DPZ - Earnings call transcript Q1 2022

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Operator

Good day and welcome to the First Quarter 2022 Domino's Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder this call is being recorded. to call like Fouracre. to now would turn over the Jenny I

may You begin.

Jenny Fouracre

joining our incoming call today results you CFO, Ritch us Thank for our from for Weiner. from Executive first new of Allison; and commentary Reddy; for quarter conversation Russell XXXX. feature Today's and will Sandeep Chief Officer, CEO, the the regarding

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

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

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

Our you like request from our as time as many would accommodate to permits. coverage analysts, we of

we only our turn Today's to I'd being website. to question that, for webcast over being call replay part ask Allison. is recorded and With one you call is call. via conference like the CEO, our on Ritch the to So encourage also

Ritch Allison

of and Jenny thanks for you Thank this to you us all morning. joining

April CFO, to on finance leader. Before new us accomplished to Reddy Sandeep team. have of to first the officially found the Domino's joined publicly getting the we details an into welcome and quarter, I our are such Sandeep like leadership Xst would thrilled

Sandeep in a You minutes. few from will hear

this days Russell our have and Sandeep leadership of into great officially today's on May in place of in Xst. You'll our I company the With Russell call. and also Weiner on from CEO team confidence future three role now will the brand. step from enormous outstanding alongside Russell hear

first attention turn the quarter. now Let's our to

We channel. turned impacted to demand stores to got release January limiting positive we the top our start in XXXX slow as for off QX in chain serve business. in in surge, a supply was centers, we the to on due this negative February, line US face the in return our the challenging which our and quarter modestly saw to further particularly again sales federal US a overlap same-store After impact morning, you of to As in that March began capacity a customer our have to stimulus overlap government and April. the continued particularly Omicron delivery

continuing carryout digital saw we and the that channel. in carryout, in I corporate to particular While quarter. momentum work restore of in business in also store QX our US are to a we important in margin build are still and in disappointed results our QX business acknowledge lot have satisfied with do that the growth to in we our sales will performance or the not first delivery

across fast restore our in is work with team our plan play. to earnings prior assessment US to a on our comprehensive recovery system we at Consistent the increases expectations high of during Those combined deleveraging the the US the business with decline for cost cost call, inflationary business. from short our in resulted we sales faced leadership role that expected communications Our that significant falling earnings same-store business the and QX. in to in pressures

our ongoing our that to growth model business solid evidenced model franchisees' by of on robust While store along foundation global continues certainly to the demonstrate of display the we as the brand in saw the growth. commitment was investing with Domino's the Domino's quarter also strength challenged, operating and

store. During the reached of quarter, opening our the global we with milestone another significant XX,XXXth

that line take business in our and our over that we will continue line that bottom we some initiatives designed address well to But business top are the are on pressure the other believe for plans on action next US our both in quarters. developing. issues earnings have face will as We to US the we time. work that And as place few

we growth the challenging shaping be is drive year. XXXX profitable optimistic in While our up to about long-term near-term ability remain to a very

share with our Now as few performance. observations brief a a followed US that business, additional the review a backdrop, I'll by of on international

And To operating many the in supply given rate, resulting development, see the economics to hours time service-related the other have some US in in headwinds, We it that store bullish Staffing maintain that of staffing estimated run continue believe for challenges our and inflationary the to EBITDA conviction stores reduced we the continued market we are growth XXXX an U.S. give the at continued Domino's. long-term unit chain take magnitude, sense on US challenges during add days of you store potential and strong QX growth our But US. accelerate to ahead. hours completed stores expect six $XXX,XXX. the in the some level across in current from US beyond to US analysis franchisee the With quarters entire across share quarter, store came may pleased the X,XXX-plus XXXX, closed operating up first when we we of business. average the and US franchisee were we can our P&Ls our of be four-wall almost for business. during US pace four-quarter a cumulatively remain lost the all the equivalent

us business. believe to the store. have it that is an based stores As staffing US our levels for performance quintiles I magnitude to first across staffing instructive break a the relative US we into on of compare staffed in it sense continues impact shared fully on last sales our quintiles essentially When quarter, the to quarter, gives we the

that our very that remains on shortages country. those we look across strong has in continued demand the particularly percentage is that near-term across essentially Domino's same-store stores most the XX% the be significant to demand, that challenge. close fully customers are XX%, believe in facing stores XX the QX sales, labor at top those are for delivery Looking serve outperformed to continue staffed points. the bottom strong for It US business, by or greatest our to to average, When capacity we consumer that current

Now, QX business XXXX. positive I'll delivery QX carryout was the about US over sales QX sales three-year in same-store XXXX, XX.X% XX% to On with share basis, compared specifically few driven by same-store very strong order carryout and thoughts ticket our a businesses. a were up carryout carryout growth. The versus both and

addition customers require As and carryout pleased initial our a and add supports business in now profitability to than carryout digital of our orders. with the are approach and with XX, value the a phone positive of online our only. a our our This store-level opportunity goals to order results carryout national and in is the is digital carryout higher and orders, counts, driving Thus a carryout carryout of particular January aligned impacts offer enhancing serve to generate growing to to ticket digital available in great engagement penetration. the online business of on members we our with experience Online balanced very loyalty bringing $X.XX and lower cost margins far, program. ticket, orders

the in associated week also of tip as same-store purchase. labor the coupon a next quintiles has around to to Tying intensity use delivery. a my for sales in after almost customer we across support insulated We to for comments carryout be our useful began the business we with carryout it's approach tip aims purchases quarter, the the a we largely the that see back comes must $X that performance can staffing order, by initial drive the order. from online staffing impacting to the this This the used a challenges carryout low offering on each saw customers earlier note which difference to repeat quintiles, the transition quarter. online form believe first no relatively their the carryout campaign strategic During in

same-store QX, driven sales business. Turning part by by declines by order now ticket. declined the to relative XX.X% delivery in to XXXX, QX offset count higher delivery

offer It is overall is performance keenly the the performers for the we stores. our past between performers we we sales business those at levels. staffing see the QX look XX XX%. point a in mix-and-match gap business, time year We had stores our are impact our same-store contrast The saw disparity quarter. underperforming above XX the XXXX stark in in stack, XX, gap business. US that first the has the the in almost delivery QX sales that driving in relative March top the bottom Looking between this bottom evolved the same and during focused X% years. our on XX% over in delivery delivery $X.XX long-running over we performance same-store and percentage quintiles and a top When on at across remained first widened lifting to the delivery up three-year On

mix-and-match Our is items for $X.XX or variety, customers, and any menu. that a We our delivery great value still offering $X.XX believe relative two for now the taste offer mix-and-match more a delivery is each great competitive order. price, increased balanced for profitable to driving across growth ticket costs is allow inherent approach key in reflecting orders, delivery long-term while and achieve This a their to the also our franchisees can growth businesses. which on

customers to through items they the significant term. menu: over businesses profitably And three their also part great variety from we have the the approach, using executed the Customers with great bringing assemble can tools by decade lava by successfully inflation X-piece manage and dozen more customers bread business. to offering mix-and-match bites, we are more made to our now to the in a cost to our changes – more XX-piece did the We last chocolate balanced same wings these We have our products franchisees X-piece facing choose grow it over their as even adding value value cakes. meals. long Parmesan than to giving while the

new results turn changes in As only first two for with report the sales March QX pleased It implemented in XXXth now so business. you these this with share consistent another growth I'll same-store fairly of international will our the consecutive positive was our It to quarter able XX, Russell of still to business. early. But in that strong quarter. more are our just for call weeks was very to were offers expectations. on be to far quarter our mix-and-match performance place we is international international on the I'm July. business. of our

first the quarter to highlight X% opened build during during markets by markets driven the combined count their now few the clear during net quarter order for by and that range growth four momentum X% year We two and across was across quarter, a growth our as store India at US the outstanding store international business. our three note. great When a our international broad trailing provide mix to store outlook quarter XXXXth customers the globally. demonstrating are highlight least growth squarely I'll encouraged to was store a to international global XX quarter. of our aligns the business. international increases growth same-store their within the and our continued of ticket was growth new with also one of balanced X%. franchisees opened growth. to value store continued sales again of continue A accompanied markets in This growth led store once that

included sales East opening first continue in also the during Other on store Guatemala. with Iceland and strong markets see I'd the Spain, master Middle and franchisee quarter XXXth China. Foods and growth markets store quarter. And of We strong Alamar congratulate Taiwan, their Africa the growth note the across Turkey, like from XX our to North Mexico, of to in

Our to and gives share And population with world's US The show GDP And the in systems combination I'll are and of that future the XX% their who brand continue with XX% of global resilience in of across of road take both US business. will just taking on franchisees you and Domino's a short-term brand the the prospects our outside our expertise to the growth the Sandeep, the getting me now international. we their turn in belief strong ahead views his global and globe nearly and drive the great over growth in confidence in Russell markets. local we residing franchisees after master through and you. actions to are of started. quarter. will over the the to details it Sandeep, the the long-

Sandeep Reddy

great everyone of call. working team. good my brands the craft the Russell with, part a of Thank to on privilege you, with start I'm as comment as many to on enormous work this such brand to few partnering to observations weeks, creation. and to to now the Having we thrilled in exciting my the the I with leadership career, the past be start would the opportunity had team, map to of learn one growth Domino's forward morning an global potential iconic To I road very me. over value is with business. and with initial look I to like continued Rich

the the the pressured. a expect Given be in U.S. rest the of in of first in percentage quarter, of resulting softness sales as comparable contraction margins for and operating sales we income the to XXXX trends

already However, working several profitability. to one, the optimization we on actively initiatives, improved include, of architecture United drive our further number pricing are exploring States. consumer These in

both to faster better many in to to pricing offers, menu enable cost growth. our both X.X% standard the for in in sales our XX% Once I review incremental results the of local global in are stores levers increased covered will business, foreign and financial seek includes sales detail. Specifically, as to QX When sales due quarter recover Number ensure delivery this post expenses. the cover fees just capacity three, Number operating X.X% implemented, XXXX. pricing, which our international sustained more to income we enable that to levels covers grow two, and national momentum increases we as actions retail impact in Global labor positive QX retail now franchisee grew company-owned in currency, see margins to negative compared and to QX we consistently pre-pandemic XXXX, our the initiatives to facing excluding offers I cost service lapping XXXX demand structure XXXX. generate we our annual basket and revenues growth our accelerate expect to food the our than the efficiencies market. of

do as believe the to in useful we'll sales we as remains look XXXX, discussed it And baseline. across we continue a back long business our the instructive in to anchored of for pre-COVID we've believe understanding so business, to As the cumulative at is performance. as past, it stack

down up relative are XX% the stack to retail on three-year XX.X% of impact sales, global at grew retail XX.X% up a year relative U.S. rolling a year grew X.X%, and negative a of increase are excluding of currency a XXXX XX.X% foreign impact stack global XXXX. X.X%, sales and the basis over three-year to sales rolling basis on retail prior retail prior three-year total stack our over Breaking increase foreign XXXX. declined XX.X% QX Looking XXXX. currency international excluding growth, sales versus

important operational service impacts stores. had staffing in more challenges by believe franchise shortened in such XX.X%. QX to challenges same-store top company-owned stores, total was from QX, for business the during added the items and our States the XX XX.X% stores three count stores a Turning XX We've decline XX.X% resulting compared franchisees by franchise counts, and many stack sales count. the increases franchised. market, to stores to growth store more line of unlock challenging believe in U.S. to and franchisees to should prior stack some and count franchise combined down the was these up completed as conservative and the continues also down prices, which quarter, quarter the three-year to environment an company-owned up of operational growth. market over as company-owned of to York higher while was will source The purchase were partially consolidate a very markets in to The closures. comp in business portfolio leveraging order and in with performance business Breaking store was a the in others both during the of comp in along to XXXX. during comps, price of decline forward. use compared driven Detroit transaction The certain stores, Same-store bringing difference X.X%, was store fee. net to substantial XX.X% unlock menu our our both DMA X.X% XXXX. our XX as decline as sale States of our allowed can in our international the higher-performing case increases basis average us by the the rolling prior our where franchisees DMA. a growth or corporate pressured in stores increase franchise going in our our order our our on for hours believe XXXX. counts stores of were corporate relative to and year the be in the and QX We We offset of XXX same-store consisting ticket U.S. declined openings basis were will international corporate be strategic US the to with with unit United unlock where driven increase and the were quarter. sales which a end delivery as order be capital QX, purchase United in three-year grew Detroit ticket of New X.X%, as stores by growth stores growth, and on by more driven our as We Shifting company-owned relative can franchise We rolling customer over per down the well The optimize partners sales there XX.X% in

openings store in to making underperforming get in of focus net brought some of net highly stores grow our and were added the out Our in to XX XXX QX, Domino's openings remains XXX franchisee in the store areas. strategic of other decisions locations the master global More half Brazil, closures. XXX. international resources closures where comprised brand, to to and stores our business while than This quarter committed

for by impacted from This quarter, X.X% the or $X.X supply increased declines rates partially Total exchange higher quarter in revenues, approximately prior decline currency in pricing revenues, basket by stores million chain million retail to in sales revenues foreign $XX.X the mentioned I franchise higher revenues from negatively and and company-owned stores. our US Changes Turning market was QX. driven revenues offset royalty by earlier. first the operating income. international to during increase to year resulting due

in increases, XX.X% sales operating same-store basket in decline of decreased percentage a due excess year US the G&A prior to the basis of deleverage quarter, by revenues labor consolidated pricing in points Our income our driven food primarily XXX as by in increases QX from to as as business. well and

diluted prior $X.XX the impacted us $X $X.XX Our EPS on gain year in last foreign $X.XX. EPS, diluted QX impacted QX in currency our was negatively by in in that investment in versus decrease in $X.XX. by Breaking quarter. down by negatively operating negatively our results exchange rates of our us Dash Changes The us impacted $X.XX.

impacted effective XX tax repurchases share by net lower And driven $X.XX. by by higher us count, impacted Our negatively the interest over months, $X.XX. us by $X.XX. us negatively rate benefited expense a diluted Higher share trailing

we headwinds to QX, continue sizable in cash we operating generate free faced Although, flow.

generated We approximately $XX.X average price cash XXX,XXX flow and approximately system we our retired initiatives centers, of of by investments $XX or million share. approximately capital of such for we next-generation technology $XX $X.X free franchise supply million operations million. shares in in invested our for expenditures We and $XX our $XXX activities purchases deducting repurchased After included operating per net which million, provided our generated an point-of-sale in QX, During DMA. cash chain approximately investments as of Detroit of in million.

returned per for in the As repurchases. Board $XXX share our payment. quarter million share end under the QX, to form a the of had of also remaining our subsequent of million $X.XX shareholders dividend the we current And quarterly $XX to authorization first end approximately we of

million we negative in rates exchange We food compared million we in compared like currency cancel to prices geopolitical to US environment, $XX commodity we our including exchange currency million those anticipate $XXX the would Based we see impact prioritize planned and the of resulting projection XX% March to will continue from growth. on now $XX investments in range increase the addition, and fluctuations we G&A in to and on expected not the to basket from the provided XXXX. foreign risk wheat a or more XX% will In of system guidance fuel levels. XXXX continuously to impact to drivers some believe originally expected as that near-term store update of is environment. overall expect CapEx expected and from as for macroeconomic change foreign XXXX for to Changes the million to XXXX. within be from delay $XXX have rates is March. the we provided $XXX now costs are range we to to million inflationary projects the now evolving in

the growth of range XX%, still back sales our year very foreign XXXX. X% three we will much while of outlook, Finally, long-term two our XXXX below intact recover excluding currency the algorithm to are to that drop low likely year starting global retail impact to end in growth that and the we expect in is to confident

Our practice the not been sales trends business of doing on make not comment to and in do a habit so. plan we short-term to has

Thank all sales will year it for joining However, now with plan the exception to our on turn the our expected And of On two very three I year global operating based future indicator calls, case. investor trends. environment, not today. are we and making others are we outlook sticking in best to an as retail on call volatile Russell. this and you over unusual experiencing, the

Russell Weiner

business country customer we team with service Omicron same with three this this COVID And that day. delivering to franchisees Thank you, every best to workload. start-off hard everybody. franchisees their of many in by in in Sandeep faced situation incredibly for during pandemic. the and around member required the and particular are communities were balance our pizzas and I operators the to stores. and corporate they teams Domino's one of every serve out good volume their want in the morning, continuing work thanking our

in ability us get I to and of growth sales levels am in expect. none we our confident satisfied the back our to were US franchisees While QX, with

of in stores were believe performance As strong. indicated by by business strength demand remains that labor for the our shortages, the carryout we constrained and our Domino's less

focus is led hours, the business US that to shaping constraints addressing impacted our demand. demand on like fulfill to things now Those activity store have the not online answering impact, as and largely with bottlenecks control. restricting peak Omicron's And our together the These distance franchisees. our orders. phones are and reducing addressing Our this in ourselves ability constraints have we're them our capacity from across we franchisees' of

First, our we'll them to core to operating hours. is our along with want closed, be working standard to franchisees be This be last returning return we're hours. ordering thing online closely uptime. standard Knowing the will with monitored to

third-party providers will call call Second, with phone add that capacity on take we allow stores to stores production have centers will utilize when focus to orders to worked grow stores and and leveraging allow to will This our during necessary. our facilitate between in on delivery centers middle and needs. number when call they're the peak May, short some X,XXX believe be X,XXX capacity. can we staffed of depending By hours. center That

corporate on and stores understand P&L. so of team as the members, on we testing be process, options part can Our center customer service this phone the store operations, will impact

to summer weeks practices. forward return They to will Third the this Boost pre-COVID drive our grow and loyalty program. boost key are in and acquisition we continue weeks business. cadence customer they expect will similar moving building our our

need levels solve effect know challenges. different quintile the QX, take to we in of staffing stores actions for from that while these will to Now, analysis begin

to take staffing. get to pre-Omicron will time some of our it US So, for entire system levels back

two-year facing sales of in XX.X% QX. we're Additionally same-store overlaps

we be be expect to quarter continue such QX As pressured. to where another sales same-store will

to stores. talk our corporate like I'd Next, about

that of the in disappointed are We business. results

current they mix when stores, in owned milestones. of case not and XX, concentrated XX, more several the into by with we've uncontrollables They leaders said staffing underperformed addressed have stores and impacted calls, business. operations plan are corporate stores said That has for already similar XX-day are shortages. gap being As by areas is This by prior our in that weeks of been adjusting franchisees. our the recovery our historically these

they While from instances, around performance develop corporate remain some stores X% perspective. and test only footprint to an in to We innovation refine a the our restore talent strategic their critical accelerate world, tool represent to of under-penetrated must and market. leadership the and growth of a

Next, I our plans through it address talk wanted performance to on and year. to as our this staffing headwind of some a

service QX, quarter. time First, in of This versus the many improved same in in service has the delivery end number in stores. last By we're seeing period sequentially delivery Domino's first the XX% year an improved each improvement stores. of during

and Second, to indication get support franchisees week to staffing their staffing to our majority confidence I while a believe customer take it of to some aggressive this may the boost drive and levels, time acquisition. that full return an that will the more service promotions continue of is improve.

of this assessment they year as individual opportunities. to comes its and on address The service with improvement service out expect store tools Omicron We at based own also results. Third, help have specific with franchisees help progresses. roll stores new service The objectives to provides a with identify our able interruptions where the program service assessment assessment end really quarter. largely program behind the were to the us we new each

as with the evidenced of that already in mean and this evolution about by initiative mind deep I'm mentioned for we open the the to the top evolve forward and staffing with am system leadership our driver this doing our believe coming of and pandemic. within we're of become disposal. as We're in said quintile how the because back analyzing look we facing all during performance even is Finally, ahead use shifts are great Ritch of leverage improve many for stores. final at an what continued work words. the to can we and opportunity A send I'll today will our at lead dive our with and the for Sandeep our solutions I That to excited exist learnings the of honored analysis from important of it Domino's. for I the them are our this driver these call, with headwinds on said delivery some what's our lot business. Ritch continuing we're this And world Together at all rest future And our talking avenues brand. has better. last at thoroughly labor. And of exploring changed these you we'll calls. to we're team, still

Ritch Allison

Thanks Russell.

runway great of world. and US a here of many members confidence ahead. to and our the globe. the remarks leadership brand outstanding Looking the all future I'm and I'll growth in our and with morning you our years team forward last team you Today earnings I optimistic a around franchisees incredible thank franchisees have and is this call with deal across of the my team this about members heartfelt in close my

Over spirit. the day your we and partnership the a will years. work inspired us now and and it your years, has And of my your the your with as you again every pleasure have on me. me call today. innovative great these Serving you been the of commitment to investors I'm And with career. you Thank been happy that grateful, you the to passion, you XX CEO has brand friendship have last truly extended for analysts joining this to highlight take to questions. our professional be over the for

Operator

Instructions] first with from Our Brian Bittner [Operator & Company. question comes Oppenheimer

Your open. line is

Brian Bittner

and well into Ritch morning Good the future. wishes Thanks.

rollover to understand idiosyncratic so can pivot role, share the health quickly as us year-to-date trends cetera, et from the we Domino's US better you can see you get to guys business partnerships? could are even As staffing and like really we we the how look pressure is stimulus this your is there you understand versus help that more much maybe of towards this experiencing think what come of about kind strategic operational staff Thanks. more you Russell headwinds? industry-wide And through perhaps system gaining just new some any into initiatives new help

Russell Weiner

I'll Brian. your answer Hi, first question.

was NPD we would people And been from on delivery. trends share -- information. the closed to sit-down when so On switches sit-down many there's rely get those on that

you -- last wanted carryout to if that's carryout pride. going second kind When take our a share on are we and moving open take store performance what answering And total down. over And the than sit-down much a more franchisees little of there's And can't visited close tour -- serve I XXXX I for first significantly that customer tell from lot parts just hold We to heard we have with XXX so only the listening my where little lot much kind who can't to I a our own and more I in got our month. delivery last I'm that's moved so which we've so with second that the and franchisees, Now the heart disappointed us, question I that it same a up start okay. is of order of again, the on time franchisees month started the last person your people and motto held look I and did was because pride perspective. can describes at the a the franchisee When I close and open. to to of I was owns the side. suspect Domino's Delco on our there's the that question a actually is take back thrown of and the you US over bit Domino's I it up who customer. so around

us almost part our or Ritch that's not that visits get through not after fact I this Omicron are it. these the in to ready so now. to you that can tell And comments us our they is of behind fact his days, is something And DNA. the and six we were And franchisees earlier talked closed

are to a energy is, going some of there to quantitative kind along what to if is and going maybe capacity? of facts that give we question way. with really do And do the information couple are that what you the we I'll some the so And address -- then to

fact, it not. now. But again us that and case. all decide continued There our the First, said to different store bit let in can we like to to a hours an decisions are hours. the than X,XXX stores we our store do same year. was we staff we're situation ended what long it's quarter make We're proud And or had made were that franchisees core better with period. that And times a And at I return to delivery hey in a improvement day store every more hours last seen in And my service this in been delivery with feel in stores. core like we've improve QX, which I year return period time that to home during the store our than going they go it right of a little is service. our every

delivering to out we the a into and they what Next those team that's and and where all analytical making we weeks calls going busy the pizza the the getting of done that second program pizza. focus free Obviously, digital to orders store are store take loyalty need years. fiddle if can one in phone one with boost our of where take thing. now boost the increase and capacity capability. for if things the haven't new couple is is really magic maybe customers And Domino's. is and that's new doors in a bringing to moving work capacity. lastly, of But up members our can weeks drives gets X,XXX-plus number And happens on And phone

job some of hey overcome before are stores, a that bullish you sure help of a going about And why I and And both we're the lot is so that's bullish, everyone today we talked you anyone think that. on in think realistic. call, to are delivery that driver but who them I to our job make future. we're do move We for and top quintile call, went this. of how we understand wants And a Domino's doing when actually have why lot into a last and through about to I full landscape the well talked our Rich that Pizza. be headwinds But to of as the this the I'm them stores goal my undergoing you hopefully, right? So to assessment our mentioned answers the seeing also top think quintile. is Domino's I'm Pizza about a gets all

nothing And we is delivery practices, long off – so best at Domino's the internally about when think order. while want will look you their term, we look we who table, continue for and when to I tell getting folks

Brian Bittner

Thank you.

Operator

question with next David Our Evercore Palmer from ISI. comes

Your line is open.

David Palmer

you. Thank

You is how recent about, And pre-COVID? degree and that or in to giving can into get mentioned something talk bottom getting as the changed confidence and labor this quintiles getting your months center of pre-COVID quintiles. weeks you levels? to recent two capacity that's even that's versus perhaps bottom staffing I solution. at one the a midyear-ish this or you How the perhaps maybe tied better But want to call on then so? Thanks. that up to do confidence And there's sense a

Russell Weiner

Sure, David.

think I not it's aligned of We are franchisees couple and bringing this things. weeks is just our summer. a confidence. back my One on boost

that I'll is to is And to inform your bottom How do so top the to but those of not think entire what to open. one We're control. something going the need the quintile that's close what's about a interesting to better our maybe is piece really it learning's we're up? address quintiles be. of is maybe to system been to right? we confident is perfect, move help first quintiles only – And means we where the learned that Last have be we me to can Domino's way And out that we'll be that's me history, going try. to

you'll staff within are is in store. you're urban control. well But our a as other store, these I we just take inform So I an realize are if help And through points, help little that folks lead things and to these of a need general, you're suburban it's bit to harder than, if franchisees. you – some what think

So bottom and I'll are more Their them their some more in They're things markets hires how to process of more quintile. in time a fortressing road, drivers about talking the drivers more on it versus is than incremental again how that spend They road differences other less fortressing are driving. forever you the right? from stores quickly, take important delivery through doing They quintile new with from also going fortressed. We've right? standpoint. have but standpoint top been is on time to going carryout a are

of quintile is really is this one and big franchisees, biggest of a that's Higher performance important list the the strength think results is our we started analysis. the and one. quintile here happy I show the The last fortressing that of we're because the one and us in tenure manager. another a drivers really the difference general

think are we things when I all control so within those things that the can And but get of one about after are and our that.

David Palmer

Thank you.

Operator

Saleh Peter question next Our BTIG. comes from with

open. Your line is

Peter Saleh

Great. drivers ones what you conversation guys Thank keep delivery I that wanted I have. delivery you more the plan just and come the you. and do guess to drivers to to attract back around to

the drivers about quarter I in last to using flexibility more think you talked scheduling guess, often. and keep sure make their technology you cars, more I

to feel where enough. Or if update that's you and you maybe to think that to some I drivers really be of you push do retain or to pay and us pay with on, So an and drivers? initiatives you and out are those like just give find have really step up go the up expand going the more step you franchisees guess have

Russell Weiner

Peter. From to can Thanks I obviously, our corporate perspective a payer -- talk stores.

-- three years, over the we've $XX last Over we increased well million. wages spent

So it's think, I don't pay.

think view. a it's I holistic real

As a I said is piece of it. manager general earlier big that

And them as so you around is stable store want the to possible. as make sure

is look at way hiring really think to we chain finish. a I start from the

past. we the really what about is that our we this think you year the We we did if television past people haven't not in advertising. in so, new that to attract done And done used had

stores owns a two out with there driver, as an aspirational a And really delivery story who have goal. so, XX-year-old, started a we franchisee Lolly, as

owner a being want you it manager to a as at starts general an be and Domino's at all If driver. Domino's

a we're there And marketing marketing hadn't something before. out awareness company. we getting staffing done So, is

that brings people. more So in

helps system, applicants their out rolled a five in more come which they minutes. through we have new less when in to applications Now ATS quickly. you process get happens? And than then what Well,

what piece jobs. can of as job that the you as better. so store, is to to once make on lot they start the easy There's need a those And you pressure do possible. Then in

of holding that out for lot We best box the practices introduced hours way example, XX we've of addresses about a taking takes time that. XX technology last some so to operational store. that the And talked

can and What so tried I are we've kind Domino's have change approach of enough holistically to will doing holistic Pizza. start when people think deliver to a assessment that you a of that to what area full do you apply this we that. in again, tell And is store, is we about working though our

Ritch Allison

week. looking would add Peter, how And one the looking at I we drivers folks have shifts, there out there We're a payroll. also the certainly once absolutely to for are now thing just perhaps those course shorter on comments. Russell's lot more over flexibility And maybe the schedule full we them fewer hours of of

make we some of team to a expectations to they our sure the up that want as way at do. scheduling look taking we're members with to So, their better ask what component well in cases that aligns show

Peter Saleh

Thank you.

Operator

Baird. with Tarantino David from comes question next Our

open. Your is line

David Tarantino

you a further happening on could clarification had be Good I about perhaps question operational And you issues guess if just nuanced you are a lot volatility but, really if guess comps and the feedback and it's delivery a I mentioned or of the was might or know morning. that's I Omicron. about kind wondering I Hi. around real bit growth question consumer levels you've the of one impact comparison seen is side. Thanks. comment some the US And what in having you the on you're it March through stable getting post stability can just stay Omicron. more perceptions on because in you're did towards And from to that consumer my of if whether on the I you generally. seeing March then, consumer relative feedback challenges deceleration? of up at the business Meaning, February clarification. comment look some one in relatively pre-COVID Domino's decelerate wondering

Sandeep Reddy

a for it I'll you the in is Feb tough the And Omicron. piece. part and January the remarks. about actually got to better. backwards -- March. got talk bit we Russell opening the pass But a in little bit the it of went then Ritch then this first was second comps, it over when about talked of take little David, very Sandeep. a question But cadence think I'll it US I with

that as I had That's we a the down bit well. significant. quarter. why think quite through this So the prepared mixed challenge X.X%. across a actually bag we that up we in talked But Russell the ended of as quarter went And was remarks we the I about saw think

quarter. We are a two-year second the against in XX.X% now stack up very a tough comparison on

So think we the first we're something in I how quarter actually to that's mind in given against compares. finished keep up that up tough

pandemic, this take accelerator the going opening address to of Russell at But to significant it's it, to to hours for be long bolster haven't call is the able create back that volume so should all well. amazing and the getting And using normal to with operating but weeks done our we're a be center more talked are basically things critical. and whole been that's about to capacity to things a as And Russell that doing actually be to now. boost We're just right terms where not the what's demand. about accept really been cadence a in of bunch pivoting from back everything this standpoint. that going happening in So, talked what accelerate remarks

up we're move about bounce years of to really about history ability at at problems that look these that kind our looked gone the we quarter, XX%, year. on over despite me with back dealing we're the comps through bullish a stack business we in the labor talking multiple When I take first and the I've to when an Russell back, start actually implementing three-year And all a I'm basis it's at was with. initiatives personally I performance the aberration. once So, look as

Russell Weiner

question, on Thanks Sandeep. saying what back. I'll I'll are consumers reflect Great. David --

is in which capacity our at started customer the back taste we a problem, And demand, I had which We of pizza. of at actually affected may You know XXXX, plenty had XXXX. then. Domino's like people didn't

closing Domino's. we supply of and we issue create capacity hard the we have plenty Demand fact from stores here We have that to Where perspective a customer closing we it actually were did customer problem. were just chain. we demand. at now is In and are

that programs the so happy -- up is what we now a got more Sure. and And headwinds much Are a serve address that's about that say what that No. I customers our coming And the difficult it? company issue. way. to is right consumer can this reflect to have that I just we're franchisees is we demand just Do think a of overcame them? our against are group

delivery extreme have We an program.

got If all against. going late, -- your understand not I our free pizza our those pizza have next you the things. got what also to they're We've they customers you're loyalty understand up get think program. happy, We've team members but time. are

the Domino's its and remember thing open closed, that. was you amazing everybody forget folks were first was customers the and system If our about is when hitting our COVID peak don't

issues a delivery way of your see difficult the before. going answering same So perspective. soon as be think being far they'll but to to we're question, long customer anyway is maybe I Domino's more as And overcome back what we've

David Tarantino

you. Thank

Operator

Mullan Brian with from Deutsche comes question Bank. next Our

Your line open. is

Brian Mullan

Hey, thank you.

issues the things? us and today X% But that two up COVID-related your remarks out targets. impacted Just than a those expressed be help on long-term that time could get prepared year minds? it at X% that some that confidence inflation a return to marry by impact take perhaps just driver you same a delays. have like issues this an growth given in sounds the range, Can general economics year question your maybe It heads sorted and year's call unit unit or all from you growth. Last as Can the longer in domestic X,XXX to could bit these had next and well. could the this you

Sandeep Reddy

growth. -- on we've to done And to back you as quarter well And Hi, of delays is, frankly, we've about think it's chain that quarters, less few gotten delays Brian. of of growth said have be which been it strong. the is both to rate we've growth Sandeep. actually prepared last like is the as driven unit What trailing there next we remarks. And and as the what on than challenges because permitting basis And very the global to domestic by the thrilled. rate. I X%, well the a have if in as the like growth store XX in months those This in persist we'd are at store the impressive caused very past we to a our if in supply probably unit past especially really strength a Ritch look we that and quarters. be actually for in been the faced And certain go the back growth issues are few international rate mentioned we've growth likely few it's quarters,

It's franchisees the franchisees economics industry-leading. look of they in the for are fantastic continue expanding $XXX,XXX at to them we opportunity have where are how unit However, and much when business, I to landscape footprint. in U.S. the EBITDA amazing a return the enables their our for generate. cash-on-cash value an

give the away very And not is through trailing stores we've X,XXX or And XX it's plus at And the that so system. take either. we're this last within objective across months X,XXX much far with that the reach. been clip

the it's growth that's the very about have to that thrilled committed opportunity the a sure make unit franchisees. And such to And that. X% they we I we're profitable We're time why continue I'm X%. exciting. be we that super we're to business for to all our of because projections think working profitable. that it's So provided comfortable with

to forward. expect that year and going this We see

Russell Weiner

our full, organic like Yes. to But the you're right a you last up on why shadow what store I I that's half -- full highest look X% at in years to on business, has to is the half Sandeep, add glass the pizza mean is Domino's franchisee. stores States XX right I I category And experiencing about when development we're X% going bit And it say growth international the internationally. perspective many to We're as the is say people I US X% months side. there full one years up nobody glass? no I'll do when between fill opened and as think XX US months half your empty half really And from guidance. to smacking our little your right United two more. QSR a in has comments. pizza three first just a want trailing my

glass an absolutely is huge is So half the accomplishment. starts that full. why I that And think

they're As Sandeep a bunch store. both said labor side that things to a dealing open up that now and the of things on there you are on the with of supply need

it have makes seeing. beyond is again time time we So -- expectations else some take some that our may They been I high and doing nobody But what number franchisees is within doing. for X,XXX do get to reach. want to thank you've as what

Operator

Morgan from Our Glass next with John question comes Stanley.

open. is line Your

John Glass

price the But to of glasses, $X.XX. the also got of, reaction didn't Russell, business increase softer. Speaking you mention, to March consumer the sort in

actions. points Is I your to the national price things it further. thinking that about Are pricing just further raise accepted? you you was And that think I you was you sort list that so not there this the price that one further at factor talk about in now to So because one-time the point a as of reconsidering And much offers? offers. you of sales? been and think Sandeep equity further national I didn't in talked adjust was exploring want can has the increases about price look And a on thought

Russell Weiner

me think comment, trying so to a off threw totally here you of my John, done. your because well to retort sitting game So just glass I'm

John Glass

Thank you.

Russell Weiner

side On we that middle the to promotion was carryout at delivery held we least two the changes the March. remember a $X.XX side of standpoint from on the $X.XX one that made

carryout them. tips program. did really we do also $X.XX get is see before some that only going were data of there did the way couple our time the moving so can important also it We our happened say there. we all can promotion. to customer things become because we're can online there. part the carryout move carryout got to a to you At remember on And online. I the And what's loyalty the with same we've tip online $X.XX did to the magic time go We of is

percentage seen we've five a online increase our point so business. And in carryout

been it John like to when we not not comes on It's it. -- And Domino's. decided so it. doing stick you I'll that I'll And we've since math pricing, launched architecture doing pricing paper to been let $X.XX it stone. is are strategy and at we it. But there wrote working. all numbers with is set start behind a down Sandeep piece There's of answering that portion. in and the we've of finish analysis absolutely here actually

relative every pricing down And Sandeep saying franchisees. mean bottom-line before best is our that optimize looked I what here. make that It the drives to is need is true. so the day. has to most that What at essentially competition I we we we But look doesn't our at customer we pricing the came for change and pricing our do value sure to pricing.

we think And standpoint to franchisees' through is that labor was understand we at I know a when And referring will food proposition costs profitability, what brands. things from the are input value testing And Sandeep a so to protect consumer do or we can And that. from to. different the what need we look our if change demand standpoint. to protect our

Sandeep Reddy

Yes exactly right, Russell. that's

our growth it make the I balance think has. that our then – profitability their end and to way it's because have actually exactly the the hit expect our keep sure generate it the to they it's who and going a consumers continuing between value franchisee partners grow delicate to Russell business in

fact cognizant the what think inflationary have be is with So that today a I do highly we dealing we're to of economy.

we the so And food demand find gone of to environment basket long-term I drive needs want think And franchisees double-digits. the a the continues proposition value ensure is that the that's are where growth for as way be it we while simple for it making is sure And to keep up still us. them to to and we and as profitability consumer that in this that mind actually costs up have just make sure Labor significantly. in flow that to is. we

Operator

Jared Goldman Sachs. Garber And our from last question comes with

Your line is open.

Jared Garber

But know question. to get get economic sort Hi. but Thanks a you on of this sense if any Wanted reads from is driver it's maybe specifically sense or of from talked Domino's signing the to sort of – peers taking at are I different. seeing understand Omicron-related heard that for in a that you industry is or something there just staffing would sort for But keeping Domino's I the what pre-COVID maybe and we've about early headwinds maybe back have think January. up to folks suggest study that work some Domino's. levels. wanted drive levels of in at post early Fully to restaurant days above of several

sort what of starting forward. and your of just inform sense you're some study a wanted to So Thanks. how that's seeing days going early that I of decision-making to of in get

Russell Weiner

is carryout got the staffing, own years a business Sure. delivery. the restaurant. to has you we need talking When is want I bit over we tip the business up about What that as more we're a have think first, really carryout this delivery I country nobody that's customer The delivery you their I piece in pizza and Domino's. But Domino's XX%. a Pizza. And And constrained – them. about clear as we last business delivers of than been little is business. know here Domino's when there are at driver. really really The that talk not essentially the to no more stuff customer specific three to think think be we – two We've businesses I because

drivers have there. a lot we So of fantastic

the options this the answers of when part done. we franchisees I Like I do more going of said a at we're think once what I our we question study with of think on more? leave table have is look lot on. and what part the deliver the But internally. nothing to is is can that's we're working study is than And we this

Jared Garber

guess in third-party part I of that the And assessment considered? elephant being maybe but partnership room aggregators as Thanks. is

Russell Weiner

Nothing are fulfill that is demand us. lot system. is have doing said But faith the a don't off the table. right have I've I problem got We've we our Domino's Luckily to but demand got job is that table. the the off now quintiles of a like But in nothing customers for it.

Jared Garber

you. Thank

Operator

with This Please remarks. concludes closing the question-and-answer session. proceed

Russell Weiner

I July joining for call second quarter the everybody results. XXXX our Have in forward you great speaking Sandeep Thanks, day. look with a morning. to and this to discuss

Operator

concludes program. This the

disconnect. now may You

Domino's Pizza (DPZ) 28 Apr 222022 Q1 Earnings call transcript