DPZ - Earnings call transcript Q3 2024

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Operator

Thank you for standing by, and welcome to Domino's Pizza's Third Quarter 2024 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, Greg Lemenchick, Vice President, Investor Relations. Please go ahead, sir.

Gregory Lemenchick

Good morning, everyone. us our joining call. quarter for you today third for conference Thank call Chief Chief by Reddy. our begin Financial Officer, Sandeep Today's with followed Executive will Russell Weiner; Officer, our a session. with conclude will call The Q&A

this morning's available differ comments materially trends are IR on The forward-looking call our statements earnings and Actual of on to XX-Q, apply also forecast. could today. from release website, the our which both our or in results

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

the earnings on is that call over call release like to This disclosures refer via reconciliations of measures webcast Russell. find also to conference please financial and for I'd replay to may our addition, In turn and X-K recorded is being morning's today's website. the to being that, non-GAAP [Operator referenced be call. Instructions] With

Russell Weiner

that When and I Greg, call today's restaurant giving Thanks, value pressured like to I'd success right QSRs leaning morning, it U.S. in XXXX in our Domino's especially and for and What December, of see is to knew across introduced value space good to the consumer on we begin do globe. spending That MORE strategy an we key the be would as strongest our at that offer back overview be Hungry by pillar strategic in the into has would win. been in renowned the proved XXXX, everybody. our the

gains measure issues the the is value peers our continue pressure world, achieved. around progressed, you're as followed within increased same these industry. a future the competitors current lead, has to demand the continue and pizza. best around year have in that company's times, know from to QSR will share we've are the the believe hearing I success from and value macroeconomic As and and that In intensity be my geopolitical I customers seen believe of thing

share. doing business, just we In that, are Domino's U.S. gaining

sales X.X% driving delivering pizza first that's are challenging the the up are more quarter our environment. incredible for sales in market results same-store despite retail that franchisees growing success Through Hungry launching than team growth more consecutive proof the QSR was of and X%. quarters fourth our X working. share. Our for and since the to less strategy a is long-term of This at this category our MORE critical metric year, MORE is business, Hungry

Importantly, franchisees. course, economics quarter to what are another fourth a key These growth count already I is now, order improving to order our market drive think store and Profitable something our also for share. growth. been unique right proven the continues we is which, of in as straight growth well, of best-in-class industry be U.S. of way economics driver was have the positive it count

'XX, to XXXX from X,XXX approximately example, For stores. opened Domino's

our QSR many as aggregate, at time look opened during in we closed top period. pizza competitors doors same you they If almost as that

well carryout business and passed performance U.S. driving I continue critical Today's is And and more members next perform key growth order of Sandeep. years. to We've of program. to achieving in Domino's because the of for as was because drives it brings officially Rewards driving play strength tomorrow's Happy customers. in our the repeat Domino's Domino's anniversary Rewards the well Rewards light X-year expect role continues of users our the future. a purchases count several the anniversary, That's the goals growth QX. back comp order the for count to driver

efforts. overall have grown active members us engage significantly allowing we our targeted drive in to with frequency XXXX, addition, more and marketing In customers

that Domino's paying Pizza. feeling this We of biggest QSR week. MOREflation them deal. are in Emergency show where next a less with off their that renowned our back boost they demanding our on the less. week, time followed At from what with them And giving and more for will Domino's up was QX, XX% MORE. brands, will one a their to MOREflation opened Looking value We corner, air, are more, ever they're consumers customers go promotions getting quarter give

While channels one nice saw grew value tapping providing In part renowned is to through sales the barbell of our value Uber as our coming through strategy, U.S. QX, own our we of we into other. marketplace X.X%. percentage aggregator a is the acceleration

customers continued been that as pressures sensitive has less incrementality the discussed in Importantly, expected I earlier. these economic to have this channel since

time an Mac line a frankly, it's As who mine. & life you a is pasta launched that X-Cheese portfolio. and for to are we originally September. platform is pillar new Cheese first bacon We and Spicy for new Buffalo. I offering what our can entire know, We our And Cheese, renowned we can in this Hungry for news products more bring the of late though our just product in those in this lineup pasta I'm food way value, excited This than since brought mean to so in our & available important a the MORE drives that strategy. little to the care, add and XXXX, launched Mac then. pasta and

year's Style products news With our intent a A innovation York MORE, and pizza have Hungry we're Mac brought Pepperoni-Stuffed portfolio. customers year in all you. we didn't New & to offering of who And Cheesy into Pizza, non-pizza platforms. to bringing last we becoming preferred Cheese clear our with in approach new for bread, is with hope reignite our I to existing

stores both In in summary, we're delivering the against U.S. MORE for our and Hungry for goals sales

we the drive that's U.S. continue of of more or continue I out of X% that us, front will why we annually. gain. same-store believe to deliver With Domino's expect share And growth additional in to sales market slate I got initiatives to

X.X% like Now first the talk X up would about of were Retail business. International year. sales I this to quarters our through

macroeconomic averaged global in retail performance. line is our more nor with sales XXXX. experiencing the combined our remain that on While drag growth, it creating over on historical remarkable impact we our issues the not has with XXst is are XX% a growth growth through International Domino's while the in category, international global of the than International sales straight for past pressures, is decade we of line same-store sales. and And expectations geopolitical pizza underperformance a track Recall, year

in Given to we a business growth to before this performance, believe more we 'XX, approximately realistic and return normalized for X% sales is same-store expectation X% planning XXXX the for level XXXX. a more

know, our our Model. retail you approximately our Asset-Light is international than profits to represents due Franchising less which global As our sales, X/X Master of business, half

impact I this don't expect profits. international business international and in of Therefore, less the will on company sales result remarks. softness to a operating significantly As his this go our shift dynamic during into goals, in Sandeep more profit have our impact

what our of in environment, hard You know work achieving headwinds. international We with results the our in it's in in should team we're today's know markets at even create challenging face master evident in franchisees the is to U.S. their works momentum that the

our little behaviors. react with to incremental sales we franchisees and master a engaging cases, slow implement to In simply too tactics strategies the and been shifting to know they've some bit consumer we're So profits. will drive

centered around focusing key on them renowned value. of X we're all So are areas,

message First, to more that consistent customers. pricing a value aggressive promotional drives

places, due uses beyond many aggregators, be that to These U.S. platforms. taking from our orders in orders the these or, in to drive carryout incremental some higher opportunities where have guided. maximizing growth on gain finally, to continue another playbook, remaining out income page them. markets their to of share customer diversifying a of the Second, And lever fair delivery

continue business international strategies achieved share gains so the expect that past. to has Our And will and much implementing by momentum growth the in potential. create and store same produce of the to plans sales outlined, net kind we I've we've market

Domino's creating value our best-in-class of and, own I been how is drive and that continue to the has to been driving shareholders. Pizza, business In share long-term through years be the for same I've reinforce strategy, and we XX In with want been share results our what do growth. we have Hungry always closing, you the I in repeatedly our That for team. with will creation MORE message at our tailwinds

With that, I'd hand to over like to Sandeep. it

Sandeep Reddy

Thank good you, everyone. morning, and

which sales productivity. by excluding quarter by is higher QX, franchise still FX, the from line a and strong growth up and as were currency result global we while driven noted, operating excluding with higher partially primarily of dollar our by due expectations. resulting backdrop, growth, impacted offset challenging more growth was of Russell profitable supply increased $X.X profit profit in expenses. Year-to-date, X.X%, which higher our our volumes chain G&A, This to operations royalty auto a increased in foreign Income was of labor As X.X% is from procurement primarily third growth. impact a delivered was financial million. results revenues increase This retail

third growth. currency, quarter store the X.X% retail Excluding and sales net grew foreign from the U.S. positive comps international impact global of and in global

look a at take Let's details. the

retail total grew order driven by low-income QX, U.S. at that by fueling for driven counts August in the carryout same-store particularly competitive and to During results market did sales quarter came delivery comps pressures strong fourth the were for positive share quarter. in of with our the X.X% continued in another X%, sales customer. We These begin consecutive X.X%, see and impact of and gains. X.X% macro

fueled Rewards same-store from transaction programming. Our marketing be continue U.S. growth Domino's by our to sales and

single digits inclusive in of X.X% from benefited California. of also We was pricing, high which

for the Our quarter. mix Uber sales X.X% grew to from

were new to count, which to Our unit store comp our higher mix, ticket by count U.S. partially added offset than XX carries we stores, bringing a tailwinds delivery. carryout system U.S. a Shifting X,XXX. lower net

August. Same-store and DPE excluding to Moving we markets. net with saw driven macro East the to that the Asia, Middle see grew with which call. foreign In a quarter, X.X% In impacts addition we were they on currency, store slowdown in in impacts update. discussed last provided growth sales retail their the in trading total beginning continues up to as updated Europe to Japan, Europe of line August was in was plan in XXXX continue we pressure comp guidance our our international, in and through quarter, in the work Asia, impact the where sales X.X% this by

Softness by impact Middle from in increased geopolitical East tensions. was the driven an

our Now outlook. turning to

me Domino's should achieve Let saying has and the the business we start of that changed. long-term can off believe what algorithm not by

profit the growth We our more to continue X% global of algorithm to XXXX. one of XXXX or and annual out look is to growth operating X% as right retail expect we more sales or that

business last increased very a growth quarter, very that we has believe competitive the and strong In I'm pressures together X% macro excluding in sales be our which XXXX. team is X%, of retail approximately allowing proud now approximately operating how the maintain our outlook of global profit evaluating to to manage come in P&L, over of FX. our light us will growth

to be guidance algorithm below international expect we As business. we XXXX, slightly our look by our ahead to driven primarily long-term

for approximately profit line global generally while XXXX, sales an still expectations growth for are updated retail X%. expectations of Our growth in with operating our delivering

we noted in million at price for we approximately of our disclosures in this quarter. the morning, repurchased an a third XXX,XXX average As total $XXX of $XXX shares

our XXXX, where environment to maturity the debt will increase in range share on driver for we the we interest be. have As plan in October the of as interest was QX, lower certainty rate we repurchases believe rate continue the now more in

drive confident closing, for has delivered continue and I investors. growth retail to can am returns In this resilient sales over model that asset-light model our extremely outsized time. profitable outsized

you. Thank

questions. open We line now will the for

Operator

the first of from comes [Operator line from question Our David Instructions] Baird. Tarantino

David Tarantino

importantly, about versus It in the unit feeling quarter? I more you beyond? came are quarter. and international. moving on growth of shared update related the to you kind last related guess, is explain first down that to back gave. change is the you And for most how of straight your And targets then just the ramp you what could But maybe parts ability the towards question assume to second XXXX I My

Sandeep Reddy

David.

XXX. time, So a store think had updated we global to to XXX guidance of had perspective, in from yes, growth XXX I we to net last terms relative XXX we've what to

come we'll bit lower we what better continues is are to had forward. better make visibility actually I move honestly, actually of fourth driver, with range. in But year. and as update this other enabled next closely us I visibility 'XX expectations the kind continue what getting get DPE as expectations continue do tighten to get well And working is that into the move it the to the we we made better little to and X And effort quarter, as to of much to our as was sense are previously. to in on in of what update think things. as One a understandings think 'XX is, this more than our we it the biggest the we

David Tarantino

sales little lower a clarify on term, I of guess, is to Or impact below XXXX maybe unit shortfall your to something growth? I the next carryover growth wanted growth being the retail up, year, follow I that from from longer just the unit And just this are and expecting outlook year? comps the for a guess related you unit that.

Sandeep Reddy

David, So good question. really

couple think on things there. of going a I

sales talked a driver retail Russell well. as with think for really we'd is macro and -- about 'XX Day. we're And in given the in expectation. talked And we're what I which big dealing sales I now. think, about prepared at initially remarks that the Investor international range, somewhere X% we right that that's and below of the that on December expectations is lower seeing 'XX the pressures that's, to think Same-store X% in back

The are as will the definitely that unit in well. 'XX. growth growth, that actually 'XX where a roll work go through I expected in is have continue in impact seeing we 'XX, partial over And the as of 'XX unit driver, we to partially to course, in will that is other think

So driven talked we in prepared is the all really in really what about remarks. set, consideration the but and primarily, the business international this 'XX that's by

Russell Weiner

the think look the just that international. future. context I little how David, business And past, to present I'll X when add things, you is when you at and a the I judged on about look at think maybe me,

We the our actually the than got better with we've So hit XX% year-to-date that the but present, a decade. growth business do line about more about to When the has think not same-store in positive year Domino's over than category. you retail averaged normally sales straight category. a last past, We're in the XXst has, that of normally sales.

for are than a category. better who says low we But that's do about lot to when the us. including and expect a that We point self-created, there ones headwinds, are are. It

what that then And value, focused consistent know turning on to our right. do X the We great we is things. news franchisees, about all make need -- We It's everyone, master don't go a CPI are delivery are there they promotional pizza renowned there and above are our to we're our carryout business. market. sit-down the opportunities. make getting more and company, the We of we're getting sure need need sure we're around. that really the to just in share And opportunities, things aggregator with fair prices reminding than delivery

all we've part And the renowned are strategy so value those discussing. of been that

markets is Which and great these our build have we've then got XX future why international a tremendous bullish a really the about where stores together. in partners XX,XXX I'm to alone, got franchise top future, history who we've so

business just aspect that off. I to our to of So wanted give that international opinion start

Operator

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

David Palmer

quarter, confidence start the my year, eye but see to third-party also of ability a to launch drive quarter. just the curious same-store about And of question can are confidence data, to be that third-party people really, to out marketing. to level think comparison see fourth guidance on your I last loyalty the general same-store set, I in in these that basis. Obviously, in speaks fourth Emergency And they tougher And really implies people X there, asking the the I on data I at sales wanted that whatever roughly quarter. about looking are driving U.S. the about sort Pizza. to ask slower X-year your that's that I'm looks Maybe sales, sales people a growth. same-store like fourth know It And going your the confirm true. excluding you growth quarter. points X% had

feel some you growth you ahead. like So have drivers clearly

that. So wanted to get your about feeling

Russell Weiner

I control. can I excited quarters so lineup you the QX. David. you one do of we doing our strongest what QX, about is I And marketing Thanks, am of for it's can are about been I've when here. control you, All tell for since can what think

back. lean I marketing the about is your all can with boost. can said, Pizza. better and lineup you things like cannot of got just now. imagine franchisees. had you your launch. on we Pizza got Emergency in a with do getting many its We We've Loyalty talked a quarter second We've pasta right a I coming going Emergency into quarter started X.X here. better that's a and programs And having And year. We've have got You all is so than --

Sandeep Reddy

on because guide to question Dave, that, year sales. And to full going on you I think, just for the the think I'm I asked add same-store

definitely in about QX. do year just to going this specifically expect on X% why or are X% to to that a just talked that in for be Russell talking be reiterating we but talking the next plan. remarks, we're we're the That's year, really initiatives aren't or this confident we're what expecting we're Hungry about. drivers. specifically As X-year years, Russell -- that's And we with the yes, basis, not All for X across and for prepared And MORE. the full more more, mentioned to

Operator

comes And Bittner question our the Brian next Oppenheimer. law from from

Brian Bittner

a to X.X% at with the a characteristics track sales believe you Uber? I ability And XXXX in all than seems is, when, a your you're that's Your DoorDash launch original And two, said. be not appear, the the you publicly outlook? DoorDash this contemplated what number have to yet made is if guys mix or question does grew of a It like it of And stronger and But least do matter have DoorDash has your the projections. which very firm you know on at decision encouraging. not quarter, made decision. on is mix it's

Russell Weiner

Yes. Thanks, Brian.

that $X on at we'd is exclusivity, us and -- absolutely out think calls, that's prior Uber decision billion we what like in end contemplates the on we've in said all aggregators, the future. us it's our being our QX, there The there. for of to do so As

on than though, is bigger Uber. right, DoorDash. You're DoorDash

an impact to achieved we've take more significant that's remains goal of time. certainly on excited goal at Uber, So X%. one likely, incremental that share. would year I'm business and, our X%, be fair we'll step essentially a most just our that a the our at than exit And our but

Operator

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

Dennis Geiger

just little a specific ask you to lot party. just that give wanted which those Can sum of for I marketing some have guess third 'XX? a the But you high I thinking business to a there changed, drivers, it those more 'XX on Russell, said I the more think driver, multiyear where specific the next that any of like you year, it's initiatives international well not whole touched sounds has on touch is you the as U.S. level 'XX products guidance U.S., you guess about other the to bit thinking tweaked on as of loyalty, color that you XQ. I have and a guide. and just for bunch new mentioned about has is really can

Russell Weiner

mean, you road I Thanks. map. the is our would kind for -- point really what do Yes. competitive for to into going reasons, is into of not the specifics. But I to go the which I'd guess go I strategy, Hungry can't MORE obviously, I'm I

renowned sure talked things we MORE, inspired every creative all wanted MOREflation, be Hungry we leaning pocket, products having pocket. a certainly bunch other But kinds into in got products, new we tips have And really their those team X back. going I'm about year. Pizza, things Carryout of programs also value can we of come for if like that's Emergency in they've to have and to. we're with so our a by On

you that. So expect should

road M, came the far next think going to is for track was is the think as -- there's Hungry understand since year. about and to desire the I O talk this the record it MORE for R out, to be year. this similar I what and I map But about team, why guess pretty do specific would the the where just especially as of programs I just

Operator

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

John Ivankoe

U.S. business, do want trade majority terms U.S. area. question overall The of And delivery an of existing is would on slower I ask unit the stores development. delivery a context in open to this new

Is expectations, number or there is So be that me repositioning it's around forward? basis still year, not we rethinking on going so something maybe XXX per the 'XX? about year-to-year on the from so. a number, correct number U.S. that in of like average true I especially XXX kind but that, any of development think thinking was kind units should previous or a unit per

Sandeep Reddy

go U.S. think the be Yes, mean is the I I committed unit to decisions. for versus business add on a precise the think John, like XXX kind we I that. And that you're and right that XXX. I think to plan. development. we're the continue on how we about talked to of But And I about informs location going Russell delivery more carryout think to bit

Russell Weiner

share. I Store growth part us of I'm gaining quarters is us John. up the Xx the first in X critical being year, U.S. -- first months that this X Yes, category essentially in about to talked sorry, a

contributions significant a then significant us When our what that as volume for new same-store as get store, be and to that's strategy. growing part store. We're delivery carryout a store getting split know on stores, high. business. is sales helps from more well sorry, of incremental it's our key that early, when on That new are. we a new -- of us we side that open And the efficient the up means a You part

part So absolutely are progress growth positively new making. the love our I of we're overall plan, stores share and

Operator

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

Peter Saleh

an how hoping think just just trend different can income going the on saw year, how specifically last we guest. have Pizza you that weakness cohorts talk so was when cohorts, you elaborate you resonated maybe idea little on income Emergency income by bit can into then we And a XQ? lower about you about the just with more I

Russell Weiner

great quarter growth. but on another side. customers softness only had of saw We we count with not income same-store growth, sales was Where order maybe a Peter. little lower Yes, delivery the

color there. to say I've feat, Emergency fill. X.X a But the The we is and has So seen have on maybe big to with Pizza, well. nail On fill. Pizza help give it has some a big shoes what if right, program program you're shoes I'd as just Emergency to bit polish little big some

And so think, but going to we're to excited one lap, about programs more you're be to that, exposed the we're better going of I how in our history.

Operator

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

Sara Senatore

on growth. said, perspective then your guess X%, context a clarification to And And and aggregate U.S. consumer. -- the of year spending last sort just think and the growing in I retail real just I competition like like to in and Just of how sales look million about lower growth pursuing or worse probably question. trying trying less you I'm there's share $XXX The if consumer. understand X%. kind as one at slower than X%, category, is of you're categories or the if if maybe other the understand it's from over it's is from that and question a clarification market growing that a things been an more this, the income to got decade,

gains just that there, so of as a I in of given Or market over grow kind maintain reason as think kind your but you've about you increases dollar base thinking Should share growth growth you I same is gain gets industry. a to be every slower there share harder year? accelerate know to can like this seen there's the those dollar it's lot the that pace store sort of that bigger, at time?

Russell Weiner

what and maybe one. question -- second Sandeep I'll I think the take I'll the there on first have in lean do

we going think little saw I go spending. particularly and debt what's And to It's going of at customer, both little guess, a August. to payments see happening you to to continue external But it about are through. taking But bit a more be bit to my I also with what activity, longer We credit think it's on card lower-income competitive talked a was internal. in both softness and watch. we're have about.

really we of competitor through -- competitors, our So X in August, free of them one saw delivery. had major

The Pizza. is their one preference promotions. version X good really Obviously, value my did of are our ours. qualitatively Emergency for But other those

I on what but think it's Now everyone we know quality at and the the your with I same August, this explain we important call. did to a was do, In went to part of intended -- wasn't to we time, actually, message. question, which

You that the Simon spot remember we put on Cowell there.

have beat won't on to food, MORE, for the is of is a Hungry that have to One, we reasons. couple with quality promise going message to to order And for delicious continue deliver in have the the in our best, we're on we M, which which most us, operations.

Service. This X got And product so you'll Summer year, remember last had sprints. of we've year, we

for the that tell what, it changed ad product raised our -- make franchisees. the to our great was not was consumers, oven. bar before was now you here in of got these we've quality know also is stores, to the so only we've it intent August in But sure the And [indiscernible] goes

let and training, hey, done we're motivation. on, year, we're all know was going to going when make we're last I bit promise a with this a added them go little We think to to customers, that

product stepped-up little into towards quickly, what back So to August, But bit MOREflation you we, competitive about went weeks, more X, then a in after X activity. We value. went quality. saw very is

Sandeep Reddy

Yes.

add wanted on assumptions Hungry in you question second on so for to had that I I think, the And the MORE. Sara,

So what let's about go in Russell to back the talked prepared remarks.

same-store We there. U.S. December saying is is We have that? this talked again about for what reiterated is We are the call. again on talked on talked track for stores XXX we business about we're very MORE. Hungry Everything And which which annually, in sales track. we annually, much about for on X%

growth You digits category roughly that take that. And market implies we share the that's about X%, annually. annually, talk that's mid-single embedded in math of that, significant a that's growing

the market the growth, XXXX less rate Hungry at what going to a our into plan. see to let's increasing versus, run is you be to XXXX X% we're you math that we That much these on forward as or category doing. calibrates very That's you MORE. assumptions say, what achieved share If we're be for to based look which going will

Russell Weiner

I on more the bit category. Maybe little Yes, a agree. context

is only have, track programs made achievable and category we record but is the I think how we part and not franchisees the it's our have to because the of and up. parcel also this

then you categories, X is of other So been south the all have in you don't every the the player half have. there. And we slightly regional right marketing share and They and we've be efficiencies dominant have when well, When some #X in about still we're I the have we you think think, potentially that pizzas supply X don't think of think are that the the brands pizza budgets about the competition chain we independents delivered gaining, U.S. of of have. twice size, the in to

the future from And also a nice past, a composition so share like perspective. of but the market present, what sense think the their really look I of can gives us

Operator

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

Gregory Francfort

chain? G&A mean of you're X%, operating the with growth finding of are to profit -- move what you you for maybe Just out you and cost sales talk at I X% do supply X% from expect can out expect you controls? growth looking efficiencies? more about the maybe where and X% to retail more G&A Do

Sandeep Reddy

talked that's a look mean, question. we what's the much I I is part Russell earlier, that at business, on the our in very for look happened into the And think the and of think about actually we if remarks we Greg, performance profit significant Thanks, talked business earlier. U.S. actually when perspective, track. Look, everything a from about I

And through to have we in we we done chain, relative which obviously terms international first procurement productivity is the profit have of and to business, already talked But a going the seen so we've is lot the quarters. about both where X softness year a course impact. supply find which during

the on move think critical fourth into we're those as focused I And very making quarter, investments. we still

within But to about more some that, technology timing for store may be priorities technology some less All urgent capacity technology, store sorry, buckets So we those consumer talked spending, are urgent. be and going may consumer perspective, X us. be -- from a investments.

have a have confident only phasing in to And expect 'XX, feel our sales to X% that's also expectation that we adjusting that the pull but have well. levers just we pulled why continue And little in actually retail with that the as 'XX we get we bit. pulling to we're in So we very on 'XX. not

Operator

from question our Citi. And line from of the Jon comes next Tower

Jon Tower

on curious, you I'm growing that the so, the earlier I curious, you're at category the Domino's you that power deal at across pivoting the thinking are and about it if, X% current term, U.S. X%. in sales growing to And outlined? of specifically you're looks broadly if consumers X% I'm trickling activity category is comp about retail was and And that the just long comment you the and number mentioned how really category and could annual your wondering north over that into pricing service. limited moment, just aggressively as within or

Russell Weiner

continue speaks that's John, to think do really doing. a Yes, to question, our and we're great what ability to I

store great drive is If squeeze to advertising. sure to bit make right? out you there's in margin. you've through value, is little up having Well, Because volume, do way of the system you got a way that you've make word a volume to the into if get think lean to advertising and through there, want a got, what with to about capacity the

-- that You're deal be frank way supply I'll great to going when have same with makes and to want is to you. chain trying else everyone a that look, sure the

which If marketing form importantly, supply is of last look fantastic competitors' our what bigger efficiencies is drive a perspective. serious XXX, we chain know than at it's I marketing, year to the it's And on that. cost. them I from most budget food franchisees a they say. But marketing, flattery know got guess our our similar has place a you really our from to ended We a continue profit perspective. I are good at very

have want you if biggest best have going the I times, want sustainable value, you want lean the into have food to and through think these have voice, economics basket got to so you and you're that. And we've that's to to to

Sandeep Reddy

I about pricing come had pricing. Jon, And think the but doing add been which question have something, about up and I we previous to think on just calls, going what on I'm we talked

incredible was pricing. the year. through tough about been what's from 'XX 'XX back about after think all been I getting was flow-through 'XX exceptionally a the journey 'XX smart has very

no the best of For inclusive 'XX, was at we're which pricing almost X.X% in is did pricing, we California, where the quarter.

to what of the This be win forward done. is why on go value, And for just highly pricing disciplined intention, as we've continue is on to we MORE. value. our into why this Hungry we're because This is winning on as rest we'll not

Operator

the line question And our Gargiulo Danilo of from comes Bernstein. next from

Danilo Gargiulo

a have a quick question clarification. and I

any pizza deploying despite because the in category So cheapest a be you of think words, macro is the not in low-income macro [indiscernible] product question, that on category share, environment, embedding previous of do as it's the growing the that So to relevance other a why the wouldn't the in challenges? spending resilient leaders brand-specific fact considered gain category? the that consumer market for decelerating why you're

Sandeep Reddy

Yes.

business, we we're low-income definitely seeing seeing taken definitely our by What cohort years different I but to is the very, we in there. as income impacted win, over incrementality. in think of where carryout been continue consumer, different potentially very all because come what are a least. manually been I Danilo, are the is So years think, couple value of last the we definitely winning good We're entered across we accumulation we the is see customer compelling. winning out multiple that's pricing at we've has clearly the It's where XP,

see we get And early this XP you some one thing pricing the to What in when high that's general levels XXXX. saw is compress will customer I XP impact general. happens think with

as right back seeing we it. some value on keep of But price we time, they stay over customers, as well of and long We focusing are well and very those to will acknowledge to it now principles that. as for come need our continuing to to we

Russell Weiner

that. just add to I'll Danilo, Yes,

just lean was respond consumers a saw I category to value. of does into lot I think and value our it. talked there about how we in August,

to do category. we're to that what in think outgrowing that other is that sustain ability I can't And significantly folks sustain the why the value is our category value. do we're able

Operator

question Goldman the from line of Sachs. comes next Christine from our And Cho

Unknown Analyst

quick double to international wanted I on the markets.

Asia, point. I mentioned pressure I the So same-store provide you Europe color sales But was able you Middle wondering East a to and if were think slowdown. on is little more bit

any And evolve of dragged just the that to your is say growth, outside in-line you're on next So to trends few on have is trajectory what particular do it seeing DPE, at overall the happening that growth? And markets quarters? unit versus in earlier? you expect how fair mostly expectations

Sandeep Reddy

the for Thanks Christine. question,

into that are we actually of saw. called We're going August. public they're happened overall, to their that's quarter, same-store out. really markets sales particular, think third said with our going market-by-market many that not a trends the regions, get across But have it later. I because as Asia, in earlier in I pressures disclosures and just was where these so macro we saw in we think in masters, look, specific So comments, the starting to we slowdown what own in And Europe

for XX see prepared growth, macro our essentially, is from what the just a remarks, resetting sales the X% Russell in we standpoint, X% an ameliorating same-store And expectation will rapid necessarily talked to next expectations say I don't very this to about we're months, say environment because in pace.

sales talk kind expectations when about of our And as so into retail growth well. we built what's that's our

on I talked store we your primarily Essentially, last second guidance adjustments hasn't So being and on this call coming the story net the growth. think question DPE. of for changed. Look, the unit -- to

that ex different. when think really, I driver. you about And I DPE is So think our not the primary DPE, is the guidance, story materially think, overall

Operator

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

Christopher O'Cull

for the outlook. in year mentioned you follow-up full guide but The targeting I to had I on comps comp imply year year. seems quarter, for this X% comps flattish believe fourth a the next XXXX

what that in trend currently could just comps current XXXX accelerate I'm curious So from you're gives or you what targeting? confidence the

Sandeep Reddy

Yes.

get into clarification a just before So I Chris. 'XX,

more are. basis Freedom same-store working we [indiscernible] next I much in The Russell for that saying there's We point we a is or for And our aren't on that XXXX. that that got think We X% And amazing going I Russell's already initiatives the XXXX, specifics mean got you got we exactly got all the is stack. marketing will spoken initiatives on that's for. up. can't full for I've on XXXX. of being tough initiatives we of team think QX. are and what on week we've But in all have on means things very gave every into And -- on. this creative we a specific lined so what quarter, I fourth have expectations the embedded those sales to an year. get year

Operator

from the of Stephens. Jim from next Salera our And comes question line

James Salera

and with people pizza pull can We've the about that seen lower of think little you I been lot -- grocery? income bit about can in on grocery the talk some you like wanted promo the and QSR a for of might those frozen to to anything drill down retain But talked increase maybe channel. from just about of anything consumers? values a we that in kind some pizza, how and the any have comments competitive on low-income consumer kind

Russell Weiner

when macro interaction you, lot even can of frozen we kind post-COVID seeing back that there the headwinds some tell against Jim, a really segment, Yes, I of with of pizza. were wasn't

I home. to home. eat what at happens side, really it's just is, to the be them a delivery the make has a think at customer will frozen on meal with do least opt just nothing it pizza to it may But for promotion, cheaper at

Operator

line RBC question the Markets. next comes from of Logan our Reich And from Capital

Logan Reich

the on consumer operating any of worse? the sort maybe on to get follow-up there 'XX outlook. in Or on that for is sort and sense the either quick environment there Is into a could XXXX guidance? to just stabilizing wanted 'XX? underlying sort the of Just had continue expectation get expectations the consumer the Just softness improving or of assumption on your U.S. a

Russell Weiner

it's are always predictable. really all the because not Hungry we leaning you, the sometimes tell into environment pillars MORE what I'll matter no Yes. is, sometimes for the strategy it's predictable, of consumer

of this rest us the and you through next year year. expect that's from what yes, so And should

Operator

from line from Slagle Alexander Our of next question comes the Jefferies.

Alexander Slagle

headwinds return want and your share expand put you're the share where does where channel, if guess transactions, weaker? you negative seeing and deliveries, carryout focus, this biggest first-party sense gains to even to first-party delivery that and does does you're make the seemingly alter view I on facing it just on there, with growth getting there weak you're really to the in get gain? your and turning And really the the more continue all

Russell Weiner

was to in part our MORE that or full do we for do ago. a compete years the that of Well, Hungry couple strategy right? of didn't We segment, delivery don't

others delivery, and area, how we're And that kind look really that I doing competing so to more are globally first we about in be at of -- channel kind in I is now and Uber of in leaning is delivery Carryout no moving for is into delivery doing, to forward. how bigger But matter too, we're going carryout. than pizza be the you're right, States.

seems to be would coming no it make so And when every towards especially concept other delivery. sense,

there's is of doing carryout lot opposite. not the people really Us leaning the a

we're master we're lot really nondelivery a and so there, in out of as because seen whether we're in there's those with to bullish. we're earlier, every our or I said So a franchisees, and compete places in taking carryout going occasion. like We've India, and volume now pizza China results down. the it's sit international working U.S. results company, And the We're

Operator

line Brian Sandler. of Mullan next comes the Our from Piper question from

Brian Mullan

the a that from that would to that? think product be you product consider the for business. be to that Just like were day, some would launch I potential ready just factors one in about consumer? ask before a Any menu to see great. operational Domino's a that innovation to pipeline. domestic question product wanted a want level Separately, would the like are you at launch of If received well to thoughts product what on pizza a the do a stuffed-crust the Domino's want you'd store be

Russell Weiner

one Is interesting, in crust we one the #X Brian. larger world company most don't have We're or sorry, the types. and the pizza of of -- important the

Domino's And in we've around the case world. stuffed the crust didn't for just understand question. got I in reason know, So markets the you all

doing is averse big we're that It's excellence it. for not volumes it's really through and quality significant pillar a to going got has and So us. the store, operational just U.S.

be so chosen would but far mean we've the store. in just to need circumstances sure it's do crust, to the table. We so right off that stuffed the And doesn't that not make

Operator

our question comes And Barclays. the next line of from Bernstein from Jeffrey

Jeffrey Bernstein

Great.

wanted follow you those a know, you've with couple on. Just franchisees working made kind got on mentioned of initiatives up of And about system. you comments Russell, to I you're the that big international that X

to that able wondering find reaccelerate international XXX franchisees, comp kind Just or influence just presumably to trend. you're their traded acceptance publicly their willingness to how you I of X behavior? obviously, in work mean, markets, you're you with

And openings wouldn't wondering more directionally you say you I in XXX think than pulled apply said had think whether and to 'XX. just then whether growth, should about outlook? component XXX anything the unit you reduced said XXXX of see just you've to did XXXX now in clarify, of you to long-term necessarily the 'XX. I'm yet unit that you've had it kind the

Russell Weiner

U.S. We our Thanks, X under with Jeff. markets out think I We And U.S., for which in our started And think the months Obviously, essentially, international right. we MORE ago. results markets. I is here MORE, you're when work at those for rally, look you much them. to these Hungry influence rolling Hungry run that at directly QX. started pretty

the with is, successful looking line in to already one also And And U.S. in the are successful? it for so this going year. things beauty folks at the the they're of is And of be their plans is

for value markets, their and how into fee on really talked job leaning Mexico they've you're about I point doing how out the to into leaned Value. a about why really, last call business. delivery turned who's their a around just really example, good specifically that's seeing India, And that's Renowned

happen to over going because going we're it's works. So proving happen it it's time, to and

Sandeep Reddy

and QX, that we'll think store through come continue you We point. add-on a in outlook. Jeff. as but to an Yes. visibility second at didn't specify And incremental back have that February, then we'll I And get had, XXXX this

Operator

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

Brian Harbour

And year at franchisees of this corporate-owned I growth comment you is nice store what seeing just kind still consistent for track look margins, directionally are that Could you're on your expectations? with with back your Yes. to still? Is year-over-year kind on EBITDA of franchise if store of kind there.

Sandeep Reddy

Yes.

question. the for thanks Brian, So

outlog corporate when store really store we've to how stores. we I an to size on we and what's not of margins this so a on P&L. It's the progress corporate stores. year about the franchisee as and progress sample continue well, rest addressed with the make small before think couple think to and corporate much for we But necessarily I corporate profitability, the we're the expect going on the stores, franchisees made times talk of corporate is on happy

we're had we for But And actually look, is grow. we've growth, expected really best-in-class in profit franchisees, continued returns the gone through are franchisee terms profitability but to coming stores. profitability far well, 'XX, and year, drive to But just to franchisee committed as continue I not we've to do we beyond. best-in-class this think of to this as as store and continuing year, concerned, it into in

Russell Weiner

profitability Yes. together point with work thinking about to I'd stopped we do that. them we and to, also franchisee never

profitability. understand to our to about Economic our marketing, they I and that working proven next how think true supply next with chain they talk the where data I just you know that week's can and together that Summit, operation, that is acting how we over I our all do really we an franchisees drive we partnership be bring in going see we do business that. call it's the our be bottom of line and actually, time, Economic us important, has share franchisees Summit we to to important, And have hear can on from it's And the just that, them. we and their know part that's I committees, think So drive something together of top are important technology, week, their so line. And should all

members for we've I'd of in these to, and And stores with we that our we're some and to areas, first close are on other. you are team for franchisees a talked come given you and We last just times -- is affected we Domino's Milton, that customers them. and is Hurricane there about at got saying Domino's there this. like that's this if and to we don't since thinking to going open. line together about each franchisees are the like mind, the in moment, got for for all decades We've

in Domino's the reopen like we about franchisees, times it's the system coming this, when sometimes not it's individual an of just entire And heroics together.

sending So electricity, North had Carolina, sending we in trucks. we over the have that mobile stores people, franchisees no country generators, all and sending have

And so proud our we I'm times of like there this. just comes our team customers. about so team And together are our during how members, thinking

Operator

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

Andrew Strelzik

of on same something the lines labor question, prior as had the it's specifically. I

while. favorable sales, of labor a the was a for As time in percent year-over-year first

hard it's But so benefit. also are more to So seeing franchisees I leverage your on sample there, there. that that those to know said control, you'll going labor what you you're drove and between curious small and I'm a be to if lines curious franchisees. you see shift, if if your that the profitability continue expecting your think may draw continue, bit what's little and in I'm

Sandeep Reddy

Andrew. Thanks,

there's think don't going I DMAs a all it's is rules think terms are one many in and legislative of states you answered question think the in size because on. yourself, difficult that so I fits which I so different what's there

at of to I'm I'll we've a dealing saw that now you why think you looking lapping quite that's And But been been have Now started of our talk stabilizing. increases you've kind it we've we for have, which seeing quarters. and few specifically. company about if pressure sure had labor, quarterlies, you stores been some with on take that those labor I

to that continuing drive et onetime nothing to over continue besides growth we margin more increases And to that there's of we of to cetera, big overall, actually think, time to So well. But the profit any committed dollar expect our things on into insurance, like kind we've as drive company read I lapped some stores. took. excluding we're

Operator

today Jeffrey Farmer from And the our comes final from Gordon for of line question Haskett.

Jeffrey Farmer

competitive touch through the activity peer balance XXXX? sort to going with you further peer on see in do U.S. do couple get surge you middle are further environment But did a and the in of 'XX this of value we intensify of promotional of expect questions. into think for the to of as promotional moving You Or we the sort group? intensify? the efforts Meaning, of it's the

Russell Weiner

MOREflation only I'll see because And it's pop Jeff. name funny Pat Thanks, tell a was Farmer, to whose the named ad. there, actually up franchisee first, we Jeff brother your you have in

So I of always Jeff you're idea nice screen. name any at but the it's related, on no the to Farmer have see up

activity burger As mean, that the lot the of the of a about talking wars. I far for competitive as rest you funny kind of the year. it's see

think to And into continue I pizza clearly, to do to And now. are with the us lean competition to is to what going we in keep the winning we're that. have value. up is right wars

to I'm and doing us, they're what going plans, we're but want they to don't have have know if do to Obviously, So their not match sure we they're what doing. continue to that. I

Gregory Lemenchick

speaking our I joining all call all our of we was question soon. look call. the Jeff. you forward and today, again Thanks, to That for to want last thank to you

may now you. Thank You disconnect.

Operator

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

You Good now day. disconnect. may

Domino's Pizza (DPZ) 10 Oct 242024 Q3 Earnings call transcript