The paragraph discusses the start of Domino's Pizza's Third Quarter 2024 Earnings Conference Call. The call is being hosted by Greg Lemenchick, Vice President of Investor Relations. It begins with brief introductory remarks and proceeds with presentations from CEO Russell Weiner, followed by CFO Sandeep Reddy, before ending with a Q&A session. The call includes forward-looking statements and references to documents available on the investor relations website for more detailed financial information. In his introduction, Russell Weiner highlights the "Hungry for MORE" strategy, recognizing the pressure on consumer spending in 2024 and emphasizing that Quick Service Restaurants (QSRs) offering the best value are likely to succeed.

In 2024, Domino's has successfully leaned into its strategic focus on value, gaining market share in the US despite increased competition. The company's retail sales have risen by 6.6%, outpacing the growth of the Quick Service Restaurant (QSR) pizza category. The "Hungry for MORE" strategy has led to four consecutive quarters of growth in same-store sales and order counts. This profitable growth enhances franchisee economics, aiding store expansion and market share increase. Since 2015, Domino's has opened around 1,750 stores, while competitors have closed a similar number. The Domino's Rewards program supports future repeat purchases and sustained order count growth.

In Q3, Domino's Rewards significantly boosted US sales by increasing light user and carryout customers, and growing their active members into 2024. The company launched promotions like the "more inflation" deal and a 50% off boost week to offer value to customers, highlighting their renowned value barbell strategy, which also includes expanding in the aggregator marketplace, growing sales through Uber. New product offerings, such as the addition of mac and cheese to their pasta lineup, also reinforce their strategy of delivering delicious food.

The paragraph discusses Domino's ongoing efforts to innovate and expand their product offerings, including mac and cheese and New York style pizza, to boost sales and market share in the US. While domestic growth is on track, international sales have not met historical performance levels due to macroeconomic and geopolitical challenges. Consequently, Domino's anticipates a more modest same store sales growth of 1% to 2% internationally for 2024 and 2025 before normalizing in 2026. Although international sales account for about half of global sales, they contribute less than a third of profits, minimizing their impact on overall company profitability.

The paragraph discusses efforts to minimize the impact of international market challenges on operating profit goals. The speaker highlights collaboration with international master franchisees to boost market performance using strategies proven successful in the U.S., such as aggressive promotional pricing, leveraging aggregator platforms, and diversifying beyond delivery. The goal is to generate sales momentum leading to market share gains and store growth. Emphasizing a proactive approach, the speaker reinforces Domino's commitment to creating growth and value through its "Hungry for MORE" strategy. The speaker then transitions the discussion to Sandeep.

In the third quarter, Sandeep Reddy reported that the company's financials showed profitable growth despite a challenging environment. Operating income increased by 5.7%, largely due to higher franchise royalty revenues from global retail sales growth and improved supply chain profits. However, higher labor expenses led to an increase in G&A costs. Year-to-date operating profit rose by 8.6%, consistent with expectations. U.S. retail sales grew by 5.1%, driven by same-store sales growth and strong performance in carryout and delivery, although macro pressures affected low-income customers. Domino's Rewards and marketing programs contributed to transaction growth, with a slight boost from pricing. Sales from Uber accounted for 2.7% of the quarter's sales mix. The company added 24 new U.S. stores, bringing the total to 6,930. International retail sales also grew by 5.1% when excluding foreign currency effects.

The paragraph discusses Domino's recent financial performance and future outlook. The company experienced net store growth and a 0.8% increase in same-store sales, with a slowdown starting in August, particularly affected by macroeconomic impacts and geopolitical tensions in Asia, Europe, and the Middle East. Despite these challenges, Domino's maintains its long-term growth targets of 7% annual global retail sales growth and 8% operating profit growth through 2026 to 2028. However, they revised their 2024 sales growth forecast to about 6% due to increased macroeconomic pressures. While 2025 growth expectations are slightly below long-term targets, the company still aims for an 8% operating profit increase. Domino's repurchased 443,000 shares for $190 million in Q3, motivated by a favorable interest rate environment and upcoming debt maturity in 2025.

In the paragraph, the speaker discusses a reduction in the projected global net store growth figures, adjusting them from 825-925 to 800-850 stores due to better visibility and guidance, particularly with DPE. They acknowledge the decline in unit growth for the second consecutive quarter, primarily due to international factors, and express confidence in improving visibility for future forecasts, with plans to update their expectations for 2025. David Tarantino from Baird asks if the lower retail sales projections for 2025 are connected to this year's adjusted unit growth.

The paragraph discusses the anticipated same-store sales growth for Domino's international business in 2024 and 2025, which is expected to be between 1% and 2%, lower than previously anticipated due to macroeconomic pressures. It also touches on unit growth trends that will affect 2024 and partially impact 2025. Sandeep Reddy emphasizes these are significant factors influencing sales expectations. Russell Weiner adds that the international business has historically performed well, with over a decade of 10% retail sales growth and 31 years of positive same-store sales, though current performance is in line with the category due to various challenges. Despite current headwinds, the company is focused on improving performance.

The paragraph discusses the strategies and outlook for the company's international business and U.S. market performance. The speaker emphasizes the importance of their renowned value strategy, ensuring consistent promotional prices, expanding delivery and carryout opportunities, and emphasizing that they are more than just a pizza delivery company. They express optimism about expanding to 10,000 stores in top international markets with strong franchise partners. The conversation then shifts to a question from David Palmer regarding the company's confidence and ability to drive same-store sales growth in the U.S., specifically a 3% growth target for the fourth quarter, despite tougher comparisons and a slower start to the quarter. Russell Weiner, presumably an executive, acknowledges these points and thanks David for his question.

The paragraph discusses the company's optimistic outlook for Q4, highlighting upcoming marketing initiatives such as Emergency Pizza 2.0 and a pasta launch, alongside the growth of their loyalty program. They aim for a full-year growth target of 3% or more in same-store sales. Brian Bittner from Oppenheimer asks about the company's delivery strategy, noting that Uber sales have improved, and inquires about DoorDash's potential impact. Russell Weiner confirms confidence in DoorDash's potential contribution but does not specify if it is included in their 2025 forecast.

The paragraph discusses the company's strategic plans and future outlook, particularly focusing on their approach to third-party aggregators and growth initiatives. They mention considering moving away from Uber exclusivity as DoorDash is a larger platform, which could have a significant impact on their business. The company is pleased with achieving their goal of capturing a 3% market share and aims to maintain it by the year's end. Dennis Geiger from UBS raises questions about the 2025 guidance, particularly concerning the U.S. market and potential initiatives like loyalty programs, marketing, and new products. Russell Weiner emphasizes their "Hungry for MORE" strategy, indicating it will guide their future decisions, highlighting potential initiatives like Emergency Pizza and carry-out tips, while also mentioning the creative team's role in developing new ideas.

The paragraph discusses the company’s strategy for product and unit development. It mentions the commitment to releasing two new products annually and maintaining a consistent product roadmap. In terms of U.S. unit development, the company plans to open 175 new stores per year, focusing on existing delivery areas despite a slower overall delivery business. The importance of store growth in gaining market share is emphasized, with new stores significantly contributing to the company’s high growth, alongside strong same-store sales performance.

In the article, the speaker discusses the impact of new store openings, noting that they improve efficiency in delivery services and contribute to the company's overall growth strategy. A question from Peter Saleh highlights a concern about lower income consumers, indicating some weakness in this demographic, particularly in delivery orders. Russell Weiner acknowledges this, mentioning that despite a strong quarter in sales and order growth, there was some softness with lower income customers in delivery. The discussion also touches on the "Emergency Pizza" program, expressing optimism for its continued success. Additionally, Sara Senatore poses a clarification question about whether the reduced spending from lower income consumers is due to economic conditions or increased competition targeting this segment.

The paragraph discusses the challenges of maintaining market share growth in a slower-growing US retail sales environment. The speaker, Russell Weiner, notes the impact of economic factors like credit card debt and increased competition on consumer spending, particularly among lower-income customers. He mentions that in August, competitors launched aggressive promotions like free delivery and alternative promotions comparable to their "Emergency Pizza." In response, their strategy focused on promoting quality, exemplified by a marketing campaign involving Simon Cowell, to differentiate their offerings and maintain brand value in the face of competition.

The paragraph discusses the company's strategy, "Hungry for MORE," which aims to enhance food quality and operations to deliver on their promise of having the most delicious food. This involves initiatives like product sprints and raising standards for franchisees. In August, the focus was on product quality, followed by a shift to value due to inflation. Sandeep Reddy highlights that their US business is on track with goals like 3% annual same-store sales growth and opening 175 stores annually, leading to mid-single digits overall growth and gaining market share in a category growing at 2%. This strategy resembles their successful growth from 2015 to 2023.

In the paragraph, Russell Weiner discusses the potential for growth in the pizza delivery market in the US, highlighting the company's strong track record, franchisee network, and competitive advantages in marketing and supply chain efficiencies. He believes that, despite currently delivering slightly less than one in four pizzas in the US, they have the potential to significantly increase their market share. The conversation then shifts to Gregory Francfort from Guggenheim, who asks about cost efficiencies and areas of focus to achieve growth targets. Sandeep Reddy responds, noting that the US business is performing well and contributing significantly to their profit.

The paragraph discusses the company's strategy to address softer international business performance by focusing on procurement, supply chain productivity, and critical investments in consumer and store technology and capacity as they move into the fourth quarter. The speaker notes that they are prioritizing investments with some adjustments in phasing for urgent needs and have ongoing strategies for 2024 and 2025 to achieve an 8% retail sales growth. In response to a question from Jon Tower about consumer trends and Domino's pricing power, Russell Weiner emphasizes leveraging value through an advertising-capable system to maintain growth, suggesting confidence in achieving a 3% annual comparative growth.

The paragraph discusses the strategy of a company in addressing squeezed store margins. The company plans to compensate for this by increasing sales volume through effective advertising and a strong supply chain. They believe their marketing budget is larger than competitors, and their supply chain is efficient in controlling food costs. Their franchisees are performing well profitably. The company aims to maintain value by having a strong market presence, competitive food offerings, and sustainable economics. Sandeep Reddy mentions that their strategic pricing in 2023-2024, particularly in California, has been minimal, contributing to their success in offering value. Their disciplined approach to pricing is part of an ongoing strategy named "Hungry for MORE" to continue winning on value.

In the paragraph, Sandeep Reddy and Russell Weiner discuss the challenges and strategies within the pizza market amidst a decelerating macro environment. They note that low-income consumers are impacted by accumulated price increases over recent years. Despite this, their business continues to perform well, particularly in the carryout segment and among third-party consumers, who represent a different income group. They acknowledge some impact on first-party customers due to high pricing levels but emphasize their commitment to offering value, which should help retain these customers over time. Weiner adds that the category overall responds to value, and their ability to consistently offer value sets them apart, leading to significant growth compared to the overall category.

In the paragraph, Christine Cho asks for more details about the slowdown in same-store sales growth in international markets, specifically in Asia, Europe, and the Middle East. She inquires about which markets are impacting overall growth and how future trends are expected to develop. Additionally, she questions whether unit growth trends are aligning with expectations. Sandeep Reddy responds, indicating that the slowdown in same-store sales began in August and is primarily due to macroeconomic pressures in Europe and Asia. He does not provide specific market details as disclosures will be made later by public masters, but resets expectations for 1% to 2% growth in the next 15 months due to the persistent macro environment. Regarding unit growth, he mentions that the previous guidance adjustments were mainly related to DPE, and outside of DPE, the trends remain consistent with previous expectations.

In the paragraph, Chris O'Cull raises a question about the confidence in achieving higher comparable sales (comps) in 2025 compared to the current trend, especially since the outlook for 2024 suggests 3% or more growth on a full-year basis. Sandeep Reddy clarifies that they are focusing on initiatives like the Freedom initiative and a strong marketing plan for 2024 and are already planning for 2025. Although specifics are not disclosed, these efforts are expected to drive sales. Jim Salera from Stephens then raises a question regarding the influence of recent grocery promotions, such as frozen pizza, on low-income consumers and how to retain that customer base. Russell Weiner responds by noting that there wasn't a significant shift towards frozen pizza purchases even during post-COVID macroeconomic challenges.

The paragraph features a discussion about the future outlook and strategy for a business, particularly in the delivery market. Logan Reich from RBC Capital Markets asks about consumer expectations and the operating environment in the US for 2025. Russell Weiner explains that their strategy, called Hungry for MORE, will continue regardless of the consumer environment. Alexander Slagle from Jefferies follows up with a question about focusing on areas with the highest returns, given the negative trends in first-party delivery transactions. Russell Weiner responds by emphasizing their strategy to compete in the full delivery segment, which they did not previously cover comprehensively a few years ago.

The paragraph discusses Domino's emphasis on carryout as a focus area over delivery, particularly in the U.S. market, highlighting its larger market size compared to delivery. The speaker mentions that, while most competitors are moving towards delivery, Domino's is focusing on carryout and sees potential in non-delivery options internationally, such as sit-down services in China and India. It also addresses a question regarding the potential introduction of a stuffed crust pizza in the U.S., noting that while Domino's does not currently offer this in the U.S., it is available in other markets worldwide and could be considered for the U.S. market in the future.

The paragraph discusses the company's strategy and progress with franchisees in international markets. The company has three major initiatives to influence franchisee behavior and improve performance, especially in the US, where results have been promising under the "Hungry for MORE" initiative introduced recently. There is also a focus on ensuring these initiatives are successful before further expanding plans. Additionally, there is a question about unit growth for 2025, asking whether it will exceed the reduced target for 2024, but no definitive answer is given in this paragraph.

The paragraph discusses the performance and strategic initiatives of a business, highlighting the positive impact of focusing on value, as seen with markets like India and Mexico. It mentions that specific performance metrics for 2025 will be revisited after the fourth quarter. Sandeep Reddy addresses a question about franchise store EBITDA, noting that while corporate store margins show growth, they are not necessarily reflective of franchise operations due to the small sample size. Nonetheless, franchise stores continue to achieve strong profitability and returns, with ongoing positive progress expected.

The paragraph discusses Domino's commitment to driving profit growth, emphasizing the company's focus on franchisee profitability through collaborative efforts such as an upcoming economic summit. It highlights Domino's partnership approach by working with franchisees in areas like marketing, technology, and operations. Additionally, it mentions the company's response to Hurricane Milton, showcasing Domino's solidarity and teamwork by assisting affected areas, such as in North Carolina, with resources like generators and support, demonstrating their resilience and community spirit.

In the paragraph, Andrew Strelzik from BMO Capital Markets asks about a shift in labor costs as a percentage of sales, noting they were favorable year-over-year for the first time in a while. He inquires about the reasons for this change, whether the trend will continue, and if franchisees are also benefiting. Sandeep Reddy responds by explaining that the situation is complex due to varying legislative rules across regions. He mentions that the company has been dealing with labor pressure but has started to stabilize by lapping previous increases. Reddy emphasizes their commitment to drive profit growth and improve margins over time, despite challenges like insurance costs.

In the paragraph, Russell Weiner addresses a question about the competitive landscape among peer companies in the U.S., particularly in the context of promotional activities. He mentions that the current focus is on "pizza wars," akin to the ongoing "burger wars," asserting that their company is leading in this competition. Weiner notes that competitors would need to emphasize value to keep up but does not provide specific insights into competitors' strategies. The call ends with Greg Lemenchick thanking participants and concluding the discussion.

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