- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Third Quarter 2022 Domino's Pizza 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] Please be advised that today's conference is being recorded. hand Goers, over and Vice to today your Investor like Ryan to President now the to conference speaker Relations. I'd of Finance ahead. go Please

Ryan Goers

Thank Executive quarter Reddy. of us Today's for Officer, call regarding you, Sandeep commentary Thank Weiner; XXXX. results for from and feature Chief Financial the third our conversation Russell and joining the for will morning. Officer, good today you Chief

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

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

please of do request many find coverage questions X-K this refer call. your I'll we earnings to In measures the to accommodate referenced morning permits. today's best of as to be to want financial may non-I analysts, time release to on addition, reconciliations our our and as disclosures that

Executive one encourage to turn is is the call one-part we ask Russell With to conference like I'd Officer, for Chief website. Weiner. that, being on you such replay Today's to recorded being this call. As also question and only call webcast via our our over

Russell Weiner

joining this our performance quarter. global you, third Ryan. to by encouraged Thank morning. during I'm you thanks of us And all the for

demand XX% QX over the quarter, our and sales retail currency, of stack in XXXX. negative XXX resulting of X% impact We three-year the Excluding foreign almost global of in versus a the plus franchisees grew opened least global over during and the stores Domino. markets net XX quarters. trailing the of new continued one new strong at our for demonstrating international X,XXX store, four over net quarter

going required perseverance our to start have and wanted and the volatile U.S. macroeconomic environment. in a a bit around I initiatives. show the depth some agility to more members franchisees call operate key world little team to by continued and in Our business, the on

important, is the as strong Domino's most and First as ever. brand

Our research health maintained and we score, like value. shows net and lead pre-pandemic have competition, our at QSR and health critical taste levels, over relevant brand metrics the remains brand promoter and

are these of of All indicators and short performance. long-term key

we store Same U.S. sales. Next, three-year on were of sales QX a business for our continue put three-year impact, and same This the it do which long versus stack, our when sequential up to in from up look in store last year. to X% COVID a at improvement And useful QX were perspective comps, same-store versus as any as QX. from QX XXXX. remains sales XX% in almost represents of will

a lever a for Now and massive us. to growth Carryout. continues be Carryout opportunity

last year. started while in shows segment brand one specific know, pizza has end a in XXXX. data company, we offers number targeting shared at as paid you of we with the Carryout effort U.S. as As NPD delivery began off, the the pizza Domino's the became that Carryout That

continue same-store versus business. XX% up grow carryout in QX our business were ahead versus stack continue Carryout a in importantly, almost to to we We third of of the XXXX quarter. of Most Carryout XXXX. the plus QX runway XX% see three-year with tremendous sales

proprietary our the offer national as pricing Delivery predicted. Delivery the On on research our for side, performed we took

on match delivery the $X.XX to mix deal move. from our $X.XX was Going right and

on should Given Carryout take as analytics now well. inflation our pricing indicate we we seen the have our national deal continued

October initiatives to match XX. we throughout resulting quarter starting We our Carryout area. capacity saw on $X.XX, deal from delivery will customer and a to progress our continue by balance from profitability From value perspective, the and taking $X.XX franchisee in mix this

our or number to At back quarter, and visibility of were the our have of levels hires to job our but more past year. labor increased grown as the the solve stores, new we throughout less far in constraint, as end While applications we the quarters. many XXXX have to corporate applications few and new has ability delivery hires remains challenges only Staffing ourselves per of over confidence my week. the a

Our delivery improvement throughout showed service also quarter. the

to has quarter we've still for the year. we While service, made this to average our am so I get time to work encouraged far. do progress improved have delivery every standards by back Estimated highest delivery

system boost for of to boost A QX, represents week our each volume. cadence. in handling return week three indicating increased in consecutive confidence is quarters pre-pandemic Additionally, week another boost the a all their on in our

Finally, phone connected in to to answer call calls. least are the around with now our some help to stores of U.S. orders, centers their regard at half

moving corporate to stores. Now on our

the to existing grow there franchisees, earlier to unlock such progress transaction quarter. will selling strengthen evolve transactions and in stores as buying by We Our York. brand. accelerate brand. year These growth such as our with several the strategy stores, purchase as and visited in feedback Domino's store corporate our these on XXXX Domino's the QX to ready of franchisees was initiatives business in our to are growth fantastic operational the aligned testing. corporate see we're provided the to I some bring utilize corporate who it transaction this with continuing corporate to stores for we in stores of re-franchised to New and stores and as end Michigan in get make our transactions happy platform moves re-franchise the Houston opportunity in opportunity to own the in new to and Utah further and after well markets, and that Arizona three These stores

that about customers look we continue have jobs sharing learn. we is to forward drive benefit I it critical we and for effectiveness said, initiatives As our to simplify as more efficiency these our employees. to and

Sandeep. Sandeep I'd CFO, QX over for more Now detail Reddy. results, on it to turn our like to

Sandeep Reddy

I'll outlined to profitability. everyone previously I've long-term the and our Thank updates morning improve good begin call. on Russell, remarks you, actions on with the to my

First, we pricing architecture. continuing and evolve to are examine our

was During the was third the U.S. increase our X.X%. system across price quarter, average that realized

mentioned carryout Russell will $X.XX mix on we October our, $X.XX XX. earlier, match deal to adjust from and As

As pricing a to update, X% the expect approximately in realize of to increase this result quarter. to fourth we

to as income from continue seek in sequential our efficiencies that consistently expenses. the to basis cost ensure QX. points a year-over-year a as Second, grow XXX in We we in structure saw operating need improvement revenues in of this points faster percentage contraction than of We trend. basis to QX XXX revenues margin

QX, in order U.S. a by QX driven decline count. in minus Third, from same sales we to smaller improvement the realized X.X% store in X% sequential in plus mostly

negative for in Now, of global detail. results QX, quarter more as QX, When sales the compared retail our in retail Global excluding currency, financial the decreased XXXX. XXXX foreign impact X.X% to retail due quarters, sales the positive global lapping over X.X% comps FX trailing XXXX. momentum growth X.X% grew in in sales the to growth QX, four and excluding store U.S. global sales sustained

As baseline, we useful believe on. do it we look business to anchored understanding stack we cumulative the discussed instructive, and the long in believe have so move as business, across of remains the will back our in it as past, sales as at is a pre-COVID continue for XXXX we to

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

Turning comps. to

X.X%. X% stack sales same-store QX three-year a up increase decrease a estimated same-store percentage in and by improvement quarter QX in company-owned franchise percentage stack XX.X% U.S. I the which on Breaking QX, by three-year business relative X.X fortressing QX representing U.S. U.S. impact rolling decline prior driven a X.X% included mentioned were offset growth, in business order our of ticket U.S. the the earlier, pricing the actions in up was sales The increase point down During for system. comp, stores was while X.X% quarter, count. in down from basis to across on The the points an basis. partially over X.X our during were a in was sequential our of XXXX, increased X% a

previously give the a we staffed U.S. As staffing. a we our to into the have impact magnitude staffing shared, fully to to levels of believe is for on break it instructive store sense based quintiles of relative stores

improvement bottom sales, consumer facing significant XX%, those percentage the seven the the Looking are to from unperformed those most at sequentially saw stores closed in done those staffed quintile are average, is QX, by fully QX and essentially labor challenges ability less gap are This that the same-store demand. stores in bottom points. the showing on in the that top meet to between percentage six lower than point we quintiles top-XX%,

versus few Now The QX, a I'll to The remained XXXX. The declined share lower more sales basis, XX% both and strong positive between QX highlighting on Delivery XXXX. serve Carryout QX be X.X% by Delivery relative three-year relative during cost consumer and XX.X% bottom business same-store gap QX, the pressured. top sales with to relatively the same-store up same-store U.S. about continue quintiles XXXX. of Carryout specifically demand our levels in Carryout QX thoughts businesses. small order. was and delivery staffing compared a based were the sales Carryout quarter, delivery strong the business to On to

QX, saw in When a Delivery top-XX% percentage bottom we continue XX%. stack, same the sales to We above between the store the business we a pronounced an in QX difference more to were sales at three-year relative and level. in on see look XXXX eight business, gap performance. those Delivery point delivery Looking stores X.X% at same-store the in the quintiles

pizza pizza to point is this on see year. store quarter. continue to we starts behavior past top market same the the is to bottom modestly to to percentage decline over gap NPD represents over from the to A and despite delivery in a size up the past or the sequential QSR point between habits. attributable sales percentage as a delivery first delivery of similar decline potentially revert share gap in note performance a of quarter, year, consumer in dine-in, in as in improvement decline market and the data the in XX based QSR the the delivery XX pre-pandemic shift This the prior, quintiles, While we second a that see point the in is gap

the years recent fact, almost three up pizza is delivery ago, In XX%, versus decline. despite the QSR still market

the new U.S., the quarter, bringing in With both years in which we three ago. year business. more steady over net a our on consisting U.S. up our for XXXX-plus brought XX%, of stores to four-quarter conviction and pizza continues net an held economics, share Our has relatively in carryout than overlap growth delivery past and strong delivery, unit that bullish channel three and our be be carryout the the by to our slightly The we store QSR, count we points U.S. end store market X,XXX the stores relatively spending Domino. modest, pointing to XXX Shifting in the basis maintain and can and dine-in growth U.S. rate is during total market unit our and four-wall which store of to X.X%. unique versus the count, to of includes remain XX order at overlap closures as above the store who our system franchisees our rate added customers openings potential XX QX U.S. long-term historical each and of

with XX% comp largest the by unfavorable This of product of X.X% prior positive UK, opened were of The XX% impact declined for excluding negative comp paybacks QX, New market our we store a impacts this strong, XXXX of in a with continue, in Similar up impact impact. international, and reduced was lap as without of to a quarter to faced more VAT to the rolling UK international basis XXXX X.X% sale. XXXX on year-over-year will rates from UK XXXX VAT we for on slightly expiration expiration VAT to year-over-year resulted the currency on three-year the increase the a the opened headwinds but X. through XXXX. stores versus performance. three-year stores negative similar impact, VAT foreign averaging last while for the relative UK year Same-store over paybacks quarter, stack and track than XX, second remains of around in deliver XXXX, relief the October sales March the in international a lower weekend relief a X.X% reduced relief

international in comprised XX openings of added closures. QX, Our store XXX net XXX new stores and business

in Our well exit This franchisees closures round the current its fall there rate as our store franchisee optimize three-year the were with or another two of four-quarter net master in combined was market. international to market, driven as by to within Brazil growth a X%. to the our global US growth, from our net master store in When brought X.X% to of continues four-quarter as Italian of trailing closures our to store base X.X%. store outlook X% range work growth

growth. market Turning by approximately from were by or international royalty Total $XX.X which higher million million stores during increased to and prior to stores $X.X revenues XX.X% chain QX. third sales due currency These higher income. quarter by in to impacted revenues revenues supply pricing changes increases revenues exchange operating and foreign retail the driven quarter, rates, resulting offset from partially for negatively basket X.X% the revenues a U.S.

Our increases. to consolidated QX leverage. driven basket XX.X% cost were revenues by labor offset impacts a G&A actions in quarter, These of operating partially points basis the year by income pricing food increased prior primarily from by as XXX and and percentage

tax Our higher in of by by EPS, impact a compensation, $X.XX exchange benefited and over us trailing XX Breaking driven QX, our diluted versus changes EPS down share stock-based diluted that $X.XX of in changes currency our our have which lower us driven expense negatively in $X.XX, interest $X.XX, impacted count decrease $X.XX $X.XX. by us results us $X.XX, repurchases foreign QX was benefited $X.XX by us rates in operating in net lower tax impacted by by $X.XX, by effective negatively diluted months the benefited share was rate XXXX.

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

three in expenditures our million, after will which initiatives deducting chain XXXX, technology we $XX first facility Indiana, quarters provided capital our activities operating including generated in investments cash of During of the for a investments by net in approximately million, consisted which approximately $XXX of and decreased three next supply new of serving capital, on flow flow accrued liabilities, XXXX, million. payments Free receivable We approximately and cash week. generated $XXX cash $XXX to net income. for first in from of working the of begin primarily receipts and accounts stores quarters million of changes free due the timing lower centers,

for During share. repurchased $XXX retired and average price quarter, $XXX.XX we XXX,XXX at million shares the of approximately an per

million share As of for of under the end QX, authorization we had board our $XXX remaining repurchases. approximately current

during $XXX similar additional and $XX facility the third million to variable quarter, During the facility drew capital $XXX additional also fund new of to facility return on million existing share the shareholders funding repurchases. down $XXX our up through are terms existing our existing variable to note quarter, to substantially our we with closed Subsequent quarter. facility paid we funding note that down to during million an million

competitive We environment. volatile able we achieve to current terms interest are very were rate pleased given with the the

end in as the subsequent September all $XX transactions XX, addition, on franchises mentioned, Russell and certain Utah the our of In Arizona completed million. approximately to corporate for quarter re-franchise to we stores to

We will our quarter the impact next of the we provide details of transaction further year. financial results report when fourth

rates environment, macroeconomic to guidance million down to down guidance in continuously Before Thank Based we impact from million $XX have Russell. of the will XXXX, year, in July. like from to expect be of I million, $XXX to now $XX call now today. to $XXX million the an of XXXX. it currency we guidance expenditures million to for And previously $XX to to approximately joining back provided foreign we million, million be the And update $XXX for negative million. we were evolving for capital approximately we We on expect to G&A previous changes to expect the increase compared $XX million. $XXX the all you see would turn $XXX the million I to close, now a previous expecting $XXX from now exchange

Russell Weiner

you, Thank Sandeep.

little couple wanted There that impact of call watching segment. in we're restaurant QSR for talk I macroenvironment the the the we questions, particularly about delivery broader dynamics industry, Before the the potential to open delivery. on and a a bit are

some their that consumers was First, that for sit business down the when as were sit down pre-COVID of past with once eating some source delivered and returned of orders the to few of is back volume delivery was years over habits, constrained. it, a bringing rebounding the restaurant

The that expenses channel. to tips due second that and fees more carryout, delivery inflation added will inflation. dynamic in is the than impact of We believe

delivery research spending be to higher prepare shows becomes at exacerbated some costs as relatively meals Our customers home. could that around constrained more the This might lead a holiday. consumer

from three around have strong important pizzas of we a have have a in experience. decisions One franchisees, the strong XXXX, pandemic, We that the thing and best-in-class to every XXXX customer pizza insight, business believe is today. around to volatile emerge one for. offer As and is than This we model tough the disciplined ever. environment. that delivered digital United chain and value profitable out we another on and times in I stronger I today built during QX, What we're begin is poised high, Domino's because I will our Domino's even now the economic joined that is these world. what was succeed, inflation number makes expertise where before States didn't is company and one delivery based supply the world shrinking three more we one business. team every is true today confidence Carryout a of Domino's pieces In we deliver consumer in have then out learned in

Pizza. in we'll have open more complete question. the restaurant I more With Domino's the future confident of never that, today, call been the a As company

Operator

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

line Your open. is

Brian Bittner

Good still macro think at of I also on being the had think are strategy. I tougher X the your it's margins been end pressured ask I And happening the September everything I touched headwind inflation. though around morning. Russell, prepared staffing discount about at does place specifically, And and would but even time in franchisees want by since you improving. promotional been where a a you've to a XX% it's know off remain remarks,

what you still is strategy? accomplish? So, just thinking is strategic to around it it wanted initially help can what so from you accomplishing the unpack can When place, in see this I

Russell Weiner

Good Brian. question. the for morning, Thanks

were the ahead and we On strategic XX% of said, you it's at it. off, reasons there quarter. went kind as really two And why of the the end did

do around The first there's try to customers. inflation, we tension that do is as tries advocates Domino's action to that brand a obviously big shows a macro society, the and a is, tension is brand are for with whenever now in our the we

everything's And going offer able so else. was time really where being moves, off Domino's a strategic more in up, and was inflation, anything a communication to there's it XX% and

remarks, Secondarily, to as carryout our offer next evolve we're I to said from my $X.XX $X.XX about week. opening in

off of And a standpoint. it XX% we're of communication bit room us where we a little does, were so gives from what part going and where between

Sandeep Reddy

promotion just promotion, is that. I'll of a way Brian, profitability standpoint the a XX% consumer. And delivering It's and mix match something just The or from add the different. to promotion significantly not different to a off

promotion. been have and our transaction, significant really a through corporate through way this franchisees not stores in margin from So standpoint, a impacted our this

that really feel of good well. we piece as about it so And

Brian Bittner

you. Thank

Operator

comes Thank next from you, for question of BTIG. line one question. next Peter Saleh And moment our our from

open. is line Your

Peter Saleh

to the on the those We've right double rhetoric year. the on all the Yet, to impact really thanks. Great, a and commentary tension now. bit seems come comments back it just the like I I pronounced inflation consumer had want made, around inflation. seems guess, just more, little digit you Russell,

we've consumer what just changed that year? I inflation can seeing? the on up you really what's inflation what's broadly. that And side, quarters there, given that had this changed so So you're with just has you far more talk Or feel just like, for really maybe the about caught double-digit three makes guess,

Russell Weiner

the for thanks question. Peter,

cost an For to remained thing we is, internal the great need relative still have inflation environment And the do what can best $X.XX at or now value it to out us $X.XX, on exactly industry, relative was research prices environment indicates we changed. side. remain we our delivery have whether in and still we enough, same Domino's, approach inputs side the research and went our relative there large on the non-inflation interestingly predicted. here a will it's from, When changed, the -- carryout our value value. to be a QSR Things

role within this our QSR that's inflationary be value to really, customers. in environment strong So our a is for relative

Peter Saleh

Thank you.

Operator

next question. you. moment our Thank One for

next Sara Bank America. from Our of question Senatore

open. Your line is

Sara Senatore

if labor even your just how you. think thank better. pressure to Hi, The sort or two-part Labor comps versus hours, stable that may. and stable, about though company was of was I franchisees. the costs lot quarter-over-quarter, was question One on a margins were

strategy trying you've margins. on for unchanged. if shortage So about understand But basis is I similar? help choose impact pretty that Is something the driver market points is I Thanks. refranchise in just comp to appetite to our to XX wages signaling to hours response or to guess, the talked to And know the a of headwind, doing that? franchisees which were that. headwind second, then more the company mitigate more refranchising and Michigan you seeing much

Sandeep Reddy

I'll the the then on Sara. will Hi, opportunity. pick first part the question up refranchising and on piece Russell of take second the

from the taking margins where were two essentially basket the and fourth this has in be was we margins have these accretive basket company going saw about company number I But But our pricing. for I showing have as of a quarter. step behind company specifically in as franchisees the margin it's were built, and actually to about we point I pricing refranchising margins. to slightly labor about think I'm the previous investments markets will we to back think in in total will or just the inflationary what labor it and food And bit we've pinch had So a make I the start little that talk we total one, and margins. talking of think up over the And a on in headwinds, multitude there. quarters think the margins, whether investments a definitely operating make there but or to standpoint, the well, stores talked been that headwinds company food stores, that corporate some

As terms the about, about minus quarter, come right to of the minus evolving we've stores, sales. same-store second this and side, went talked we've national on saw into we sequential benefit really we're actually the as given we've improvement changes done I that talked since the X% third we're X.X% from offers the It company-operated last now stores and the pleased what the will quarter obviously. with quarter. with franchisee between carryout in that in And well think as the

up stores forward. So we the of indicator where that's can very encouraging. corporate our And this going take being of ends profitability a leading

be including going fix, already So an it's of but actions, overnight underway. lot to pricing, the not a

I it's actually to think in of play of out margins. profit time So total see terms this more a question

to on pass franchising. So

Russell Weiner

The for of in it Thanks franchising I ways. strategy. more our are is would growth Sara. a for there unlock growth the Team to corporate strategy as Sure. us think two markets store or question, -- refranchising U.S.A., really

the let so what seconds tell positions. makes call And we unlock drivers' instance and because cases, interested a maybe creation upside. particular a would me really, what some listening of in Phoenix to interested market of are franchisees. are sold buy because to going who you was our what this that stores it's done spend is now stores, be In in think kind why special. about three most our are or Domino's were is you we're We Six it stores to Lake people Michigan, there franchisees Utah. have And we did are when employees a was to in refranchise unlocking lot become market drivers And means in franchisees ever of our that's City. they going who refranchised and to what I should and making some first-time and franchisees talking that Salt former to we corporate like worked XX ourselves be done it and like the of markets two in there the in. through growth and Remember, them stores driving. recently Sometimes own were few in Arizona we a employees. refranchising, just future franchisees them our as started of of purchased franchisees purchased our XX% and pizza of out first those, store franchisees, the redistribute

that's part which American Domino's. is dream, of so And the

growth we're So unlocking case, and this in franchisees. new

Operator

for moment One you. question. Thank next

question the John next Our will from come Morgan Stanley. line of Glass from

Your line open. is

John Glass

Thanks. Good year? for outlook about or next the year the balance that growth talk you morning. of Can into U.S. You signaled unit maybe global would slow.

quarter, those talk certain about see store generally, more an further any Thanks. starting just but that environment? you are given some Are if were that? I think And concerns just there changing of sort supply development can about think deterioration given constraints international all chain? inflation, closures ex higher. say, macro in this growth not you this I is or you contained seeing that on international I'm closures you were slowing, see should to international given might you how

Sandeep Reddy

And Sandeep. is I for this John, on we're growth, think the global bullish. really outlook unit

We've I in changed very XX of terms terms of things growth exists. calculus. in previously top markets. the our talked where potential about strong looking That hasn't potential XX,XXX the are for in think stores

between we've has that to with, and permitting come. we're U.S. recent in be that delays see the already more construction at Looking The going quarter, specific flagged dealing we're slowdown the the a slowdown.

of market they that of franchisee exit the as specifically I talked the the think it. third in part There a the a more there Italian driver the in of I as closed our And the internationally, Brazil, that key a first we close And were master saw continuing some we and decline. So about in some master optimize think we stores quarter, to franchisees had stores market. by quarter.

It from talked I They're going. the into read XXXX assure on wouldn't around about as XXXX like terms really of stores. I well. compelling. very better. I very can of U.S. our are potential. where and much paybacks years remarks three years terms you even trends track is seems this prepared They're international to more the are So paybacks the in the long-term be recent on in too that strong in international

the confident there that. over very, got So and is very that strong, very runway we're we've of

Operator

Thank you. for next One moment question.

of Bank. question from next line Brian the Our off Mullan Deutsche

is open. line Your

Brian Mullan

Yeah. Thank you.

quintile the said historical improvement. stores quintile question was delivery, in what I quarter you sense top is, the between us gap to get as between and was that another about getting internally this it COVID? an or you in close the and solved bottom eight-point gap progress. you bottom your driver that when an talk of that My is think remarks, top that indicator the prepared of a can delivery Just you is mind? quintile normal to for the and give And measuring make prior the gap, to issue sequential back that

Sandeep Reddy

that for question. thanks Brian,

bit about eight points. it's continue in we've was mean is make higher more that be seeing You're QX. was historically. it talked still but prepared than Russell in delivery progress, XX It points work XX to higher, the in done, But again, there's right. let's on and mind, the seen and a keep we now gap to as is QX, remarks. It eight-point I we're in just points still

that service comes I fulfill And we able So to to And be. our returned think to the are actually customers need those that know we're where actually we're next as as is the to we're through far we we through system look we things make sure like to all concerned, our we profiles. levels make accustomed had sequential about happen at here continue demand key to And also probably restore when very the way. quarter. talked confident It's the continue go about previously. need the we've the is we'll to. as to that progress progress points as for look think We'll year. we to it we within that talking keep I answer we've But the over

Operator

next Thank you. for One moment our question.

John of next JPMorgan. question Ivankoe comes from from Our the line

open. is line Your

John Ivankoe

months? was should Sandeep, that U.S. in looking has -- is firstly, I question growth? the the terms levels of in I But on unit and your was at units have the And also G&A next CapEx. The that terms the modest guess, bottom XX XXX the changes be are cutbacks I understand Hi. quarter, significant the or think, I know cutbacks lasting? come, question. Thank X.X%, going in secondly, I talked development. you. other the more It's timing we oriented? John year-over-year, there's mean, is mean I if first more quote. Is higher to then you about but lower Ivankoe. in in be from of is thinking that in about months just XX Thank that Or you. more I there to that in next how guess, of the achieved are business those here? the any is we symbolism wanted fourth terms that the slowdown previous stable

Sandeep Reddy

Thanks, the questions. John. Appreciate

this we flagged second the quarter terms that U.S. we the were of at when and delays due the talked end back permitting expected in of seeing. we the Now the units, to slowdown construction about I think

construction once to expected that past completely get permitting about a impact earlier. what headwind, it's until we've we definitely we we and very the from as balance do think going abate, our the delays is head. it to is of I is franchisees. demand year, the see I the see strong But be think And frankly, talked

we're when G&A we're to that these convinced we take it's of seeing getting then question first. G&A think one we G&A to to prior work that why more to the little here. the on past I'll I stores And comes norms So CapEx way and mark. of growth are talked it adjustments really a X,XXX-plus in that's guidance, that should that by I The is see macro disruptions of terms think the And to very rates. over we that refranchising And about. a impacted bit our

in Utah vendor hit into well. driver and of G&A of of expenses elements of with that -- stores part adjustments in Arizona those went the into other corporate So are with now corporate franchise G&A, structure that are that's the moving wouldn't -- and our was the it. as some there actually terms really the small of the And going with that stores stores P&L, the some

I and was but of -- CapEx, million just on CapEx, not franchise bit if more And it's at the you of So rate on between a think corporate stores. major. It's a reclass $XXX our look stores run up. tick a

We have sliding just pretty forward. spend on investments. heavier expected to it some We're our of much supply chain

It's cadence timing of just So going to forward. of don't impact much starting it's we're change how think I more a have. the spend to going

Operator

next next from from Thank comes of The for One Gregory you. the question. moment Guggenheim. line Francfort question

open. is line Your

Gregory Francfort

menu? question. Hey, XX% prices a taken think the delivery prices. but I there maybe delivery pretty elasticity interesting their fees elasticity the in about Russell, widen in-store of of you Thanks. guys, maybe a have guys, versus Domino's? work question fees. prices just little I Is in the bit the had that pricing delivery prices consistent, and pricing lot an delivery out is competitors a XX%, of for above it's to up in-store I And thanks higher some And the the because have your for the also, over you on it's time versus that opportunity think,

Russell Weiner

Yeah. question. Gregory, for thanks the

you prices franchisees' taken at are are need on on said do their and relative that's be where certainly we account pricing all is the local that calls, though, on of pricing. they set to the make. based there both they And and into with a data level. competition fees on versus our to are the national provide we've recommendations when what there, the As what delivery context we decision prior them What is menu competitive

Operator

next One moment question. Thank for you.

next question from Strelzik from Our come will BMO. Andrew

is line Your open.

Andrew Strelzik

you've could elaborate about find anything you're hoping in in exploring technology on good recent this mentioned structure, store opportunities level something at execution is you been morning. of And efficiency is the or cost efficiency otherwise a you your you was kind about? that to incremental are Or an little in initiatives talking there continuing is as the bit which from the comments But Hey, of efficiencies more I prior perspective? well. then months? to quarters help potentially

Sandeep Reddy

for So question. the Andrew, thanks

I to look at of about In terms beginning think talking continuing from been structure, it. the the year, the in cost of efficiencies we've

to think eliminated a be to allocation, how of it's actually I they resources it's do redeploy that combination eliminate. the But costs we could sense resource make best more other importantly, if returns.

And as from when we'll to And so I talked in the think move much well. do continue to changed journey I in talked not really you we're what think not just April. it's the we forward, I first quarter terms we under, 'XX into this that of in but fourth that about as

technology comments from that standpoint, so And that. chain on from a you to nothing and more there's I a standpoint, had Russell some supply But than question, that. think add if

Russell Weiner

right on standpoint. you're and to been It's look think we've I looking Yeah, to it. drive something efficiency absolutely to drive, we'll the continue

see you, are was there in two doing operations in of we're that it. so codifying that as when calls. was excited is One and I Houston. told bringing to what to future think in I really of practices part But down ways the physical talk in I circle best we're going I about

suite to with tries just decision what the manual launch of generation automate we launched, that the operation, optimize circle systems of continue our and addition going have we're already In next stores. more and really to making to that a store of to do the of we've and efficiency some can physical we effectiveness

how center at standpoint also design a technology looking from can help we're us. human So and

Operator

next for moment question. One

question line from the Cowen. Our of come next Charles Andrew will from

is open. Your line

Andrew Charles

is in innovation you advertising. that I but Thank with just question XQ, these drove boost pre-COVID loyalty, pizza of beyond grow evolution know as my guys to competitive playbook menu work brand a years really, looking in dig said weeks recent XXXX scores more as prior Russell, parts advance little your years, delivery beyond XX on and Great. want a the you to well the being help done around four to are in modernization and and highs, what health bit success in and ball category? in environment traffic is, the I things you. more core digital And the beyond

Russell Weiner

our I couple way. question. kind things of of the right, came during for mean adjusting as you're thanks last we Andrew, years, certainly Yeah, the were

mix match and platforms order, we're spending that work products when don't work well unique items out going the and of took a products innovation, mix then launched launch which I store. in of planning customer a the So to kind continue to was little but fully innovation and for into are to are the increases this our we're society, come and about in our technology you're they what seat to match environment. the But expect, it before, stories incremental we be we and healthy ticket. bit know talk that's we us on only drive future. deal, them platforms can't an into used back just on those I trying But way we really going to stories these all what the and will unique standpoint, from money the for sake to really think in long-term OUS, obviously, from just you've and Domino's per what's did a to not deal. adjust maybe and seen that And From of market. we that we seeing adjusting We

right grown in the you're think and how business, on going be we've the I we're you forward. focus to way So assessed that's how moving

Operator

moment One next you. question. for Thank

question line will the from next O'Cull come Our of Chris from Stifel.

Your open. line is

Patrick Johnson

supply the thinking Thanks, And on opportunities relates remain I question outside guys. whole? make sense Would and or volumes as business the products adding if growth is that so, what a are year-over-year, Chris. segment? Patrick in there that consider This My Am you along to strategic down that transaction in for of unit with right new unit other to for potentially some chain. improve volumes transactions? alternatives

Sandeep Reddy

most offset two But chain, question. to the overall, partial you there was up think a happened actual quarter, what a I on go by in recent of was XX.X%. basket at the things. that pricing the think the margin, market different were when was dynamics we look fact Chris, because Yeah, that I for the down volume sorry. was unit that driver if specifically yes, supply And think I Thanks look at and the just

was what a change. decline reminder, you year. in gap hardening quarter, were versus actually an saw to this just I product was improving margins. we And will quarter, a sell. little the a second but which a the costs of margin situation impacted supply costs In think cost and would said chain supply shift seeing contract downwards the in and food the where a margins we that's opposite we labor constant fuel be margins had I actually you cost that on headwind environment impact food basically before, in have think because dollar prior why a we've decline, chain terms also margins and sequentially the the It compared bit increasing

our So this we business apply nothing of to terms to model and new is franchisees. we the in that how the model price

to the for And see so given where full this basket. headwind the of year projecting expect we're balance we the

Operator

Thank moment question. you. for next One

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

is line open. Your

Lauren Silberman

or week. Can two the and much. it the other expected, the into that talk comfort versus wanted alongside more more about I you. it so factors went now so Thank decision price decision? in you on mix elasticity for Thanks Is to the about have the to any ask raising increase than change in carryout carryout lower match increasing carryout March you delivery?

Sandeep Reddy

Thanks, Lauren.

I look essentially the But our competition look pricing also and of consumer what side at of I terms think the it's the decade is over is think I long-term then the our franchisees we And store elements profitability and in and in what's for market. or happening it's it's last important we about not we at look corporate really think stock points philosophy the relative company, would One input at new, this price does not stores. year, really key think and been own how more. the it. that there's in on to costs

believe and all that were permanent that factors nature. of these side. of to So needed hardening where on was March. to visibility side, channel when contribution to is we was in adjust business, it that the in that labor and adjustment back decision back But on more peel was delivery match more delivery mix because to delivery tend the in think mix March, had the into a in match I you consideration. be margin saw And actually there taken to the the some we had in labor-intensive cost the needed increases And price make the drive delivery been we to to

basket been already can had what going volatile. it can it's happened also It food up, very While started up, has go but historically is reverse.

were wanted So likely how actually that we pricing competitive the over are six we to that basket seeing we've the on increasing months to make And the has sure evolved in food costs sustain. examined the last also, marketplace.

well harden, match mix So the to we for under when as drive and change is as shift basket profitability the the on competitive has as carryout process. the make franchisees believe right that elements those you consideration price well take to continued fact food to and the both that time now the

Operator

One next for you. Thank question. moment

Goldman Our next come question Sachs. Jared from of will Garber line the from

line open. Your is

Jared Garber

there, consumer. the the you as business you relates of certainly, about Europe I maybe the breakdown markets Can And dynamic around outlook we'll made maybe delivery some you're bad that in little the comments shift a pressure as demand see talk of and it know some versus as bit Hi. the broader give question. some us go international delivery a for business potentially seeing on to Russell, the more that carryout consumer more a the UK and little the we well we or sense in there? versus Thanks some bit but on forward. macroeconomic on challenged of color is in heard carryout good the impacts market,

on be thinking you're that be So any or how and about that franchisees we how hearing what should color would seeing Thanks. and thinking great. from about you're

Sandeep Reddy

demand international I Yeah, before the think couple away markets, points think on talking change. of bulk the a that was the I Jared, just get I into which about

between environment. -- there's unique said the we it's the what some there I remarks, pretty think macroeconomic think prepared to a in very we talked businesses. and versus standpoint carryout the delivery, And two be overall, could the remarks overlap I on little in environment businesses. delivery, was But think inflationary I specifically from pressure So prepared about as we've two

between necessarily when domestic talk as out So two not I But we well. a it's we the overall, see a think is channels. don't it impact international switch just impact, the inflation, of about

factor. all. consumers same be home a preparing that a that's internationally, it inflation, I is very we including the about have So you the being about. the And dynamics pressure risk impact point an just we to significant and at when cooking that talked And may would for risk actually switch talked UK the think

We are inflationary times. an unprecedented

likelihood be right these So a little inflation models but our switch at is testing consumer elevated if a seen, more still how bit evolves higher levels. behavior remains there's to show now of that

Russell Weiner

growth, But lot the U.S. the fact when mentioned to is on add carryout really delivery is people I where carryout we relative more the tend also I we When go win. our earlier, would Yeah. pizza the the number And hits that's lot that a other pricing of to Sandeep tend at pricing look QSR. in one on to brand, a side, hits cook at said from the to at volume folks what carryout home. side, of we're value. least And source

is where volume. going of pricing up, globally, should business a So is on carryout during our times be actually source

Operator

next for Thank question. you. moment One

of UBS. from question Geiger line Our next from Dennis will come

line Your is open.

Dennis Geiger

particularly open to the you Sandeep, demand permitting stores you the new and franchisee past supply delays. as question. strong get for the a to chain the Thanks U.S., spoke in

you a health of as as facing has bit speak cost interest the we wondering pressures sort that about just if I'm as little been well think the higher to franchisee U.S. industry of So across more sort could the now rates.

your is broadly franchisees in here the sort where for sentiment of Just States? now

Sandeep Reddy

Yeah.

we I this when transaction actually we I pipeline refranchising well, us discussions, partner recent very growth seen think into have every think The as time around franchisees clearly these with pipeline. by very we're growth potential. mentioned growth. And talk potential extensively significant our that when franchisees. is talking obviously discussions happened they and it on our about to our growth And we how

conversations of the confidence with leadership across I'm the of in with happening organization. -- organization level in. come are seen happening since multiple comes this I've so Russell, They the all of from that really building course. our happen because confident And And I've that

toughest much as solutions at So in, that But being pretty April, been in here they were. I've improving when I found. quarter sequentially because an the over came seen I things were think think point sentiment every are I've I

I think on we've actually think national to performance. offers I we're improvements seeing collectively, our and drive latest profitability. franchisee taken the long-term in And decision all has we're that well very the by excited been system, received

Russell Weiner

that. to add just would I And

with working franchisees, my is Domino's of me, best the job. part For

Next have summit. coming an we franchisees have Annually, week, in. we economic our

so to you to am And we tell do again. I'm we how end looking I I thought going conversation, they're them is of the to year, this get towards the forward I'm at every excited little about would and seeing I And be a something what doing. what them, bit as maybe talking

QX better QX means That improvements. about better talked QX. than sequential So than Sandeep

is one before time on better three them than week and they boost deliver post. carryout in is shrinking now delivered same-store than gap sales in they QX. service So The year for the back one and and prior QX, every QX QX. What pandemic. and better pizzas all how congratulated are than every to better they times, boost should is three one QX first is do the week number better is the QX, to future into getting one about out in to emerged they in what Service brand. year. used the out fifth the service their better we've quintile of as boost week they pandemic, the weeks their into of got three They pizzas QX every second first QX, between be got performance, quarter. new and time we was The boost than

from so and share just ago, question? more amazing XXX accomplishment. we're Maybe pizza versus a And market points that's an one years total standpoint, basis up three

Operator

question. Thank one you. do last have We

the come Jefferies. will question line Alexander from Slagle last of Our

Your is line open.

Alexander Slagle

thanks. Hey,

G&A. follow-up question the a Just on

have structural in beyond year? an there G&A you that the Or talked year outlook might meaningfully the year if through And we extend change spend down the are increase shifts some is but this ramping a fairly typical? curious that about ratcheted see that of drive there conversely, than next As it there's past less deeper refranchising impact, possible -- and this is 'XX? timing can more

Sandeep Reddy

this, previously on just go what So I Alex, to on I back think I would said G&A.

basically shifts how I franchisee was where driver we've it out And corporate the look it, I investments transaction we continued to in into of the big always think the G&A growth. at system. refranchising the make would the of stores terms think to of fuel

We We very growth. will to -- for make to the growth the continue intact is fuel investments algorithm company. much

than that the don't And it investing be to so reductions G&A. have allocate that's just reductions we really I in the we're about thoughtful of where But we very more to the expect focus time, And in. same need absolute resources structural at in G&A.

Operator

Russell the That's like you. closing to I'd over have we time remarks. Q&A. back call for for any the turn Thank all to

Russell Weiner

Have weekend. forward results. year We a great speaking I this Well, day and look a morning. right. with in it. Sandeep appreciate All for everyone, thanks, joining 'XX you our and great to full And will

Operator

This concludes today's participating. conference call. Thank you for

disconnect. may a day. Everyone, have now You great

Domino's Pizza (DPZ) 13 Oct 222022 Q3 Earnings call transcript