Earnings call transcript Q1 2023

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Operator

Thank you for standing by, and welcome to Domino's Pizza's First Quarter 2023 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.

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

Ryan Goers

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

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

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

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

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

time accommodate morning Our of your coverage best request to our as this we want our as many do permits. to to analyst, questions

we encourage call is As Today's one, recorded also and is website. question webcast for call. you being part only such, via this being our on to ask replay one

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

Russell Weiner

today's team start that that our Thanks good do. actions and the am I'd and franchisees you, we going results back said us were the one, Thank this positive really our they of delivered. our to to on I Ryan, for looking have joining like call on last where morning, proud finished everybody. call. and we taken what we

last first delivery And continued with global of business one were leadership a to company our three themes a call. the progress we the You'll in U.S. discussed evolution from we quarter, there both since this carryout. recall the delivery last continued and that Domino's pizza brand was

stores Domino's master are there their Kong off of and IPO Aileen on start and CEO, Exchange. completed operating companies Hong We're DPC March On the that public China. the partners developing franchisee globe. the growing across to me XX, Dash, our Pizza to Wang with proud team welcome our list Stock her Let

got in have they've the operating cities We surface just opportunity only in stores potential tremendous China team of Dash XX believes their with China. scrapped where total the in

public the XXXX, of of part strength Domino's top Enterprises, the ALSEA, of Alamar, end in got portfolio of DPZ a by our This Jubilant We've markets are companies, Group Domino's of QSRs our around speaking cap, XX family. the world Now public than in more as to QX all as by Pizza franchisees, Foodworks, six is an of top the master joined diverse of exemplifies Domino's market XX. world. and brand. measured important Pizza me the the XX

weather markets our the us to come out dynamic certain more international facing in others play business QX scale are they and this affords ability So short-term balance. in We've markets is up. well, should pressures. balancing headwinds that performing what exceptionally has out And both any this with seen

growth same-store though, quarter. the first in this, of All international sales resulted positive for

that us have the believe during in macro both pizza XX% and in contributing believe we've and to would businesses with recent sales more segments to headwind orders incremental mitigate We're the the Now quarter. continue QSR overlap. be category. balance of delivery we The first in we on to other strengthened around out the the position allowed half our carry one the stores and In has U.S. limited to number delivery U.S., our the carryout each

hard-earned where customers balance the has spend and price right decide on every to discussed call we with was where their theme dollars. value maintain to the second a our competitive marketplace service. last need in to is of day Value The what do our

start with be pricing, of mindful our I'll on both exists national delivered and I franchisees business got that our we mentioned U.S. on Our pricing. these menu value our offers. to QX, On and that of outside in have things

Menu On pricing and stores increase minute first first were over to our first prior and from franchisees both saw on and versus the stable service quarter continue quarter in prices delivery our made than we fronts. fees the menu carryover of means the quarter delivery times were the XXXX. make Estimated were year average was in that throughout changes of capacity, relatively a progress in better QX that XXXX. most

is from improvement have While continued we critical service franchisees back our levels get made to delivery our our in and this improve and encouraged I'm to the measure. goal XXXX, by on really

need our the We're of one summer come inviting all our to efforts to why We're franchisees we're system initiative. to system of that's be that of even largest launching Our be may And training best, U.S. program. the the calling Arbor understands to be important you yourself. it the Ann when in our an to history. part beat best of best, service training

significant circle every our positively driven technology specific and franchisees, of improvements we've that allow of summer impact who expect Arbor we service stores. practices more their we've operations in leave of will years program to our plans service coming. with us Ann our few will last the they create best The Look, with to one for over got back-of-house and share

franchise our will team customers and changes corporate in the improve also think and for our I our stores. these members experience

third the Our last from theme more need call to innovation. the around drive was

this one into and all a way to brand throughout history While that, few the business. over bringing of will up the our are do future. and We to continue news year certainly of has the dialed innovation aspects months new anticipate the products last

with innovation. start Let's product

we're the Tots. pleased side, with our the Loaded launch really product of On

delivers Match and consumers Loaded extraordinarily craveable well. variety our their even side They offer value Mix that potato orders. a when fit Tots build into consumers, more menu, nicely also great For providing &

& Tots ticket, Chicken the a than Cheeseburger Taco performing For Loaded two Dips Early franchisees, largely to our Twists healthy profile. better specialty have and they've even point and given tots drive last margin and been pizza. incremental launches product strong signs

their drive iOS news while to allows orders ordering the app. their so because on business, orders when and arrive their fresh avoid lines and convenience it we go our orders customers CarPlay our on to Apple go, to place customers on at drive-through, track To great the is by CarPlay convenient This consumers and to they're hot alternative they carryout Domino's. they're allows their ordering a CarPlay. via place long way launched innovation a in with is and ready placing their while local for food

equity. short ordering ordering improve is leveraging important the got As tradition. platform will call for what history drive to of We've experiences a continues that and ordering technology CarPlay Domino's itself, customer we technology help our as techquity, CarPlay

expanding. On over largest of of initial delivery We on the vehicles call us electric delivery that with committed vehicles the Today, X,XXX in pizza has Domino's and announced XXX EVs electric fleet by innovation and been our last counting. the cars. fleet made our country the corporate order side, Domino's to franchisees stores has

fleet a for not of our while to the is great opportunities may EV individuals all access have stores pool environment, growing car. and The to that offering drivers the by potential

Domino's news contributed into QX in U.S. to All for will of growth momentum provide and this same-store the sales future. positive

to CFO, turn I’d it Now Reddy. to for over Sandeep? more Sandeep on detail like our the quarter,

Sandeep Reddy

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

architecture. pricing on First,

price the first included average increase national U.S. the the made changes quarter, realized was was year-over-year in system of During that XXXX. X.X%. our year-over-year across benefit This pricing

carryout year, was in As match with last a March of October. in $X.XX reminder, to delivery mix updated mix match updated and and

in update lapped national we second we As impact our the year-over-year have pricing delivery and pricing realized moderate. March, mix quarter to expect match

margin. improvement income operating income year-over-year XXX efficiencies in structure rates a basis the margin, Second, of in we XXXX. quarter. versus exchange was continue We basis year-over-year saw which despite as grew our cost impact on operating points approximately having drive negative points XX recovery margin QX during our foreign This to in by

leverage. in Third, sales for foreign consecutive we income impact and businesses excluding which our our operating international to same-store also U.S. second contributed the positive quarter, both improving had currency growth,

X.X% FX global quarter year more trailing growth, excluding negative financial down International sales of decrease the prior sales, lapping U.S. a for sales X.X%. retail of over quarters, X.X%, global rolling and QX for prior negative grew retail global XXXX. detail. our X.X%. excluding for the grew foreign net excluding comps Breaking When the over four growth X.X%, currency, to retail growth, sales currency, increase of foreign results the sales X.X% due of sales retail increased store impact rolling Now impact global over retail in the positive

comps. to Turning

the included aided a of an overlap mentioned were in was by Omicron as same-store order a for QX, QX increased boost Omicron aid starting During year, seeded XXXX a last earlier, in sales of for decline increase The rolling prior us X.X%, the we in every QX. in run business The offset QX the year. X.X%. from U.S. decrease as benefit tailwinds by over in by same-store of actions quarter pricing were from boost in comps balance driven year well QX ticket, XXXX last increase these headwind, counts. partially that the weeks will not in in which U.S. sales in did week ran I Neither the the a as and as X.X% we

QX delivery with year businesses. U.S. The few carryout U.S. same-store rolling a positive prior share to sales the in increase XX.X%. carryout I’ll business compared Now, thoughts of QX and strong a over specifically XXXX, XX.X% was about carryout

in as very growth we But strength business. expect are a moderation XXXX. the for rates lap We of carryout our the balance we the of accelerating year pleased in at do growth

to business pressured. that business two by delivery still challenged decline discussed declined XXXX, XX.X%. relative in we last sales same-store our call. rolling of delivery The prior more factors over QX by delivery The a QX remains is X.X%

sit-down First, delivery behavior reversion pre-pandemic of the a channel consumer the from continues. to as the migration channel to demand

them lower budgets for households factoring constrained to tips income, and relatively with prompting fees when to home. cooking particularly disposable their shift at delivery occasion Second,

in in evolution trend to a our the inflection in headwind real consistent monitoring relief the result on that expenditures business. growth closely are We second consumption as personal delivery of could

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

continue be the we last As and a construction of before gradual pressured by marked year, by in and store our permitting before seeing challenges chain inflection pipeline store in trend. U.S. supply an the the mentioned development starting first on half expected stabilization call, second will to recovery

many relative food inflationary high strong a remain economics and challenges staffing throughout pressures unit environment including to the labor. year, faced Domino’s for the and

coming in up amount estimated $XXX,XXX provided completed our of our $XXX,XXX call. estimate on average profitability for the store have XXXX, with at last final analysis franchisee We U.S. the from

As store seeing previously mentioned, pricing franchisees national QX estimated XXXX the XXXX, and and mix benefits average higher the in flow-through are than match profitability carryout. for of delivery both increases as QX was

improvement an additional this flow-through profitability and in with the tailwind expect quarter. during continue from being We in margin Tots first to Loaded XXXX the

further will We the an time margin will over if to year. course Loaded of lift provide Tots evaluate dollar the need incremental

costs on increase these Also, roughly store in in stores, Even on approximate beyond. are build three-year paybacks franchisees as XXXX costs, increased cost at an build for looking of we openings build XXXX cost average to we with and have relative XXXX, new our completed build our saw analysis XX% XXXX. for

$X.XXX briefly international business, beginning will investments touch the fund of be our to U.S. our franchisees to would innovation, redesign I quarter. charged fee Before to including increased on of our a effective technology discussing to To additional technology technology platform, like e-commerce transaction we in the from costs. second the $X.XXX transition

and increase million technology same effect. $XXX advertising expenditures and into million $XXX roughly the million annual year to At are in spend $XXX point XX evenly reduction guidance national included go $XX basis covers transaction fund investments fiscal The time, measures expenditures. fee G&A contributions investments million to will temporary the the a for capital XXXX. G&A between on split of These in capital to

profitability changes XX on technology the advertising to in reduction point basis net the XXXX. of should be U.S. average these impact increase estimated franchisee neutral The the contributions relatively store fee and franchisee two in of

prior international over X.X%, our sales, Same-store foreign increased the currency X.X%. to for of our business excluding Turning business. rolling international increase impact

through largest international year-over-year continue expiration the relief the retail the UK negative the of XXXX. last sales. full XXXX to impact headwind the the in VAT of negative quarter place We our by of of year-over-year the program in was VAT March XX, impact the relief UK, with face being market This

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

Brazil continues round closures Our base in our closures work store were driven that franchisee well in optimize by as master the in as closures to market some its there as Russia. another of

the impacted into in also our our the franchisees of quarter periods to shift These of were to quarter that International timing master significant store store net stores X.X%. of current our a some caused first net openings second openings first quarter. by of store international growth, store our week global net the four brought number fiscal in additional trailing with trailing rate X%. was rate U.S. growth XXX our four When combined growth quarter of

to EPS. Turning

$X.XX impacted diluted $X.XX. Lower by share in us Our repurchases interest XX QX in $X.XX $X.XX. by a months in was diluted EPS lower QX trailing us results in currency over benefited that expense by increase by our share the XXXX. $X.XX. tax benefited $X.XX count Changes foreign diluted $X.XX negatively down by us exchange us our rate versus Breaking net A rates EPS, lower benefited driven us impacted by and positively $X.XX. effective operating

continue generate free flow. cash We to sizable

we generated flow and quarter, the of Free chain $XX investments million. first million deducting XXXX, After we for cash capital quarter net increased our technology due the million, of supply first of capital changes approximately approximately consisted activities operating the approximately positive of in net $XX free in of provided $XX initiatives cash of million. working generated to higher which $XXX impact from by flow income. primarily expenditures and centers, cash During

million through share shareholders $XX over returned to repurchases. we quarter, the During

of the approximately Board of under authorization As for $XXX remaining our share quarter, the had we million repurchases. end

prospective of and of in other in quarter, $XX increase million. allocation The of income developed methodology an segment $X costs, first the resulted offset a international by estimated support estimated fully basis. allocation U.S. of software segment methodology income million in the which income In segment decrease for certain store updated internally in change million, increase an was franchise on a $XX

would I that few a an measures like guidance on to Finally, communicated. our previously update provide annual of we

increase negative XXXX. to excluding in in to to XXXX. international a And basket expected revenues rates market to in have year-over-year $X currency X% range foreign from $X impact a of rate, compensation, our impact expect the XXXX. on is XX% million We X% royalty Changes in of could equity-based million XX% tax

respective each expect end low Based in measures on current ranges. these the will we come trends, of towards of their

and Additionally, low year expect global of global our outlook. to XXXX three to continue to to sales growth unit growth we trend retail in end the two our unchanged year

joining the the Thank today. And for I’ll to you now all back call call turn Russell.

Russell Weiner

Thanks, Sandeep.

Before want of touch as are couple on important forward XXXX. out the in call, a move we that we to close I areas

is one first The store growth.

the permitting seeing to we Sandeep expect pipeline supply comments, the by in store that As in continue construction U.S. will his development beginning challenges be pressured year. before gradual recovery chain of and second the mentioned store half a

to of store the towards on discussions that This will see challenging building conversations end new an and into came industry. trend year in to commitments estimated we with Domino’s growth store inflection XXXX. a team a franchisees to the Domino’s EBITDA system, of proves I’m with confident and in them, of store by my $XXX,XXX. remains of our XXXX franchisees and In our that me restaurant with one more the importantly best the investments out almost

ability you customer improving that of news but a giving a our not leveraging loyalty our bringing a should into also innovation, database. is e-commerce to insight drive pipeline. personalized our it understand our It’s highlight to want and to robust customers I you list, point we’re second experience, The little while help more bit comprehensive

the delivery were Piece it XXXX, we our with momentum. mentioned on our still refreshing gaining launched business carryout Pie be in a As back we’ll of of call, last we When more loyalty program. and I improving our company

more designed So naturally, our delivery loyalty was customer. the program around

delivery addition key program the cater of be customer of Pie the of the Piece to explicitly One in refreshed objectives the the will carryout to to customer.

excited and everybody. We’re rewards more value add for to

a the platform. along This progress entire will We’ve rewrite update and on and will also continue on way. to we of our into redesign work e-commerce you started XXXX, work

and competitive time. strategy have digital us Our clients of for advantage huge ordering over been part our a and a tech stack

remain we forms leadership we to So, ensure in position. need these in to invest a

of our long-term to Day, our late Domino’s In QX. model Pizza. strategy help on I first by the on our closing, business when be remain of and and bullish story I team quarter, the telling you will the forward more can’t at held look our members encouraged be advantage I bring back to our future Investor that which and our but resilience competitive franchisees look and in

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

Operator

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

question please. Your

Brian Bittner

Thank you. Good morning.

Just from you, clarification a Sandeep. question first,

appreciate up macro within outlined you your that As XXXX macro And share? implied embedded to X% competitive sales you range. to and are further this taking calls. total previous to Russell, in for about for market guidance – it set turn weakness elaborate outlook segment, and what to during relates And lower my question the recede? you to this company same-store improve are But delivery to a your Can of when just be the you, outlook, on as relates you to at just advantage pressures main talk you inside that to are I then, this actions retail the ongoing currently strong end can X% in us taking pressures delivery is? the call business it the these that – the sales in what

Sandeep Reddy

what – global expected I think to in asked not we time, said, retail to the asking so question. outlook, end lowered and place, really morning low a you’re drove we the narrative challenges rating the about be think last good that first U.S. retail back the think estimation that primary of was were we’re outlook we what the sales second XXXX. I the saying at go X% X% changing is said still and global cover And that and was the again, in driver will seeing business first that sales I thank this I’ll of of when in for the the take to for Russell you which we the adjustment of time you the what delivery piece, of Brian piece the So, the outlook. terms

confident more carryout very feel heard notwithstanding we UK, you Russell The as because over. So we about great. well, business, extremely the as just international from has were the been business business broadly that the VAT did rolling impact well

So challenges, we is delivery feel think outlook about, really we asked come about we overall appropriate. good and business. you until believe the I that's that what the through the But Russell basically

Russell Weiner

Thanks, Brian. Sandeep. Morning,

the in question two delivery to side, – your parts. really it On answer really is

First, share to we delivery last do grew QSR pizza We're year. in that continuing QX. market

do job areas, not up all just to electric to vehicles. This then new online. that program you out of delivery a point And vehicles. have the is minute innovation Innovation service transactions. there And going product, It's kind we ask driving that. driving were in our value, We're a the year is but were outlined same ago. do really than delivery it's the to better can loyalty delivery majority what were on in of good with call. same drive in so And a we the the we we things customers actually addition basic X,XXX now

talking well. when e-commerce you're about redoing hearing our as what help we're platforms, there And to certainly so going that's I think

Brian Bittner

Thank you.

Operator

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

question, Your please.

Peter Saleh

ask I us spend? XX decision you much Russell, by this give in fees. digital to spend how understand sense the about much I year the impressions can reduction down just be to reduce raising pretty the basis with wanted – an on points. a But offset total thanks. marketing would to Great, it's the that

Russell Weiner

better Sure. look of the in are we day the we just next at holistic franchisees' our course a And the of end budget. the we investment P&Ls. I take of marketing at mean where this the is year, the because point think is over that a

impression overall the a is of money great an decline, their just I I So don't think that expect this use year. for

Sandeep Reddy

of deep to And and where are little this And a with we Pete, discussions course And standpoint about that that of have think the I'll this reserve I and holistically I before pandemic, up the the we financial from add we that were it's to ad we this very to just move. bit point engaged over made because ad the advertising we've built our kind standpoint for at. what we're the the think a funds strategically cover franchisees both actually think looking fund an important than actually to in enough demands more are in believe a year. resources that,

at And us technology, at innovation as way the that was to the redeploy and need same our and the this invest time, looked in believe to franchisees we right investment.

it clearly to done year one a adjustment view And with so is, that as we've very the been have this said, we And we long-term. made.

to do. take we'll decide time at what So and one it in look year's a

Peter Saleh

Great, thank much. you very

Operator

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

Your question, please.

Sara Senatore

Okay, be A won't said quick and continued the thank you. boost follow-up, week a tailwind. you question

if trying drivers go those think or that I forward? run sales that can of Your I'm just caution. you the note look might might Russ we like magnitude general was? quantify the you a rate outlook what to on tailwind strikes highlighted, same-store what the underlying was in of as wondering be understand

the as dine-in. higher back on the than shifting pre-COVID. a comment a about lot sales And follow-up share of then just industry across quick was Delivery is to it

trying mix. again, So long headwind But might I ends lower the Thanks. that your in on would view? this do a probably as thoughts how last? long share understand how any shift to persists up total expect of dine-in you have

Sandeep Reddy

this. a take there, Hi I'll sequence. in in I'll them but Sara, quite a few take questions

from and first didn't a lapping the which I got talking we you're also quarter pointed remarks in we So tailwinds the fact the from comp on things of XXXX, the prepared I boost XXXX. had the that that first exactly not pricing that think we I update how I going it, on now was, we And tailwinds, about lapped impact definitely think as third got they're was that and tailwind much actually that the we think that if have week benefits two the of in unpack those Omicron have definitely, some because the to out had delivery. but national in a actually that embedded in I'm the on details also were about we of in pricing benefit the ticket well. And to

you elements, to think because these we an about going actually when will first the there out. to deceleration So all some that different uniquely pointed we expectation there those that And be quarter. is tailwinds that's be why those that, had relative in were

then we've I dine-in the had below when well of look topic back to And seen QX broader – where at the throughout we the shifting think still when XXXX shift values was, our did we we reached, think for but I think actually And levels of XXXX, a point the call dine-in, were dine-in. into I dine-in.

so had of XXXX. expectation set is over particularly continue was three-year we the And for shift that outlook to time happening frame the and two to when to we up on see that XXXX, our course the

Sara Senatore

Thanks.

Operator

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

Your question, please.

Dennis Geiger

stepping up to you Russell, good you. spoke and pace innovation, of examples. you some the gave Thank

to evolution few in it anything how Perhaps if And a kind if it Thank to little you. think innovation that long there, brand? wondering menu about could thinking third-party technology? across could how years is back? update going you get was think I innovation and flip as and you more of about Just more about part you touch aggregator takes can a what with where there relationships bit in related share And the respect we means? any on a technology of to

Russell Weiner

Dennis. Good first internationally day. every – aggregators. got $X there We've maybe to take little learning And a business billion bit the second first the with talk about third-party. morning. I we're Hey question

we we've going to with where compete is you us. decide to thing brand. number work to consumers order Domino's the from learned when a when make one or we're whoever that more you they they're When is whoever think I better stickier order with, have

the is getting it's value right, getting stickiness right. And service

You to talked so I'll about in innovation, that second. a get

is this make The our e-commerce I will to new recognizing it's that updated time program think program. as loyalty stickier site. loyalty stickiness us as also well upgrade

matter a win. we'll we who that so compete work can in a be here, or with if And with no Pizza, we we're stickier place Domino's

example doing and lot carryout a an something carryout we're give of that product which that innovation Secondly, firstly, and But say or maybe of be is to your doing think be not really couch that's guess, to question would and that me innovation. to going not innovation would – broad you innovation. not let stepping a the I on of innovation. a first definition what people up take was delivery tips. folks or I question, wouldn't And ask of going be we're as

delivering pizza, we're of They our said, it what Carryout incremental people they back job. And it purchase. call let's our what, tips, to marketing you did did, what get tip. calling bounce a coupon. the a great are is a incentive it's customers of this to companies, they bounce-back $X and We're call a a the majority coupon, it that's next In $X and case, And company. an an delivery innovation. week, know

innovation. anyone don't think carryout think way the So cars tots. about product EV is got innovation, innovation, I is delivery a do. Apple value Value you we CarPlay innovation or innovation, talks with the I

things see you basis, a able to expect quarterly of innovations you are should of All update on be to I on types Thanks. those these calls.

Operator

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

please. Your question,

Gregory Francfort

the better. help not? what But is a today, for profitability platforms or five Thanks. and four can you about little differentiation or changed out aggregators last if can five changed ago, just the reasons or us talk figured bit over you kind of why understand competitive have those you years that's if you maybe four have versus of think Russell, the and business the differentiation the years Domino's that's think I from competitive

Russell Weiner

think Yes. the lot that Sure. about thanks overlap and about broadness is we talk question. a there's I talk I'd carryout. to fact Good what and not XX%. start the about Actually, for out competitiveness, lot a and with morning delivery historically carryout of like when We between

And the back on carryout in at it's if U.S. XX% up years same-store business, three almost so look last sales. you our

delivery that business, only total not So incremental a think as restaurant. think growth differentiating company, help very pizza our and hopefully piece growing how about understand of that's for diversifying a you we a and to but should ourselves as

piece, the I again, a lot, lot competition over but on the pizza delivery delivery we the think is think think is we And I’ll are can Greg, But more. last we’ve a of it few point learned – growing And years. certainly, share, different. we because do market to I

what we’re think availability is necessity say went learned service of the capacity this some of through that’s driver here. And constraints. the doing through through COVID. mother We went We You we of why issues. invention. And they program summer

it’s people we are video. because not of significant all and something We’re learning, franchisees inviting innovations and in now these substantial enough circle our of be and that better this in operations made will we in technology, a can improvements train because of we’ve up, that our our

back. at and how they’re their U.S. these when up service. they really franchisee Domino’s away, day single Ann there. stores that in they with leave together leaning go change going in an ourselves this here we’re individual coming Arbor to training, stepping end macro And the hopefully, think, to I And the when things this to of for for up example is plans is Every will go it’s be of step order putting

Operator

from of And line Markets. Chris Carril Instructions] question Capital comes [Operator RBC the you. from next Thank our

Your question please.

Chris Carril

thanks and morning. good Hi

Sandeep, And initiatives with to of mix in or match improve and pricing if are So have to in noted open those levels stable improve, focus pricing delivery taking further you March. service see moderate the on on to remain you the transactions Thanks. you how here in But do pricing, place? lapping If were XQ. the that your here. should particularly with potentially begin pricing, you appreciating value continued all

Sandeep Reddy

question. for and the Chris, Hi thanks

and the I that year. been options been a more value, think decade last we’ve this. pricing doing when over constant. It’s think not that’s I talk It’s we or this about last

And to what I of to yield kind it’s because particularly think of do the we actually pricing to always will a the demand standpoint, to the are or so going environment trying competition But work. in do macro to say work. from going what relative going to we’re we’ll be outcome because evaluate to don’t going continue the not and we’re do

Operator

question [Operator Thank next comes Morgan the of Brian And Instructions] Harbour from from line you. our Stanley.

please. question Your

Brian Harbour

others? just of perhaps is and innovation the as one about morning. I source or have you Yes, share thank much share two market you to talk you lean be opportunities that those different about talking that about product curious dayparts at could where was can you. Good there’s And whether your of as innovation into One thing perhaps? think specific a don’t

Sandeep Reddy

are there? you Brian

Brian Harbour

you Can Hello. me? Yes. hear

Sandeep Reddy

Yes.

Sorry, the we question, Do please? last repeating a blip on had question. the mind you

Brian Harbour

about well share different dayparts talk could might differently? about as curious by was to just you differ an opportunity that kind daypart about Sorry of you if how target market whether I your dayparts that’s think innovation and and that.

Russell Weiner

I key incremental don’t and a – product piece absolutely. weren’t the dayparts. business. for into has pretty brand. I that’s I going to Finding to of detail the sites into then is numbers of for we’re joined of your now lunch. your specific your stores way, with our gave them is remember significant going our majority when pasta. don’t open drill a I think been sorry, sandwiches morning. in our And of answer We XXXX, we’re later this go the by the to question But think or – answer the go – good

and come a company big half out carryout weren’t Domino’s. carry obviously now that orders of the through also We

So is one what and that we’re those absolutely dayparts we areas job – to sites what drill our every day of incremental find do to look. is are

Operator

from Instructions] [Operator David question you. next from And our Thank Palmer comes of line Evercore the ISI.

please. question Your

David Palmer

Thanks.

collecting and on in about previous marketing those U.S. sites a from and orders the follow-up the Just question third-party

or of much. noted way on have Thanks highest you’re But and for You those And previous this you closing saying overseas. kind so you factors the you we about? of about be up mind? sort kind said found do that you the Is thinking stickier how if this and you your of what it evaluating timing value. that made are your you’re answer, you’re of still, that it evaluating Or that are sales looking book you’ve your should still? thinking

Russell Weiner

Yes.

anything not I there think Domino’s going or competing folks best with with folks. we’re maybe to the issues way day. opportunities unless are and every to there working Domino’s. we’re about think interpret what And I our into said before going the best And is, are we’re potential there with getting also

the about our be some And we improving and loyalty better to talked a compete pieces. of then with with we’ll or We’re anybody. work in place and service, tech

David Palmer

might that you you you the book but but something perhaps pursue on. path, changes on closed making is that is haven’t you’re haven’t committing enable at This that the that something this not you’re point, to book closed some

Russell Weiner

to prior the Maybe I’ll refer questions. back

us, are of looking We’re there are smart incremental sites. this for always If and them. drill one drill for that sites is

things. You’re hear closes on the never better Right now, we’re to team on ourselves a this going book Domino’s. making that focused

David Palmer

you. Thank

Operator

Thank you. line Long from Instructions] from next of our question the comes And Joshua [Operator Stephens.

question please. Your

Joshua Long

that? with franchisees learned away of what what come in this year. be help you’ve some this talk Great. as Thanks to of that curious the from just pieces all about contextualize all either they Excited are could questions. walking the us my – certainly franchisees been the summer have be little later bit plan hear an to kind more but going test, about that program, for an more individualized if already away understanding is to exciting, but taking maybe big to you walking And with service a up

Russell Weiner

Josh. morning, Good

is that to join for come I Day think question the QX. Investor invite up way you our best in and to answer us to

work then the you circle reinvent what learned we customer importantly, to and technology some the as how also pizza. Domino’s are improve circle of that help day, improve to our of gets operations really it end availability as would to the of through at these driver operations, leading show ideas And which to excited We we’ve to is can the hot of at issues, capacity it to a the be. like but show more franchisees, on be issues. takeaways are our that product And also help things

stuff is were and little there show a videos, the bit able you be old-school more, So phone this but I’d maybe to if call.

And so you have Arbor. to to we forward come you. Ann up look And seeing to

Joshua Long

Understood. Thank you.

Operator

And line next Thank Stifel. [Operator from Instructions] question comes from O’Cull of you. our Chris the

Chris O’Cull

true. But under benefits Sandeep, second was transaction quarter impression declines comparison mentioned wondering comparison that guys. in Implying in I’m the would just second And morning growth understand Good I ticket you how just could quarter. That slow benefit that won’t last that helpful. should quarter Thanks. meaningful the if be should also to first was help Thank year. if And continue also the weak just quarter. second the in as us you you. be were the the then the favorable.

Sandeep Reddy

Yes.

Chris, So transactions as well. the are in year last that did you right quarter decline second

had Omicron that part So, is last lab. year, second one had the question I What was we and not of was which I your and year. the pricing this consistent of boost national consistent QX pricing in you think We that necessarily QX fact think of tailwind. in QX. asked between week there – is the about And the not is piece QX

going increase from do $X.XX into so point. to million can – it at not clearly, get But was a the detail $X.XX We’re I an really of of how moderating going this the math QX. to me much pretty that significant out you and being in impact to look it terms is be. think that’s in call it But for to enough for

Operator

of our from the And from Thank you. question Andrew [Operator Cowen. Charles comes Instructions] line next

Your question please.

Andrew Charles

perhaps in four-year the to of end like confidence Great. from the I did guys Thank XXXX. looks XQ. just growth deteriorate And you. It’s you’re points guess XXX from outside, trends a long-term to talk about about talking very the basis guide about also encouraging by you on it basis But in hear U.S. retail XQ performance. low sales

can not the contextualize So just driving obvious? externally help may what’s be perhaps as you that encouragement

Sandeep Reddy

Yes.

you comp look I can to call, is think our that’s thanks that business. And why think question. fair to the at stacks not the actually about more like are current and So we’re that overlapping. the and at really, we’re Andrew, last ask I want I comparison the measuring question, going really a that And enough what said talked but we for – as it’s of the we’ve near term, on way something’s care look

a carryout carryout business, lapping And terrific it’d last us. So be result what year, for really year XX.X% great basically we XX% really or XX.X% a terrific see to was business. be doing this is a

of number And a things there’s on. look, working we’re delivery, that

we’re about and service You working heard all the value that and innovation initiatives on on.

the are everything QX from doing And on look, minus even improved performance in control there, part drive in within that an QX. to we in on So the our minus to improvement sequentially, X.X% of that business. it X.X%

positive inflect not negative We actually We’re happy want to with comps. the comps.

to keep So the is have talked that and impacting that. macro. away, on us It’s gone some working on not we’re about we extent. And going to

But we all actually to we control, the why what’s outcomes need. on our those and foot putting don’t want really focus forward in driving the we’re get to keep initiatives to making of our excuses want and that’s We macro. about that to

long-term. on So the super bullish

of we short-term work these some just think for I to have issues.

Operator

And Thank line comes from next you. Suisse. of the from [Operator Instructions] Silberman Lauren question our Credit

Your question please.

Lauren Silberman

Thank you.

the average differences Over as recently, in then of seen us changes check as in differences performance help profitability the you between management any carryout been understand well shift across delivery past channels. Thank and more in the just between size either Can the the order mix few you years, you. per there’s channels? And two. the just have order in

Sandeep Reddy

Yes.

question. the for thanks Lauren, So

both margin very, shift accretive at the think franchisees; of really carryout delivery they’re And when I between not that’s profit the delivery I And I look businesses. profits. businesses we both in just carryout the to different look business, profiles, very we a the with they’re when think because impacted at the is but good shift. very occurring good on profitability way their to actually significant and that’s franchisee why the think

obvious size, our I’m higher decline you average I – carryout. think cost the But a but to bit reasons I is you cost check so ticket because of have ticket is particular. going think be unfortunately, big businesses in overall, for than don’t more quantify to year. like, delivery typically, we important, going from on the for did super how delivery Both versus carryout not last driver are intensive delivery delivery, want to little But labor is actually in

on smaller are in that the on higher, is flow-through So profile the transaction. cost dollars terms I a delivery the the but transaction therefore, is margins good, carryout and versus think of

Operator

comes next the our Thank line [ph] Gokhale from question Instructions] you. And JPMorgan. [Operator of Shreya from

please. question Your

John Ivankoe

about you. which John we ask personalization are the specific of customers in Ivankoe. you been promotions to in data-driven to customize where I the It’s I to the Hi, It’s something hearing to top better elicit journey. companies are we’ve want the spirit about the really did behavior. thank innovation, certainly of a ability

that in Is that new that program, any are doing significant loyalty can some come around journey? work we you’re Pulse where your of functionality of X.X. So kind as back-end there maybe part

you where term? where go think of sense in the Thanks. will a you you us near give and Just to medium relatively are

Russell Weiner

Hey John, question. great it’s a

Multivariate the making tested of things kind through call it, of tweaking it that. like improvements A/B are in, testing, We

be bigger leaning new able and know reason a lean in right the and think And this redo into to we’re let will I doing not business think want to into our a redo, a that I e-commerce there much a that personalization now. is we’re do us way. are things loyalty don’t really of I program certain we

So perfect. great question, and the timing is

Operator

question [Operator from next Wells you. Thank Fadem of the from line Instructions] comes And our Fargo. Zach

Your question please.

John Parke

takeout. color I some This away income the lower a from cohorts given about you within you for Parke the guess, bit Can versus macro taking how talked that question. of on different pressures. delivery I John my delivery for morning kind provide just good Hey, guys Zach. of guys. income on shying demo again, kind is performed Thanks mean,

Sandeep Reddy

Yes.

downward we to than I that. monitor holding remarks, to real And on growth my you’re of on kind think right what to going the did this, also we’re pointed how you call. now trend, standpoint from that in on what if have the be continue a but out the what disposable and call, in U.S. seeing Because up inflation particularly trends go to noted, to I wage is say – economy. is back evolving? a prepared seems income that’s So macro – more we this the last was But

I it cuts But strata. little think bit differently a on income depending

I over we going of this to So a a being you’re still basically time, pressure But change dynamic. potentially see now, think as in see the point.

Russell Weiner

you And little how I’d see I a overlap we’re times think lot talked do earlier down between asked two. the on what of there’s that any to add these a is carryout. about calls, to from trade delivery I

I We’re seeing from think And a about. we’re carryout. Domino’s into carryout lot non-Domino’s of trade those talking it’s down consumers

are certainly, pressures, that’s So macro delivery from the a but carryout there standpoint, I us on an think side. for actually advantage

Operator

Todd comes Benchmark. question Instructions] [Operator from our for Brooks you. And from of line the today final Thank

question Your please.

Todd Brooks

squeezing for thanks me Hey, in.

international ease side Sandeep, will that X% of I second continue to in those there that you way Any of construction about reaching And confidence that half? frictions about to that the then comfortable gives you here. on quarter the know how can what commentary the unit X% U.S. low growth least do the of end side. growth Thanks. you be at occur in openings any with on the guidance? weeks you unit quarter many talked did maybe of size just openings. first some Is couple fiscal versus of end Just the timing

Sandeep Reddy

the timing your between was I quarters with in the frankly, noise which be master you question A growth our year. and pretty calendar unpacked our a is to few unit I’m that factor, franchisees, issue things in let’s going think a start going for much questions. fiscal international had. to And many that the There

global are openings that’s think the year pipeline projecting of noise. see feel But track We a are and You’ll master look into really unit full quarter-to-quarter on that we at our franchisees our for we growth when I basis, estimation. end be. are overall, to where good incorporated pretty the year going

saying in which U.S. the permitting half that chain been then mean, by be of the talk I about same think Look, I will expected first supply I issues, we year so to growth And we’ve store is a see particular. pressured the But construction we’ve beginning talking since talking internal challenges through. to franchisees. heard themselves, is say teams that been our want very talking to been really digging you is which we Russell – robust. system. because pipeline own been very, to We’ve get the in our We’ve to the

for And very that’s openings strong. frankly, yes. that we the appetite store why is feel And

going half, the actually we goes very said, to And we bit confidence. And this which and in because a see another then say of a so Russell that piece, a now. critical that beyond going but see And bring going XXXX much right a into as in have pipeline second that XXXX we’ll I’m why I’m we’re element. that’s is ask, inflection. to you have First, it’s to stabilization didn’t

now towards carefully I last QX you And the quarter. not our standpoint a talked the of overall, in the end, If at franchisees franchisees in anything, that for that first think they fourth about right through. profit I the inflection accelerating are started from year. the very inflection all in place off going we’re low a how And flows to relative good based profits the on food basket guidance, is results. quarter if look

our So unit showing a that of reinforce there’s actually number will is that in in growth confidence tailwinds the system projections.

Todd Brooks

you. Thank

Russell Weiner

our to you you and results. speaking like July forward joining we’d for soon. thank discuss QX us we Until talk to in Well, everyone to look morning, this right. to All then, to

Operator

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

You may day. now Good disconnect.

Domino's Pizza (DPZ) 27 Apr 232023 Q1 Earnings call transcript