The paragraph introduces the Domino's Pizza Second Quarter 2024 Earnings Conference Call and the speakers, CEO Russell Weiner and CFO Sandeep Reddy. It also mentions that the call will include a Q&A session and that the forward-looking statements and non-GAAP financial measures discussed on the call can be found in the company's filings. The call will also be webcast and recorded for replay. The company's Hungry for MORE strategy has led to positive results, with profitable order count growth driving US Comp performance in the second quarter.

The company has seen positive order counts in both their delivery and carryout businesses, as well as across all income levels. They are on track to meet their annual sales and profit growth targets and have a strong pipeline for new stores in the US. However, there may be a delay in international store growth due to challenges faced by one of their master franchisees. The company's largest growth markets in China and India are still expected to meet their potential. The company's MORE pillars continue to drive their business, with a focus on providing the most delicious food.

Domino's is focused on showcasing their delicious food through mouth-watering food photography and marketing. They recently launched their New York Style pizza, which was designed to appeal to a different type of pizza lover and is available as part of their mix-and-match offer. The company is also implementing a new service program called MORE Delicious Operations to consistently deliver a great experience with their products. This program, along with technology, is helping to improve their delivery times.

In the second quarter of 2024, Domino's saw a significant improvement in delivery times and increased orders, thanks to the dedication of their franchisees and operators. The company's "Hungry for More" pillar of Renowned Value focuses on providing innovative and memorable value to customers, such as their successful Domino's Rewards program. This has resulted in an increase in active members and redemptions, contributing to transaction growth. National promotions, such as Boost weeks, have also been successful in driving transactions and customer acquisition. Domino's plans to continue with around six Boost weeks in 2024.

The paragraph discusses Domino's barbell strategy, which involves providing value through their own channels and tapping into the aggregator marketplace. The company's franchisees play a crucial role in their strategy, and their recent worldwide rally was a success. The company's second quarter financial results were in-line with expectations, with strong growth in profit and retail sales. US same store sales increased by 4.8%, driven by growth in carryout and delivery transactions.

The company's US same store sales were driven by transaction growth from their new loyalty program and strong marketing. They also saw an increase in sales from Uber and added 32 new stores, bringing their total to 6,906 in the US. International comp results were in-line with expectations and store counts increased by 143. Income from operations increased, but was partially offset by higher G&A expenses. The company's global retail sales growth and Hungry for MORE strategy were highlighted as positive factors.

The company's margin rate was impacted by a 0.3% headwind in Q2 due to a reduction in tech fees and an increase in ad fund contribution rate. They expect 7% or more global retail sales growth, with US comps above 3% and international comps accelerating in the second half of the year. They also expect an 8% or more increase in operating income, with margins remaining relatively flat compared to 2023. However, there will be no cost leverage in 2024 due to investments in consumer and store technology, and supply chain margins are expected to expand.

The company is expecting to come in below their projected food basket range for the year. Supply chain margins will be flat in Q3 and down in Q4 due to pressure in G&A. The impact of foreign currency is expected to be around 1% of operating profit dollars in 2024. The company has not repurchased any shares in the second quarter and is maintaining flexibility due to the volatility of the interest rate environment. The first question in the Q&A session is about the company's loyalty program and how they plan to promote it in the future. The company has seen great success with the loyalty program this year, driving light users and frequency.

The company is pleased with the success of their new Loyalty program, which has increased both delivery and carryout orders. They plan to release a number of new users at the end of the year and have seen a significant increase in orders with Loyalty redemptions compared to the previous year. The program is expected to continue driving sales for multiple years and is contributing to the current strong quarter.

During the Investor Day in December, the company was in alignment with its master franchisees, including DPE, on the expectations for the business. However, as the second quarter progressed, it became clear that there was a significant increase in new store openings and closures from DPE, which led to a reevaluation of their forecast for the year. This was confirmed by DPE's recent announcement of planned closures in Japan and France. As a result, the company has updated its guidance for 2024 to reflect the impact of DPE's performance.

The range for the company's outlook is large due to potential changes in store closures and openings between fiscal years 2024 and 2025. However, the impact of these closures on operating income is minimal and the company remains confident in its long-term growth targets. The company also has other levers for growth, such as development in China and India, and is on track to open 175 stores in the US this year.

The speaker discusses the importance of development and the positive state of it currently. They mention the closing of only seven stores out of 7,000 in the US and the overall health of development. They also address concerns about consumer spending and explain their confidence in maintaining their targets for the year. The speaker believes that their brand's strength will continue to drive positive results, even in tough economic times.

The speaker, Sandeep Reddy, responds to a question from Andrew Charles about the expected 3Q comps in the US. Reddy explains that the expectation for 3Q is slightly lower than 2Q due to one less Boost week and the ramp in Uber. However, he reassures that the company is seeing strong transaction growth in the first half and expects the same in the second half. The next question comes from David Palmer, who asks about the volatility of sales trends in the US and what has been working and not working.

Russell Weiner, the CEO of Domino's Pizza, addresses concerns about the company's performance in the third and fourth quarters of the year. He explains that the company focuses on long-term performance rather than short-term volatility and is confident in their Hungry for MORE strategy. He gives an example of the success of their recent launch of New York Style Pizza, which combines various aspects of the company's programs, such as operational excellence and loyalty programs. He also mentions that the company is always striving for improvement and has a strong focus on orders, stores, and market share.

The speaker is discussing the growth of the pizza category and how the company is positioned to benefit from it. They mention the steady cadence of sales and the impact of their loyalty program and partnership with Uber. They expect both Q3 and Q4 to have a comp above 3%, with Q4 potentially being even higher due to the compounding effect of their loyalty program and Uber partnership. The company is confident in their growth and the positive impact it will have on franchisee profitability.

The speaker discusses the success of Domino's value strategy, which focuses on offering customers consistent value across all menu items. This approach has been in place since 2009 and has resulted in increased order counts and customer loyalty. The speaker also notes that this strategy sets Domino's apart from other companies in the industry who are simply offering deals on individual items.

The speaker discusses the approach to value, which is not just about price but also about what customers actually want to order. They mention the sustainable growth seen over time and the impact of Uber on sales, which is currently at 1.9% and expected to reach 3% by the end of the year. The way customers shop and the algorithm have influenced a shift towards a high-low pricing strategy, leading to more eyeballs and positive results. The speaker also mentions the possibility of a partnership with DoorDash in the near future.

The speaker discusses the current exclusivity with Uber and the potential for opening up to other aggregators like DoorDash. They also mention the $1 billion opportunity for the company in the next three years. The next question is about the impact of store splits in the US, which the speaker says is currently at a high rate for a mature brand. They mention the closures in France and Japan and the potential negative impact on same-store sales. The speaker also discusses the risk of encroaching on existing assets while trying to hit US store targets.

The speaker talks about the success of Domino's carryout model and how it drives incremental business. They also mention the benefits of splitting stores and getting closer to customers, which leads to more consistent delivery and customer loyalty. They reference international learnings and the success of splitting stores in Australia and Japan. The next question is about new restaurant growth.

Sandeep Reddy clarifies that the modest price increase in the quarter did not cover inflation for labor and insurance costs for corporate stores, resulting in a margin contraction. However, when the insurance charge is stripped out, margins were flat and profit dollars grew. The company expects to see profit dollar growth and margin improvement for both franchisees and corporate stores. The closures in China and India are of low-volume stores, while the lack of openings in Australia may have a bigger impact on retail sales volumes.

The speaker believes that the closures in Japan and France will not have a significant impact on overall growth opportunities for the company, especially with the success of new store openings in China. The company's focus is on driving order count rather than increasing prices to cover cost inflation, and their research and consumer and franchisee reactions have been positive.

The speaker discusses the success of a proprietary strategy and addresses concerns about softness in unit openings by a master franchisee. They express confidence in the rest of the business and highlight the strength of being in over 90 countries. They also mention positive order counts in delivery and carryout in the US.

In response to a question about the customer base and store closures, the CEO and CFO of Domino's Pizza provided information about the impact of the closures on profits and the order count of lower-income customers. They also emphasized the balanced order count across all income segments and the positive impact of the Loyalty program.

Domino's has recently introduced a new strategy called "Innovation with Intent" which has been successful in driving sales, as seen with the launch of their New York Style Pizza. This approach involves carefully considering the strategic role of new products before launching them, as evidenced by the fact that only two items have been taken off the menu in the last 15 years. This strategy has been effective in maintaining consistency and profitability for the company.

The speaker discusses the company's plans for the future, including continuing to release two new products per year and targeting customers who don't usually visit Domino's. They also mention the importance of promoting existing platforms to increase ticket sales and profitability for franchisees. A question is then asked about store margins, to which the speaker responds that wage inflation is a factor, but there are also other variables at play.

The company is facing wage pressure in the first half of the year, but they are close to lapping it and still expect margins and profit to grow. The franchisee stores are seeing balanced profit growth and the company is confident in reaching their target of $170,000 or more. The company is not concerned about lapping potential headwinds, such as the success of emergency pizza, and is confident in their ability to beat them. They believe they have established themselves as the leader in the market with their emergency pizza offering.

The speaker discusses the success of various promotions and discounts offered by the company, such as loyalty programs and tipping programs. They mention the consistent trend of customers redeeming rewards at the 20 and 40-point levels, driving frequency and loyalty. The speaker also highlights the importance of "Innovation with Intent" in the company's approach to new products and value offerings.

The speaker discusses the success of the recent worldwide rally, noting that it had the highest attendance and satisfaction scores ever. Attendees took away a key message with 98% reporting that they understood their responsibilities. The US franchisees left with a clear understanding of their roles in the company.

The speaker discusses the success of their renowned value concept and how it has led to changes in marketing strategies in international markets. They also mention the satisfaction of their franchisees and their excitement for the future. The call has come to an end.

This summary was generated with AI and may contain some inaccuracies.