Earnings call transcript Q2 2023

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Operator

Thank you for standing by, and welcome to the Domino's Pizza's Second 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 ahead, go sir. Please

Ryan Goers

joining Good for our for Thank the for morning, you us conversation quarter XXXX. today of everyone. second regarding the results

will like Before hosting I Arbor, you forward entire Michigan. Russell headquarters. December to Domino's hold Officer, Ann our Executive at and announce X, we our in Investor would to that Weiner, begin, Chief leadership on Day look we the team

Officer, will feature Russell Sandeep commentary Reddy. Financial call Today's and from Chief

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

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

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

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

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

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

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

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

Russell Weiner

you, Ryan, morning, thank and Well, everybody. good

a we're to ample and discussions. of today overview by momentum Domino's your current here questions creating with performance, then high-level the open financial going and at provide I'm Sandeep some for our brief regarding our focus remarks time followed Pizza. quarterly will

United important our improve order a and continue States. plan counts and to driving to restore make to business. staffing We in innovation growth service value delivery in our this of are the will here segment executing and difference, drive Efforts

of these delivery Domino's experience. transactions QX a large believe year. and incremental of with and growing Domino's Eats, of Our provide two cohort customers delivery with better in we agreement who announced levels meaningful nearly And Uber customers. benefit last leverage recently number from will the ended increase than the will minutes We be the QX service a delivery

one gain research in sales Domino's Domino's billion U.S. aggregators. our our segment incremental will that $X this prior pizza has every get has for among share incremental billion aggregator in we've decision orders what from participating According Circana, $X also our sales. for pieces And We $X business the and grown U.S. most billion delivered to XXXX. business. in quick-serve May over the developed to delivery ending the out fair plan aggregator to represents transactions to restaurants be customers for the master U.S. franchisees from this XX opportunity indicates of taking who've almost already to supported of marketplace. time. our market The our compete learned of in we three over from sales international of by been Pizza This months

participating "Is to our by consumers. here that the the drive We by incremental a over decisions. indicates net thing the in a orders into business ask sense making evaluation extensive of for term the ourselves group Our process have marketplace business?" tapping Domino's right growth long-term the new aggregator and brand will long for this question: important do common at it We of

orders of delivered In Eats be will Uber most addition, data customer our contractual over assess importantly, protection maintain and agreement And require Domino's placed delivery our the has control experts. the platform. through secured that incrementality we the to by the platform

later Uber the important begin Eats and initiative. So, forward growth reporting we're through accepting excited channel orders to look this year the results this to of

pizza thoughtful new pizza in to channel pizza approached a manner Carryout took the in fair action. our isn't of Successfully brand we distribution a is our aggressive scaled share segment one back executing similar the in number smaller the XXXX. making $X.X was in today, an carryout larger before aggressive our plan And We XXXX, it to almost us. U.S. get the Domino's than carryout business carryout percentage pizza billion of business was

growth, market at in share fair in share carryout pizza sales. and points aspiration need this reach Despite delivery represents segment, current further carryout is market additional same an points additional to in our the retail share share drive impressive XX about least today. enjoy $X earn billion the this to our to of we to We market even our XX

the of the XX U.S., in and same Domino's of Eats Uber Outside operate markets.

around economics Our stores to XX% deal to our customers improved the new franchisees. global has the with international bring for Uber of Eats' world Domino's potential

current in Next, our initiative this important customers. points. and I requirements reduce of new program the we'll us, improved want earn to the that year. launching U.S. and impact carryout be will September another the delivery retain loyalty program for positively us The our This talk in as as new to and help redeem well will loyalty about customers

innovation. that receive know, of who just with Domino's are we of new their drop order to a our U.S. app. the launched core are, this in customers in the is on our exciting keeps Delivery Delivery so quarter; increasing option allowing of innovation, delivery two innovations to pace by give June. you have coming the nearly them Pinpoint we're the we Finally, of We third intention as the with thrilled this market stated late pin to anywhere

margin and Pepperoni a bread Cheesy of late ago. The we're the launch and Stuffed which cheesy a Stuffed provides line a launch Bread follows platform, our Bread. for It menu Cheesy Stuffed over successful going of was Tots, franchisees. in brings healthy mix launched is our significant Bread part Loaded decade stuffed news August, to And is delicious. to Domino's Cheesy it Pepperoni

both with ways our product-related. message My today technology to is innovation, more both customers more delivery, and and sales loyalty in you more; to reward new program, carryout more and

we'll and loyalty and customers This with We at drive Domino's is and new plan about, into we'll Pizza. tap go-forward best-in-class innovation with back I our then will bring orders as program. marketplace improved service incremental talked value, and those a

beyond. momentum and in significantly will build Our XXXX will of in the starting performance and our QX impact business

for momentum continued drive franchisees. EBITDA growth should this important, As

Our Mix & strong That to was year franchisees QX. has a I sales is last inflationary as the through helped just And customers than I grow and $X.XX, this remains profitability time profitability headwinds. offer Match it it a continue despite accelerate value store-level higher of building initiatives our result at to outlined. expect for

for things many Reddy. an the are there Domino's things And financial exciting of CFO, over So, I overview Pizza. will Sandeep now results, our at QX our to here underway turn

Sandeep Reddy

morning the on and good everyone call. you, Russell, Thank to

of our the I'll franchisees. begin Domino's and with updates on drive profitability our actions to long-term

pricing. First,

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

pricing we in We expect & third to the to average quarter X%, change the when quarter be pricing Match before from fourth Mix XXXX. carryout approximately left October similar moderating in the

drove operating exceed Second, having QX recovery. reach points income operating by grew margin to margin, in XXXX exchange year-over-year impact This cost income a points full-year efficiencies We XXXX. versus our expect negative quarter. XX during drive to in margins which XXX was operating as We income improvement margin rates basis or on levels. we continue basis XXXX now foreign despite the

drove and store same excluding in international growth operating quarter foreign Third, income third U.S. consecutive sales businesses our improvement. impact for the positive currency

quarter. our for for the results financial Now

retail the U.S. to the sales positive impact X.X% excluding retail net XX.X%. Excluding currency, global X.X%. grew growth. of International increased foreign comps impact retail store and sales sales, currency, negative of sales due negative global grew

pricing During store I ticket, QX, order sales mentioned average increase The for the business higher store declines. U.S. actions same a U.S. X.X%. the including was sales by partially same increased by earlier, offset in driven count

QX, same X.X%, XX.X% in business store over rolling XXXX. plus with carryout remained strong performance a in sales plus Our

The X.X%, XXXX. over minus be U.S. in QX delivery XX.X% challenged. store QX delivery sales business continues declined a to rolling same

QX expect to business to trends delivery sales similar same store We challenged be QX. our in

to considerable in Russell However, program roll our slight Eats trend in followed a growth initiatives we you. partnership of our loyalty result expect shared with XXXX a transaction in other updated QX has as out, a Uber improvement as by and from improvement begins

three and Domino's for store U.S. X.X%. system bringing continued our with store count. net stores rate four closures, store unit the Shifting net to in We remain the end quarter our U.S. the at U.S. our growth economics count EBITDA X,XXX to XX unit the in strong XX openings added growth stores with U.S. and quarter franchisees. of new to

least We are of in on XXXX. track at to $XXX,XXX profitability deliver average franchised U.S. store

Moving Same currency in business, international. excluding international to sales store X.X%. our impact, increased

closure by closures in of to an net Our the master count closures. the to master some market, new international were franchisee XXX base, and openings XX intention and stores, indicated continues Closures market. store Denmark as store Russia exit franchisee its by there the driven optimize store closures our the where XXX Brazil in has increased of comprised

stores. reductions publicly-traded our quarter an recently our XX to in of year. will occur will This additional master during net likely for stores in XX underperforming one to and our Pizza Domino's their the These quarter. the intention upcoming rate Enterprises, store down growth underperforming pull disclosed full close franchisees, third

rate our in continued and we once us. store anticipate international robust XXXX, to returning builds be full-year are net our closures However, store behind of new in these to run growth store

growth the store rate X.X%. current the When trailing net store growth store to U.S. quarter was global's quarter combined four with net rate our XXX net trailing in additional brought four international Our stores growth, X.X%.

outlook and expect of the midpoint growth X% three low to X% two to end two global of We X%, sales. global by international of retail to to growth to three to low XXXX to now track our stronger sales expect same our to X% continue our we outlook. year And XXXX store year our unit between the end driven track

to will gross year. be these in store materially this anticipated store will new certain not Since strong stores closures is international impact of markets, challenged our Despite international openings. pressured the openings, this be closures underperforming benefit we financial by

structure for the company the leverage the is times times within capital appropriate range on debt depending of of update. interest the moves leverage rates. to Finally, and ratio level X X A our

this us returns strong with in In range so. our shareholder repurchase shareholders dividend and We for interest to almost today's us it's to expect best for should investments free grow business, you cash when of flow share environment, to have debt our retire the strategies through and do our operated use of XX rate to make leverage interest years. create the

we markets if As warrant additional refinancing. always, be borrowing opportunistic will or credit

you. Thank

the open to now will We questions. call

Operator

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

please. question, Your

Brian Bittner

morning. have one demand, you. Good two, and program being you Eats to September. stimulate like relaunch Uber the two partnership, It loyalty Thank being the do catalysts new your really tangible incremental of with in seems

it Uber You've how the to the it's quickly talked partnership $X could Eats with launched? business the be order you have could rank it this the for the being impactful how to it size relates size partnership the in about loyalty, once be, relative to opportunity up to of importance or Eats prize billion, as Thanks. an relaunch us? of but And attempted you maybe Uber of powerful can

Russell Weiner

we've Brian. say morning, is, Good I'd what think got catalysts. three I Actually,

you talked about about the piece, You talked Uber loyalty.

also to $X billion lot $X.X gained in We carryout talked the got to a We've carryout another share. our on call. since XXXX. leaned we And about we've billion just fair get

Our on fair share share, which Pizza in carry that a there more we've if out well. lot compete and three, feeling sells should one a is at to vigorously, is is got that go our delivery, pizza our we here we of of Domino's as every so category get

questions a There within lot of there. are

So come back. and then if I missed anything, a you let unpack couple me

U.S., $X First billion number $X about is in the we're billion incremental. the talking here that

is first aggregator we're of partners we'd however excited After billion our Uber. them choose to starting take the months. the optionality can of for we delivery share as know, entire contract you We're we've in As a first The exclusive got like. XX that, business. the that with billion U.S. signal to $X fair pizza really $X

broader would platform, that's on at when the which do to we the And so get intend obviously, happen we something some in point. to that competitors

question. loyalty Ryan's program really -- I'm the joking to On the way, you. totally listened you by one-part with

their from program new means a usually away short opposite the redo standpoint, as it I a do a the taken customer the loyalty is for as programs. here. feel a which doing most me a end. things little to bit think the way exact like trying We're more of how -- I loyalty loyalty A they're from to loyalty when On on company Usually, customer. profitability, drive customer, I'm the brands means as are

opportunity And in the in loyalty the to program the changes there are so the changes business. making and we're scope our

talked the being we about catalysts. So carryout one of

points and will program customers' so of the hurdle getting going the recognize new going lower, things true to in for be One that's be the that is loyalty is we're ticket a lower. to carryout

Secondarily, we want levels. to engage people at all

a We at our need of And points, various expect influx you there'll have points big XX standpoint. current coming levels program, from to be customers today. a new in redemption

think a improved we and for and this one new customers truly So, profitable for is program a our our franchisees.

Brian Bittner

me with on working for Thanks that.

Russell Weiner

Sure.

Operator

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

Your please. question,

Peter Saleh

be configured, you the if wanted I a sort to understand understand order from in just new do on spend-based transaction-based conversation around come the to to and that of spend-based, just from elaborate be additional to structure September? you pressure Thanks. trying how moving if do a on here loyalty Russell, are transaction-based guess, little to anticipate come to program. counts? I the to Just trying the change -- Great. we there'll Are any Or a back going loyalty changes you September. Can is this bit? happening model? Or program the

Russell Weiner

morning, in general. at franchisee opening big remarks, at count we look -- We profitability. lifetime Yes, the in clear that, Yes, value. And drives I sure. loyalty the fans at business in said Good long are decisions. it's order we on term, look We as Peter. side, the look long-term

will this a so continue transactions-based program. And to be

and like in need transaction-based the big in level. And incremental be at the at with think XX to still you'll actually the is that participate, we is bringing be driver of pizza value important get on into a said, transact to points, XX at get will nice change we I frequency able to to will this a allow so, you we be In able really yes, products, order counts. points. program. you'll And future, the different but a Today, think people lower lower

through multiple customers lot and that, Mix upselling Ticket, a in And on system, got testing and robust appropriate on up a website we've usually -- doing & something Match, with there's is of apps. our obviously, platforms so general, the upselling AB themselves. end the

Peter Saleh

you. Thank

Operator

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

Your question, please.

Sara Senatore

FYI, question. Thank Great. one-part two-part, I guess I another you. have

I'm in the was evident is understand little just delivery, and opportunity. more the of first like I of and the tracker. always service to I Domino's perhaps The thought of just guess things distinction a carryout trying bit between speed the sort independence because

translate less pricing a gap it trends, because ahead and me price? versus about that? carryout an and of the So, guess, perspective, the how it advantages sort to from Is pronounced, you Thanks. on industry, a there to you. just to or or going inroads seems of I perhaps is that the industry traffic better to is keeps are harder widening, is question it that thinking are into then, separate opportunity make the And

Russell Weiner

sure. Yes,

couple X:XX a give call we So, Usually, so I'm coffee. Sandeep, two-part you me sorry, morning. I'll do this had made do this a XX:XX, I've cups answer. of of

think proximity. about the carryout, you when of kind apologies. sense interesting and is thing it, On my the drives So, it carryout makes business, that just

up great closer our is fortressing customers. the of opening to so, that we're strategy stores piece And

efficient Pizza our more like incremental to we we middle, pizza a are thing Pizza from customers, thing really drivers in closer competitors just delivery you that put example, the right Domino's that's mentioned, when transactions put deliveries those So -- same companies. really, a local us. for a being they're if is the great If Domino's make

the more split than standpoint. store we from when incremental a customer delivery carryout of incrementality the fact, In is even

able to piece And they delivery second fee the avoid carryout they're customers, and Domino's the tip, I want our and really to they nobody want passed avoid So, standpoint. that than competitive Part think very they the purchasing carryout through get a from is is doing to scale to then we're the provides of value. of along we're reasons one value is better customers, carryout want Pizza. the

franchisees to, franchisee Domino's pricing, high-volume then, are need to But order the established, then, And we once the our increase we and what making We at the have, have a they has been sure is we per Sandeep with to volume-based. on profit mentality. pricing order-by-order profit -- me, talked to call, want make certainly profitability. always in want to an the basis,

proper And drive help so, price frequently. order on per more that buy basis Domino's we a for profitability to will consumer

we're kind -- the so of pricing. while best-in-class high be at profitability, expect to the to don't do of restaurants high in And you expect if offering customers. be and how look look our I I that's of end other I at value to What it. to we categories, our at I think end franchisees expect at

Sara Senatore

you. Thank

Operator

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

please. question, Your

Dennis Geiger

on thanks helpful. And the for details you. all sales definitely the Thank drivers,

the partnerships, Russell, the menu of you just But of will impactful. bigger third-party Summer The could if e-commerce loyalty Service, upgrade, the of that of you seem the spoke speak tech quite wondering other a slightly business forward. maybe drivers, all the less-impactful going part and that the and carryout to some be some sales to seemingly and innovation

of help of Just frame Thank curious some could other if you. impactful think sort are. up how about you you drivers those

Russell Weiner

I it. of that headlines because But No, you times, the think subtext what a grabs actually the you, sure. actually, if lot appreciate it's the headlines, Yes. drives about are folks.

done most to this And the talked growth underlying of three really seen the the talking going out you've drivers fundamentals is, But addition help is maybe things us of other not about. those but the year, of business. it, you've we've those in the behind we've talking And improved some fundamentals that which get so, are to that really, drivers, mentioned significant about those already. what about we've carryout

our about income talked us, and operating So, profitability franchisees Sandeep improved for our for frankly; margins.

to improved Service Summer is service. of leading

quarter actually -- ago a better X better quarter. last almost minutes the quarter X.X versus than year service we're last and Dennis, even minutes this than So, just year,

Summer of this We've so, firsthand how you had of the discussions, into bunch making people Summer franchisees stores leaning Service, And with different. can of is Service. I here the -- our our in we've so represented essentially through this got it the equivalent service be we're just are fact best building here. the morning already so tell franchisees immediate that excited to practices, We already XX% for of

that improved the loyalty again, service, program discussed. improved new obviously, and profitability, So then, we

we purposeful what's the global an this two products. I It's, new need many for brand innovation. And "All look is I far. tell so say which we've would purposeful we're innovation this achieve at And we approach that is From -- so, we that We you right, purpose what obviously, product time," to important, to many standpoint, sit year, launches when innovation product need it's trying this and our innovation, is say, over and don't we've at, us, right? significant for being this mentioned technologies. least got

we But is products. more than new believe we also -- just innovation

doing new product a you're base In in products, your you're is and you're fact, kind all if of your hurting degrading way, service.

like And also do other so, what we'd lean things. to is into

is launched it drivers, of Delivery those innovation. just example innovation we now. great our tech-quity a a types Pinpoint drives right that It's so, technology call We equity. And technology

with But whenever innovation do with our our vehicle. whether that, what are how in it case, Pinpoint, delivery. shows it's, own we And an incredibly from obsessed does standpoint, is it too we built this consumers we

on piece. to realize is different are we long-term XX drives If launch ways the year. delivery process, they we does the show every those obsessed that brand ago ordering earlier and with what pizza, customers you or we're that that it DXP, the even are remember means love. And obsessed years the with recognize When have order this there process electric we with our vehicle

do orders, there's customer are we delivering with there. competitive entire do Delivery. to do obsessed We because We delivery. aggregator advantage And out a the have Pinpoint vehicles we why that's We have to be it have are think of right? fleets And we and these experience. we owning

we're as were why the And really sure important. delivery and is platform that leaning delivery that experts, this getting in that were the really the us so making we're we pizzas delivering through we're

answer tell, delivery four-part here a So, we're gave one-part really question. you as about your a But Pizza. question. I excited at you can you to had one-part Domino's

Dennis Geiger

Russell. great. That's Thanks,

Russell Weiner

Sure.

Operator

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

question, Your please.

Gregory Francfort

with the question. to thanks terms is for of the agreement new question my Russell, going data get. Hey, in Uber and the you're around what just

comment into I you negotiations go to what's think relationship What look be have to of in what you wanting a -- getting about like? sufficient did And did you Thanks. data. put go-forward the the that kind the up going arrangement? release end

Russell Weiner

Yes. Sure, Greg.

data to to incrementality data was standpoint, for the order the of to platform. analyze it the have we in get that really On need us important the

are in And we that partnership. the so, appreciate getting We that.

the name that address course, it which and The the And in other but pizza, order delivering of piece of is we need probably hits over we information head, and that deliver the are the you every thing and to means pizzas. we pizza, customer's information. if deliver contact

kind And two we're the product, those getting incrementality analyze you what sense that data and of things, so ability be of gives here. fact maybe to delivering we'll hopefully the a the the

Operator

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

question, Your please.

Andrew Strelzik

if the I also to alleviate And coming you think about realizing me, I good guess curious is questions. delivery like Thanks costs. value, -- some Thanks. expect broader this from an question I'm or or for deflation you taking consumer food how the pressured morning. to of thanks about that, do by maybe mean, I forward? price where if And continue deflation you guess to I'm leverage about is really Hey, food do something a but is for opportunity pressures, those sensitivity excuse environment that? going see

Sandeep Reddy

Hey, Andrew, it's Sandeep.

really that bring think points I you So, important up.

know, pretty you basket the volatility on actually call last, the food over as standpoint, seven significant it, cost food and we've value a from think I had quarters.

driven the QX we if level food of X.X%. specifically, food was provided X% up And to about happened you X%, of think quarter current you a basically So, look obviously, guidance continues, balance X%. it's the food their think I they basket on when mostly cheese year year-to-date helps at the to go Last took that difference deflation 'XX look in on last of the is profitability. the that basket the our basket of in a when makes pressure upside the we And year. the some deflationary material see huge with minus should by to repair way, at by that profitability of through that we I franchisees. a the continue basis This as quarter

price a value, very I from the So, standpoint, is to we've from value opportunity clear get-go about what been think the consumer.

So, if there that pass to well. the we going is where actually continually to consumer And platforms, our promotional look actually actually -- had about that a It's way we the different be always what early to to the of as too opportunity. value the this be approach take all way same through this. maximize is it framework actually always exactly which But talk we've analyze on through to pricing. we'll as we're will

Russell Weiner

Sandeep's would to I add answer. And Yes. just

to understand incremental -- in this going be we aggregators, I it's new for have really channel unlock we're to value. important of Now that that think in we're a

the to our be Delivery. channel. dominos.com. best The The apps Pinpoint or be new offers way That's our value loyalty to our our best the dominos.com best will apps. So, the program be will only to at prices, only great or going get value, get way

need get to that opens up platform customer the what on I my every of think essentially we aggregator let it. us maybe -- point view me you for don't give platform. on But

get the we need right customers. think I to

to we be come premium them that to dominos.com. going we're I But to channel be are here. value a income this the got specifically for customers, the like that said, they've ones and us, customers targeting want the higher will price So

unlock this but marketplace. a from kind anything, value I us higher franchisees think And also so, value customers, levers income, to as gives if our of far for as more higher price

Andrew Strelzik

very Great. Thank you much.

Operator

Markets. next One line question. from Capital Carril moment our And from for our the you. question Chris comes of next RBC Thank

Your question, please.

Chris Carril

morning. Good Thanks.

thanks So, outlook. all context U.S. international, did follow on the around I up development, want but on to for the

soon that translate drivers think U.S. more the just expecting actually all can U.S. the already on store year, the that you improving into you then, of for profitability expand you're that can of in pacing of here you growth? beyond development top-line Thanks. and how year? So, this balance And acceleration meaningful spoke the do

Russell Weiner

Great I'll that Chris. one. question, take

internationally about that was eight -- question we're in on U.S., get think I of the Pizza. it think world, that your somewhere know two every pride when on. lot opening And basis, think around seconds. that hours team a of up on But the a I I a our is the something I'll to you just Domino's global takes magnitude

our up the and question. right? As seat want expect store, we into and is of end I'm what ensure for some growth money at or the kind year. your which last the $XXX,XXX franchisees, up a put And going talking the is inflect -- now $XX,XXX to open store towards certainly And to perspective said, year why, specifically I'm this okay, on yourself Sandeep year It's expect especially in ask to the and say me of an want I'm going XXXX. our about ensure? of let just give you what versus franchisees I spend store, if as investor to least a at Sandeep I we I to profitability, per my U.S. be if to said, do and

you growing So, see profits. to want

track The record. to you is do thing the look to other at you want want

last hiccups, tell really me I look one be But Pizza. think only are stores. the bit XX we've And track a is always about record, when closed that at business months, right? going over thing let track so is to the you there look, of record if little you special Domino's And I domestic say the our XX

X.X% that's our base. of stores, XX so, And

X.X% about is average QSR the think I X%. to

stores. And more XXXX. the than so, was closed Actually, we XX we closed last only stores XX in time

reason up And believe opening we're so and really to because better to going take more more in me, competitors, already is lean track a fantastic. that, record stores profitability the system why its that's is than the the is to and

Sandeep Reddy

last just thing super one beginning we quarter, talked I which to development when is in think about outlook is because add this, Chris, QX, I we inflect to to about important, the talked wanted the to think and Uber be a was in XXXX, franchisees. tremendous I thinking this And the before this then is think about partnership, value Uber about strong very the partnership. you actually when

to the our means say all the actually deals talked sold on incremental be that Russell think the only And will as them. what is transactions about, which be our is franchisees drives going special platform, and and aggregated just promotions flow-through into reason we those all have about I 'XX. profitability we which all will essentially what actually on national menu great great the you for about being talked platforms of if that price, And that are

the in already very of going accelerates talked on for 'XX. the top unit to in franchisees development if profitability into is U.S. last So, And in the further increase in about momentum this, material call. we going the be anything, what

Chris Carril

Great. Thanks so much.

Operator

Thank our you. And question. comes the line of Stanley. from next Morgan next Brian One moment for question from Harbour our

please. question, Your

Brian Harbour

Yes. Good morning. Thank you.

you which are on you intend of for you else thought the of on share So, of of just other multiple intend who, cited sort peers? then partners, Do you do on internationally? as you your service peers years. actually about number will appearing? remind $X your it at most about over you've the ways aggregator relative besides emphasize to just course, And some like And talked any partnership, are have already perhaps, you compete market those that you billion incrementality Do kind in times your that, sounded kind fair of against related fighting other How platforms. platforms? to those could you What that to the of kind again, heavily? was to us of

Russell Weiner

Brian. Yes,

business got already On we the billion there. piece, $X international

so, to markets. are is And XX -- markets of we And the be call take The that type the we Eats incremental those that the on are be about. remind the to expecting between that volume just XX% where because incrementality of that U.S. this and talked stores we net be where to getting XX these incremental this we're Uber as Eats, same $X billion clear. stores stores and markets are a we'll Uber just from -- will everyone I with international, located, of number means located, overlapping want that our and number, the on

I think how about on questions U.S. ourselves job distinguish platform here in we're a to of going the answering some did the great you the

pieces of key the service. One is

best the or believe, thing industry. pizza in we house about the is care warm we service pizza have only will getting and We delicious. hot the your The and experience, restaurant to

is of it make ones we only is product, the important part who my only of actually We it that's in the who make special. the as thing, touches just order this to remarks from Service, time next your deliver and our think really The person the and you, Summer we're you really, And franchisees customer. we and opening it.

menu has things but number going on got Even good prices. price, our prices. Second, are that of premium a in it's menu Domino's prices, significant a we've

the good it I left So, I be high say fully times, Domino's yes, expect But of get when service And only high us of is that to at to will the end, expect because value be I never great the there. end, experience hand. end you right, when product, going service have be to and the that. you're not on

our our Finally, to in they're we our Domino's, buy the but on will drive to it's is, money, spending we'll want important be digital on be we, One to We the we've spending and to we But place two of to marketing once of drive be platform. on with course, the is them won't platform, line platform. return advertising spend. a negotiated money how the media. only things. marketing spending rest money understand the That's consumers

going one. But on think we platform. any how so, media buy digital know be to to profitable we a And it's

there. see do can we I'm to excited So what

Operator

line And moment our next Thank question. next you. our question the from Evercore David comes for from of One Palmer ISI.

Your question, please.

David Palmer

over it's to In U.S. that. earlier? same its lower aggregators delivery, so contemplating your deal And when store you're way to delivery maybe it Thanks. that remarks, the targets sales then, that hear helpful transaction, would sounds talked It's a Eats great other Thanks in mention this I is the you but to for did of prepared carryout when contemplate for multiyear to would on And growth? if minimum period that? Uber about you're factors are will thinking the how restoring major growth the just lowered U.S. Sandeep, get Or for Domino's ask delivery. anything. there growth you to was targeting And because mean a unclear move check much. you be what loyalty multiyear like you that

Russell Weiner

Yes, mentioned I ticket. because really the on David. carryout The on piece end loyalty program that's is really carryout. not just front focused the

of this get Domino's interested to deal a in really customers through lot well, obviously, Pizza. as expect, We

that driving the and so, customers the And delivery at have want interactions end, one that's of things incremental to we're here. we for low

Sandeep Reddy

was just Yes. not. three-year we question, was we to going the to thought is, outlook to on the when provided time, which lowered gotten where not that second add do No, we the had that it. And were two- deal we to aggregated At February? it contemplated actually we to point Dave, your

is this have. the so, just should we context And -- I think that's

David Palmer

you. Thank

Russell Weiner

Thanks.

Operator

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

Your question, please.

John Ivankoe

delivery in I wanted hear have headwind way make you opportunity some this comments if But or as could some at tailwind that one And two of an mechanics of drivers, of that about picked delivery is part that improvement is were or that minutes good in to about service how you or the and service than talk about big taught talking access times? Certainly, of times, maybe significantly your of working Hi, what a Thank it's Service is you. change have as see before. can of general, delivery you the of thank an but minute point it? learned better retaining the in we improve more to to of terms you've it's you. efficient. up Summer specifically, how the to make about attracting

Russell Weiner

Hey, for XXXX. than question. of drivers. with in thanks did in coming have the the We back the applications -- I'll for attraction actually delivery drivers start we John, now delivery more on Yes,

that. we're excited about so, And

actually, that having it's and time the but really And drive them, I that plenty of opened of vehicles. there vehicles, really X,XXX of of want is what ones licenses -- difference. to people driver's done for a really what's store that up some really and haven't trouble that don't drivers, non-electric talking to coming Domino's we're getting every with vehicles translating electric spent needs make them seeing a are are that Pizza, that's have is X,XXX delivery have not drivers, we And about the access we've about to improved fleet services. over And and got on. fleet We've our lot got more

so current of part And in the that's why momentum. seeing you're increase

desire to to the it Summer so of of continue system, U.S. that Arbor from mind, is right? the it practices mind, ones. driving just driving driving of these with drive And is a to the in bringing exist this, of top importance the in already best that the what we that, coming then franchisee but in is expect and accountability in practices. delivery are experience. best every And ways, Ann is some lastly, it One And new to Service few do top the

circle now what that a today forward of different of see looking to even really is our And really than for I'm just operations those Domino's the sharing so, And service. And a it Day. Summer changes are we're ago. with very in you'll is Pizza during franchisees couple of Investor the of Service things years some sharing was impacting

aspect it. And of technology then, there's the

-- the to our helping going we've as and team of to part our new franchisees of systems really members so, are got upgrade more. we're systems system service because store our level next-generation running that our in And store be

today. so in systems these of running are our And stores many

of making customers pizzas for complete So are many orders our -- before our example, actually stores their online.

drivers even those orders drivers back before stores. are of And in to some dispatching them those the are orders --

you're people pizzas to ordering your way going a the spot, to you're if finish doesn't parking so and in and a dispatching come store into them back that And before help. require them making find that's driver

of Summer help our so, AI-enabled more Service but these kind job franchisees practices, members about introducing do And of their efficiently. best suite is of it's and to team about services

John Ivankoe

Thank you very much.

Operator

And One you. of next line question from our Brian from next question. Mullan comes Thank for our moment Piper Sandler. the

Your question, please.

Brian Mullan

Hey, thanks.

business, on on China. international question specifically a Just

doing Thank current how market of get opportunity on comment how Understanding take just the and could in to is quite your us you if things right maybe the the outlook feel the business this in long-term big, state today, development on and hoping macro is over you. term. sense the operations year. to there near now the regards for the wondering a consumer over balance Just give the the of of

Sandeep Reddy

market. thanks excited Brian, question. Hi, the we're China Look, about the for really

I think we're well. doing extremely

we've a development for over Great productivity COVID years, be and growth going biggest seen very I portfolio. out of think potential actually runway that the of huge now to it opportunities happening one actually come terms international in we've is the there. in future development. growth in strong of And actually the

We are super excited about it.

Russell Weiner

plays and our stores one a are build markets, I -- obviously, China fact is top still international markets about XX talk there those the would China of say we that in when XX,XXX-plus the big to role there.

Operator

from the And One question next Joshua next from you. comes line question. Long Stephens. our Thank for moment of our

please. Your question,

Joshua Long

you some out curious about build Thank could messaging disparate platform as you insight if you give consumers. of seemly my you're was questions. us for taking how thinking Great. marketing and I into your

in opportunity. So, is the the third-party the past about we've consumer, very now consumer delivery talked about than different how the carryout and thinking

you're together and and dig Just on could opportunity marketing really high-level Just a share you are changes of any needed? be wealth terms perspective? there it? thoughts data. transaction a around What kind What where whole from -- communications of investments the we kind just bringing in really might that sitting utilize picture maybe of this sort of of into to or

Russell Weiner

Josh. sure, Yes,

brand to matter what say, overall is through. special think and a it I little drives it's marketing really important we've experience, sauce. go throughout suffice pizza And ordering really a looking XX, But our is XX the for in detail, not is I had there think what great customer which last to what's -- of common no the the a years. is channel messaging a they're consistency understand is message going strong bit to for I'm that

place in world because are out great in mediums we're a different the so think and actually, now there many there. What I --

And what buy media And but there's the the is also being very so we targeted. the there's marketing can message, do very, then with buy. media

a we to quick reach for delivery way. carryout can we that and them or and out yes, that's bundle wants If whatever, so, customer control party for as And delivery that well. birthday customer times looking value, big maybe that a that do can a

meaning more and And -- a so, as message. customers. highest-in-class we'll in we're the brand Domino's marketing to what or is think do what really media to singular to marketing -- have leverage order personalize I going a will budget is a I But best-in-class is think

gets probably I but question, to a -- just me am of more, what is that we're today, into personalization. that your little which excited to about that part going going doing and that last bit the And to lean is we're we're

to investment got users forefront our just millions better, the As going we're getting message that's the today. and be of of our that. we've is we're said, at are and personalizing tools going you database But where on and the

Joshua Long

Thank you.

Russell Weiner

Thanks.

Operator

moment you. Cowen. from question. of Thank One line Charles TD for question our our comes from the Andrew next next And

please. question, Your

Andrew Charles

on then, Uber ad XXXX? with me that one-part, the into the please secondly, just And funding earlier structuring given you're I the fund in Uber I'm with you. franchisee platform center. be bear a here. fuse to Thank partnership the this reduction profitability at month, Eats so trying appreciate Great. will in first, But question advertising two-part

by what not volume? orders so, quantitatively, for borne or order is fee the fixed a be about I'm curious commission of will qualitatively, franchisees And percent a the these

Russell Weiner

going and to as you, a give good I'm the Well, one-part to answer. the as I'm to that. you have appreciate question. let two-part me going first That's not answer I pretty so have I'm -- -- good, to

funds -- we're do, are the marketing that investments that marketing the a that of being surplus On it, the we The used to earlier tech are cover trying of about piece to budget. came funds. related marketing that Uber on first, of out now right way, talked the the by some of

next money have year or been have this could spent year. should that so even And been, was never

amount every our of And we and do we to despite increase customers the year, -- inflationary so do of to GRPs is to plenty what continue money environment. there have which out

what Uber of comment So funding that to at all. I'll plan held on hasn't us let back they do. kind

I marketing think you about within is funding to a how message platform. I going the to little driving or talked our bit be

little a structure? Sandeep, about talk you the commission bit to want

Sandeep Reddy

it's things think I really in are and few there's a question, And that a good Yes. there. quite

And little for so, I'm of a to actually going bit kind you. unpack them

the based with Well, tech tech fees start counts. I'll fee the itself. So, on order

So order. fee apply, will every platform, the same with tech other incremental any order that actually comes a through

think that's I So one.

report. And of I royalties think is the rest be delivery of in what It's really fee. terms as well basically we the on the will it what food payable sales as

of any those our appear directly service store And from same won't and will retail to So, our will in calculation really those those. Uber. service there fees include be sales are charges, sales that numbers, if actually or charges Uber

is how to that of the helps work. understand structure this kind of hopefully you So going

Operator

from Thank you. Northcoast our One the line from our next comes Research. Jim moment question Sanderson question. of And for next

question, please. Your

Jim Sanderson

Hey, thanks the for question.

on some business? on, wanted aggregators? the often Uber and the that, or third-party if early programs. in might that participate your wondering any promotions follow we I'm up to there's to Just cannibalization free if on some discussion Thanks. plan of charges marketing you free of And concern see delivery own delivery you to see

Russell Weiner

Yes.

and franchisee level fees, all fee our pricing structure. they're delivery delivery Our contemplated in

them to all. And their we're for to affecting be want our I customers us. Pizza, do And the anything going drive on as that's don't buy so, to no, to think Domino's that's profitability with they really platform, upside at

Jim Sanderson

That would be expense? their at

Russell Weiner

clear money something things spend, that or advertising be kind our social media on specifically called we we drive or and a be customer is we're digital with want other measure spending how on would Google return any I ways that on of that to can the Yes. so media.

Sandeep Reddy

And just...

Jim Sanderson

Yes. you. Thank Okay.

Sandeep Reddy

just the I would partnership I thing, it. be agreed in want touch that one we us. promotional do clarify on But have to on to And with with any we'll Just them. activity platform sure think make to

thinking of we'll that the holistic think So, I promotions. those through lens be

Operator

next of comes Gargiulo moment from One question And you. Bernstein. our question. for next Danilo our Thank from the line

please. question, Your

Danilo Gargiulo

going you making staffing. Good in improvement levels to started and you're be call staffing are morning. saying the Russell, important,

could if Domino's the stores, expecting. the -- wonder opportunity demand kind level you aggregators see of on staffing in whether to I were the service as -- comment to challenges from and at So, you any come incremental to the fruition you staffing of if service the

Russell Weiner

Yes, you But much question, of currently need we the answer this I'm to that volume. to drivers confident, for great will a and give and I'm we going I have not on delivery I expect also based very incremental what a hope drivers, corporate our number hiring takes know and going one we've learned struggling this tongue-in-cheek know, and you -- time training, turnover is we'll as incremental look what if stores fleet new you down, the talking as been numbers that certain a it's it look through we're the we hire at well now, our what's to just practices, whether at about. actually the if do

yes So expect -- need incremental And get do I to be Yes. I them. expect to to drivers? able yes,

Operator

moment for question you. Jeffrey comes for final the of And today final from line Bernstein question. Barclays. One Thank our our from

Your question, please.

Jeffrey Bernstein

the guess, long guys I that presumably you a best was interest deemed much. Uber know closure franchisees. company had and long, not the putting for time in the Thank I Great. very you around of a discussion. partnership some

you push you over the were Thank of Uber of or and be would that partner And puts there drive of conscious what if is if decision? you're the will what some perhaps assume with at that I'm I So, some headwinds about talk whether XXXX and before. tipped you. now. still still could guess, like share something, set you sign up going maybe end kind I the you whether could it's of where wondering you you just the very somebody else, that to just just headwinds recently watching the scales anticipating consideration what add who decide to you lingering to closely maybe still edge, forward,

Russell Weiner

delivery billion scale, the and company three now. one we Sure. pizza down in country on order It's Really the Thanks, scale delivery elements: We're of to category. scope is Jeff. the number came sell QSR it. for us, The big and it single incrementality. $X a don't a pizza aggregator business

opportunity, billion there's scale, if kind $X us for share. a so to can And that you of expect compete fair our

and The and now Uber. stores the will I international of potentially and our from second to deal said access the us orders XX% the terms domestic deal scope of are scope, franchisees. really And for -- earlier, of how is the the favorable is have

incrementality. And the is piece the last just

We are the done here internationally that work we done it's from clear -- a and the separate in states the we've studies incremental know drive we've manage to and as volume. how channel this

things those the in past. always weren't And there

in honest, be that our needed are perfectly able next incremental, and see we own that or and to now with improvement we to ready absolutely are wave as time, the increased As we frankly, can before deliver the orders be doing for service took delivery to right of company we a you and on orders. just we're

Operator

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

Russell Weiner

Well, you everybody, a for and Ryan Have with thank joining forward you speaking Sandeep, call results. so I, our much, October great in discuss the XXXX day. to morning. look again we really to this QX

Operator

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

day. Good may now You disconnect.

Domino's Pizza (DPZ) 24 Jul 232023 Q2 Earnings call transcript