DPZ - Earnings call 3 2023 | Domino's Pizza, Inc.

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Operator

Thank you for standing by, and welcome to Domino's Third Quarter 2023 Earnings Conference Call. [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. Ryan Goers Vice President, Finance, Investor Relations. Please go ahead, sir.

Ryan Goers

Good morning, everyone. us third our quarter joining results regarding for the for of you today conversation for the Thank XXXX. Reddy. Chief Today's Chief call Officer, our Executive our Sandeep Financial Officer, Russell will Weiner; followed begin with by discussion. Russell and Sandeep leave ample questions time for will and

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

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

being of non-GAAP measures be please also our call. We to questions on many time our call may refer permits. want financial today's [Operator Instructions] the over referenced addition, as call our Officer, like replay Chief to via conference release Today's accommodate for to to morning Executive is Russell reconciliations webcast best is to of website. I'd turn the recorded this Weiner. your do and to now earnings that In and as X-K find disclosures being

Russell Weiner

some everybody. Domino's several Rewards this in on September designed program, My the good will our And focus and that morning of years are current on mechanics meaningful months prospective the to and customers. Ryan, create significant Thanks, our and launched new loyalty new morning, are that are value initiatives remarks to shareholder ahead. really here We XX.

ticket to even carryout this the $X, points be change make we lower. more from us tends spend where lowered $XX and earn the to in segment competitive to First, will threshold down

for customers. more change attainable redemption Our creating was lower frequency opportunities second

to order So in get a times X free past, pizza. they to the needed

XX-, our at XX-point from different items X menu. features and and expansive categories Our new on tiers offers redemptions XX- program

single-serve lines feature XX cakes. Dipping Joining sandwiches, big Bites of XX Stuffed Cheesy pastas pizza beverages, lava offer we level XX-point the and points, and Bread Breads, and at our Parmesan at At Twist we Bread and are the Cups. points,

to just from items more choose redemption So purchases. X options with after

just we've XX- the at levels. While seen meaningful launched, and the program redemptions XX-point

are customers delivery We will a strategic users to and driver and grow segment. for be and value significant Domino's with brand improvements more Rewards. These our carryout clearly in plan continued growth unlocking order So the both engaging company. active share frequency,

value-creating initiative second marketplace delivery entering Our is aggregator the for orders.

integration the by as to providing Our of the year. achieve of UberEATS planned. orders into our the proceeding delivery end stores is U.S. our UberEATS goal platform We'll all

from for We drive initiative exceed Rewards our to and company delivery UberEATS. expect of will that create will This measurable the will customers incremental want quarter begin get through in way pizza in of a volume our XXXX. We franchisees. first this stronger expectations the and market economics share new incremental the and the customers, delivery increase Domino's

considerable channel. lasting Service customers experience to and our delivery flowing Rewards will through many Now pre-pandemic to brand for do excellent back best that's improvement delivery franchisees during was best-in-class why lifetime customers with our our provide of QX in pleased delivery way highlighted program. focus experiences for XXXX new the the from announce and XXXX times. to loyal service. of achieved to This the company. lead value important to we at of us for through that I'm an UberEATS ended QX our Domino's want is who We that provide This is Summer practices these And

non-pizza Stuffed on to We Cheesy renewed platforms I'll the to forward: Stuffed and that launched XX. build you're brand. from going ability Now to innovation our in Domino's category plays role our going Pepperoni leveraging talk commitment things bringing Bread us the X August of and all-important see continue existing Rewards. to The is our pizza indicative to launch news Cheesy our Bread to

lowered required all got loyalty the Bread, customers of with past, of they to innovation continue launch advantage a functions. In innovation Cheesy top redemption work case, this the the the of an this serves in together, see many that purposeful makes encouraging points platform Stuffed of new for I've and and from an is and so XX It's Pepperoni well kind product up example sign For innovation to talked technology our we've of program. mind great improved we've that product a to existing while to take about customers, XX. the

market more orders top greater and more line to So growth customers, and more share, all leading more profits.

are innovation Another launched maybe will ago. emergency earn so. a pizza bit be e-commerce promotion place days claim Domino's their use emergency circumstances to pizza. in XX emergency Customers to example Rewards any have and, fit, days or course, burned XX have a making who a of the things is will days order see whether on platform automatically tougher emergency must Domino's of Domino's free pizza do Customers they pizza just to afford. we purposeful an dinner our their of few to was to They'll who members redeem order

technology the we Another innovation and with a On business, this Microsoft. to experience. the announced innovation in member more and best X, drive undertaking to October challenge orders profit. We're improve more customer also more driving team designed customers, behind purposeful service

I critical endeavor. more quality enhancing with by ordering operations and will create X personalization transforming Microsoft goals: focused customer important ordering Our predictive on are then technology. collaborate control process our and X Together, to companies simplification; AI operations with the more experiences solutions and this generative generation next first, on the work through teams pizza and excited tools. on will be couldn't of that streamlining second,

is operating that's Finally, for I want Despite stores our sales, us and predicted softness profit our for our margin U.S. discussed more Domino's for the and that expect we our the that, of more to for QX our and for address year. flow including improved, I in here income our our at in topics to future the that investors. even model about means most and, as Sandeep. significantly, improvements to Domino's. With more turn I'll profit, efficient important future, sales profit through did am franchisee the immediate things of What and estimated one at confident XXXX, will Domino's, over in profitability same-store realize previously here all our company. a

Sandeep Reddy

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

the Russia. I I through our on to give update performance financial an Before for quarter, go wanted

Our announced to detailed master DP the market, release. our Eurasia, earnings their exit process in as franchisee,

during in As a result, stores XXX the quarter. remaining closed market we the third the

we global from both business net current the growth, purposes For Russia the and of have our removed retail growth sales year. the prior and store

Moving on the of Domino's long-term our and on updates to actions franchisees. drive our to profitability

pricing. First,

across when system the Match the Mix realized was loyalty our third X.X%. from we trends fourth from pricing newly expect incorporate Rewards moderate are Domino's carryout slightly to the of average our average quarter, now & increase we pricing We launched left and During in the quarter below to XXXX impact October U.S. program. price seeing change X% the

year QX Second, by cost margin, recovery. to efficiency which margin operating in income for levels. the as operating points we margins basis improvement expect continue to grew our We XXXX reach now XXXX. versus an We XXX drive income drove

drove currency our international sales and improvement. Third, impact positive U.S. excluding foreign businesses growth, in income operating retail

Now for our quarter. financial the results for

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

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

carryout continued over in with over X.X%, sales our plus in the to in call, QX XXXX. plus The with be challenged minus its X.X% U.S. QX, delivery same-store line continued XX.X% business business with momentum in in a stated same-store minus positive performance Our delivery XXXX. QX a expectations rolling X.X%, on sales last rolling

As other as mentioned pizza program a XXXX trend of in and our UberEATS followed emergency from call, we on growth result with expect you. QX the initiatives that previously partnership improvement and now as improvement rolled updated in considerable orders and our have have promotion shared delivery a loyalty to our in by last an out, transaction the

in We X,XXX store openings XX expect to quarter. Shifting the sales Including fourth unit closure U.S. be in count U.S. comps QX the X the stores added our we XX to count. end net U.S. consistent our with carryout the store business, versus and new to positive trends of bringing quarter. in stores system at

the net during growth of with store indicated, we during the stabilized with the at quarter. into rate the the XXXX. had further will store quarter end rate As growth X.X%, acceleration confident quarter We rate remain at the consistent U.S. second the improve fourth X-quarter previously

in construction in under expected week, of majority XX which open U.S., As are are to of stores last the the QX.

continued with U.S. EBITDA strong for franchisees. remained economics growth our unit Domino's

of in store on We track call. are profitability on the from at franchisee to least estimated deliver XXXX, last $XXX,XXX we the $XXX,XXX indicated up average

our in international foreign impact increased currency business excluding sales X.X%. Same-store

with XXX the XX stores, the from previously XXX store closures. its by last closures Pizza call. comprised openings stores of primarily on along international Domino's store decreased Our of were XXX our count as driven store exit by and Closures and remaining net Russia mentioned Enterprises, mentioned market

store our Our X.X%. global When current growth was trailing in net growth, with store trailing X.X%. X-quarter rate was our U.S. growth combined net store international X-quarter rate

anticipate materially we benefit impact certain underperforming end growth outlook. of to closures new believe international be X-year year are or these X% by unit We expect our not closures to store us. elevated strong low the do our global in stores pressured you. to will Since X% openings, our openings. Thank store Despite mostly to behind this the financial slightly gross below we were will underperforming X- we of markets, that track this

will call We questions. the to now open

Operator

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

Brian Bittner

upcoming X drive Domino's the system this initiative, and that has drivers is to of and going your demand. seem The confident clearly UberEATS very rewards incremental new relaunch in you

initiative to as month You earlier this rewards ready had Service for Summer the it just a specifically relaunch, this And relates counts. even system order it of year to higher the get ago. happened

just in. to this month helpful really reads I in comp initiative. be a fourth we're the trends you understand early know So on improved the And expect quarter. it'd

helpful you and I relaunch. relative think color true it's on whether the would it's positive for expectations incrementality But incremental be to prelaunch your driving said how comps. behaving any

Russell Weiner

And to took the especially and think how gate. I'd program about from level we're Purposely, down the question. you $X. we entry two both things Russell. carryout about has really, customer. important, really the it's say, We've Thanks That's -- $XX right? are this of done our dollar level excited working, very come when the for out rewards Brian, with to

a deal We have national at $X.XX.

deal change, national points. So couldn't the and you get prior to loyalty this

front to the to has then in lighter we end. And that a on been talked So and this way that different It we different a back customers. bring to pizza. X carryout about be buy your points. now you order can nice have had to in ways, really you get on times the used free X X users platforms That's use end,

what X And buy plays it can times you get lighter that as Now frequency items. does free of users. is to little as with really

right, you that's can as you're exactly We've in we've And moved lot we a what tell I what So projected folks with that's Domino's seen beforehand. doing what that Rewards. we've far, of seen. so

Operator

next from comes Peter of question And from line BTIG. our the Saleh

Peter Saleh

in so you to the also next a And performing if to year. it guys really you think you've couple about Or into early But you far I seem provide any Any so excited of wanted gear partnership, have versus reads -- markets about for so. had the kicks the adjustments detail a either program guys or could ask now I which or to there? had it's far your any UberEATS that going few thoughts Russell, forward. how months any expectations? make very on

Russell Weiner

we these all closely, any not more call we're the already platforms. deliver either country. market a is Yes. it kind than I call between using markets. Uber to more what large This And pizzas mean, X because out in pilot the I really Peter. versus Domino's, something it's anyone of I really handshake we're outside platform point. really marketing, pilot this Thanks, Obviously, test test really at inside watching or

need is the making just Uber to and what so that and And do we works. technology then staffing our with doing make now. And That's take as orders, certainly sure that. we on incremental we're right, sure these working franchisees we're to

Houston, corporate tell the can And So now. as we've course are right you continuing Las we're I Miami, in the those been of both things going into stores now what stores. Seattle, and Vegas next moving next -- weeks pilots Detroit And and the in is few planned. over franchise

of we on launch all going the for at end and national still a So year. expected, is as the we're target

Operator

from comes line And America. Sara of the from our next Senatore of question Bank

Sara Senatore

that Actually a the I opens in question. international that numbers gross clarification global about the loyalty. are to sure just wanted on question more and understood track, make I U.S. the I a closures. then had on the the was about But are

You what like impact in look time? low the seeing customer is couple to tell who there When you anything said more the frequency could expect average or lower us a engagement. whether of are that Or only of over you times seeing of transactions have to it's you coming these us be that about change see for might the color take might the it would redemption might customers you're can If the while impact on frequency? tiers? give a increased to year, you frequency, as a know the you sort some frequency that

Russell Weiner

Sure. I'll both questions. your answer

builds was closures that Sandeep we've think remember, actually about we think your over U.S., in about closed got when drives franchisee I visibility the -- said now. and And talked In And I into opens, EBITDA. what first past question about quarter. think XX he the store store U.S. you this we X right

got at been builds, visibility closures EBITDA they got Domino's building of open. open, you've a when in Pizza. stores since stay $XXX,XXX. XX at you've These So franchisee stores, U.S. There's under the excitement lot into annual about XXXX. We've

stay a have strong open. So pipeline those and stores we U.S.

can it customers, we're is were in obviously what tell we for and redemption early level I On lower you, that really is side, But what loyalty in. levels the looking amongst spades. seeing

of a have right but pretty information cycles, couple we're through what seeing we'll to more So wanted much once there. longer see get term we we purchase away

Sandeep Reddy

net it driven come we on unit expectations the in I'll that through global the That's international in last talked QX the seeing driver now really by And the the as just about the call, and and of Sara, on the level. the well. that's And add on, numbers closures growth. we're big adjustment 'XX

Operator

question our the Geiger comes line from next of And UBS. from Dennis

Dennis Geiger

got this open going it wanted to to XX, better. a expected really relates as I into better been demand maybe U.S. 'XX. better, top -- guess, look it those on drivers. and -- How little over stores the look U.S. is much ask in to more maybe line sales and compelling much the is I The another staffing to XX acceleration open is to trajectory is of place to the thoughts going new are franchisee the XX of months. you've some the returns to XX has a than last how it

U.S., in XX-plus maybe unpack just what sort last could the shift of of the demand guys over the kind you what of If little in a we've seen from and months beyond be bit to great. that expect you would 'XX

Russell Weiner

Yes, obviously on done you've research good Dennis. business. the Well,

there. those of lot a hit You

those that, things needed on have all there to Staffing I wanted how were coming is those where with to. of all opens that am to the permitting it's back headwinds are So subside. I and I -- proud our we think started system. back, right? reiterate

We XXXX -- our levels, it's about big deal, are gotten at service is back and where a we've it staffing which to. talks

if and currently in QX. they over continues relatively -- the it's coming $XXX,XXX the sales a chunk coming EBITDA with And the "Wow, is know Uber seeing I'm U.S. know go the at in now," in the say, second on that's to returns And is I'd right we on own. we QX is what's businesses of Second EBITDA as what folks big are franchisee, And up, flat

So do they.

to lot we a volume. interest this of that so And there's make service sure that

store we're incremental. XX% we the of carryout split, this a so and is service when when an think business new important, take open franchisees that. Right those the into, carryout I lastly, that are it, about leaning realize store split growth when area we so customers now, even existing we is store,

to And the a Domino's store. a you at build and the of are subsided headwinds the and have franchisees, as so look when present into that there you lot reasons look future, the

Sandeep Reddy

build add costs about Where calls, Frankly, because And costs, Dennis, very I'll in build 'XX we costs time a up. in the that we've seen just the have up gone right? level are I far. we've -- previous from coming talked build so XXXX. XX% And has about for last look, versus we think on actually expected gone similar updated what to $XXX,XXX. profit something We

$XXX,XXX. it's Now

going to coming we terms of more in and expect more in growth more of the stores. compelling And the to are given obviously, with So opportunity 'XX year, returns that see be dynamic. next Uber profitability even frankly,

very appetite So strong. is

Operator

next Gokhale from the our ] from comes Saransh question [ line And of JPMorgan.

John Ivankoe

Ivankoe. of can a me. do announcement. put is closed actually of want system Obviously, development, This you Microsoft significant closed but came this to system. in-house in The is Hopefully, that also costs. question the with hear I the John context this benefits And on is considerable there years point-of-sale XX-plus

course a actually famous that as spend the over years. basis, side just frame, cost it's company, just a the did in slow an the side a from see, benefit been of perhaps, how want will that release, will a see on X-year of are the get is I the what you you but has kind I franchisees you technology this also going of equation for of what opportunity see, balance if read to to changing the Domino's some So of the net to customer the what think and actually equation, this I agreement both

Russell Weiner

great John, that's point. a

it when comes As built history to things we of competitive the back in Domino's, have internally difference. points you more look certainly

outsource competitive the aren't of that out are you said a really a outsource always there of difference. point really competitive field we've things difference. that think do point can't We I in

So what done competitive pizza AI internally. is a we of we expertise generative What case? There's we've difference the the the got and resources field solutions. point be with this going here externally. have the with And Microsoft got to in best think in we've

cost, also if do Microsoft. And together, would you those an a you it's to pick just two it's take could with, it we This anyone see not that things so pick we and impact. is journey

the -- And transforming personalization tools. predictive is first, with on with second the focus quality enhancing really more them: is control order things so simplification; the streaming on by right through like process two and the experience and consumer areas some now, streamlining operations and

of is excited best-in-class this are best-in-class very our kind hybrid AI, a yes, both So best-in-class work and here, pizza, teams together. to

Operator

question from the Andrew And from our next of Strelzik Capital comes line Markets. BMO

Andrew Strelzik

how Maybe your and are evolving, just through what be delivery a you what showing on and and may analytics the consumer whether how things changing? seeing domestic, there maybe broader international. are question behaviors Curious you're it's carryout,

Russell Weiner

Yes.

relative Our that value best what weeks no always the have with Canada provide only boost exported is approach best in our the changed, those our behind that television same, had. consumer the U.S. in like we We Mexico customers. for been matter just in had Those around have which the to and couple not a weeks like best to is States. the that the internationally. them, but point weeks. countries just practices environment of boost been to are And hasn't do here I'd

think customers so looking And in I value. are just general for

and position to is me value tension buy the of their talk right? the of up. trying people, I price, antennas the about is, Essentially, in and things what emergency a X, want Now around that former now is a as the emergency is what X do are right get bit. and just free world Domino's that the at little But marketer, that, because than what to economy old-school like pizza more to here pizza, we're beauty

it is the message but buy get The X, And buy pizza. it creative you mechanics the you're X because XX get over whenever later, about. is emergency to marketing so that get instead a is, of X now, days. We called of pizza pizza the want the talking decided resonate calling which are what emergency next free, still our going you economic your this department X, you same, buy can or -- essentially

is not So doing think through value critical. message message, we're And that. is best-in-class break value a making important, sure we strong I but with just a brand

Operator

next And question our of Capital from RBC Carril Chris the comes from Markets. line

Christopher Carril

clarify, factor in there? performance the the on outlook a exit quarter the what's leading unit current updates, Russia you unit So growth seeing date? anything bit simply sales, the update? then more just Or international on retail And net is is For the are that's maybe to a to can expand updated the it in driving to just outlook? you changes on growth, not

Sandeep Reddy

Chris. just Thanks, answer I'll for that question you.

fourth X about. retail And what taking the we on past, months, we're quarter. consideration we're into So think have X the that's quarters in expectations the talking the the for sales I outlook, plus incorporated that in the

of As United you well. expectation comps it and in positive includes of as States the in noted, the growth strong expectation an an international business

the So have business, standpoint, the international big in made and on there. a modification terms and of think the earlier of taken consideration looks from global U.S. over unit That's what we have trajectory, entire I think overall, unit happened as is closures think on business driver the in based But talked internationally. into And level that closures we there. solid. Russell growth about I very our is change I the a that the growth visibility

Russell Weiner

maybe Pizza summer of me let a obviously were And that -- talked have time. short-term those over and they Enterprises closures. QX. their for going ahead closures saw Pizza in going QX their that stores. they to outlook at the still kind as business also ones around Enterprises X,XXX still Domino's What to about on on some The were part that bullish announced long-term and were side. put perspective Domino's to they did were was XXXX Russia just adjustment of we And not talked change they those of

kind as see this these I events. So both of of onetime-ish as

up an this openings around X,XXX -- out, for stayed from right less We trailing store closures opened in quarter perspective, X 'XX. XX stores and those closed opening XX take in the in of international months. we blocks over still You over X,XXX 'XX, X,XXX on than

that's more bit And little a our just store openings. international so color around

Operator

question comes David from And Palmer Evercore the ISI. line from our next of

David Palmer

In quarter, the in I of do impact in what of time. from higher hitting XXXX. about about third come I'm redemptions? sort sort sure release, expect you're loyalty you expecting lift think the you over the from party net loyalty XQ, higher wonder not orders sales it, from and minus to talked press lift loyalty this same-store of perhaps really what And

I think for some part, reason, that I'm ramps. like and something we to were just thinking something from of a phased like the a change, either. and loyalty. couple about more ramp loyalty, the you're not not And of perhaps thinking step ramp how course, wondering percentage point about of boost really magnitude I'm magnitude sure a

Russell Weiner

David. Thanks, Yes.

-- Sandeep answer few one. we seeing we're to things. to know affect Pepperoni are our things On of Stuffed loyalty We've I this Cheesy I and that is of think a going QX are that will think going gate. and got emergency out both loyalty, absolutely pizza, loyalty, one numbers, Bread, all the

up higher perspective, you From innovation and piece term, let big next expected get The QX soon how the tell ramping start party we'll are third we certainly that business, be our in program coming time than on in know. the a at folks But you, affecting I interacting in. can I is with that short level will loyalty more and information year. December, as as a will loyalty

Sandeep Reddy

a want what been in QX. can what's comps And to of happening just to just for are something of terms add get so cadence Dave, and sense you expectations with I our that the

the you driven increased expectations for it redemptions If actually under loyalty, roughly business. offset the pricing, that . we Domino's note, in from have is positive you our is if because we than bit And a if or seeing flat that the it, fourth the had little on QX reduction X% by transactions. the of which for a about by you impact was pricing quarter a being this better of X% impact in this actually is were And roughly from about really nearly the in great expectations implies talking in to more transactions which, comps that our total implicit think X% incremental are we're Rewards,

-- about well which both expect remember transitions come XXXX. this news so & as done as the delivery carryout. And improvement And in in the pricing, this Mix is we're to lapping that good this Match was in we carryout, October promo

of pricing carryout, have over bit expect too. a lose on there, fourth we still trends quarter but consistent to the in we So

So feeling really about on the it's and the of accelerator the loyalty good an balance of definitely QX, transactions. impact of program

Operator

comes And from from line Morgan Brian of our Harbour next question Stanley. the

Brian Harbour

you into fair it seen at chain couple margins think quarters but is as that, continues to on you've basket just commented think a food about that I that supply probably we assume store the of fourth And lower. profits of point. being and quarter this

Sandeep Reddy

Yes, Brian, a really good question on the food basket.

a I to $XXX,XXX bit favorability. franchisee volatile, that $XXX,XXX, perhaps when the about big into a And seem bit or volatility, going more go line in QX improvement, saw did that July little whether particularly little the us, a pointing reported you the from I basket. Things think for be quarter. think there a volatility That to up to continue, you are on still trend quarter, profitability drew of and in overall we favorable think tailwind the the so much third reported in as we we X.X% cheese. we to second being improved expectation was driver and ended bit still in but when fourth of we -- minus as what for, an basket, the quarter trends both but store

how standpoint. that's up deflationary ends if will food margin food see franchisee and also, being in from benefit basket a baskets we the So chain the fourth profitability. But supply margins quarter,

Operator

of And Charles our next Andrew Cowen. question comes from from the line TD

Andrew Charles

hoping to with it you think least that, XQ. were points. forward. as XX still in just higher XQ labor than chain productivity help the as bit was like neighborhood business could we round and in should at well? of indicated how supply in durability the about XX-Q And versus going our that I you a of the that the chain it in in speak with Could XQ the were continued model, benefits they cost you The Sandeep, basis supply looks

Sandeep Reddy

Yes, Andrew.

I and of driven the a pressure, productivity expect the that labor think this little in well. about look at and Brian was right. the think of over improvement actually procurement we impacting chain, to third quarter, we When center you're QX. into look what by at The margin but more is the lot got the talked slightly that that biggest the favorably. There fourth food continue the as we of of when we of to I happened the opening been a supply I there driver all Indiana quarter year, benefit just basket lapped margins is in we that bit has

think trends chain centers. seeing on our if does? the chain And we're It's we're of I happy drive and go more to to I the transactions, overall, going centers Dave drive in gave you to supply So answer supply margins. supply that back through profit volume with that chain out guess our very what therefore more

Operator

line from from And question our Stifel. of O'Cull Chris comes the next

Christopher O'Cull

& Uber Domino's offering offering comments to deals about I your value Match best the international importance won't Domino's platform. like Russell, be the the Mix appreciate earlier on of consumers. But

market it also obtain Uber of understand what on XP curious that as to the can you platform. pizza think similar offer delivery So I'm be of can against I'm proposition off that XP has share And effective the trying competition. will the if Domino's Domino's a

Russell Weiner

question. great Chris,

is just for and and of a drive what the at the we Uber, want price least I that you're back franchisees. think consumer we and sure to on our the have step here such broader want the margin we side you're best you And incrementality, at our it to make day, of want are if to on to to I'll sure way talk And in program, a and want you of our positive going have the But customers our maybe are strategy, loyalty be take then piece the assets your we're you that, make best going or understand to or come assets, because kind why get you want if marketplace, to this and me about question. into when prices customers, either Uber I that's both because, incrementality. dominos.com. There only some both. customer are doing going don't end about a on Let we're that we

And channel. our price to slight so menu on have our a we'll while we'll that have entire premium menu Uber, on

menu Now Pizza at still very Domino's are competitive. prices

And think platform, that so within be competitive. we'll I

thing that is a The marketplace us. you second see in well, platform we and digital media, our for do Uber really digital the this

that into And budget all and we've fund going drive on with media have folks expertise our got advertising marketing and to we're platform being going our social the to Facebook within that so other Uber, we the We're platforms. all bring from national and money.

expertise that to If Domino's, that how that. And really you're you're place. you're other you going good drive do in have competition, see be going we're and to to the relative to of a on in prices menu lot we'll platform, we to there, a from once

we'll be there within player think that once platform. a value I have awareness will you're and high

platform entire that on our marketplace to aggregators. get can we share for think I absolutely, fair the as as eventually well so And

Operator

next from question Inc. the line from Long And of Stephens Joshua our comes

Joshua Long

participate in a little about some carryout for think initiatives we a please. and a to place that's and carryout there, marketplace calls. has as think in of can beyond, point conversation just if been you're have about strategic and XXXX to well, to the unlock think bit how back put prior focus of and to the your piece the about awareness we side forward initiatives talk circle can more loyalty up business of that as been carryout back been focused your so And building lot -- third-party scaling building you that the how and the delivery. and But we When you think on of other opportunity

Russell Weiner

getting favorite Carryout talked one big right? strong our to It's point No, growth X-year topics share recently, of channel. Yes. my X really a $X billion What's most great. last there. fair really is time, been ago The the incrementality. about And XX.X% of Pizza, share our way, X-in-X, opportunity. I'll carryout? just channels the comp most billion on Remember of growth X-in-X perspective. It's a the business last like first our was over business. by delivery, of carryout aggregator But the incremental we Domino's of the like net for we carryout. That's from second share $X and a just do share carryout fair aggressive of our fair that's is decade the has

to lean And continue so we're going to in.

we're Now But what that customers. day, customers. end before, we're both the at customers affects doing really we've they're think more pretty that business. our the are seeing is talked the thing separate of nice The stuff the and the is pizza parts of we're learning, about I

really redemption going across like things actually, pizza surprising So are emergency things Cheesy Stuffed work ends. -- pizza is from customers, it's both And seen we've to nice emergency which Pepperoni on like Bread, carryout been me. to

it, operations to the So also tips it Phone back. seen before. is I'm in though, the not. is come marketing, sure marketing carryout both lean us, of important, to that continue right? one you've believe You'll on or really the piece ordering see and going

we have sure online stores our about centers of on right large ordering, potential the need coming number answering there calls we're as phones still but that And and now overflow. our call have of operationally. We make a customers are X,XXX those in to

to And so will there funnel are but that driving marketing, having things be both driving top and the we the support driving do the operational doing. also we need the line,

Operator

the be Jim Research. line And Jim our Northcoast next might question comes Sanderson phone your mute. of Sanderson, from from on

Russell Weiner

waiting Sounds pizza. for his Jim emergency like is

to that make sure we'll So get them. we

Operator

from Danilo of Our line Bernstein. the next comes Gargiulo from question

Danilo Gargiulo

they've feedback unit contemplating might the credit? navigate Can you your rates incremental be down slowing you regarding these outside of with their their control any forward? growth share rising And franchisees to any at seen giving Because pressures hard interest that net incentive to times? if franchisees access expectations are so, incremental are end, for are your going there

Sandeep Reddy

Yes. Thanks the question, for Danilo.

at $XXX,XXX cash for it's which think a the marketplace, expensive. really definitely per cash we is operating where much talk that unit situation Because is with were much the a last situation where But about start you to that's very now the franchisees, $XXX,XXX are to backdrop, and tighter generating. and above, about -- if we think generation very think I are fair franchisees. In going I'm the it in the definitely it credit is point. fair more flows good that it's improved with and significantly question I franchisees the to basically a year

the franchisees from unit business, are the in of I cognizant and opportunity about for earlier, remarks. And incentive of with at an that. talk think a about they appetite them as incentive definitely and I worked continue we as Russell a have franchisees the on And talked growth talked strong to programs so always standpoint, development, we'll as do the at they I the prepared when we've very But that. think company, actually business, when for trajectory they to look look on

we look opportunity we think to our do. in for and And it's I both so that's that something growth, the continue will as it, interest look at to at

Russell Weiner

as this say just what I'd I we've if this more in year And it's at the year, time time aggressive. this much early got indicator, look an pipeline versus last

Operator

Guggenheim. And the our line from question comes from Greg Francfort next of

Gregory Francfort

seen of these you the going the cost. some supply you And of quarter, year. chain then and how efficiencies you'd in about chain us in -- spreads quarter first looked supply the half last forward. just process some fixed the can of of talked remind on that's wondering third if the Sandeep, raising I'm the

in You've spreads be you how through process Any could the look Obviously, on which those you a of teens time. goes how the had curious. raising mid- would that to dollar high that on couple helpful. or just curious spreads process over years at on thoughts last there's franchisees, basis. And inflation often the a those. cumulative I'm I'm raise

Sandeep Reddy

good question. Really Greg. Thanks,

productivity predominantly part supply how I last margins are And basically standpoint, it look your food. do taking ties had we've is to actually think we've chain we've adjusting all the about serving take that a procurement benefits, the question, a is at from as we year, on we of -- we're profit back talked on, right? to what the which you that franchisees. And

of flow-through our actually that a operating been this leaner think I as the productivity. We'll I great about has expected so has gotten of think a of chain continue volume volumes. level capacity more much to has we to the about couple adjustment flowing But up through into much volume we've is And the be to adjusted P&L, procurement the clearly, to happened reset what come with with and deal much, actually All because of supply growth leading the when this. that in optimize a think this talk much lower to lot operating around with efficient years last really is year, become I we've that's to change is but model model. tighter able benefit

standpoint see fourth we profit improvements transaction So growth. big from improvements, but improvements. to standpoint, focus expect with dollar to massive continue That's supply the growth a profitability The beyond. from should be not a quarter coming and chain in

Operator

comes question line from Cleveland Research. from of next the our And Steven Gojak

Steve Gojak

was or a you least a offer it More first outside sets had of off it it you looked cadence those XX% at pre-COVID for like question, like of week a that does And look October. near-term promotions. boost ran of of but week normal the

what into the much how boost and then ahead the the earlier and of that doing week promotion that to does out pizza play the that deal. timing you've particularly looks emergency on curious in be incremental of outlook And quarter strategy fourth Just laid the an positive week call?

Russell Weiner

-- will be quarter. boost don't doing week another Yes, not this Steven, we we

this know early, our I we're know lot on, want about cadence a do and that's toes, this pick sense. I keep make quarter is want into toes. keep fourth make like in that -- strategic it. Our you your we'd periods Obviously, innovation. sure getting with which Obviously, of about understand you you of questions done on your I touch a But we talk stepped-up guys sure so it direct have lot to I do quarterly. do up we wasn't just think, that product time I you I also we maybe a we to again. to on that about that we've makes but And we when a leaning to question like promotional -- cadence to why these talk so to a

The of major Cheesy product we our launches had had X at interestingly XXXX. look we've this X If those Stuffed year, innovation was time last launches you Bread. X And was major X launches. enough,

marketplace. And we're really and we And that seeing back change and If Domino's, purposely the we're Stuffed well Stuffed that. Pepperoni vehicles, delivery so you got is we're now do we're we're it's a -- dynamic. it now really, use in all we lot do the an But think built We of We us. working in into I'll to example how of about do we innovation. more And continue things those of product lot for that innovation. as how look fitting we've going really Bread of innovation. Cheesy product lean to years to realizing is a technology did kinds several doing Cheesy because a of didn't of that need

robust a these Bread we've mix, are said, we platforms. them. got don't launched know launched in Cheesy though I know XXXX. XXXX. A So sandwiches we We in people Even platforms. pastas launched got Stuffed there people have of lot XXXX. of that lot we've don't they're Like We there that pretty in out

my Believe it professional outperform Bread? not, base or I've never do Pepperoni are Breads now we more launched a the do Cheesy a Cheese most seen -- what have and We Breads. we extension of we Stuffed Stuffed new I regular doing line are than selling so Cheesy have with been And Stuffed career, I base. SKU. innovation

loyalty is we innovation when with get the launch platforms leveraging to these doing what bring you sales And that new program. Two, the you product. third, do like on this, back one, have. we're you our then we're is So product awareness great

a stuffed is a In for so time, doing normally, this case, And we're points. cheesy redemption. XX limited XX-point bread

the we're going to X to make one of one innovation, of is of things a continue kind time. I we're these trick at going types on all including to call are on all pony. together about how see lean levers There want you know so product. not into sure just folks And working

Operator

question next Our Setyan comes from of the line Wedbush. Nick from

Nick Setyan

Just term, the pre-COVID longer company and margins. over XX% question about margins thinking to on you're company how over obviously, medium a

flat. company-owned X, delivery not third-party now think and the Just of it's changes like loyalty, going How inflation, close given QX margins of should in beyond? going terms in but pricing all only be seems X post we pretty XXXX to forward to about years of

Sandeep Reddy

So in that it's margins. improvement we at expanded basis think, really margins basis third in the I QX. the a was And think good I quarter, a if And you gross think, back points XXX look company I points, Nick, on in question. of,

But time. when you the late So even being is with and structure leverage optimized us. we used improvement bit, impact along. Obviously, talked there I P&L, make further been better that think we've going about company that and at be where transaction continue of as it's going pricing about little fixed -- definitely actually think of the to year over profitability big to but driver impact quarter. is we're cost to is is march within look going P&L being think margins be doing towards the see looking earlier, the caught that, the company And going levels. able to terms at I lot from And going number growth. I we'll to is transaction overall, that's to more. actually to margin the I in expansion acknowledge the next the But which in been other to fourth of that margins, are store as been and we've on a and peak be do a It's well. our growth all that margins, we up a taking peak cost take store talked of a I the thing pricing have initiatives we standpoint,

Russell Weiner

Yes.

the are with into model, franchisees. way look XXXX think I DPZ and improved our I going for it we an at both operating is

the business, now and thought essentially of expected. As business, and improved. U.S. it's we talked In we I quarter that where right? margins we earlier, that land what profit this had a landed was about said in about franchisee QX Think foundation would improved where the flat has of kind

that XXXX, bring take expect but just especially that really the And you really, we so in nice. and in orders QX that leverages you both in

to be ready is Domino's of foundation the so And leveraged.

Operator

And from line the Tarantino our comes of from question Baird. David next

David Tarantino

this pricing and a one franchisees was XXXX. guess, it question had and of your value. is, I wondering you pricing I And part on how the second you outside approaching maybe does as about I question think And bit are part the then towards it emergency into is pizza the more promotion, a rewards leaning even with seem program. value-oriented you're like of promotions of

promotions you about on think running value leaning in like So you XXXX. -- about one thinking frequently the or as I are guess, you're more

Russell Weiner

Yes.

franchisee pretty And do. times, tougher excited we it's economic reflected need in that next look again, is year. a we'll so of pricing customers pricing actions bullish Match. took just going relative think couple you we've I our something going that feel always more XXXX, we continue of But at you which be at includes to as while it's pricing ways think when EBITDA think should we -- think the about that to of EBITDA, value the the was year. change we're that, into I'm actually the right to I last again are it. optimize took to for next this on is year the if get pricing over pricing. Even reflective these look I there as years, the about we about taken thing last the things their level do Mix and in something through if we to And really to & it,

always there's from feedback of because As I'm promotional the the price about to no we than more from promotion. a or emergency lot value these always you breaking through. takeaway as kudos really advertising far is it ideas value and of it we're our lot kind it's and effort. is, customers And value. pizza, means, but wow, of What has and excited is hearing promotional always kind we Again, look, some of are done traditionally department, this is in prior marketing -- both do a we've a

Operator

final for today, our be will question line Bernstein this of comes Barclays. And Jeffrey from the from

Jeffrey Bernstein

the were does lot keen past about little talking wondering we maybe if just you could category Russell, where could get again. talk to over It could you consumers performance you slowdowns, just the past performance if I'm we a like you the Domino's. if about of customer downturns. prior carryout that in And wondering year, looking and broader versus just bit out post-COVID back fatigue remind think versus talk delivery pizza are maybe about the us, in the a spectrum, seem segment. current to

are 'XX. I a expecting maybe consumer think most going slowdown into investors

So I'm that just historically in have wondering performed how your of X business components type your of environment.

Russell Weiner

sure. Yes,

significantly. me talk it's Let is the that first that. category, Domino's amongst to a you far, And been grow segment. share category. when been I about about the we've What's at by Pizza historically, look that X.X-point pizza don't able change growth been expect great biggest to, X,

in is advertising or is nice so regionals category scale who spending percent chain think is category the store folks think the independents, or to more a And pizza supply I going you in continue. What's the it, little don't advertising growth of do. than the when about and XX-plus on of really have growth that we carryout delivery, or

It's do it of it so to if -- where there's share. carryout and lean kind at continue we'll we've that gain no it growth we And can't before then pizza continues in and that is, again. done reason

saw seeing delivery also big what think that, I switching we've there's about, more that is what I health switching, category, talking going continue more There value. we're mean, inspired things delivery far see down the a pizza As happen, downturn, that we've right? Delivery, going it been when out little we XXXX to carryout folks growth are remember of to down launched delivery standpoint, our and tips. as This switching obviously, in think, downturn, coming carryout I a the is was channel came new delivery both of, than last the are There which will lot caused bit you the fees. I into in have And to to and because pizza. some been expensive. be into out

switching are we the to the has more is think us that's I higher for home opening that delivery. that will to down while delivery. probably beauty happening, But to platform in platform. customers we're for out eating switching income up at And a Uber little customers see both, So

And has in that platform now place. a so that, little in more if opening a slowdown bit that to we're there ourselves is a really elasticity

a think I like and So to place. carryout next look really on be good we're year, matter the the no delivery what going the economics business, in both

Operator

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

Russell Weiner

X. and appreciate we Day, we look forward either talking seeing via Well, today, everybody live December to video, or at Investor you our to on

it. to forward Looking care. Take

Operator

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

may Good now disconnect. You day.

Domino's Pizza (DPZ) 12 Oct 232023 Q3 Earnings call transcript