The paragraph is an introduction to the Domino's Pizza Fourth Quarter 2024 Earnings Conference Call. It begins with the operator explaining that the call is in a listen-only mode and instructions for the Q&A session. Greg Lemenchick, Vice President of Investor Relations, then introduces the agenda for the call, which includes presentations by CEO Russell Weiner and CFO Sandeep Reddy, followed by a Q&A session. He notes that any forward-looking statements are subject to risks, as detailed in Domino's SEC filings, and encourages participants to ask one question due to time constraints. Russell Weiner then starts his presentation, reflecting on the first year of their "Hungry for More" strategy amidst expected consumer spending pressures, emphasizing the importance of offering strong value in the QSR sector.

In the paragraph, Domino's discusses its strategic focus on delivering renowned value, which has resulted in a 1% market share gain in the US QSR Pizza segment, similar to its average share growth since 2015. The company anticipates continued challenges from pressured consumer spending and a value-driven marketplace until 2025, with market share gains as a key success measure. In 2024, Domino's achieved a 5.3% increase in retail sales in the US and positive growth in order count, driven by its rewards program and new partnership with Uber. The company saw significant same-store sales growth in its carryout business, up over 6%. Under the "Hungry for More" strategy, Domino's emphasizes having the most delicious food, launching successful new products like New York style pizza and mac and cheese pasta, reflecting innovation with purpose.

The company plans to maintain momentum in 2025 by launching at least two new products and enhancing their food presentation and e-commerce platform. Upgrades to the US e-commerce site aim to improve user experience and feature their food better. They emphasize operational excellence through the "More Delicious Operations" service program, which focuses on training in deal management, product preparation, and baking, leading to improved delivery times. Innovations like upgrading the Dom OS operating system and deploying 1,600 DJ dough stretching machines across the US enhance store operations, product consistency, and efficiency. The company thanks franchisees and operations team for their efforts towards achieving operational excellence.

In 2024, Domino's focused on value-driven initiatives to enhance its brand and customer experience, including a successful rewards program and expanding into aggregator platforms through a partnership with Uber. This led to significant growth in active users and sales through new channels. Looking ahead to 2025, Domino's plans to continue emphasizing value through national promotions, personalized marketing, and expanding its presence on aggregator platforms, viewing these strategies as essential to navigating challenges in the quick-service restaurant (QSR) industry.

The paragraph highlights Domino's Pizza's business strategies and achievements across both domestic and international markets. Domestically, they have extended their exclusivity with Uber until May 1 and are negotiating with other aggregators to expand sales channels, expecting significant growth by 2025. In 2024, they added 60 new franchisees and have 120 more in the pipeline, all originating as team members, aiming for 3% annual US same-store sales growth and 175 new stores. Internationally, Domino's has achieved 31 years of consecutive same-store sales growth, working with master franchisees to navigate global challenges by focusing on value messaging, aggregators, and growth in carryout and dine-in services.

The paragraph discusses various strategies and outcomes for international business growth. Canada benefited from a Q4 pizza promotion, boosting traffic, while Jubilant in India saw increased delivery orders by eliminating delivery fees. The UK and Canada partnered with Uber, enhancing sales, and Mexico's carryout business improved in 2024 with the launch of a premium pan pizza at a competitive price. The company remains committed to its "Hungry for More" strategies to drive market share and store growth. Despite a challenging financial environment in 2024, the company achieved an 8% growth in profits, with a 6.5% increase in Q4 income from operations, largely due to supply chain efficiencies and reduced administrative expenses. Global retail sales grew by 4.4% in Q4, boosted by positive US and international performance and net store growth.

In the past year, global retail sales increased by about 6%, aligning with expectations. In the US, Q4 retail sales rose by 2.3%, with same-store sales up 0.4% driven by a 3.2% lift in carryout, although delivery was down 1.4% due to economic conditions affecting low-income customers. The company benefited from a 2.3% price increase, and sales through Uber contributed 2.7%. The growth was partially offset by a higher carryout mix, which typically has a lower ticket value than delivery. Overall traffic remained flat, partly due to New Year's Eve timing. Delivery accounted for more transaction percentages than carryout for the year. Estimated average US franchisee store profitability was approximately $162,000 in 2024, despite pressures in the latter part of the year. The company added 84 new stores and opened its 7,000th store in the US, totaling 7,014. Internationally, retail sales grew 6.4%, supported by net store growth and slightly better than expected same-store sales.

In the quarter, strong performance in India and Europe helped drive improvements in Asia, with franchisees increasing first store profitability and reducing new store payback times, despite a challenging international environment. Looking to 2025, the company anticipates US comps aligning with a 3% long-term growth guide, aided by aggregators and loyalty initiatives. However, persistent macro pressures could affect these goals, with a weaker first half expected compared to the second half. International same-store sales growth is projected at 1% to 2% for 2025, with a return to normal growth by 2026. The company plans to add over 175 net stores in the US, while international net store growth is expected to match 2024 levels. Domino's Pizza Enterprises, their master franchisee in Australia, is addressing strategic goals under a new CEO, including closing over 200 underperforming stores in Japan and focusing on profitable new store locations.

The paragraph outlines Domino's financial expectations and strategies as they look towards 2026. They anticipate an 8% operating profit growth, excluding currency impacts, and expect their supply chain margins to expand slightly due to procurement productivity. Despite potential tariffs, their US supply chain should remain largely unaffected as most products are sourced domestically. They foresee low single-digit increases in the food basket, with cheese prices driving higher costs in the first half of the year. Starting Q1 2025, they will increase the technology fee per digital transaction to fund tech initiatives. Operating income margins are expected to grow slightly in 2025, more so in the latter half of the year. Foreign currency rates may impose a 1% to 2% headwind on operating income growth. They are addressing debt maturity and anticipate a tax rate between 21% and 23%. Their confidence in Domino's long-term business potential remains unchanged.

The paragraph outlines the company's financial expectations and recent actions. It anticipates pressure on 2026 global retail sales and profit expectations due to additional net closures planned for 2025, aligning 2026 projections with 2025 levels. The company announced a 15% dividend increase, aligning with capital allocation priorities, and repurchased around 259,000 shares at an average price of $433, totaling $112 million in the fourth quarter. As of the end of 2024, $814 million remains for share repurchases. During a Q&A session, Dennis Geiger from UBS inquires about the 2025 US same-store sales guidance, focusing on sales initiatives like aggregators and loyalty programs. Sandeep Reddy responds, emphasizing negotiations with aggregator platforms and a more significant impact expected in the latter half of 2025.

The paragraph discusses a company's marketing strategy and plans for 2024 and 2025. They mention the launch of several initiatives, including a "best deal ever" promotion inspired by their "Hungry for More" strategy. The company, represented by Russell Weiner, emphasizes their reluctance to divulge specific future marketing plans to keep their competition surprised. It then shifts to a Q&A where Brian Bittner from Oppenheimer inquires about the company's 2025 guidance, particularly regarding international same-store sales expectations. Despite better-than-expected Q4 performance and improved trends among peers, the company maintains its conservative international sales outlook of 1% to 2% growth, consistent with prior calls.

In the article paragraph, Russell Weiner discusses their company's performance in the fourth quarter, expressing satisfaction with the controlled aspects of their strategy, particularly in international markets. They are focusing on driving international same-store sales by ensuring prices are at or below the Consumer Price Index, leveraging aggregators, and diversifying beyond delivery. Sandeep Reddy adds that the guidance on same-store sales hasn't tilted conservatively despite a challenging macroeconomic environment with volatility, and their expectations remain consistent with previous communications. The paragraph concludes with an acknowledgment from the operator, introducing a question from David Tarantino from Baird.

In the investor call, David Tarantino asked about the confidence in achieving US unit growth targets for 2025 after falling short in 2024. Russell Weiner and Sandeep Reddy explained that hurricanes negatively impacted net openings, but the company still managed to surpass their competitors in net store openings. They emphasized their strong position in the market, gaining more share in the US despite setbacks. Reddy highlighted that their economics remain attractive with compelling paybacks and strong demand for new units, boosting their confidence in reaching future targets. The call then moved on to a question from John Ivankoe about pricing strategies.

In the discussion, the focus is on Domino's pricing strategy, particularly around the $9.99 price point for their pizza promotions, comparing it to competitors who also offer similar deals. Russell Weiner emphasizes that while many competitors have similar offers, Domino’s advantage lies in their ability to sustain these price points due to their scale, cost management, and strong franchisee economics. This pricing allows them to maintain strong same-store sales compared to other pizza chains.

The paragraph discusses the concerns and excitement of investors regarding Domino's strategies, focusing on initiatives like the DoorDash expansion and stuffed crust rollout. Despite investor concerns about long-term same-store sales growth, the company's CEO, Russell Weiner, emphasizes Domino's track record and ability to consistently deliver growth, even without disclosing specific future programs for competitive reasons.

The paragraph highlights the company's strategic focus on expanding through aggregator platforms and emphasizes their strong track record of delivering value. While avoiding specific details about future plans, the speaker mentions the significant growth potential in embracing these platforms, as demonstrated by the performance in Q4. Sandeep Reddy adds that by 2026 there are long-term opportunities to capitalize on this segment, particularly in the rapidly growing Pizza QSR space, indicating that they have not yet fully leveraged these platforms.

The paragraph discusses the positive impact of gaining 2.5 million new loyalty members, particularly light and carryout users, which creates a database for effective marketing and drives compounding growth. Russell Weiner highlights the importance of building scale, noting success in same-store sales and store expansion, which enhances market reach and competitiveness. This strategy has been a consistent driver of long-term growth, contributing to a successful flywheel effect. The operator then introduces Danilo Gargiulo from Bernstein, who commends the company for maintaining solid cost discipline in 2024, both in the supply chain and general administrative areas.

In the paragraph, Sandeep Reddy addresses a question about the timing of investments and potential optimization of G&A expenses in light of lower-than-expected retail sales in 2025. He explains that despite sales not meeting initial expectations in 2024, the company achieved its target of 8% operating income growth by being agile and focusing on productivity, particularly in the supply chain. Reddy mentions three investment areas: consumer technology, store technology, and capacity investments. Due to current volume trends, the company has adjusted the timing of capacity investments. They are planning their 2025 strategy by aligning investments with sales trends to ensure appropriate pacing.

The paragraph discusses a company's progress and future plans with its third-party partnership with Uber Eats. The company remains optimistic about reaching a billion-dollar revenue opportunity through this partnership, although the timeline may extend beyond initial expectations. The delay is attributed to a deliberate strategy to maximize incremental volume and profitability over time rather than capturing all volume at once. Key learnings from the partnership include optimizing marketing strategies and improving technology integration, which should expedite the process in future partnerships. The company aims to expand to other platforms by 2025 and expects these efforts to be beneficial for its franchisees' profitability.

The paragraph discusses the shortfall in US store level cash flow for 2024, which ended at $162,000 compared to the initial target of $170,000. Sandeep Reddy explains that while the first half of the year met expectations, the second half saw decreased sales due to macroeconomic and competitive pressures, along with increased food costs in the fourth quarter. Despite this, the company gained a point in market share and increased loyalty membership by 2.5 million. Reddy remains optimistic about 2025, citing various growth catalysts in marketing, digital, and supply chain to drive future cash flow and share growth. Russell Weiner's comments are not specified in the paragraph.

The paragraph discusses Domino's franchisees' dedication and long-term investment in their business, highlighting their exclusive focus on Domino's. In 2024, the franchisees adapted to similar promotions from competitors, resulting in higher sales, more stores, and increased market share for Domino's, even with lower volumes. The franchisees showed their commitment by approving a $9.99 promotion, considered their best deal ever, which indicates their confidence in the business's direction. The company's store growth also continued, reinforcing a positive outlook for 2024 despite not fully meeting expectations. The conversation then shifts to a new question about international growth and challenges anticipates in 2025 due to the closure of the Australian master franchisee.

The paragraph discusses the confidence in business growth for 2026, noting that despite the planned closure of 200 stores by DPE by the end of the year, the overall growth trajectory remains strong. Russell Weiner emphasizes the robust expansion in China and India, with China having opened 240 stores last year and planning for 300-350 more. Sandeep Reddy adds that profitability is improving globally, including in China and India, where paybacks are compelling. Even outside these markets, the store performance is positive, showcasing a focus on profitable and sustainable growth. The closures by DPE are part of a strategy to enhance the portfolio's profitability, which is expected to lead to healthy growth through 2026 and beyond. Christine Cho from Goldman Sachs is then introduced to ask the next question.

In the paragraph, Russell Weiner discusses the challenges and progress related to the implementation of dough stretchers in their operations. The demand for these devices is higher than the supply, indicating their effectiveness. Traditionally, it takes new employees about 25 shifts to become proficient in stretching dough, but with the dough stretcher (referred to as DJ), it only takes two shifts. He highlights that the dough stretcher is just one part of the broader improvements the company has made post-COVID, including advances in their operations and technology. These efforts, focused on enhancing training and operations, have led to improved delivery times and reduced turnover in their Team USA stores, reflecting overall operational success.

The paragraph discusses the rollout of a new e-commerce platform, including a new app and website. Russell explains the gradual launch process, where the new site is incrementally shown to more users while monitoring conversion rates. Adjustments are made as needed if conversion rates are flat or negative. The updates aim to improve operations and support business needs effectively, with all changes expected to be implemented within 2025. The consumer-facing enhancements include improved food photography and layouts to enhance visual appeal, as visuals play a crucial role in purchasing decisions. The apps are anticipated to launch after the website.

The article discusses improvements in user flows for a new website, making it more intuitive, especially for carryout services, which have become more important. The back end has been enhanced for better integration, personalization, and speed. During a Q&A, Brian Harbour from Morgan Stanley asks about the consistency of market share gains between carryout and delivery. Russell Weiner responds that there were gains in both areas, and they expect balanced growth. He notes that delivery has faced challenges because consumers are eating at home more in a value-conscious environment, although the entry into new marketplaces could bring new customers for delivery services.

In the paragraph, Sandeep Reddy discusses expectations for balanced growth in delivery and carryout services and between ticket and transaction in 2025, emphasizing disciplined pricing strategies. Russell Weiner adds that the company’s delivery business will be reported as a unified entity, focusing on profitable transactions across all delivery platforms. He advises considering the delivery business as a single entity moving forward. Additionally, Lauren Silberman from Deutsche Bank asks about the timing of launching new products and balancing it with potential new delivery partners. The company does not confirm specifics on the timing of the launch.

In the paragraph, Russell Weiner addresses several questions about Domino's business strategy. He mentions that while limited-time offers (LTOs) are not entirely off the table, the company focuses on long-term return on investment by introducing products with staying power, citing past successes like New York Style Pizza and mac and cheese. Although Domino's currently doesn't offer stuffed crust in the U.S., it's available in other markets. Weiner emphasizes that Domino's has capacity to increase order volume, comparing current levels to those during COVID-19 and highlighting operational improvements. Sandeep Reddy acknowledges a specific query about same-store sales guidance.

The paragraph discusses a company's expectations for sales growth and competitive positioning in the market. The company anticipates a more significant impact from aggregators in the latter half of the year, which is included in their 3% same-store sales growth guidance. They also plan to introduce two new products annually. Jeffrey Bernstein from Barclays raises concerns about the company's value proposition, particularly in delivery services, which may be less competitive due to surcharges and tips. He also notes increased competition from other quick-service restaurants (QSRs) offering value deals. The response emphasizes that value is relative, acknowledging delivery's higher costs compared to carryout, including fees and driver tips.

The paragraph discusses the competitive nature of delivery services, particularly in comparison to other types of food delivery. Russell Weiner emphasizes the value of pizza delivery, especially when considering the price per slice and its ability to feed many people. Despite economic pressures affecting lower-income customers, Domino's still considers its delivery services as offering good value. Jeffrey Farmer raises a concern about expanding demand challenges beyond lower-income groups, which Sandeep Reddy addresses by acknowledging a shift in consumer behavior. He notes that economic pressures lead customers to switch from more expensive dining options to quick-service restaurants (QSR) or pizza, and in some cases, choose more affordable at-home dining alternatives.

The paragraph discusses consumer behavior trends in the quick-service restaurant (QSR) industry, particularly regarding "upswitching," where customers are willing to pay more for a different dining experience due to smaller price gaps between QSR and more expensive dining options. Despite this trend, the emphasis remains on providing genuine value, meaning customers should value the products offered beyond just discounted prices. Domino's Pizza aims to ensure customers have choices they truly desire through their mix and match offerings, which has been a strategy for over a decade. The conversation concludes with expressions of gratitude from the speakers and the operator.

The paragraph instructs the reader that they can now disconnect, and it concludes with a polite farewell.

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