The first quarter 2025 earnings conference call for Domino's Pizza, hosted by Greg Lemenchick, Vice President of Investor Relations, commenced with remarks from CEO Russell Weiner and CFO Sandeep Reddy, followed by a Q&A session. The presentation included discussion of forward-looking statements, with a reminder that actual results might differ due to various risks. The company emphasized its strategy, "Hungry for MORE," which led to market share gains domestically and internationally despite challenges. The call is being webcast and recorded, with a focus on allowing as many questions as possible, encouraging participants to limit themselves to one question each.

The paragraph discusses the success of the "Hungry for MORE" strategy introduced in late 2023, focusing on innovation and operational excellence. A key highlight is the launch of the Parmesan Stuffed Crust pizza, which exemplifies their "innovation with intent" approach. Despite its recent introduction, customer satisfaction with the new product is high, and it is expected to be a significant market driver moving forward. The launch was challenging due to the operational complexities involved, but improvements in service and significant training programs have enabled its successful introduction. The company plans to continue enhancing its menu with new products annually, in line with its strategic goals to increase sales, store count, and profits.

The paragraph discusses Domino's efforts to enhance its value proposition, focusing on the introduction of the Parmesan Stuffed Crust and leveraging technological improvements and strategic partnerships. Key initiatives include successful promotional activities like the Best Deal Ever and expanding their presence on aggregator platforms, particularly through a new partnership with DoorDash. This partnership, piloted in select stores and planned for a full rollout by mid-year, aims to enhance Domino's delivery reach and competitiveness. The company anticipates that this expansion onto aggregator platforms will drive approximately 50% incremental growth as they continue to adapt to the challenging economic environment.

The paragraph discusses recent organizational changes at Domino's aimed at enhancing efficiency and aligning with their "Hungry for MORE" strategy. Key changes include promoting Joe Jordan to Chief Operating Officer and Weiking Ng to Head of Domino's International, as well as restructuring below the executive level. While some roles were eliminated, the company believes the new structure will accelerate market responsiveness and increase focus on impactful investments for customers and franchisees. Sandeep Reddy adds that despite macroeconomic challenges, Q1 operating profit met expectations, with a 1.4% increase in income from operations, largely due to supply chain growth and increased international franchise fees. Severance costs from the reorganization affected expenses, but without them, income would have risen by 3.6%.

In the first quarter, global retail sales grew by 4.7% when excluding foreign currency impacts, driven by international comps and net store growth. US retail sales increased by 1.3%, primarily from net store growth, although same-store sales declined by 0.5% due to negative traffic and mix changes. The carryout business grew by 1%, whereas delivery decreased by 1.5%, impacted by macroeconomic pressures on low-income consumers. Seventeen net new stores were added in the US, totaling 7,031 locations. Internationally, retail sales rose by 8.2% with strong performance in Asia, especially India, and in Canada. However, the net international store count decreased by 25, mainly due to store closures by Domino's Pizza Enterprises in Japan. Regarding capital allocation, the company repurchased approximately 115,000 shares for $50 million, with $764 million remaining authorized for share repurchases.

The paragraph discusses the company's outlook for 2025, projecting global retail sales growth to align with 2024. They expect a 3% growth in US comparable sales, lower in the first half due to initiative timing, and 1% to 2% international same-store sales growth amid global macro and geopolitical pressures. Operating profit growth is expected at 8% excluding currency impacts and $5 million in severance expenses from organizational realignment. Savings from these changes will be reinvested into the business. US-sourced food products should mitigate tariff impacts on operating profit. The paragraph concludes with a question from Danilo Gargiulo about geopolitical pressures affecting international consumer behavior towards US brands, particularly Domino's, to which Sandeep Reddy responds, noting concerns about geopolitical risks based on recent events.

The paragraph discusses the impact of geopolitical volatility on demand, which is considered in the company's yearly growth guidance of 1% to 2%. During a call, Brian Bittner from Oppenheimer inquires about the anticipated impact of launching DoorDash compared to Uber Eats. Russell Weiner responds, noting that DoorDash's pizza sales are around double that of Uber's, although they are not committing to specific quarterly goals as they did with Uber. The company views the aggregator business as part of its delivery operations, expecting DoorDash to contribute about twice as much as Uber. The DoorDash launch is expected to impact the second half of the year's performance. David Tarantino from Baird then questions the stuffed crust pizza platform, which is performing in line with expectations but didn't significantly influence the first quarter.

The paragraph involves a discussion between David Palmer from Evercore ISI and Russell Weiner about the launch and performance of a new product: stuffed crust pizza. Russell mentions that the product didn't significantly impact sales in Q1 due to its late launch but expresses satisfaction with its performance since then. The demand and consumer feedback have been positive, and the stores are operating well. He highlights that stuffed crust represents a significant opportunity since it's prevalent among competitors and suggests it could potentially capture a substantial portion of the sales mix. Russell refrains from providing specific future expectations, but acknowledges the importance of understanding both the mix percentage and the incrementality in terms of orders and revenue with the new product.

The paragraph discusses the importance of the stuffed crust pizza product in enhancing the brand's reputation for deliciousness beyond just sales figures. Sandeep Reddy addresses a question about sales expectations, mentioning that initiatives like partnerships with DoorDash and the introduction of stuffed crust are accounted for in their 3% same-store sales growth projection for the year. He notes that the company's assumptions are based on current insights and that detailed specifics about the second quarter are not being shared at this moment. Dennis Geiger from UBS asks about additional strategies to achieve sales targets, including promotions or new items, and seeks insight on the impact of various initiatives throughout the year. Reddy begins to respond to this.

The paragraph discusses a strategic approach for the upcoming year centered around the "Hungry for MORE" platform, focusing on launching two new products annually and maintaining the same amount of Boost Weeks as the previous year. The emphasis is on creating "talk value" rather than just offering competitive prices, with initiatives that engage customers, such as carryout tips and emergency pizza. Although specific initiatives are not disclosed in advance, their alignment with the overall strategy is assured. Additionally, there's a focus on a new loyalty program targeting carryout customers to increase engagement and frequency of visits. The past year saw growth in the loyalty database, with expectations for future sales momentum from these loyal customers.

The paragraph discusses updates made to a loyalty program initially introduced in 2015, highlighting improvements such as lowering point prices and reducing purchase requirements to activate the program, aiming to include more customers. It emphasizes the multi-year benefits of loyalty programs and growth potential on aggregator platforms. Additionally, Peter Saleh from BTIG asks about the impact of tariffs on construction costs and unit growth projections, specifically regarding the guidance of 175 new domestic stores by 2025. Sandeep Reddy responds, affirming there is no change in their expectations for domestic unit growth despite tariff concerns.

In the paragraph, the speaker discusses the strong economic performance and promising growth prospects of their franchisees, highlighting robust franchisee enthusiasm and pipeline improvements over the previous year. Despite potential tariff impacts, demand is expected to remain unaffected. Russell Weiner notes a difference in customer behavior on aggregator platforms compared to direct website orders, with aggregator channels attracting smaller groups and still being sensitive to promotions. The operator then moves to the next question.

In the paragraph, Chris O'Cull from Stifel asks Russell Weiner about the impact of a promotional offer called the "Best Deal Ever" on sales trends. Russell explains that the name "Best Deal Ever" originated from their initial reaction to the offer and highlights the strategy behind it. The promotion aimed to provide a fair price for desirable items rather than just low-cost options, allowing customers to choose any crust and any topping without limitations. Although it ran for a limited time amidst challenging market conditions, Russell expresses satisfaction with its performance and the message it conveyed to consumers.

In this paragraph, the speakers discuss the performance and outlook of their business, focusing on the franchisees' involvement in a pricing strategy for pizza offers. They express pride in the franchisees' confidence in analytics and their ability to maintain profitability amid challenges, emphasizing a long-term commitment. Sara Senatore from Bank of America asks about the U.S. outlook, noting macroeconomic pressures and external factors like weather affecting sales forecasts. Russell Weiner and Sandeep respond, explaining that their annual plan is back-half loaded, suggesting that improvements and results were expected later in the year.

The paragraph discusses the business performance and challenges faced by Domino's. It highlights that despite a tough macroeconomic environment, which is affecting the entire quick-service restaurant (QSR) industry and not just Domino's, the company still aims to achieve a 3% growth in U.S. same-store sales. Sandeep Reddy and Russell Weiner acknowledge that the first quarter was challenging and closely aligned with their expectations due to these external factors. However, they are optimistic about continuing to grow market share, which could benefit Domino's once the macro environment improves. They also believe that Domino's is well-positioned to compete effectively against these headwinds compared to other companies. Additionally, an operator introduces a question from Andrew Charles of TD Cowen regarding third-party delivery incrementality.

Domino's Pizza is expanding its delivery options by partnering with both DoorDash and Uber, aiming to reach customers on their preferred platforms. Russell Weiner explains that customer loyalty to these platforms influences their decisions more than brand loyalty. While Domino's will try to encourage returns to their own channels, they're comfortable with customers purchasing through DoorDash or Uber as it reflects natural customer behavior. Sandeep Reddy adds that Domino's will assess their delivery business holistically, without distinguishing between orders from their own channel and aggregators, signaling a shift from previous disclosure strategies.

The paragraph features a discussion between John Ivankoe and Russell Weiner about the strategy behind opening new franchise stores to enhance delivery and carryout services. Weiner explains that in the U.S., about two-thirds of new stores will be splits (dividing existing territories), while one-third will be in new areas. He emphasizes that although these splits might seem delivery-focused, they are significantly driven by carryout demand, with 80% of carryout customers being new. This strategy helps stores become financially viable through carryout alone, with delivery efficiency improving subsequently due to closer proximity of drivers to customers, leading to faster and more reliable deliveries.

The paragraph discusses the performance and strategies of a company in different regions. The company has seen growth in its carryout business, although it still lags compared to its delivery segment, which they believe will improve with store growth. Christine Cho from Goldman Sachs inquires about the sustained strength in Canada and potential international growth, particularly after closures of several DPE plants. Russell Weiner highlights the adoption of the "Hungry for MORE" strategy in Canada, including value offerings and new products like stuffed crust pizza. Sandeep Reddy addresses the impact of DPE store closures in the first quarter, primarily in Japan, with expectations to close around 200 stores as planned.

The paragraph discusses the strong performance trends in India and Japan, noting that all international markets, except for Domino's Pizza Enterprises (DPE), are meeting initial expectations for profitability. The speaker is optimistic about future profitability, despite current pressures on DPE, which they expect to resolve by 2026. They mention that DPE's CEO is devising a plan to ensure new stores are sustainably profitable to avoid future closures of unprofitable stores. The company is in a "wait-and-see" mode regarding updates to DPE's strategy. During a Q&A session, Lauren Silberman from Deutsche Bank asks for clarification on the 50% incrementality figure related to Domino's Direct customers and its relation to partnerships. She also inquires about the deceleration in carryout sales, which grew by only 1%, and seeks clarification on what the company observes with carryout customers compared to previous quarters.

In the paragraph, Russell Weiner and Sandeep Reddy discuss their company's strategy involving aggregator platforms, particularly DoorDash, which is twice as large as Uber for pizza orders. This move is expected to drive significant growth, with incrementality nearing 50%. They also reflect on the previous year's calendar and timing impacts on their carryout business, noting the influence of bringback specials and a new loyalty program. They anticipate growth in both delivery and carryout segments this year, with DoorDash acting as a positive factor for delivery. Sandeep Reddy reiterates their expectation of a 3% comparable growth, roughly split between delivery and carryout. Jon Tower from Citi seeks clarification on the impact of DoorDash's contribution to growth.

The paragraph discusses the availability and sizing of stuffed crust pizza. Currently, it is only offered in medium size because it uses a unique, buttery-flavored dough different from regular hand-tossed dough. This size facilitates a $4 upcharge for promotional purposes, acting both as an order and ticket driver. While there are no immediate plans to offer other sizes, the company is monitoring consumer demand. Additionally, there is a brief mention of Sandeep Reddy addressing international unit expectations, indicating closures may follow a normal pattern, and net unit openings should be similar to last year.

In the paragraph, Sandeep Reddy addresses the impact of macroeconomic and geopolitical factors on international same-store sales, explaining that normal store closures are expected as part of the business plan. He highlights ongoing global marketplace volatility and geopolitical issues, such as tariff discussions, that can affect consumer demand. These factors have been incorporated into the company's guidance, which forecasts a 1% to 2% growth expectation for the year, accounting for some deceleration compared to Q1. Following this, Andrew Strelzik asks about the company's reinvestment priorities in light of savings from restructuring.

The paragraph is a discussion from a Q&A session involving Sandeep Reddy and Russell Weiner, with questions from Andrew and Jeffrey Farmer. Sandeep Reddy emphasizes the company's investment focus on consumer and store technology, as well as capacity investments, without giving specific savings figures but confirming adherence to an 8% profit growth target by 2026. Jeffrey Farmer inquires about the company's exposure to lower-income and Hispanic customer demographics in the U.S., specifically regarding their same-store sales performance. Russell Weiner responds by noting that lower-income customers are a significant part of the pizza and QSR (Quick Service Restaurant) market and that there isn't a noticeable shift away from Domino's to other brands among these demographics.

The paragraph discusses the strategic approach of a quick-service restaurant (QSR), specifically Domino's Pizza, in response to economic pressures. The company acknowledges the need to offer sustained value to meet consumer demands, which they believe will boost their market share. They highlight their advantages, such as robust supply chain capabilities, a substantial advertising budget, and strong franchisee economics. Domino's is confident in sustaining low prices to drive volume and perceives this period as an opportunity to strengthen their position and improve service, digital offerings, and new products. The section ends with a transition to a question from Jeff Bernstein from Barclays.

In the press release and call, Russell Weiner addresses concerns about potential pizza category fatigue and negative comps in the US market. He emphasizes that he doesn't see this as fatigue, mentioning that the pizza industry typically grows 1% to 2% annually. While growth may have been on the lower side in Q1, driven by same-store sales and new store openings, he highlights consistent retail sales growth and Domino's continuous market share gains. Being the #1 pizza player, Domino's still has room for market share expansion, given that other leading brands in different food categories have higher shares. Thus, he remains optimistic about long-term growth in the category.

The paragraph discusses the competitive landscape and growth potential for a pizza business, emphasizing that many competitors lack the long-term value capabilities that they possess. It highlights expectations for the pizza category's growth rate, foreseeing roughly flat growth for the coming quarter but noting confidence in their 1.3% retail sales and market share gains. A question about DoorDash and its impact on reaching customers in suburban and rural markets prompts a response that the company's delivery times will not change, as maintaining consistency and delivering hot products are priorities.

The paragraph discusses the company's strategy involving partnerships with Uber and Boost Weeks for customer acquisition. The first part highlights that the company is utilizing both rural/suburban and urban markets by being on both delivery aggregators, creating a balanced approach across their stores. The latter part addresses questions about the Uber mix and Boost Weeks, with Sandeep Reddy noting satisfaction with their Uber business and emphasizing that Boost Weeks are effective for customer acquisition. While they plan to continue Boost Weeks at a level similar to last year, Russell Weiner mentions they don't intend to increase the frequency significantly to avoid conditioning customers to expect it.

In the paragraph, a discussion takes place regarding the competitive intensity in the pizza and broader quick-service restaurant (QSR) industry, noted by Russell Weiner. He mentions that two competitors launched stuffed crust promotions in response to their own stuffed crust offering, amidst broader industry-wide discounting. Weiner also highlights that consumer disposable income and confidence are low, posing a challenge for the business. However, he notes that their economic model allows them to sustain promotional intensity better than competitors, who could face financial strain if they attempt to match these promotions. Over the past decade, their company has expanded by opening 1,900 stores, while major competitors have closed slightly fewer, illustrating the risk of heavy promotion without a strong economic foundation.

In the article's final question, Todd Brooks from The Benchmark Company inquires about Domino's market share gains since launching the Hungry for MORE program. Russell Weiner responds by highlighting Domino's consistent market share growth of about one point per year in the pizza industry. He attributes this success to their market share, advertising, and franchisee profitability. Weiner suggests looking at average unit volumes (AUVs) to understand Domino's advantage over competitors, emphasizing that Domino's large store network creates challenges for competitors trying to match their scale and performance with similar outlet costs. The call concludes with Greg Lemenchick ending the session and thanking participants.

The operator thanks the participants for joining the conference, announces its conclusion, and instructs them that they may now disconnect.

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