DPZ - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2021 Domino's Pizza, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions]. [Operator like Brandon, conference Director now speaker to hand Chris today, of to would over the your I Investor Relations. please and you, go Thank ahead.

Chris Brandon

joining Executive first Levy. quarter and Thank Today's Officer, call today Appreciate Stu morning, commentary XXXX. Allison; the us from and feature for Financial Chief regarding our Samantha, conversation Ritch for of it, results will our Officer, good you everyone. Chief

in also investor Actual about be audience, are comments this media As materially a or release morning's I all those on for available earnings differ this call and forecast. results want the apply to is to documents our of members Both that XX-Q statements trends I our website. and mode. our our others everyone the could today. from in primarily listen-only of remind ask to forward-looking

For in discussed risk more our to filings please information, the SEC. the factors refer with

earnings of be find today's addition, the to disclosures please may that release measures reconciliations X-K and referenced financial to refer call. In on non-GAAP

Our as our to of best many our accommodate as want this you We request to coverage permits. morning to time do analysts.

being our So Levy. being would, like if and for call please. conference Stu call Chief one-part you is ask to website. via over recorded With also the on that, you Officer, this turn Today's is replay to we question our Financial encourage call, webcast only I'd to

Stu Levy

compared results XXXX. with first results, sales EPS world Overall, QX diluted Good We're the Global leading for our today. everyone. first excited QX you XX.X% morning, $X in the a Chris. quarter team share of to Thanks, operating as grew franchisees retail members to to Domino's impressive generated around quarter. and strong

the the growth growth, positive growth grew sales impact down As sales retail that International currency, grew positive sales includes impact I'll down sales excluding excluding retail global of a retail our in international of both retail break a retail grew moment. currency, growth, sales foreign retail and When reminder, global unit XX.X% comp XX%. grew for US and you foreign When Breaking our XX.X%. XX%. sales which global

see growth. to in international continue unit both QX, performance net both U.S. and We our strong momentum same-store leading and businesses positive sales to in

to Turning comps.

to a we quarters with U.S. consecutive lead quarters industry the X. increase rolling grew year quarter, XX.X% XX.X%, XX sales year continued increase sales X.X%. our prior down over prior a positive Same-store the broader straight of X%. Same-store of and for QX, international business comparable of sales bit a U.S. further. the US comp restaurant of Breaking positive lapping international comps. in During in the XXX grew

Our seen items historically up X.X%. new corporate base. splits heavily relative company-owned our XXXX. of corporate of company-owned urban our higher franchise by driven than comp ticket a and the and franchise was The quarter, driven and unit per in fortressing increase the consisting more US count. between a of an stores was growth. larger up net in corporate order the we as We our per Shifting The ticket openings resulting our and a we and were during a one which company-owned order to stores franchise delivery the also by stores store was higher the US efforts was business, from order. by that mix, also which a increase our income ticket store XX of franchisees US we believe and stores international of a transparent mix stores. quarter, a both closure higher items stores, line growth spread business was an primarily observed our included and ticket Similar the XX.X% stores while comp than footprint first driven top in to XX.X% our result performance in by we've impacted this growth. a diverse both quarter disproportionately of stores delivery mix of was corporate mix our We The store across The base did store opened as includes added percent franchise more total healthy fee. of comp our delivery growth to the XX in

openings an the our comprised added year of international XXX net quarter. prior our QX, pleased with unit Our XX was closures. business growth net and with increase stores over XXX very We're during store which

XX.X% approximately Total to and the higher global The higher the for international Turning approximately and our by million million was prior first or business. compared as over year royalty revenues margins. driven revenues quarter. were $XXX up revenues year. operating increase of million, were quarter XXXX QX areas $X.X revenues retail by in prior generated all sales, in across to which $XXX Changes

revenues QX increased margin QX primarily operating This QX prior labor operating by of margin Supply from Company-owned store also year leverage. XXXX. franchise up a XX.X% costs driven consolidated US chain from a in XX% XX.X% Our percent revenues the of XXXX prior margin quarter. a XX. as the as in from decreased of sequentially XX.X% to as as of percent strong higher XXXX, increased was revenues X% year in percent due lower to in revenue of percent our a revenue in result business. to from sales

in well in increased New overall in our expenses Carolina opened quarter, costs revenue. primarily centers interest income. of resulting reminder, which Jersey, G&A supply new of from travel. increased million approximately percent combination QX Net expenses South as higher product new a interest chain lower two as QX in the million in XXXX, approximately the line result offset fixed operating $X.X a respectively, to costs, increased As Texas, pressed as $X.X a expense by of compared and we advertising partially and labor XXXX, as a

the observable of performance valuation original investment of Accordingly, QX As the $XX franchisee of million million in the income in invested first quarter conditions. last established additional $X.X master remeasured their to China change XXXX, we in previously million the due recorded from QX Dash price we following was previously the in our disclosed, an XXXX. Brands, we in achievement made in gain of investment. This additional other year in $XX

tax our the for impact was tax XXXX. The to exercise positive in impact decrease XXXX This tax XX.X% benefits stock was negative QX quarter equity-based due from percentage QX effective as in effective percentage fewer compared includes as rate before continued rate in tax significantly positive XX QX X.X% QX XXXX. income first a to in option pretax X.X% compensation a Our of X.X point year. all point on compared these to XXXX. in a taxes volatility effective rate related million to elements, our net income Combining this XX.X%. down expect versus QX up $X.X to for of equity-based million basis, see compensation or provision was quarter was tax we $XX.X a income benefits. And these On or

$X from us tax And $X.XX. by benefited A trailing cash. versus XX EPS by finally, investment improved diluted driven The was lower us to year, Most negatively the resulting lower I on notably, expense by benefited $X.XX. Shifting mentioned by us gain repurchases benefits compensation, tax decrease QX in impacted over prior rate by in $X.XX by equity-based a Breaking interest on $X.XX operating months our us X.X%. count our Our negatively us diluted $X.XX. higher impacted benefited of the as effective the Brands $X.XX. Net share share results $X.XX. previously, that down decrease. Dash

Our flow economic cash to continued model significant quarter. generate the throughout

free we million. During generated deducting approximately cash of cash provided flow $XXX million. generated $XXX QX, we for After net by CapEx, approximately activities of operating

QX, in expenditures, on our initiatives. on Regarding technology We capital spent $XX CapEx primarily approximately our million

As million. previously XX,XXX QX, and disclosed, for shares repurchased we retired during also approximately $XX

share for in As billion our reminder, new February, $X repurchases. approved a a Board authorization future

to dividend XX. of end a be of quarterly $X.XX Subsequent quarter, on also quarterly the XX. Board per the a of paid paid on June $X.XX dividend Directors March We our declared to share

notes. As structure, X.X-year and our keep on $X.XX gross of notes X.XXX% $XXX transaction prefund the April interest to pleased our payable a fixed and in fees of pay we portion to used and capital $X of with billion XX, our billion retire debt refinanced We to which pace our growing rate million XX-year We're notes expenses. issuance certain X.XXX% XXXX our rate rate to it fixed notes fixed XXXX rate our floating to very proceeds includes business. with of X-year relates

approximately end the for previous payments EBITDA, remaining to corporate recapitalization of weighted leverage which from quarter our our to and reduce include to proceeds distributions use average holders return X.X% stock first approximately Xx of and/or of leverage general it equivalent the expect purposes, rate This recapitalizations. model following other to our consistent We will X.X%, with may the common as stock, will borrowing repurchases. our

calls, was in franchisees, our expenses, to first safety times, XX-Q, closing, first members, which Form of of we're In these strength strong of included the Additional morning. we've impact members continued franchisees confident information material. teams The on our this all the operations pandemic impact filed Domino's we pay in support for and our closely while quarter. transaction compensation corporate our the including estimated of the aspects resilience cleaning the brand and items XXXX on team and earnings Domino's monitor communities. and Since quarter sick worldwide. provided the not of COVID-XX-related its of business the performance continue and for of onset ever-changing team the in our our and And enhanced updates during other in equipment, is was our this and previous these in their

not them. and again, Ritch. the you, tireless I'll turn appreciate would be we for call results Thank day, possible to each over efforts it their and and today, Our sincerely without every joining

Ritch Allison

with to start morning. for our am Overall, Thank XXXX. this you, and our to I and us you results thanks of strong very this joining all pleased Stu, quarter

X that, a as around global I brief, international brand, ever we most extremely after our through are of and our day-to-day first it we've industry environment an be are then more and We continue quarter value questions. customers comments Stu a safe proud results our experienced the our We COVID I need your of to highlight the than be for rather food and remain on experiences. leader the their some outstanding at And Today, product, as as on efforts to when challenging service, extraordinary will I providing pandemic, to execution. happy as position carryout and and reliable time continue year franchisees our into also now operating and the keep businesses. US I'll focused image delivery brand. take a my most. And proud

business. US the with start Let's

Our our growth. sales same-store XXth by XX.X% and a well during extremely This growth performed comp positive consecutive US XX.X% quarter, US sales of retail business the marked highlighted quarter

a of quarter, but to to Due impact elected country. those between the markets run we instead, that and our the remain boost to focused offering February we have the negative remained versus at and to stimulus, continue service growth have on business did see from from the positive We largely QX. the winter impacted quarter, our large end some day. And strong great reopened providing not that week first every not that restricted. stimulus value differences the great at promotions portion we of benefits federal We the more storms the aggressive of certainly any any the witness impacts beginning customers partially significant those offset our the in of were and saw which such by across sales in government sales material during

X-year you, stack sales. X-year of a of first we improvement US we the saw the compared also quarter are many XXXX. stack to slight XX% the the At of watching fourth like on quarter for sequential Now same-store when

the and X- overlaps, business the through we to we both, as throughout Given look report X-year the will you at continue COVID XXXX. lenses to

am look store Now exceeded new our pleased the same-store sales unit component at US with comps, quite sales weekly quarter beyond growth. first absolute first our other I in when the the also of That's you average on the openings. the performance critical quarter in dollars, retail $XX,XXX. our

to one future stores closure a our QX, store was by US me only X are and many franchise improvement of corporate of over XXXX, strong occasions, openings. unit you've QX impressive extension XX system. that heard testament want anticipate growth store of US Our the health had we that we highlight US On we had net closures, I addition net and a store to in say nice during ways an store closures important elite one to X, our pipeline health of units our and another history. continued most the yet closure single offer within stores of base estimated And franchisees. US report of just I'm franchise a proposition the number brand's coming to A in on year quarter economic in over our our thrilled note, EBITDA we measure at a the in demonstrates industry. that on that XXXX highest With X,XXX record-setting final of to over $XXX,XXX, franchisee for profitability. average the the

was While an incredible aided demand work this throughout incredibly franchisees their the certainly and clearly COVID brand, it relentless of the by demonstrates power only also XXXX. tailwind, operators US result the and of busy the efforts our not but

within and as costs, better stores drive in therefore, continue strategy economics growth case well we and and compete with showcasing continues best incremental the big fortress the practice per along carryout and up to in hour service, lower enterprise sets relative it to territories. to drivers, build XXXX runs fortressing is beyond for part us as important, strategy. our better higher Our ROI, studies which excitement meaningful of franchisee But equally a momentum extremely behind

different order pressured Delivery. of option the year, Not carryout customers carryout will evolve new to created it important untapped we grow new, the last has enhance carryout experience. also our COVID to of our as Carside count largely QX and current continue part Domino's oriented forward. we in an the only going remain throughout but remained effectively a continue customers strategy loyalty was reach to This While of during serve drive-thru our awareness to as customer to a and

with advertising front, launched highlighting this TV about On our exciting very campaign excited partnership the we week. national the I'm Neuro.

in delivery Houston brand delivering the build future. demonstrating our a for customers experience select evolve pizza autonomous are as approach true we forward-thinking today, to innovation, to and We the

buzz brand. nemesis, the it brought ad We The incredible old around campaign, is this our back also in Noid, generating Domino's and already some

very labor thing This to combination strong results they our customers. we've that members while like the of we acknowledge The QX final and our and stimulus long time. the in close environments US operators doing that environment are high the broader puts market. deliver staffing pressure of and retain service store level today. difficult US Now is of difficult one to attract tight our seen to operators great continuing the their demand out is I in corporate creating franchisees staffing a on for is we reopening our great sales, discussion work the in team very are to most thank meet in on government I'd to economy the COVID, the the a

As highlight discussion confident would we close growth. US to out as is the long-term brand I ability and on in been, our strong has I business, simply that the remain our ever Domino's drive it

move performance quarter business. It business. our International to an the was now of international Let's for outstanding on

more we've international in franchise fact, by seen the XX.X% retail sales was of our result accomplishment strong XX.X% was end QX in year. we in very strongest sales growth comp, the that consecutive business. Our the last our tremendous a continuing quarter by also partners. comp of a supported QX than a saw the in XXXth marked same-store towards international, momentum And positive decade

discussed earlier so X-year also business, XXXX. international fourth of are watching stack, our XXX X-year I comp to for and with the will was quarter stacks point represented we versus QX As basis improvement a the do throughout XX.X% a continue which XXXX. US

in to store We growth momentum build also continue our international business. on

first the quarter stores in improvement QX of net was XXX-store versus XXX a Our XXXX.

COVID economics commitment growth our many But that will of of acceleration for the perseverance significant franchisees. have our outstanding to store come to and will on this time challenges continue master unit new ongoing speaks and and a international expect our markets We to to international bring in level some impact openings.

world, down few over closures quarter. store first the of around dramatically the below We last and continue the to temporary those come have quarters, XXX but at we're have end the

market, quarter. growth to delivered like Germany Turkey, highlight China, our Now Colombia, I'd also store during Guatemala India, another growth. in terrific sales highlight few once a like And China to France the and again, unit drove Japan, led I'd the impressive growth that drove and retail markets that Japan, during net all system quarter. terrific growth.

master that's am continue the the again, why XXXX. sales over bullish be to international very So a of are great proud to and best growth I retail long-term. our I the about operators their once They in start our and franchisees for opportunity business,

one pleased So our in closing, I'm quarter very results. with

base global meaningful additional sales incredible pizza, QSR growth leader QX economics, so the franchisees is within global to of as still drive position outstanding Our and retail combined category. within the position of there and unit-level but us enviable an operators, of in with to our strength place industry. share capture opportunity ahead us much in reinforced our

the ahead X% sales as on X% As retail we remain always, the XX% long stay to and growth we X-year of our growth. to confident outlook store in look X- X% we and will, of annual net XXXX winning annual and beyond, to rest focused game to global

So thank your today. be for you, I us And to again, at happy this time, and now will questions. once take Stu joining

Operator

question first Bittner [Operator line Oppenheimer. of the from Instructions] comes with Your Brian

Brian Bittner

morning. that Good to upswing topical lap that the Obviously, the Stu. business in must time. you. phenomenal and engine is good really to pretty as business outlook Ritch, related Thank strength a to continues the begins began I morning, meaningful around the Good But US it there question the US from is this be clear. last ask year long-term morning,

that do weapons of you the over fight two-year all thought? here least than plan lapping of get have of improving what reaction to As we I in your quarter, on trends originally. Thanks. lap? more analyze year gains hold the Can at deploy rest sit strength, those – thought to in an the arsenal that does perhaps actually this your of it we likelihood to specific ability And to successfully you your maybe first and we kind the suggest that to with

Ritch Allison

business. ahead Hi, continuing the us in second growth what the a quarters Brian, the out chest. absolutely to across in and the to got and some right. pretty the on long-term we're the got from drive we We've enviable thanks are for I advertising year. war fantastic We've laps third rest as last look you're strong really the But investments And question. an position. make And year, really of focused of of are

weeks past deployed not have far this that acquisitions. in the We the customer used boost tools some so drive of year our incremental around we've to

those business, which very I at we relative a look our carryout its on think when during rate. importantly, So growth in relative arsenal. was run the order to And historical have basis, you weak, XXXX

And so and that day drive well. carryout week opportunity along continue we've got day the some business, an parts during to with to as

relates late last and it in from weekends weak earlier the and dayparts As relatively to were night the last year. year versus weekdays

patterns set us our business. change, feel continue customer to up, as confident tools as the continue a that to of grow we've So to to continues economy got we open allow to

Brian Bittner

you. Thank

Operator

question next the from BTIG. line with Saleh Your comes of Peter

Peter Saleh

give Great. per higher $XXX,XXX the almost I morning? asset think I that actually you EBITDA back Thanks. that sense about figure was number level this in guys original XX,XXX maybe on Could is think you that original store between January. estimate than and the store, the bit difference the Ritch, was reported a you new little the just of guys mentioned us which provided you what that

Ritch Allison

And quite entire think really the that January puts come in. within not course bit our from them result that played had throughout in estimate, original system we the first out pretty is the surprised of number, final that of US just the in the the coming this up we you're I much does sit way a franchisee as it comes sample store-level when we time, original only a position the limited about move but in over in an P&Ls strength. sample when the stronger. quarter. the the estimate where And early back on give the we collect rarely incredible industry begin one to closed roll see quarter, When those you Pete. Sure, today, it, store to based in, in $XXX,XXX over And that which the ended and EBITDA of

Peter Saleh

impressive. Very Thank you.

Operator

comes question Senatore Sara of next Your the Bernstein. from line with

Sara Senatore

trying guess, kind just Great. associated I US businesses. Thank of I that had of versus X markets. but think not terms the delivery commentary overall, any that some about affected I what a you variability I would the maybe question, might of of in with carryout across seeing understand carryout talk in said be quick across category, mobility the can really you but just very strength going delivery on to about with those US. of the out of I Thank And between you're be the business, sort if restrictions much. have softer the guess markets, about I I'm you carryout carryout those within by pizza; to share so sort can you. those vary would reconcile might within versus restrictions.

Ritch Allison

a we across total. order country. we Sure. overall. our across US what down at looked in in pace There was business discernible different on Sarah, continued reopening no state-by-state really it the differences were count carryout saw But of broke pressure and the when

we So as come tell the have been see that business and that past to also opportunity lot back the promoting -- continue we you still increases carryout on And to for in we've not been broadly aggressive across we've grow mobility of can also. I as country. carryout a as

so well. And rest us are as year we the look for opportunities there across there as of the

Operator

John Your comes Morgan with Glass Stanley. from question of line the next

John Glass

significant just but talked international lockdown drivers. the of you perspective, few comp I a development, acceleration maybe just international to strong, really international about just -- that there how really markets is if Talk in trends, broadly the highlight getting increased about Do about benefit? a was markets. have on to want inflected, any a or what as this you those those you the and just underlying know business of are of lockdowns? think result you key that those materially just And business contributed the is trends X-year anecdotes much maybe a it

Ritch Allison

is get for relates you choppy units year. last quite market the performance it's reopened lapping strong pipeline in of look as business, last it guess might dynamics be year. to upon thanks retail be very market still international new that able our the recall strong what and from in markets, the as seen going year, as may lapping we quite the different what And continue in across time marketing gosh, the on markets -- on world temporarily businesses, been within But to the have seen it's are of of as be to, parts sales that to comps -- question. places, John, because in we really we to the then that And other out depending closed. this it weak some to operate you development very XXXX going over COVID as across going is, in. planet, in. back able And places mixed course many international the we we've to get we've last reopen we're is X,XXX-plus the resurgence the XXXX, we're of still markets units from turn were we numbers And we're were and sales across Sure. a that by to were going in the

John Glass

you. Thank

Operator

Goldman of Garber Sachs. comes from the Jared with Your line next question

Jared Garber

be you came you if sort to should are some matter sense about you these follow-up a about at the growth level unit international Thanks the comps unit in for key Australia markets, when for medium I from markets international. of that took it prior Japan wanted over, And question in higher those think get business. the that the kind has that structural a be Ritch a talked opens Several term? maybe on over remaining from in happening years of question. that that there the changes of taking and or on there of international any are you ago, Actually we level or India thinking

Ritch Allison

Yes.

continued share As Jared, in that much gain still business. for opportunity the I see look globe, international we and so growth across

grows while the in grows opportunity over kind as to So, you've -- that an overall that still of decade, got it's rapidly, certainly then looking that last you're kind gain mid-single-digits. low that business grown of market low much international at well. total the in share in And

international less the today. business significantly than US we in in is total where share the Our in are

the of So, around I significant look a some opportunity it world. We're the of hitting grow continue amount scale at business. key in markets as the I to to now, see still

look while by much remain unit few of some we as the in got we've like there the wherewithal economics the the in in we're the highlight, Japan, And places to at not across once would with unit some high COVID globe, starting give We've still time, us forward. the in again, as really and scale loosening to to as back large, economics ability that at some get hit around you places, challenges strong, markets some we nice those If the talk about certainly where up strong and all then the in invest really a well finally, in level places others. really in been And business. to the India, started like world and the growth I a comes really going business level points level recently, China. the just

As release it unit pent-up that loosens demand level up, it to those growth. and really of franchisees investment some gives opportunity for the

Jared Garber

for the color. Thanks

Operator

line of BMO. the Strelzik from comes question Andrew next with Your

Andrew Strelzik

frequency the US initiatives here way starting that Thanks. driving the the et the with you some customers hoping good during and cetera. the you retention Hey frequency higher environment is vaccine and of morning. would now newer share the on gained color pandemic to I could that maybe rollouts, normalize CRM Are in retention expected? you have you the seeing or lapse metrics some was

Ritch Allison

first I our Yes, the as fourth quarter, released again, acquired a lot we remained customers. some active customer in pleased lot grow. -- consistent loyalty active is promotions, of I What really a am frequency and to February we we we've steady of getting which drive that the order the out more customers acquisition. mentioned down back more among growth in to dynamics see quarter those newly in continue we're the when customers. to strong the And of also, think retained of continues And that pretty in versus turned aggressive membership see loyalty

back opportunities, through well. So, got look on and think, the to engagement we the turn strong our existing and from really we've year acquisition sales out new as as course of continued customer volume the I some customers up

Andrew Strelzik

Obviously, the traditionally I customers. that sales, we've to run look more Yes. the But the base. year our from not core pleased last you done new greater frequency loyalty loyalty had you some that to that when come at the to at attract of our relative mean numbers and our numbers having business continue over obviously and to things loyalty weeks that of boost repeat and look course from when grow. those

Operator

of Your line question Chris O'Cull comes next from the Stifel. with

Chris O'Cull

last in Thanks. in the Good grow why that my business, segment light overall pretty understanding carryout morning business? needs that going not just to the just guys. the Ritch, marketing grew struggling over like Curious it fortressing especially strategy. I’m is the recently, pace if just pizza year. feel at healthy was a think years curious Domino's you but be past after any that systems few to to changes the of approach there efforts, and you

Ritch Allison

question. for Chris, thanks the So

to year. the pressure into back QX continuing carryout is in then segment carryout are in and We the also grow really that were in the under last more counts sales It looking segment. order

more quarter -- adding but order ticket customers that growth for still last per items still segment, more year. capturing from and through we're we first come it's So into also back the in

QSR COVID in to the as But aggressive the concerns operating year to in some Delivery, critical the for food really we earlier, look service to brought around the up I see concepts. environment, that weapon segment, tool the have of that in But opportunity we given that's as safety picking us Carside long-term, As had mentioned that. not lanes our back up. of other of a to lot challenges marketing we method around a see customers just We a we across business environment. great as And a for drive-thru compete we carryout that do the carryout their this been of against as over our Domino's address crank continue forward of new COVID

Stu Levy

just keep to of restaurants, all COVID that demand a a choice dine-in do or delivery. is how that figure but thing, other this and thing to out their to for very The mind, carryout was of in lot unique was

the players in delivery shift that you've So they their got et we're carryout, cetera. reasons dining see whether in which still players that essentially increase the players it they of playing But dine-in, there stay has. one market well, in there group that back they market changes split you of in terms permanently, how into wondering all the rooms, carryout in as is whether of

Chris O'Cull

Thanks. helpful. It’s

Operator

JPMorgan. line Your Ivankoe with next question John from comes of the

John Ivankoe

levels, on The question service calls other the terms mention in the something anything continue that current in we have to And and that labor. pricing like the franchisees is chain swing basis. is you you Hi, to before with to changing consumer. one if times those on in labor. I to work about things unfavorable commodities, some mechanism supply can discuss U.S. you're of words, the service if of Thanks. and times talked that then is in thank And lengthening delivery like seeing that your you're talk used think whether the improve also levels in ability direction it, do on an And pre-COVID to do I the pendulum you. I'd and Ritch, about the you U.S. think service commissaries distribution. labor market ask Can but we've there's a a doing secondly, you to to cover people costs, themselves have

Stu Levy

that. for I'll the Yes. question. John, Thanks grab Thanks.

with our supply side. trying as explicitly Let supply we're says, that to don't I've price dollars grow overall do with business, We our breakdown previously, based while food. on a overall our profit well, the franchisees it on we're and chain trying the growth. is is franchisees it We're the this do through me piece franchisees. the And chain piece start of our for this mentioned labor trying not at to to expense

a automatically So we labor piece increase, the through, cost passing inflation. same food absorbing do with that we're versus that of that

talked that We Part them to and you've loyalty. to said because believe the engagement is of drive perspective, that a fortressing, customer still a the got everybody of your our we to done, and all the -- -- do, drive have now, is perspective. you obviously serve ball, I from get and service store it you your hiring service, and the one news challenged structural that, ability want see certainly, but don't we've take that things be you a about right a is of better. focused fortressing. level, to And lot services closer perspective us everywhere In labor differential you at eye think which helps we off on where customers terms from when

and doing of labor we that to The that everybody a store, store and thing make investments the try things. is, front I a on lot the back do other technology the do in take the out the lot of that that labor on improve we think, same sees end on efficiency There's to some be end. second s labor the of enable we

So make the a labor right do the throughput trying the that whether line, way in drive doing reduce of tools hourly related -- the on other don't is initiatives mind service required to try to to and sacrificing and at now. it. it's basis. the forefront or But everybody's we're think I There daily, to stores its

Ritch Allison

John, of model pizzas they the store do they perform other as a basically never we're their described, operating to the other that some of, tech environment. get the are with that to old as and bit Stu -- And not. keep XXX% of out kind operating around around the the Definitely work moving and cars, trying drivers in had good delivering goal is, tasks opposed that constantly, long-term activities, of time, to to

John Ivankoe

the they that pizza. And opportunity changed if the an the risk customer a I is times time that at mean guess, to or they the I from order service materially their get And may, that time I to have this point?

Ritch Allison

change, us, they've continue faster. for Yes. which John, get no got enough, good is to not because material to

really that's volume to we we're And focused in so, any change We've but without on. service the got get faster. times, absorbed the what material

John Ivankoe

Understood. Thank you.

Operator

with next Your from David the Baird. of line Tarantino question comes

David Tarantino

My allocation. Hi. is Stu, for morning. on question capital Good the

of excess refinancing cash done place. have assume on anything. that you your want in a buyback Now you've and sheet But I big the transaction, balance I a to think lot guess don't I

what have? might So that could you cash of you that thinking terms quickly of capital in through kind how just us allocation, you deploy and you're walk

Stu Levy

fundamental intention perspective, a in there's our about our deploy through the to and mean, will that for business in no from we don't one sheet. I then of an as form course allocation even that Yes. we to were speaking, balance and another, pretty on over that capital shareholders we amount upfront a cash sitting huge strategy went change we time. with term this recapitalization, long investments returning or have capital the the But generally of of excess

David Tarantino

Thank you. Okay

Stu Levy

Sure.

Operator

UBS. Your next Dennis line the question of comes from Geiger with

Dennis Geiger

how kind it, in and going kind of Great. your some of you're next perhaps opportunities over you Stu, And in just segment wanted Thanks out coming forward. your more carryout. delivery channels. kind bit players thinking this few a mentioned on care of gain for curious know kind comments I you are share US question. share year of ask Ritch, about versus years, and if of about I market taking to different to the

whether thoughts there. continues that the latest share if larger any it's from, latest independent of on where it's or Curious small thoughts kind players, chains, maybe Just to comes

Ritch Allison

it for we Thanks continue agnostic I from. key ultimately share to across the focused business, start where the why I'll Dennis. metric And obviously, sales we our saying drives that's we're – why the question. over all economics take to but we comes category. growth share as we're it's the And by gain the as Sure, to relatively so share market retail how in time. opportunities because guess see gain on not only

As ongoing, continue to of big gain is fortressing that going to I strategy look this year part to and share. a be

offer we've got that opportunity terrific about the we of time. on continue that gain to in relatively incremental talked gives still are side, believe we As to out service we've underpenetrated business. talked to to continue great on to customers carryout we've about largely fortressing an to how then delivery fortressing go to continue well. our as business the in specifically. economics, chest carryout We're side. with And service and grow. that And then share do grab and initiatives awareness our and helps us customer the us unit-level customers going value the in allow And over share to with service continue fantastic in very past, help in delivery incredible war invest terms continue we that our better in to out job to to strong invest practices, and a technology procedures to like advertising there and our which combine fund franchisees of you an we're operating of drive acquisition, feel and a terms position to in go to And and

Dennis Geiger

Thanks so much.

Operator

comes Your Suisse. Silberman Lauren of the question with from next line Credit

Lauren Silberman

the do How Thanks stimulus. headwinds labor bit a these more alternatives commentary offer delivery, of think delivery be given structural about nature for the appreciate you challenges more environment whether staffing. optionality at food longer-term drivers, of on ride-share certainly that the flexibility? the Ritch, Part question. perception your given least the seen could transitory for or

Ritch Allison

of we a the lot both the pinch is it's Lauren, about something point great and particular, question and think availability drivers. Yes, the in real and is business labor cost a the in

make what number alternatives a on about relative out there. we're working strategies that of other job of great around the to to part the trying have we've And talked So and economics to doing for that continue with that. they a best is, drivers,

which We're translates deliveries give to practices drivers that more our We drivers fortressing hour, per working in operating into continue their wages. work and on technology cars. higher around keep

and pizzas So run to their imagine into a the store, go the world take order. out we the next they come where back and then cars don't

-- different inside is Domino's entrepreneur an store we're made or and has time driver become different the over over time. Domino's being them busy at is So pizza to an on level that, to big then makes them opportunity a us maker keep wages. higher a those to drivers work keep also part trying and what our earning a for of economics And

big across job wage say and is we labor and XX-plus places around brand, minimum in final insiders. over we our office not and it thing certainly, going is our drivers a into jobs -- calendar year. changes the another, opportunity in just as to not is plan also others for of the of challenge, because percent as the from the those them the national in our but sell started or always an Domino's, others. for I'd we'll the then that, market about so, part to account And marketing present the as industry take we just the And forward ongoing differentially promotional a And franchisees' things course pressures that some of moves operate puts as one to country, have ongoing

Lauren Silberman

Thank much. very you

Operator

comes question next Carril with RBC Capital. of from Your line the Chris

Chris Carril

mentioned pipeline the the store Ritch, when US business. strong you morning. earlier discussing Good openings for

of franchisees well. seeing So potential back as the large very a in on from also presume more could average that composition you're seeing step-up around demand you from detail new pipeline? you provide a earlier? franchisees bit more EBITDA little existing you increase the I Are highlighted of store the the demand in

hear curious pipeline more like forward? looks about what to moving the So –

Ritch Allison

And both. really it's Great mix of a is, it Sure. question.

And also by territories So ongoing lot the certainly stores the demand That the for operated that opportunity fortressing gotten a lot lot economics have busier. a within franchisee stores creates today, our are fact of existing of existing base our given that a of franchisees.

of those things from coming franchisees that, little the a And is different QSR in You've construction that you is number from as permitting some system wasn't so also that satisfied new a system. restrictions of then around rest come XXXX in what and many and healthy here to And we and everything within makes into else. new got franchising of year. that add the franchisees one of demand had pent-up XXXX every all us the more our

we've could be So franchisees our want experience become our have necessary already and they They Domino's members run corporate steady franchisees. skills But necessary to be folks that a who of stores. could employees. to got of the the pipeline team

Chris Carril

you. Thank

Operator

with Your of next ISI. David Evercore question Palmer the comes line from

David Palmer

back Perhaps can for Thanks us your look two-year makes trends, it those trends and did Thanks. to you to then, think sense two-year do XXXX, what then and back I back going comments, at forward. to compare in to those you're you going help you saw we're if too, on what the as think from year your what seeing in the of weird what maybe course, your been this has quarter. robust innovation lately of the doing we're not starting as terms not internal weeks terms as was second been and year had plans I year in a then, know you of boost seeing last competitors and doing lately. might many have track

thunder how versus quarters perhaps over you're can going business much next about to be in did few what talk XXXX Thanks. benchmark? a you So your making the you in as

Ritch Allison

Sure, David.

off were Pie relative that couldn't see of where volume about the we would doing immediately their walk being as we the Pass, that as our and customers of one and XXXX, TV had five change years driven of of And on service in we were that beginning pick with carryout, remainder talked I screen just the business the that. bit back up not pushed COVID little folks at can't in in little preceded on bit years we stores. of in the six the them, had on lot were the the methods to a we but approach but in our business a into hard things then call name what the to or turn pizza, but they call, the turned you by of called, XXXX, some some running year, store their as we throughout into earlier have did a come XXXX back I new the advertising allow -- pushing those on that down developing to might things we XXXX, we carryout safe for weren't recall when We

had peppered more the We calendar. those XXXX. run the Secondly, aggressive We in off didn't ran typically promotional across we that annual weeks those turned we in XXXX.

to we have in into may of to in XXXX XXXX. market will, out that if we did doing for other a quiver, new of and news and get in the give we – forward bit development back sense XXXX more environment. a attract customers actually of operating that you deploy the continue bring look little So and a as the we to do normal to of We at We'll brand. some to product in also some things that bring the bit that you a to relevant that those little can here looking arrows more

David Palmer

will remainder say comparable and you'd the relatively XXXX, like on terms up, that all of energy year the the it year? weeks in remainder feels versus boost innovation it summing So be of it of the

Ritch Allison

still of done basis. And COVID but going still we've the still certainly Domino's, with there. we vaccinations lot still with. are there's we've into when good making -- riding And there's what we're deal work David, factors play but Well, across across as We're on got still still bit a got to the then progress that government to wave of be We're economy U.S., a stimulus. of think the lot a of to we not -- things real-time deploy going a at bring about evolving forward. just

arrows we've of do in look year depending flexible the be the drive be So out And unfold. here ability to of we we business to a things number across mentioned, and I to one always the look the do that as things to is and that upon we have to as adaptive. how quiver, the got

David Palmer

Thank you.

Operator

of comes line Stephens next with from Your question James Inc. Rutherford the

James Rutherford

sales you fully the that more are earlier wanted deterioration comment on to in markets follow-up about made I not seeing opened.

it throughout Given lot other many can given in and including that we're stimulus real trends on there weather quarter, spike light reopening? average a any your and that a puts us have puts factors, seeing recent of seen And little I more recent takes anything impact were share and also a checks. about mean more you first weekly behavior? more distance of that between dine-in those you in stimulus sit

Ritch Allison

even I mentioned in a one. quarter my remarks, prepared But comment going certainly we're to as James, one, not we today bit -- that quarter an was on post-quarter saw we a little during did quarter. not anything

You reopening had at the stimulus the that, you around. on and had the beginning certain on And the then of country parts extreme and of weather country in all some alongside end in middle. all events the had you rather different speeds then

the weekly, So, the to together top a quarter obviously, obviously, And lot more daily it, of We, but moving of continue three of on in share, and business. first have stay we hourly. about months. again when to we'll parts second not the in quarter get

James Rutherford

Okay. Thank you.

Operator

Fargo. from next the Tower Jon with Your line question Wells comes of

Jon Tower

taking for question. the you Thank

service a second on Just then PPP the include loyalty government then the in support and conversation, limited And like benefit quick the others loans? does EBITDA per clarification, that to rewards with ensure following of that store, space high up any of later of question $XXX,XXX this doesn't programs the franchisee secondarily, clarification kind from on plan of themselves to today some alter tactics, slip. perhaps some the of or engagement acquisition rewards you the level change loyalty the you adding programs year, do new member a to have

Ritch Allison

time. course on years we of loyalty, over through launched living of thing didn't the over loyalty it little Jon, We're five on Domino's as that XXXX. don't has through first We this program to number. we from our Pizza -- the in a $XXX,XXX, in program. And the any the into pandemic. your running company, government Hey money course question be back loyalty a EBITDA on any government stores. That's And DPZ, money take the the count

on are the them turn different to to dials ways so program at constantly And attract the into program looking we that engaged. keep we that can customers

and over constantly So, about points thinking earn customers time. how burn

and as see what customer very to extensive do continuing learn -- in there As program out on we pleased we the to grow. active the customers. we of to research marketplace that own continued amount has do as enrollment see in been an We've well from that our

big order members And the also, frequency and steady continued -- in. loyalty you million of comes for it's the value XX as active earlier, been as frequency ongoing active we to from We've continued the part remain appeal continued to has to mentioned your to get because pleased that engagement of that new today, of I So, just coming have program once have those see then customers customers. and

Jon Tower

Great. Thank you much. very

Operator

with question line Charles Cowen. from Your next comes the of Andrew

Andrew Charles

performance you this you from recognize Ritch, year. you. likely And in spoken ad year XXXX surplus air the XQ I better-than-expected be deployed lapped? XX would fund on how XXXX. weeks concentrating across But you were when weeks toughest Great. and about that sales And Thank that will you be the have last and previously guys presume are surplus the in in about year? XX XQ that the thinking in deploying compares are particular, are on

Ritch Allison

put we a Andrew, really thanks year. for it when will. we position for with the sales need an to to fortunate business, if strong little us allow happens and and look a bit more opportunity where I in comment does what the and that gives won't And competitive out us reasons, to. we're chest see quarter-to-quarter But we across question. war muscle deploy really as we the against and surplus going in are a it, how into things year have trends going on to very the you

Operator

MKM comes next line Brett Partners. from the question Levy with Your of

Brett Levy

Thanks for call. taking the

a talked bit more you of forward-looking. for put and clarity it's -- you going sales something into and can like a to numbers. you're -- Nuro more sometime. not about probably drive You've things good, in about operational years for have. you how and Can are this some and start much that's more technology much talk over But and right material lot on what be efficiencies Right into greater you're for really innovation. give your and showcase little up the how us Obviously, about play the show talked now, now, to the you call they

that framework? are Thanks. how thinking you Just about

Ritch Allison

that, sit we value, out near-term Sure. every immediate make forefront down investments question, on. around when against that invest year also value, then in both and sure great our some any portfolio trying longer-term and drive in that, of Brett, is of I we our we're improving we've operate with a efficiency not got near-term have always one may we investment decisions and think our component is can think things labor, are When that It immediate a the of and want the level. technology, to constraints significant the it's amount at investment to that but it of make about that of but points what we key store right the which some going technology When stores a today about availability now. is business, pinch labor of you to costs or the the kind that the are the stores.

efficient lot labor of and time such So sales per focusing on order we we're hour. a energy and that can more stores, drive counts higher running higher

through lot our effort a of system today. of And things that Nuro is great and example a term, there’s number then rolling there on the a So are out longer of that.

before but particular, to a interact make our will operations today, speak, technology, the but customers. we it business the robot to right will and delivery stores. and how those robot we're to deployed the can the with Houston, have We as are be understanding the to drive autonomous impact system, interact key when able across are is customer investing learnings our doing the want our at good we're the we're with going ready such that some that more And of trying Domino's we broadly how broadly now, deliveries learning in how and that deploy we are in and it's a autonomous while sure now,

Operator

line Bernstein of from Your Jeffrey the next question with comes Barclays.

Jeffrey Bernstein

your about caused to COVID X% I and wondering well. and much. Thank for was permitting just or versus, as ultimately know tough I to growth wanted guidance But there's unit guidance think, construction like just a sub-X% that X% year, a XXXX of two, guys three-year growth. you very effects whether for you mentioned think Great. in I I'm ask or thing you any others one-year setback lingering sites terms We delays.

level you hire. reasonable back are labor know think wondering US help. or wondering stores issue you're have whether to just just hiring would slowing uptick assume creative in into to that range be XXXX, on demand Thank the that about think Whether the and it's comes international. store would play. on not in have We talking franchisees any or more get because would importantly, the is you EBITDA obviously within everybody whether I'm ways you. stores. pent-up huge the growth to down big you obviously But the the You whether color to struggling as need those they any that or I'm staff whether they get

Ritch Allison

Sure, Jeff.

have in pace. You on unit know, acceleration already the the we an growth, seen

XXX had this we If if quarter when you for of net And you the openings look trailing quarter the look back last was year. look four at year, you first year, XXX. in

the than accelerate of up which – and XXX has per look shrink part comfortable still two one already in really opening these business driver raging more the also COVID see where our on, the our And particularly across news you of is of to of So in of to our relates at and pipeline is that our carryout growth unit as per year, unknown question opportunity business, things. see and much places for to an challenge really worse. extent still getting grow pipeline The part that the are pace more international – for always as when of to investment and in accelerated economics that good around which the beauty, us labor-intensive the that incremental for monitoring at around so we to but that The demand we the pace majority is strong, relates to opportunity a is ahead still what of that that. you one unit the the out can of to the see we US there fortressing we do pipeline manage staffing impacts delivery is final some deliveries get look And the of pace and unit overtime. opening Part look is the units. continue still an and these continue to To But you'll pace franchisees opening. around that franchisee by want we brand us our program we continue to territory, the COVID. that hour reasons and the the a stores, to it strong uncertainty business. but we're expect less news US get that’s feel is as accelerate. we we the growth, stores there, was and that are places, for new One in have a are we labor, of your giving world build turn incredibly unit the some markets, some are

Stu Levy

of the to don't grow, to bandwidth The sheer you – reality just ability year last I demand just make while terms in to QX done, other thing to would just the unfortunate increase you the seen or even you and you've up have in There growth, to grow, – particularly if what trying desire units. is add it of that takes the for a of that practical have last the the that year. new get is stopped

just it. resources numbers franchisees, build our the want the build master to. – You they their They because time go to our it, double internationally can't go franchisees to need can't

So the it's accelerate. we up continue period going time take It's that we we to some while, year. while a to of for before lost going make take to time last

Jeffrey Bernstein

you. Thank Understood.

Operator

Your next CL with question of King comes from line Brooks Todd & the Associates.

Todd Brooks

the up. squeezing about Just compares some with me in. talked of on We level. your into I'm Boost 'XX? spent individual Are and anything time focusing arrows about tougher medium drive shifts talked more to more broader the resources for incremental kind simulate way, about personalized message fiscal through dollars when Thanks frequency wondering in advertising trying at one-to-one traffic you the carrying wondering getting the to talking platforms at versus look on spend this coming carryout. marketing in kind you're weeks, share of that can the against or whether period quiver to the about year? morning. in you the out really We've that good Hey, of CRM call going tactics, mix of more marketing, that about

Ritch Allison

stuff that the dollars thanks in majority time for Hey, the question. think vast fund the because And franchisees Todd, about are we dollars. it's the all of that advertising

And also we spend how about one the care. with – it decisions talk it's analytics make Domino's. lot we've where a areas we It's to the terrific area use opportunities invest of channels we we So or of on an a different at part range in system. of analytics dollars have spending that return the those our them across to got terms great understanding of on

our that looking constantly the use that dials managing to greatest and are for for return And investment the system. so, we at

Todd Brooks

Thanks Ritch. Great. Okay.

Operator

further now no like over are turn There Allison would for remarks. questions to this or I any call the Ritch back to at closing time. additional

Ritch Allison

you great join the a speaking thanks to We Thank results. and of taking us Have morning. our again time forward much, to quarter day. all second XXXX the this you July look with in discuss to very you for call to on

Operator

today's and conclude Ladies call. gentlemen, does this conference

You your may now disconnect lines.

Domino's Pizza (DPZ) 29 Apr 212021 Q1 Earnings call transcript