit to And no little we most and prepared originally. financial that, make EBITDA G&A ratchet We So the important able real thing bit is bit think going Certainly, the done invested the long little all on flow. York earlier to the mentioned strategic noise leaned business. leaders helped and was thought really that being there will my through in in I little see having on flow the the game remarks a both that XXXX. sale the think a you Ritch that cash you the I than said a but in were mistake, around we more really in to were initiatives in CapEx heavy think we all we a stores the on again in line, drive of the coming sales. down additional we other business, during still the through discipline But continue in in I all

invest customer in we slowed and to and which XXXX that the that great innovation we have and I think in supply So there of going the at investment centered seriousness was continued will little a We bit, squeezed it really opportunity. continue a you'll level chain experience but hasn't advantage capacity, thought of don't down we where down took slow and see forward. down technological

Operator

you. Thank

Our Guggenheim Matt Securities. DiFrisco next question comes from with

is line Your open.

Matt DiFrisco

probably the for that skews to what a well? percent technology you and skews -- when does either like a lower? been in there presuming store I look digital Is some XX% break as out on and by a the and you guys drive as of pretty sort then higher carryout little appreciate to it growing How little carryout color try it's way fast. as giving carryout of there, are delivery, delivery the use carryout, think -- how we should that far there about is all obviously that digital the

Ritch Allison

Hey Ritch. it's Matt,

the the carryout a mix And is digital percentage the side that -- delivery as to grow of business. has the So carryout the digital drive to certainly, side percentage. our most up of we objectives of digital one business higher side business of honestly, then continue the

commercial, you started this Monday the So, the of in the Pie greeted on your you seen digitally. in picking running have of week, to ahead store we may ordered our to up of expedite order Pass process to technology being pizza, time in have have and

that using side. also a us smart in us help so one not uptake drive on that teams that that Because to And as see to for digital that's drive innovation us to we're and investing try our we to drive, the working other smarter great more and order are here. are things on customer to but There that ticket the in opportunity business upsells opportunity continue count other only an business. help given things do

certainly for going opportunity most forward. So us an

Matt DiFrisco

specifically Houston that an just update then September talked what's a the How and And expansion perhaps? some of new the going also in lot timeline on any technologies, give about us that and of the those tests is cars. you test could there of, is or the sort you Excellent. driverless the

Ritch Allison

or I'm in so the down going with September, they around, have Nuro an that there personally a hand of Matt we bit within well this out down a may on testing And seen, it was at Houston. so in far. to week have talked approvals regulatory are that. there Yes, good. is some month as to about working hand we going And look announcement last received so but conduct myself so so deliveries you the far in

a approach to helping to our with frankly we and delivery forward autonomous forward. So to-date partnership we're excited where about shape and from the lot this looking learning it are going

Operator

Thank question next our Chris Stifel. from comes you. And with O'Cull

line open. is Your

Chris O'Cull

new you share process go focused Ritch, the about what want the a talk a any details products, I you're to of new then success customer certain you to testing the understand appreciate, can probably needs product? addressing Meaning, new through but hoping also on help you you accomplish us threat? evaluate about state are competitive to products? many don't could And likely or with

Ritch Allison

Sure, Chris.

it about around what franchisees. product is for is development, process incrementality So think our decision new centered we our

So, you that's also franchisee have not just for take mix of brands incremental a incremental product look differently by a a post-release. will identifying gets measure, We of it actually success consumer new product that products sales, not lot that that the enough, starts with course a strong at appeal. what profits now but of But little measure we and salads lot We incremental example. We of because that through through but to salads we drove launch and selling a Not on sell selling salads based launched to profit launch our incremental pizza salads the success for didn't the salads. profitability use a the an I'll of launch pizzas. products salads sell stores. in and

lens the that's So that we look through.

force terms without end. incrementality benefit the for looking of stores? sales ticket the go there. into the that the it going a as the overall to basket items it's traffic why with Will the that operational But ultimately products don't our And were see we to significant on then what of when that products into dozens many a we lot new great more down don't be? franchisees, we're appeal well? consumer consumer help complexity drive and because drive profitability incremental kitchen, and what really it the add taste back the for if test appeal. we happens is So into they additional -- And launch of not our franchisees? the But that behavior and we're drive profits in what with customer processes start obviously have of stores the Will testing

going coming for to excited I So we're I'm for that's be it. approach I we the will that franchisees. up think our that exciting that and some consumers this also, take And, to summer know, news have exciting

Chris O'Cull

think on international of of bit little in Can we mentioned you fewer year-over-year. that quickly a And openings as and source openings, I then color provide you helpful. XXXX unit the been should a some the year. down past was openings as the anticipate then, big why That's just was a this result have it Coronavirus? China case to may

Ritch Allison

last our had the in of Fourth So a higher last may the might were in Germany, look recall, actually stores you Hallo if in of quarter unit fourth some at openings year. pizza we fourth year, but international tailwind from the they were on was openings lower, you remember quarter were the in coming the total XXXX, of we you pushing than of really which hard conversions year. quarter

to two for good as the laid economics four our X% wall by feel outlook. business. international to looking X% driven global you really growth we've about our strong forward the that's across three out And very I still year unit that

your the our small overall on terms also a impact of relatively count sales. and is question still Coronavirus, terms retail today store portfolio To in of of the in China of part

Now, growth as my China earlier, big a XXXX. store to comments highlighted in contributor was I in

there Coronavirus As over how we handling I tell dash you that of can the proud happening I with today, look at is really am what's brands things.

the You of the that members the one the market. in It is priority we've got now our At help openings than sales store XX and is stores know, present, our number not China. in team or are right closed customers. fewer

of are the don't some store with I But of of and are in virus as part the are over I so China long-term don't our impact closures, Obviously, just But slowdown -- of this them control. But, under citizens see with there to do I get early business. temporary there a this our is All a those It's this long-term but impact. a not year in the expect a temporary team for permanent. on the as impact, see members this none thoughts virus openings. inevitable.

Operator

limit yourself to a as one reminder, question. And you. please Thank

Our Senatore Bernstein. next comes from with question Sarah

is line open. Your

Sarah Senatore

comments I I off. about leveling but sales you an a aggregator stable? rate pressure? made aggregator just look of real right you? Why of back want where how growth want up the or comment leveling split it step interpreting I pressure is understand to accelerating state we hairs, be the X% we of are it be just is clarify saw this we're guess not? I'm don't now, to is dollar to sort steady it X% your I'm Is saying if in or aggregator to in to off? trying shouldn't to was sort you sales fortressing heavy stable why about for it sort constant before Why

Ritch Allison

Sarah. Hi,

I bit. incremental a say 'XX and 'XX, new cities to try second traditional media when mean in advertising the the and and aggregators saw significant marketplace. and digital level first in significant I into both little So the spending country half increases on I'll of off, clarify discounting relative to push When half the of of across significant we

didn't just We ramp there. like still is some previous more of stuff the that up, seen had see quarter. of a on we of All

elevating about think So us is not still just It's QX. it didn't pressure all from as as the see on it we -- there.

to honest continue don't don't continue going keep just we of Now XXXX. I'm to best in a metaphor to were know going they don't advertising in standing know, I going discounting what's these with and have I going be going to because as to they're behave. to think choice. keep squad think firing you. now any they folks are circular happen right We can how to The

the to we're And, bullets we how we might not by firing in a along And the expect the know we stray way. to just exactly don't of so while that. middle few quantify yet get hit squad,

year growth our way. and got X% deliver like quarter-to-quarter. moving it So that it not to outlook. franchisees really we model We're a range, that if that's healthy around along is our in business can reward why, can X profits the operate for the We X X%, can to and feel a shareholders we

Operator

you. Thank

Our from Suisse. Credit next Lauren Silberman question with comes

is open. line Your

Lauren Silberman

And currently was sequential the what delivery you're Just the comps percentage metrics, has GPS U.S. whether it of times, that in that across delivery technology? store on attributable satisfaction, in the what then to segment. have system clarify, customer color and acceleration Can saving? tracking, all any you relevant the provide on to be seeing labor implemented

Jeff Lawrence

the Hey GPS. Lauren, then over Ritch on I'll take it's one kick I'll Jeff. the and to first it

on really that focus And We're comp fire operators our the customers Ritch QX, the the greater big the getting franchise as what really of cross comp carryout. day it the most hard strategically really behind far make of just tools really way. section given and it. for saw heavily a carryout as It's that carryout technology our it. the surge advertising in we mentioned in want. [Indiscernible] business a big every was at better and earlier, and in to on into As a

delivery side, On the improve over It tougher competitive did sequentially environment there. QX.

in So our see we to the to that very, remains And we that resiliency customers definitely in business. strong. were can provide pleased segment feel like the value that very we delivery

So in both those I'm of businesses. we're glad

them delivery better technology. continue experience behind the carryout consumer did bit a advertising but than to QX over and Ritch kick little to invest GPS to in in it date Going heavily I'll on commentary. The

Ritch Allison

very, of the personally a out them talking operators. manage reception getting And really our to and store of managers around our out it very out positive helping -- over getting out our as few and a better with quite been actually is to couple GPS we I've technology, weeks roll among franchisees Because Yes. complex in food what with customers. a last I've stores is store process the the

exactly knowing where drivers in the the pizzas close terms are, their knowing in of the the drivers to out when get hands and enables to us returns, ready door those are they quickly. store So of and

early, some some seeing we're times, turn turn the It's technology. in really reduction times. that So still reduction very have in new this in stores adopted but

to so honest you about have have It's it my the or you've two we're it consumer too the sides look And side, GPS get ourselves, And as training the as the One if that. me and managers, we the driver but accelerate on real mind GPS. excited needed and mean, on and hand. think can forward thing drivers GPS is will for get in our but I with side. we it delivery the there way Well, have our GPS in where early, But are more of Uber that customers consumer pizza we them. I and to route delivery Lyft competitors because that to learn in for historically the to is there. really already it, place inside a a anytime got how to with about from customers, come important I I'm run business know fastest still It's our our They for a are months also drivers operate change area. the we stores as to is benefit an today. well. three six we've the for GPS got those to

Operator

Peter next BTIG. with Saleh from question Our comes

open. is line Your

Peter Saleh

the of I in terms rising. a what elaborate of how -- and some margins? on pressure and wages walls aware under GPS think outside the mentioned the into are efficiencies bit to that franchisees of you stores of the much you're you Could with of costs tracking you guys try the mitigate four cost within of improve were some putting place little the

Ritch Allison

Sure.

in minimum and where the significant out of So across yes, along labor sure of the there are is know. over wage a not states cost and pressure you we've the you as look a as marketplace guys restaurant It concentrated there seen time. landscape, lot it's all you in coast see I'm increases lot and uniform

are franchisees like just those dealing our industry across pressures. cost So operators with restaurant the

trying one about were labor things that number which working time GPS In provides terms is on just we're we to are the orders, that of on. shrink efficiency. talking we're of them a whereby of there efficiencies, turn

in to inefficiency if a right in sure honest are make stores that each the is our our today with have we we're lot and to store there We of business piloting some ourselves number system in AI-based our corporate about try been algorithms that. of of labor hours scheduling using

So, that there. are a things on lot going of

Innovation stores, able of every those is our seconds trying as of all for a look it to to and be Garage successful. of we and up game focus come you We're We're looking taking set our some how help and a to because look on we're ways were see. with steps we pennies at which at our aspect and operators of operate

Operator

question next Our from comes David Baird. with Tarantino

is open. line Your

David Tarantino

be could one business us execution And for in XXXX Ritch, think I that past you more on you've on is service as you there biggest or current operations an context of of wondering is I relative Thanks. service. your opportunistic. whether in or areas been helpful. the give where Anything the can some see if focus to you was mentioned you this U.S. levels issue offer would the

Ritch Allison

how as it. would delivery. future. I tell we're today, be I David, describe for our not happy as to. ever we're But Yes, on you good is, we've What delivery is good on service can been enough the This

ago. founded So, on promise decades of business kind was this XX-minute

look when be as food at get think or otherwise best delivered, you to I absolute forward, Well, can got we've it. we the anything,

stores with reduction It's ordering X in franchisees, in using like based have obviously the a GPS. now on faster are customers minutes stores that's we of that We those all get our not enable we're average of it. delivery of digitally. to is pizzas technology a so our us part see fortress working much technology versus on And fortressing non-fortress in territories. what about oven and time But that

it. every a at we're So of aspect taking look

of at open time that to take through pizza that shows looking your the app out of process we're customer. step product from all ways you to every time Paramount the to is to that door. obviously safely getting the time But, that to up the

David Tarantino

on do pretty type see follow-up progress this a sales improvement? when And see you the correlation good make related to just to you a the you immediate in market, of that, do this, when

Ritch Allison

The customer strong measure correlation averaged is times sales between which is household, very great and the delivery a per purchase. repeat of

dramatic. in And curve you delivering you minutes I'll When have average. on below XX across of in get is the XX So, under tell operators a the and are down today the yes. -- get you, U.S. to minutes, we number inflection when that

Operator

with Bank next Our from America. Francfort comes of question Gregory

line Your open. is

Gregory Francfort

That overlap There largest have Do that you one bankruptcy. you through of going night Is much that -- your likely U.S. competitor of risk looked have your last leverage question, at be average is maybe were the And the of what how great. some Thanks. second something in system? with that the then, articles stand biggest you would franchisee asking all? know the a franchisee at today. is it

Ritch Allison

if the talked in sales, out is industry won't cost there question, a Greg, really growing can as we earlier So, on It tough a first profit declining. our tell you NPC. not environment standpoint. from restaurant be were about on I operating And the speculate that would I we

we XXXX. store growth about, in level same-store talked we our roughly we As be pretty expect to And flat. good sales had profits

compete order to in So continue the to in thrive to and you've got grow business.

share I'm every leverage. got per going X,XXX one franchisee in one even we're footprint U.S, Jeff competing or we units. our focus that we've across Given the that the with X a community around of to specifically stores question on take competing territories let this franchisee out don't second the country. there certainly, operate But, much in frankly franchisees across plus that pretty the overlap brand, brand we

Jeff Lawrence

Hey, Greg. Good morning.

the in U.S., we're balance independent very leverage franchisees on XXX regular their nearly sheets franchise the a P&Ls, to On submit fortunate basis. their that us

leverage not model we just And they So because responsibly. I they're for the of our at. a they bit don't our tell have we use little earned what business in of best because But that where you economics good they risk is, pretty that's understanding significant -- believe opinion, would a and a alongside they've U.S. that us. and enjoy of

as think about getting units big us to a for XX,XXX around the risk those not world. we So

Operator

you. Thank

Our Carril Chris RBC Capital Markets. with comes next from question

open. line Your is

Chris Carril

particularly from how messaging of value maybe to a advertising, a incremental forward? going delivery. to Will that So proposition aggregator be in there opportunity your greater relative much your delivery is your view highlight perspective Domino's part in

Ritch Allison

now a really with then for first Chris, part it business. it's down been we of core message the carryout launched around and XX we the doubled Yes. years. Since on XXX XXX

parties it. into space comes delivery things. be think compete the that it's and when additional what we element for that delivery think to food So relative your this think the I it promotional be to have of about free we of third of component a of sorts the to and And lot a customers against third been activity are will There's order in going continue how with -- core parties charging those fee first part all delivered. of I to play the

how of you a inclusive pay feeding yet how food type third-party. against a family that via shakes stacks any we But delivered to delivery value of proposition look of charges, virtually would out. about take of we've it have a good the other to Domino's feel see So to when we what with fully up you at really four

Operator

Katherine from with question a Goldman have Fogertey Sachs. We

is line open. Your

Katherine Fogertey

about if on you. in here store as of any fortress is question sales. carryout guys are in the of delivery accelerating And around carryout ticket non-fortress fortress mix you A out well? this seeing you quarter, then terms incremental the with to the comment trend bringing or more you're And itself, in on seeing on there and messaging carryout, in both relative increased stores? business stores Thank could cannibalization the if customers messaging to or delivery potentially stimulating the

Jeff Lawrence

one. Hey. Thanks for the shot question. this This is take at a Jeff. I'll

in an for consumer that maybe XX two really But industry occasions. or about with around again, are insight going, so. was separate strategic in they existence the XXth years better company We're first trying to just On pizza where businesses and needs were accidental for the carryout of QX in the separate kind the of is of of well ways. lot year the extraordinarily the carryout our We performing a mix us. occasion, address the

a two, absolutely sometimes results research carryout think but delivery different says, a show that from our the I customer. customer conflict people our is I think

XXX carryout you're like which really the large the drop in the day helping the into many, bottom we're and get total Off Customers outperformance lean into all is special, seeing every comp. it is and some to years many week. that that, really as just can topping we to of drive Ritch mentioned now three

business, Match service helps making of & Mix dynamic their over we're delighting highly there, value offer really multiple long-term it's On The plus XXX mentioned customers the our marketplace that competitive the the own on multiple sure with franchisees stores times of that last shine really the our holding in calls, capture the through over proposition customer. focus and Ritch us value as and but very there. year delivery are our delivery side and food obviously the corporate

super on over QX were improvement we So excited sequential to QX delivery. see the

I'd So say on that's that. overall what

versus stores really the we've the stores the territory, been to it the As of enjoying stuff our you. store it's in brand reaching The are customers same kind that than what we XXX% store, relates incremental. have carryout the with fortress that weren't that new the split Domino's data That's more shows told XX% simply almost fortress that there.

really that's financial part excited important to those the opportunity. the get So equation about a investment of franchisees

simply but store certainly new to were shifting there. addresses, we are the service getting and of delivery new an a customer it that business, up addresses to better from store, safely old the The side time the are picking

about we we're continue So, franchisees that remain strategy. going really on it as our as to together, gelling and excited to it's can super grow fast

Operator

next Thank from you. Stanley. John with our comes Morgan question And Glass

Your line is open.

John Glass

impact of the guess Is program as on that importantly, of visitation impact we been else changing that passed. might the some sales a right contemplating must remembering to you're has from it discussion enhance it correctly something at think the How the you on Can the in talk something been. some just that about maybe just grow. continue the I membership grown, have And grown help loyalty about impact think I XXXX sort year what has had how there point that's to of or points or XXXX? maybe about more has

Ritch Allison

Hey, John, Ritch. it's

in growth loyalty the with pleased were we the So program.

million in mark. we XXXX XX active passed the passed million member we XX in recall, and the mark you'll As XXXX,

time. The to on loyalty So continues sales customers. tailwind get with you impact it grow does for decline resonate and over that

its at looking right enhance in the it over able we're Points campaign and nowhere part to Pies would year have be you this And near looking to for of the what might first ran ways to in enhance we're it have always have because customers we to in our seen to that program. 'XX at value launched loyalty We after 'XX 'XX to half-life a a any and So program time. we continue feeding for going it to our results. you bit find another deliver and and it ways to grow to it, way to of give keep does keep

John Glass

actually kind or a evolution get point shift near-term on more or though it other in or basis. the it idea would change in talked of be people basis program the more them value that of the to read about you as would be way sort short-term you for clear, reengaged Points or Just earn of Pies would be the some

RitchAllison

one Well, where over frequency a which based way structured. won't It's why program, count be order the purpose a X is spin-based the thing as order will in loyalty it's behind program you It's growth to you the drive opposed free that John, to time. program. transaction and a change, pizza it's times get

on focused transactions our drives with driving So business. sales, profits drive which we going know we're in transactions because remain to it

that running that different we with look constantly context, we're research taken the can and ways enhance program. So at a

you that I from can't it frequency. we're tell to different So, a tell about going anything but will drive gives year us through customer be I you that from do trying not today, can now, to away transactions what

Operator

question next Levy Our from comes MKM Brett Partners. with

open. is line Your

Brett Levy

kind of system ask little bit, to a bit differently. franchise the trying on up this following been little Just a

talked you that the but you. and You've push and pressures any any them? doing some a about the both asks you where talked now also that from not franchisees, as right Thank domestically hearing you've about from under. for What areas you're biggest are internationally already back number things are that you're the doing of also, you're they're getting there of

Ritch Allison

Yes.

staff ultimately we help mean, technologies that's I brought franchisees, ask help members. the bear the team more job continue bring overall the teams, to But again. time efficiently. franchisees to something to it grow their Brett, technology run and around that customers motivate and and to serve brand hire their to we time to businesses and them is and for So, system their that as develop their can

out, franchisees see, Ultimately you example and GPS for that that's for we've as us why bring something want that rolled eager grow bear. sales profits. hungry an that's to to and were So franchisees to

profitable So to way. with we together do is things grow outside system continue and of our specific the like always healthy work how technology in dialog a to them around

Operator

question UBS. Geiger next Dennis with comes from Our

Your is line open.

Dennis Geiger

the just in Jeff, business carryout the on strength another the and opportunity. U.S. or Richard one

mentioned. service given In you've the fortressing, we the addition of Pass other the carryout even that the also the greater to Could marketing beyond some you and efforts the Pie tech XXX see promo and success levels, pick that seen carryouts I focus, guess potentially even shifting more competitors opportunity greater delivery particularly for even does are some more Thank an recently? given to present you. you your And here? up of a towards

Ritch Allison

a absolutely huge answer take drive on opportunity it's that we to The transaction that are that in year going is business. one. that it. us. drive our number it offer. segment X.Xx we trends U.S. more we've resonated. answer of try this toward I'll more the do around, the of in for because crust are carryout And transactions all as to the on got opportunities really We that to five XXX basis, delivery a I started We expanded think last see The The include hero the of to end types with to

our in into the could the have thinking definitely that handed technologies of on about offer roll XXX We're them and are the we for to stores car getting and come with into opportunities to is to a can where now out windows, and customers. opposed the up. great products pick are pickup them trying of of carryout through customer working more store the potentially that friction to out up kids our pizza experience. already we a We've the window than take what hard U.S. value have got to or So pull what the as other right the

get pizza and the Pass Ritch their let's up line. to front, So lonely, on it and Domino's jump up on them If I'd I them ways screen. carryout a I'd Get handed the feeling make seamless. and to in name see store. the to Pie the to I'm more the go into and to screen see we're love looking for more likes everybody order to

your of is interesting the this and then shift. competitor it And about question really to a question second part

rolling restaurant the delivery, So in. huge increase happening in in transactions we see incremental what no a but is industry

customers is So in to if And your you're across cost wage for sure most are certainly the high across particularly at business pick markets shift shift that, trading serve. you there drive-through or higher you business, some then U.S., delivery to up channel channels. there if is moving business in brands, the a look

are business $XX, delivery hard have franchisees; serve because side of carryout, a that engine how So very to profitable business, when we our defend but over on approach that becomes think base labor, carryout time. grow and $XX, to got we're business going the you about pushing of we as $XX continue the $XX, an and to profit we hold hour

Operator

you. Thank

next John comes JPMorgan. Our with question Ivankoe from

is open. line Your

John Ivankoe

follow-up? to and what in of just a the unusual about But reported isn't driven lot could of necessarily probably expectations restaurant lack based thing First, we by know that you, had snow a call fourth? I talk on have good guys out a obviously I is a warm you'd dining don't specific really side, the very because you and have trends, And normally on casual to for quarter anything weather change question, that very there weather? that especially like it. Good like quarter-to-date, specifically weather, you the in first

Ritch Allison

we'll John talk in April. QX about

John Ivankoe

I In I prepared touched would ways a you and few in but I remarks like you this revisit got on different your think it. to it.

talked about ideas and being profitability maybe system that necessarily haven't we about able GPS corporate of see that franchisees just the and on finding nickels efficiencies to that talked exist corporate. U.S. about? and I we following the You both what on managing within might not exist of that, driving up what do might be pennies side, store part and structural, type bigger efficiency big at Certainly but understand other

Ritch Allison

we've here, and and it working in better work costs, And reasons service some this. lot it's Garage in that which results we of of over our does Yes, spending not We're but on improvements around also operational of to labor get that time Innovation great built we've to could we AI initiatives. machine these in GPS only question. pilots, the on accelerate about John, one efficiency our bit, the learning team a hard in so levels. not backyard a done, I our it main lower efficiently in only corporate member result been stores schedule, more scheduling, talked

right in the win-win having So there team store members time. the number on of right a is there at the

we've outside other doing these of our and ourselves asking at We're also business we don't them? got if done X,XXX in from looking lessons need U.S. years that pizza things the some international We've more that and stores markets. years our than to we for any learned boxes. keep And pre-fold things are that

at testing store them store corporate decent in at of our like For example, we're taking requires the at in and looking about preparing to in the We're which a and which that at business. we pretty things positioned the night. do how stores us equipment look stores, amount equipment every how we time, that our for comes that rush dinner labor think a our and that use is

opportunities labor to So down or is over going know that to I'm because we're state my no going business only that bet up breaking operation minimum find time. wage. to we in municipality career costs every efficiency aspect willing lower are to for try of the

to up and with not service. operate an going them we So to up environment the cost linearly where go prepared be got provide that with does to your customers' to to costs are pay go willingness in

Operator

Thank you. with Jeffrey Bernstein from And our Barclays. next question comes

open. is line Your

Jeffrey Bernstein

question a program. on the Just loyalty

that usage of one-to-one share average I you'd into in active dial color non-active versus terms now of I you've fourth pushed was to of the having a XX think wondering of north or whether any mentioned quarter marketing benefit on whether wondering higher go not you trying kind million. greater greater mentioned emphasis if or program. any it's in the database. gone XX you you. million how Thank household? know in I that ultimately guess, XX from help to you I do from total pushing XX about loyalty million having usage per million you how adoption. XX incentivize your I'm customers to million even And increase there

Ritch Allison

Yes.

a certainly bit non-active. from us more buy our active often loyalty So than members our

of driver big So into get program. that's a want why we to them the

the this in which we've earlier, not entrenched delivery carryout our our customers. of it is think business is around I side opportunity that got to as as program particularly mentioned lot business, as drive of I continue growing a to with digital

we're So and customers digital, to drive carryout we looking for more continue experience to more ways adoption to to that way. experience the as helpful convenient make our try

You This use of bit about spending asked energy. where now, targeted? how is the we get we more how stage right a data, an do a we're area time also lot early but do and

just opportunities set, the we we the data the stage our database that relevant be and to in the of and effective are more at but surgical And active, becoming that our very can not offers we're XX and I say and Jeff. Looking to think of how present area early million enrolled more XX plus how XX in that customers. plus on

Operator

Thank you.

with Our Company. & Charles comes next question from Cowen Andrew

line Your open. is

Andrew Charles

which In of promoting an the launched domestic the know Your against aggressively kind more the through short-term incremental expensive delivery delivery you of versus headwinds? value third-party X,XXX National ticket? defend now as traffic offering only Pizza we platform. you versus last is unusual restaurants curious concept yours, are all confidence their delivery delivery obviously your usually is month, the is a pizza largest carryout And I'm the what gives that can third-party

Ritch Allison

business. the we we been Domino's have to very Pizza that the Ritch. we now it's take of cost stay is, what I And all-in and enters pizza seriously every, look on take our We that players delivery. relative certainly, we seriously. most it the as we to of that think very still further just into Andrew, for the very that every offer us, feel And delivered our at about system competitor But good every take have or Yes. that a value. comes consumers reinforces in the value can competitor any are focused

Operator

Thank you.

comes from question next Our Todd Brooks.

Your line is open.

Todd Brooks

are there the out partners a to few call As base we the you. would Thank relatively bit across slowing at Can that of the a the of sales. a sales headwind being a performance we maybe across international international talk is most or it about, same-store markets of you homogeneous XXXX. look and international discrete store as slowing same-store

Ritch Allison

XX break quarter, the start that, is markets uniform the in. you it tell outperformed you our would not in And markets. down more operate to I it's countries we across What that our emerging if mature Todd. Yes,

a wanted distinction emerging you markets and during course the to quarter. line of markets if draw by outperform but exceptions, try more of there the So mature to the always large, tended to

Operator

further Thank call Allison at to I like showing am you. the time, Ritch back remarks. turn to no I'd this for questions closing And

Ritch Allison

really late joining XXXX you, I as analysts, our to the speaking in Thank you call first and everybody. Jeff results. discuss morning. we appreciate April and forward look this you thanks quarter Thanks. with We

Operator

Ladies and concludes Thank gentlemen, this call. participating. today's for you conference

day. great disconnect. have may Everyone now You a

Domino's Pizza (DPZ) 20 Feb 202019 Q4 Earnings call transcript