Earnings call transcript Q4 2022

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Operator

Thank you for standing by and welcome to Domino's Pizza’s Fourth Quarter 2022 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, today's program is being recorded.

to host like Mr. today’s I’d now introduce for your program, And Goers, Investor and President, Ryan Finance Relations. Vice go Please ahead, sir.

Ryan Goers

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

a primarily all others call is for mode. in members to the this audience, ask our As I and of media be listen-only investor

I and to forward-looking today. earnings on forecast. want or are that in statements results could the call Actual documents trends to remind our XX-K everyone differ available this morning's website. from on Both the our release of those applied our also comments materially

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

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

we ask encourage you one-part one on call. such, only this As question to

being Today's webcast being call is for and website. conference via replay our also is recorded

like turn I'd call our over to Executive that, With to Officer, the Chief Russell Weiner.

Russell Weiner

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

team the XXXX As Domino's to franchisees. encouraged and I’m pandemic, of the look by we work beginning and by members end the incredible done back

through in difficult markets hit Since for world, by many stores is as when and and Domino’s to or closed the X,XXX new XX an a franchisees XX,XXX over time of beginning restaurant XXXX, around extremely the system should development. we grow stores XXXX. our store in grown brands have struggled

gain up to XXXX QSR the a pre-pandemic XX% NPD. versus growth approximately sales in the category Domino's almost the the since three according In pizza with QSR resulting points pizza serviced category in that of share three levels. over years last grew U.S.

in Carryout significant We continue us, the Carryout moving with our incremental, service highly costs U.S. the incremental and business. approximately lower to where in and of to system. not for about it's half now grow comprises a remains to our Carryout are customers method for of sales cases orders XX% delivery

Our headwinds the and delivery both business three experienced years. over past tailwinds

focused at finding team Our efforts solutions turn. every on

Now to the challenges the the quarter, delivery mixed, in business with fourth fourth that the U.S. quarter. during previewed results our In we QX particularly call. our were

in I dynamics broader call, out. During pointed were watching since restaurant played of we that couple to the that have a category

that pre-COVID the returned habits, consumers that their many returned of to orders of as to sit-down some source eating volume of restaurant channel. First, business was for a delivery

channel. delivery to of inflation fees due in tips Second, added and impacted expenses the that

XXXX. the than disposable shows remains prepare short home Domino’s pre-COVID that pressure category the higher baseline leads term, were of We them relatively at $X.X for a this macroeconomic delivered. the believe Despite cost delivery billion than by inflationary getting Our in meals XXXX in sales as pressures, customers long delivery during in times higher research these consumers' to factors. income will some delivery more dynamic instead U.S. continue the pressured as to

digits Domino's well. to entire was pizza According year challenges. Not the in QSR delivery according delivery not for data, NPD, high delivery facing was to was business NPD down as alone category XXXX. single these surprisingly, fiscal down

delivery that was saw business industry Domino's in these pizza delivery wide XXXX, in moderate increase headwinds, while we're share. our challenged Given encouraged a QSR

at Staffing our that do to positions exist while on the the topic within all we like On work there's Drive restaurants, system. has the In. more staffing feel of business, including challenge in delivery, answers to part corporate of improved this Domino

should to area, done more do. improve that constraints we help like around franchisees leverage measure. the this I have delivery fleet, and as innovations practices address we in best new in continue delivery as the this know am of business, Continuing proud and have to to our labor work well internal service, critical electric to our delivery

positive been our macro Domino's more consistent evolution side. throughout the continued we some of are the the helped two This offset on the of businesses running challenges XXXX than company A U.S. In out has the restaurant complete delivery a business. of ever, stores.

of Number in X U.S. Carryout segments in and the pizza QSR. We both delivery the are

Carryout business The with be to strength, tremendous continues a momentum.

XXXX retail pre-COVID than more Carryout billion year U.S. for In $X levels. higher fact, were than sales full

a you scale the have we it of sense runway our still importantly, current of To of Carryout this based America top give December would the Domino's a the by obtained in XX segment if U.S. QSR own, year important counted its business. Carryout on brands ending the of More XXXX. be a for were long in for company spending NPD consumer growth amongst business,

of growth the in in the we supply business, September. support To new Merrillville, Indiana chain opened a center

in invested XXXX. chain, opening since significantly have four new centers you we supply As our know,

quarter centers over in automation During our we new look Indiana. Merrillville technology, in the an to bringing of forward testing chain, new procedures. the incredible best in for ground of has learned we and around the parts future latest the fourth It Indiana to supply the represents center what I time. country operational visited other and Domino’s

strong and around a world nearly X,XXX gross our year the store openings for XXXX. in We was franchisees growth. global XXXX had

This X.X in around world. store brand testament about of to operating openings strength Domino's difficult development. For for the a that's per day on the the context, is while environment a new average,

members continued a Domino's and have environment. macroeconomic perseverance team franchisees show and grow in the to operate agility volatile and Our required footprint to

specifically the another master openings conversion openings were any without organic history. our of achieved U.S. the in Looking franchisees outside of gross Meaning, highest business, the large a our they pizza X,XXX scale our chain. were conducting at international of

Delhi, during of their In Domino's position New in in QSR to One be franchisees, largest one cement further leading which with opportunity stories with the quarter met global market. in India five critical this their reiterated as grow X,XXX in years, over the the the brand to December would was master they personal Jubilant next goal of highlights team my market our to FoodWorks. I where over

inspiring able fortressing services. extending more get franchisees delivery and India. we enhanced global is our Service closer our to delivery service always see stores. its to When new raise able is on XX for service the stores, Jubilant these Jubilant operations and customers was I with bar brand, action advantage they How are zones. build in can and With by in their a do we was key Additionally, incredible and touring I Carryout to been this? strategy. minute has Domino's delivery system when global the improve differentiator to

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

Sandeep Reddy

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

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

U.S. the year-over-year The year across was that was X.X%. our system quarter, average pricing fourth increase realized for full realized price the During X.X%. XXXX was

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

operating million basis margin if from in $XX.X of versus exclude income XXX income points as Even the the by you quarter in to XXX revenues the percentage quarter, gain margin operating recognized refranchising improved in sequentially the basis the a benefit points year-over-year contraction QX.

leverage. had income Third, XXXX, impact both improving and U.S. operating sales businesses, to our first growth, store time in excluding QX positive for currency we same contributing our foreign the international since

global results retail our week global over the Now, sales in to growth, detail. financial FX negative for the positive grew more in foreign sales due lapping X.X% retail excluding the When trading and quarters, and sales store comps of the excluding QX, currency, XXXX four XXXX. global in XXrd impact quarter impact X% growth

to As has we we back as at across stack the it a sales baseline. anchored discussed of instructive the past, believe business, XXXX accumulated look to have in pre-COVID been

With not year XXXX. conditions, on to believe forward, in will comp macro-economic to back do anticipate anchor evaluating be one returning relevant a going to it business basis XXXX and the the evolving currently we

XX% Looking at stack, XXXX excluding year impact, three currency a retail QX grew QX, versus global sales, over our foreign XXXX.

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

of X.X%, This increased on during holidays. sequential macroeconomic we comps, and basis three deceleration represented the XX.X% X.X% sales were year the QX as during delivery year prior to stack rolling of particular, a a store challenging saw business QX X% increase up the evidence environment customers from to relative softening same of over a in demand clear basis, U.S. QX XXXX. a on for from stack given three Turning

system. The estimated impact of during the percentage across the quarter points fortressing U.S. was X.X

fortressing forward, impact the update in the we of is only if material. will change Going impact

order partially by U.S. decline a store ticket, offset pricing actions sales X.X% in in which in increase same in increase counts. a included earlier, driven mentioned The in was QX an I by

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

in the saw point. that X down labor average on X to point staffed, QX. in the percentage gap same Looking significant close store XX%, This XX%, fully percentage most are bottom sales, facing at than those outperformed less are is essentially that from by approximate sequentially QX shortages we stores stores in the top those the

QX, and share store thoughts in with Carryout was XX.X% positive to Carryout The I'll U.S. same delivery Carryout strong the U.S. QX Now, businesses. specifically XXXX. few sales compared a business about

gap On top a and bottom relative between quintiles same basis, The XXXX. QX, sales declined be up were pressured. on store to Carryout during levels, by the small XXXX. three quarter. business more QX continued QX, sales year versus to The for remain same store XX% X.X% delivery delivery staffing based the Carryout

to look between the a relative sales QX quintile stores store QX X.X% at three bottom XXXX the closed the business same and delivery same the year stack, on considerably. we the were delivery Looking gap levels. business, top quintiles When at above

percent disclosing in same in store The saw the improvement percentage point X XX% from a X point represents continue the expected a believe the top is stores performance. end performance of we sequential staffing the operating and sales bottom the line percentage only quarter. do gap percentage in between not We intend longer third is gap to performance sales with no delivery a X environment, driver point the and This the normal those future. a in in significant gap by gap in in XX%. quintiles We

is our close business close going XXXX basis points up and market Carryout and Carryout basis XXX is U.S. QSR pizza share points strength-to-strength, Our XXXX. up to since in from XXX to

Down Delivery, basis market includes which in still hold total year, Carryout to it's past close QSR, points and versus over share three and Our XXX the pizza Sit to ago steady up continued years

on share, comments dynamics to my pizza data we NPD. touch based would conclude market for I QSR on non-pizza channel receive QSR like from on I versus Before

was As non-pizza and was in while delivery significantly up in both. done QSR QSR XXXX Russell pizza Down mentioned in Sit earlier, both

home. Sit Carryout the QSR, QSR Carryout. business in potentially Down of but Down to more pizza delivery, a the case historically was Sit to this been have driven added case channels, In by channels. was delivery Sit U.S. Down so mostly others relative in distribution to driven the of us the the Domino's model at non-pizza have has Carryout, delivery shift from growth had models delivery to shift their Down a and Sit shift but from that historically QSR by and who in business cooking and In on also from focused non-pizza hurts include now the

as dynamic levels. recent Sit to is XXXX, out XXXX Down still this play below despite We growth continue in to expect

U.S. of franchisees added rate X.X%. openings and store in our X,XXX count during Shifting of which net XX our the unit the U.S. our the new stores count, store closures, end consisting net Q,X bringing in brought to growth store quarter, to system four XX the the and seven we quarter to stores U.S. at

permitting This supply deceleration faced year. challenges the chain we light and of growth in all store in expected have construction was

XXXX. the towards factors, recovery challenging year starting a openings of of be While half we due expect first the half we a U.S. to store for second the to based our of continuation gradual current these to on pipeline, continue expect same

strong for remain $X.X average high U.S. generated and economics relative during labor. throughout the unit year, million Domino’s store more the staffing including to food the environment Domino's sales and in The many XXXX faced pressures inflationary in challenges than

U.S. close We $XXX,XXX. EBITDA was currently store much average estimated EBITDA XXXX not franchise estimate that the our XXXX to below of $XXX,XXX,

In fact, was estimated profitability in XXXX. higher QX, average XXXX store than QX

our update on will the number QX call. final We

With conviction bullish Domino’s. term our be X,XXX-plus remain store that we on continued can our strong the four U.S. an potential market wall in unit economics, growth maintain and U.S. for we the the long

store New stores remained to vintage. similar averaging three openings XXXX, paybacks XXXX with around paybacks in strong opened the year

relative for Same X.X%, on and store XXXX. rolling up nearly prior QX, currency sales stack were three increased our international increase XX% to over impact of business excluding foreign year a basis a X.X%

UK, the quarter, from the through sales. international the were in our relief second of as expiration October place of rates We while UK XXXX. fourth The The XX, and impact continue was face to impact VAT VAT the retail will X.X% was by March that the in magnitude around the XXXX UK quarter half continue XX% VAT we lap the the to largest of of of year-over-year market third impact the reduced relief reduced XXXX of headwind the on X. relief year-over-year in exploration negative

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

franchisee some where announced Our driven franchisee the well opportunities as business base Russia, as closures by closures there in them, the our in exit the to its in previously of continues work in optimize master explore continues round our were master market. to that by market, as store as to another closures Brazil

significant Italy fourth our and store quarter was current X.X% to global compared The in U.S. as our brought a growth rate, impacted this When including is to growth, run trailing fourth This closures Russia. international net store rate our X.X%. in growth store Brazil, quarter by combined international our X.X%. historical net with increase year, rate in

dilutive versus operating our EPS results our us Turning in down to us QX, our $X.XX, in in was Breaking XXXX. EPS, negatively rates changes by foreign exchange $X.XX EPS, impacted increase $X.XX. currency $X.XX in that $X.XX benefited QX delivered by

the Our during by tax foreign our based discrete positively rate reserve, XXXX. us $X.XX, impacted of from tax to lower by tax effective on driven change, impact related subsidiaries one law reversal recent our the of

by diluted quarter unrealized to in re-measurement by refranchising The our transaction, $X.XX. gain $X.XX in our months store gain recognized by by net trading count repurchases and expense over interest us driven Lower benefited benefited related us XX $X.XX. The to on recognized XXXX, us our investment by a fourth us benefited share share $X.XX. the lower Dash negatively impacted

currency. the year, financial declined grew retail Transitioning foreign sales and Global FX a sales like international, X.X% to to grew impact of the on excluding the full $X.XX. few XXXX. U.S. for would the hit year, excluding I Same for in store highlights $X.XX

our discuss. international We year in opened and higher significantly during, as stores markets net this our closures new franchisees despite X,XXX previously

of for was reflecting up basket year impact food the strong XX.X%,, inflation. the Our

$XXX year for million, down X.X% $XXX was in versus million the G&A XXXX. Our

$XX income positively margin down of the be will If was that forward, million $XX refranchising as but by the foreign impacted to points margins. current due going was million levels income XX Operating the impact recovering to we expect offset basis refranchising currency. foreign including operating to XXXX, Operating income headwind a this the negative by impact gain. increases gain, pre-pandemic at was this a fully our currency or from remains barrier versus

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

capital in of technology deducting our we generated consisted free million. activities chain provided initiatives cash supply of for flow million, generated $XXX $XXX approximately approximately we centers, investments which by of approximately expenditures cash of and $XX After net During XXXX operating million.

accrued flow from cash net due as changes funds including and Free liabilities XXXX, well decreased in to taxes, higher as and $XXX income. primarily million advertising working income capital, spend lower

of shareholders million. share of $XXX During through million the to $XXX over we repurchases and dividends million year, returned $XXX

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

quarterly $X.XX approved has March is from to increase XX year. board payable Our that prior a this of our dividend XX% also on

to the levels. guidance up currently will project to to as X% system Looking provide would annual to our be We for like store forward U.S. we XXXX the measures that basket food our X% compared XXXX, within year.

the quarter than We expect be first increase food higher year. the basket of to the rest

as estimate in impact impact on level. half on based to a remain We at expected exchange royalty in higher current current that $X XXXX year the million rates. to revenues of million to negative changes if in currency foreign exchange the of The be have foreign negative rates could XXXX currency $X compared is international first rates

our and prioritize $XXX our million spend. will continue be CapEx in strategically and as anticipate between investments We invest business our we $XX to million

be $XXX million. We in $XXX our G&A expect the expense of range to million to

Our tax rate XX% XX%. expected is compensation to excluding the impact range of to equity from based

the three are sales, particular, given X% to current to headwinds global delivery from to year net updating in we global unit Finally, unit XX% our to impacting business net global unit to to outlook sales X% and to are growth. X% our two U.S. macroeconomic X% that growth retail from growth global X% X% growth X% retail

to look Investor for ranges providing end both of We the We the calendar in our XXXX. forward towards end we of metrics. more expect hold Day XXXX low will to details before come at the

today, for Russell. now turn all will Thank I to the back you joining and call it

Russell Weiner

history. work-in-progress be is of, in We on way Sandeep. a have system better to The we proud ourselves period describe and also has you, being there this lot our no address. Domino’s a pride to and Thank brand, to opportunities

for recession, portion significant of disposable last economy, income, our who lower delivery moves business. customers the especially in a with saw we As represent the with

expect business delivery the our be XXXX, to a XXXX. for As it headwind in we in was economy QX of

While QSR challenged. share, spend hard to we will delivery sales their expect earned we to be the where will deciding also Every continue day pizza expect to grow customers be delivery delivery dollars.

So we to improve continue service. need value maintain to and our

On launched That in venue, must XXXX was across make moving the value just of in match subject the franchisees sure our decision $X.XX and we we mix vigilant not offers. $X.XX to be our for of December offer XXXX to exists and said, entire promotional the brand. in right value, our

of were to helped became I XX innovation. in the We have Domino’s, liked. constraints we also Coming to back we year. our stories. COVID, at than to market. we ideas my ideas when react years and our These I This we earlier more brand our drive look discussed with us tell out needed team more great transactional some best at brought need When big customers the understandable would labor was of pivot as to at

XXX the our at In our electric We news delivery franchisees segment. the now biggest have to of ended has drive value ‘XX in we which the electric XXXX. tips position brought and reinforced Domino’s country. and in way vehicles innovative continues pizza encouraged the introducing that by delivery our Carryout, we vehicles. leader begun and fleet as of a delivery I'm fleet Carryout back promotion,

and well platforms Loaded it of that our difficult many to up a customers' and cold find innovation to launched literally for strategy has Loaded and product We've soggy. delivered and menu. years, Adding a continues in was our but to been side our a in menu early delivers, are figuratively, Tots XXXX. Tots didn't homes end adding that potato goal incremental

improve also further fall the and in in to loyalty our members XX XXXX. will with finished XX customers. opportunity Piece refresh of to this by base last in million an the an program grow Pie Piece program. total loyalty wider we our over There active launched the innovate of even approximately members and and of XXXX unlocking In value million Pie year is We database. the program of We

technology are experience; and to team years; we're our an tell and is domino's what to technology those continue Dominos company, the come of customers one over-deliver innovation of but the has also our on possible company, a Product, and been service company. from kind expect to innovation called This many a should when delivery best all and marketing at things a best, company, pizza specific pizza. have brand expectations. are a you stories with over we purpose; to pizza true, a a very to give members expect store company,

to that, call open With the we'll questions.

Operator

from Instructions] line the first Oppenheimer. [Operator of from Certainly. And Bittner Brian our question comes

question, Your please.

Brian Bittner

My morning. question unit growth. Good on you. Thank is

the us change, to unpack decelerating on like first, U.S. for that because is there moment algorithm moving drivers Can X% that two to to change? understand us. year X% from Just you'd outlook X% factors the X%. forced or primarily the maybe other this to Is help three it to to this just of take you

of forward? the you Sandeep from that, be our bottom range that this this scenario the growth in thinking unit near base for low be this said the just range? case moving paint area. of Can should see to catalyst following XXXX makes range, the emerging, unit you you that growth midpoint where end the should second you of And Is us about, X% we a of at more there accelerate new of kind XXXX that Thanks. for a

Sandeep Reddy

Thank rationale X% Brian. X%. you so to the start for from morning, question, and X% the growth let me update unit first X% for to the to with Good

as standpoint. remarks in front to from business the a slow a I the and of constraints As actually delivery well, unit delivery business U.S. we prepared are growth decision us this the driver the the of U.S. think we in expectations big see on said that down

forward from on to the also we expected XXXX. is going as expect remarks, you put noted of first in to as And prepared the to half pressure XXXX into we the growth and headwinds XXXX that go throughout that my unit are we saw see continue that

the talked and the about answer I in what of be, itself bit would And growth is I cadence. U.S. little the a the terms terms on in of catalyst think what

of XXXX move that this have continue of was But half I to looks into first the to pipeline the really year, encouraging, half we the pressured pressured year back that going is think be it and second in So to economics continue same at the for for is we reasons that as the compelling. of the be XXXX. the very

the that We’re encouragingly, were and P&L the pressures QX delivering literally exit XXXX faced $X,XXX from food that's levels. the estimating for general labor costs, costs for price that and levels Carryout are the had EBITDA of EBITDA the the offer the on all a in in inflationary of in on an within we rate that from quarter, is most just levels. XXXX above with really through. of particular This we Mix in standpoint And Match fourth took $XXX,XXX increases manifestation natural beginning to flow

we through P&L is franchisee the Franchisee that notwithstanding very The very at three in in very we to to that's improving back strong their food it increase be as the move the continue profitability, that are flow and benefits good paybacks with cadence for continues, forward X% they're place ’XX, X% feel so up, roughly this pipeline we a why XXXX, years. in that at. continue confident this basket and compelling, we’re seeing economics looking if to feel

Brian Bittner

you. Thank

Operator

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

question, Your please.

Peter Saleh

you Great! been for driver, a was some program hoping years to color a feels the more alluded for meaningful I like could it’s bit add as XXXX. little rewards you several be changes could guys That it a you that. driver Thanks. Russell, the to past. in in to

Thanks. be would beneficial. that any just update So on

Russell Weiner

thanks Sure. and Good morning Peter.

launched during and evolution keeping active got – and opportunities as remarks, dial continuing million we the then total so program. XXXX. specifics members, program, not pleased to said with we and talk point now. we're what it this we've best it XX over on the is this We We've about the I where and about the rewards been up members, in of XX at and taking my really to the of the think As to have are, going of million best

I to the you see continue you, joining not and central launch us customers to are XXXX, launched think are I'm more. enjoy those I probably this who some to of The see program our frequent incented to program going it tell positives was And – loyalty to year, of But misspoke. continue be it, the I later going do when on sorry you'll less should are XXXX.

Peter Saleh

Thanks. or to Is restaurant one levels do with then get delivery get to those XXXX, follow you of here back really resurge mix to you to it know to back of just delivery up franchisees for margins this possible Sandy. level margins? need for And types the carryout XXXX Thanks.

Sandeep Reddy

for question. Thanks. Thanks Peter that

Now, in what from in was level standpoint pretty we of XXXX franchise's believe the to terms see where went It significantly really restaurant profitability. XXXX in XXX I terms were, a the up XXXX. did of margins cadence you XXX side, on between and from

to we've Over and that think and to back get course, kind come those normalizing, have But significant, I until some time. increases take through time think absolute going have think of I in basically really start the we’ll cost profitability increases that been it's I taken them actually that of beds of dollars. levels and price the

we're that on talked hope as term profitability I place see at actually think because trend, in move pricing we a this we're architecture, think looking the franchisees, and we good small the I ‘XX. better that I the in we're we and inflicting adjustments made we're inflicting, and the now continues about in short But QX into with and the specifically, helps to XXXX now even accelerate with them steps

Operator

for Senatore moment the line America. next from of Sara – from One moment, question. next Bank comes you. And one from question Thank our our

please. question, Your

Sara Senatore

about you. me? comments on wanted I hear of ask you comp to the and the can Yes, Thank sort environment. the macro

I might price or sensitivity delivery seeing industry, across know the evidence very be of I and is much understand two-fold. of You rest question softness the really guess we're not different, the but

where X points, say. is is, that seem gap maybe X to to One to would higher? and be your the You lagging comp roughly industry I could be any by that's reason pricing think is your there

So you know on fees. on is there more and as maybe you take menu less the think perhaps about delivery pricing, room to

service, a with likelihood this does platform. separately, then as of as partnering the attractiveness delivery but or And the aggregators, increase a marketing not

that the virtually know remember everybody is cohort to that the has proprietary to income ordering. ordering aggregator maybe and incremental done on You know that the suggested higher has platforms you through it's who –

trying lag maybe just I'm value of to but a everything together that's in So absolute, the piece industry some drivers. Thanks. versus overall good and pizza happening being very in the the context

Russell Weiner

Yes, question. great thanks a it's Sarah,

what back I take I'll do perspective give step think just little on our is a business. and

it's unique As a you said, one.

actually the shared. our in QSR When delivering. down, the we talked of Dominos about comments XX% pizza category are delivery gained sales delivery our down, was category

way in the not in the your a see they grew gain share, pressured, macroeconomic that’s of the the delivery it's when XX% XX% That's sharing time prettiest going business, our numbers entire is pizza did. fall of and category. QSR to out where you're business, way to category we the So but

about Sara Dominos what and future more America like how years Now, to were about than are we think talk when of is much ago. diverse I'd from I we the Senatore Bank

over more the fire, we than So know QX, years, had headwinds that's that's $X business by over that's in last our over think business was history. three then about on really up to our and three XX% Carryout the not billion internationally organic a last stores we of open any ever XX% dollars in encumbered you those XX% years,

need entire this we're actually out better us how come but just our think delivery, so performing place company, so is that a delivery how perspective better, how more at dominoes the when of I we as to you in making going And these performance of through a be complete that is head tougher have to we better in we're looking times. business,

we're of delivery I outside We've that we day, your better billion sure got know for and globally. improve grow again I to with where about, that take our U.S. learning is ordering pizza continuing question the spoke every to program we're of do delivery, said, everybody than to backdrop you our the doing We as like and work like were share continuing to we're sales aggregators here. I to things as experience ordering while loyalty make second on delivery do else's. improving if So in aggregated $X a experience

Operator

our question Gordon And the next moment comes One line Haskett. for from Jeffrey you. question. Thank of next Farmer our from

please. question, Your

Jeffrey Farmer

Good morning.

with that that of you driver on the constraints having you sort no of done to of what stated longer up that a material are delivery believe staffing impact business. just need? address And guys labor shortfalls relative proud shore you've work the there Can performance? your done to and do elaborate sales store you've you're some franchisees You same on

Russell Weiner

Look, until as we thanks satisfied expeditiously the there with we're be is for it. question. never We're as every can the going Yes, satisfied delivery get to improvement.

service that's but They better. times satisfied, than is I'd were we more the our to work what are say need place we're they are XXXX so do, in and to better have not So we go.

our a you business. stores, for pre stores, think Corporate the at is as are getting hires going system now, what's corporate we're of applications. on our up faster it’s about that When proxy applications trying on the to people look levels and at through turnover in are rest down, pandemic the job

call, are this help and our really stores wouldn't that Not they I on mention there half but about call but call the through single now. are the centers. call centers easier job to on makes call about for members. right every goes it centers, team talked We our

a when simplification place with we're come Day. lot we have processes you in that guys for really into that to of you We excited share Investor put operation

that something was then just this we EV that launched And I'd fleet. point to

fleet you're and what an purchasing franchisees our we don't to but larger kind who've us maybe access XXX actually vehicles. to but EV attract a got driver's starting corporate is vehicles. stores have that And do vehicles, of to part folks strategic that of licenses, see of have with enables is shift and So

a sequential you know driver, put to QX. together, seeing people, you're why new said inflow that's coming first we up, the that of of why efficient week we efficient more when we another more operations, pools fifth you're regular in the improvement boost that's cadence seeing quintile. all So you And stuff got do the back in and would as

Operator

our And from comes line of One next the Bank. you. question. Thank in our for question Brian Deutsche Mullan moment next

question, Your please.

Brian Mullan

in versus bit, the decelerate sounds you sales XX% trend up same versus saw basis. thank a ’XX versus quarter absolute very points a like hundred the on little the It's that on an It Carryout U.S. the a store did Hey! you. the just very, business quarter. in question few strong were basis ’XX. In XX% third

you playing could been were quarter anything behind think at noting. have the deceleration, speak the what worth Carryout wondering dynamics if to in if in might Just and you that

Russell Weiner

morning. good Brian,

think, the $X I business. a bit, sometimes a look over the business, billion strong. is over business at years a last change be to look grown little – it look on to when tax actually XX% on get on business the that I is we three underlying off really sequential you where three the point going Carryout it, when underlying don't has think at extremely The reflects of but years, we

the into we are in we Carryout really look we as both are forward seeing back XXXX XXXX. as and business, on We about what look pleased

So, super we've happy with seen. what

Operator

the One Dennis our our comes And UBS. moment Geiger next for line Thank question question. from of from next you.

please. question, Your

Dennis Geiger

more that one how about delivery address mentioned overcome Great, just thank challenges gave macro there. biggest again difficult a else’s, for U.S. but experience focus within Russell, the talk now? to a think going you delivery brand. the you the I kind of order of your of to Just remarks how everyone on the do your But bunch sales and address at than the a you you. can focus I end wanted you. forward. you it you biggest right another can to know, opportunities those, ultimately points you have better the prepared and is on issues Thank pressures pressure, of bit how making this

Russell Weiner

was the it, like our mean, kind that the delivery means are think outperforming rest so and has you're I growing not your I of when the that category. you're of way said category thing, a answer grow a a I to of question question. share, pressures part it's sure. headwinds, got while pretty in Yes, macroeconomic Look. in The share

not pressures. talking overall really numbers, about macro what Now in but we you're see that's to our like

recession. what headwinds the I to will fee with all because category last economic I get during I that of folks, a operations, during, all of the said subside headwinds think we and look that’s extra is they're times. headwinds, way last because the in We tips, look, better when to now time, because increase delivery having things, those at if circle boomed delivery these – as delivery with got so share now is going And have during joined technology, innovating, a and the recession, of of things a out that with with we so in time that tighter hiring we're doing these of during knew this,

times, to So I are like performing to getting pressure you accelerate. times? when gone better during that how these these look us see during we at so Are is should we

Operator

next Thank question our And Andrew from the line you. One next our Strelzik from of BMO. for moment question. comes

Your question, please.

Andrew Strelzik

about, of and as what talking the it. question. improves. challenges real up a I Hey! about maybe macro Good kind incremental a acceleration sounds of answer, Mine morning. aggressive actually more Kind question is you're Thanks follow for what creating I'm bridge then and taking of is like your understanding instead to the maybe more and of guess steps a balancing, kind my kind approach how is being a of the prior macro through incremental

to you the and cadence out dip do to smooth think how opportunities about the potential than Thanks. of that aggressive be more boom? kind So rather

Russell Weiner

great question, kind end, the know of at and really was what you Yeah that's I Andrew, talking to,

that were had during clear we issues. pandemic during we Look, COVID the capacity

innovation, seeing side to piece car type innovations forward, contactless of talk I'm an And to not delivery but delivery, so so that's going things you more delivery moving us. and on important are for or there like the

to product an day. standpoint, of I out that break break on that's category, the to you of addition going in should to then want break – talk we EV us the help and the help to innovations later, But out category away all we there fleet the need If from from innovation know That talk are are us crowd. side. technology we'll could

Operator

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

question, Your please.

Gregory Francfort

maybe to Hey! Russell, looks little like and what of feedback about reassess Thanks menu. Can the value from for maybe to national driving offers or broadening a franchisees that coupon talked expand getting rest that? you're question. to bit you Thanks. you the you that's customer what the on the

Russell Weiner

sure, want positive Yeah our to $X.XX both our It I change and absolutely was made the Carryout. thing. reiterate thanks. we look in moving delivering right match, mix to Well, to just the

things world, fees And we all and not menu you the like are cost know franchisees that were the if control as their You promotion. models all world stores, some [inaudible]pretty and experience and and with things delivery changes the our local like headwinds and in know, the stores own things in at look the pricing in quick. think and food labor that to our I that of on and

of to some fee have international head. maybe of our just may be a price need So, menus bit and We case delivery got little a offer. not value,

have lot be Sometimes franchisees our of that other pizzas, menu. sometimes working on too. things two the people just they that. making other want a it's the want with our they medium types two times but We'll type pieces we sure And pizzas, want right of medium across value

Operator

from next question. from our Silberman One Credit Lauren moment next you. Thank And the for Suisse. question comes our of line

Your question, please.

Lauren Silberman

payback. – were the where just appreciate you on and question. the set franchise today? are in they X,XXX Can costs I all commentary XXXX. those development were for you running think I EBITDA Thank in level around

Just have think that said EBITDA versus might to now. ’XX, that could ‘XX. grow figure out Did then, I is I Sandeep, in actually what correctly? franchise And understand you

Sandeep Reddy

thanks with for Yes, part. I'll to last start then part, the Lauren And the first the back go question. we'll

back expect changes the made ’XX. and in we lowering think be given from improved food anticipate costs that in ’XX basket of half of we year we to for towards pressure EBITDA, pricing I the XXXX versus the franchise that the terms So sure, and

of development development of where on It the in range big a terms stores, and it think are varies. kind they I there's around But the answer costs depends of terms the cost, exactly in country. is, building

is, to cost sure, constrained number of as the are we're specific until into of I that had in you right at. give environment, in construction we a think out out terms we will the not be store coming play getting see this so And things update this we probably And that is of from what for ’XX. where saying over there basically pressure permitting right but think I issues, where are is better course time and some the a position at

of three very payback are investments a making. at, and year looking from what much standpoint, essentially But they is are making range are the payback franchisees why they the still that's

Operator

And next question Thank Ivankoe the you. John from our our moment question. One line comes next JPMorgan. for of from

question, please. Your

John Ivankoe

me, first, part A you. U.S. Hi, unit thank from development X.X%.

And there You’ve the from that like on sales kind you would store from something a think split stores. talked of if going as wonder that's be stores, about the nearby comes it XX%, first average way So be question. suggest existing of footprint splits because forward greater around of X,XXX XX% the I stores, about a to impact would splits, most the of to the basis reduce than points, much so obviously those part to XX

get seeing if this or went in call. store initiatives the correctly. found we that of some and can guess we Houston system theory has to some we share that that anything so talked we effectiveness initiatives that Thank maybe I I there, maybe you were test secondly, doing I remember there much. then think selection a some of some on to Is that since And you could Domino’s little the those stores, application it's delivery, been time from a publicly of the market, if efficiency preview about see in in you're whatever specifically

Sandeep Reddy

to Sure I'll split referring growth impact start that on unit a the impact of fortressing you're on basically and off the John.

quarter updating I second of we fortressing think get and the ’XX you you now. we X.X% X.X% – course impact of in As to saw the from started during went if again already

becoming fortressing it's on less what effects in less same and store of the the is on impact terms So got sales.

forward. to runway. significant very really in as deviates still that. as if said we actually we But plenty we see again, don't seen move a it of impact that from our is we being We growth it very, update it There going

pipeline out we feel on what and mapped it, out on definitely think and that in we the back internal of the opportunity half. that that we teams, we opportunity the know pretty see good they that that. have go right Knowing I have we balance the like, so that is the can had our coming that looks economics We after by franchisees from

Russell Weiner

John. Yes, add just I would

are And this company We we a delivery tighter. our only bigger pun we're now. topic Carryout why hot we what today, potatoes transforming new not store, delivery significantly way, intended. pizza Tots, but get time than launching and general Obviously, is by hot do the a right is which up in times is is hot so our because the business QSR actually you know pizza, open is people food delivery QSR Carryout see want every hot

The customer’s far, to delivery walk that but to pizza. get customers don't times – want want get don't their – to incremental. to far Consumers want very don’t tighter, that drive Carryout also the volume is

– the to store of of part brand complete these absolutely company So growth. is you continuing drive transformation a more know this into

going improve product. far also invite in hot we're as of faster that I I safe stuff trying super store processes were a to later that of a rather where our to but to the me But us think the things pizza over but meeting really to team Houston, our show the would and are hard would that a end say at resulting to live. members day As doing get customers, to year, the experience call, that I these come quality enable we for obviously in describe, way. It's the at describe some this you than to things

your Arbor. enough that's hopefully, whistle to to come So Ann to wet

Operator

moment question. And David final Thank you. question for from our the Baird. our for Tarantino of final One Robert line comes W. from today

Your question please.

David Tarantino

frame Hi! XXXX. hit My low could if targeted end you will is I out think in was outlook Sandeep, margin margin you morning. the good the of EBIT questions range to on and the you your progress wondering if help how

Sandeep Reddy

so David. Yeah, a question, that's great

we've we're faster as is outlined So as concerned, revenue actually should far expenses. mean that growing than principles the guiding be look, I

essentially, and look our below is G&A in at on range at the So end G&A, see the guidance growth midpoint. on look even that basically the of you at our when range global that low guidance retail can you sales terms at

I think into away straight number a where one. so so place be you that gets point And can that's margin accretive, you

bit we still operating past on where had little is, this we rates see a two current year same of from not XX the where we lot I point headwinds given in ’XX. number exchange, are. and foreign Point Unfortunately, margin actually are, impact a a magnitude headwind, but that in given more basis actually think experienced negative our

some And more have sales happened, of a three But mix that the an that helps we’ll that, now corporate to that would improvement. our store operating quarters or with actually so standpoint, full from that from get margins. be offset

expectations ’XX, my XXXX is So that think we I than improve. margins saying margins some in we or probably and a that for more the P&L. that about experienced headwinds talked margins at overall when that's margins But It's factors of when think the time something that the I away unattainable. ’XX, we of further hit with but it's we're the pre-pandemic will question not look margins, its currency other

Operator

session Thank I'd today's of remarks. for program you. the further program. hand like question-and-answer to any the conclude back Russell to Weiner does This

Russell Weiner

you our discuss thank soon. we'll in results. for speaking everybody to first and call this and you, look you quarter morning. then, thank joining with April Well, the I talk Sandeep Until forward to

Operator

the participation your for today's and does program. conference. ladies gentlemen conclude you in Thank This

disconnect now Good day! may today. You

Domino's Pizza (DPZ) 23 Feb 232022 Q4 Earnings call transcript