No bad stock

Domino’s Pizza, Inc.
CEO : Mr. Russell J. Weiner

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	3.6% YoY	11.7%	4.4%	2023-02-23

Sandeep Reddy says,

Pricing Architecture

• The average year-over-year price increase that was realized across the U.S. system was 6.3% in Q4 2022. The realized pricing for full year 2022 was 5.4%.

Cost Structure

• Efficiencies in the cost structure as revenues consistently grow faster than expenses.
• Year-over-year operating income margin as a percentage of revenues expanded to 130 basis points in Q4 2022 versus the 160 basis points contraction in Q3 2022.
• The contraction in year-over-year operating income margin as a percentage of revenues in Q4 2022 sequentially improved by 140 basis points versus Q3 2022.

Same Store Sales

• Positive same store sales growth, excluding foreign currency impact in both U.S. and international businesses, for the first time since Q4 2021, contributing to improving operating income leverage.
• During Q4 same store sales for the U.S. business increased 0.9%, rolling over a prior increase of 1% and were up 13.1% on a three-year stack basis relative to Q4 2019.

International Business

• Same store sales excluding foreign currency impact for international business increased 2.6%, rolling over a prior increase of 1.8% and were up nearly 12% on a three-year stack basis relative to Q4 2019.
• Our international business added 318 net new stores in Q4 2022, comprised of 406 store openings and 88 closures.

Unit Economics

• The average Domino’s store in the U.S. generated more than $1.3 million in sales during 2022.
• The estimated average store profitability was higher in Q4 2022 than Q4 2019.

Store Growth

• We and our franchisees added 43 net new stores in the U.S. during Q4 2022, consisting of 50 store openings and seven closures, bringing our U.S. system store count to 6,686 stores at the end of the quarter.

Russell Weiner says,

Store Growth and Position in QSR Pizza Category

• Domino’s and franchisees grew by 2,860 new stores worldwide since 2020
• Expected to hit 20,000 stores as a system in 2023
• QSR pizza category sales in the US grew by almost 10% since pre-pandemic levels, with Domino’s gaining approximately three share points

Delivery and Carryout Business Performance

• Carryout now comprises approximately 50% of orders and 40% of sales in the US
• Domino’s delivery business saw both headwinds and tailwinds over the past three years, with US delivery sales in 2022 being over $0.5 billion higher than the pre-COVID baseline in 2019
• Entire QSR delivery category was down high single digits for fiscal year 2022, while pizza delivery was down as well
• US Carryout retail sales in 2022 were more than $1 billion higher than pre-COVID levels

International Business Growth

• 1,135 gross international store openings in 2022 were the highest organic openings in history
• One of the largest master franchisees, Jubilant FoodWorks, has a goal to grow to over 3,000 stores in India over the next five years
• Service has always been a key differentiator, with Jubilant extending its delivery service advantage in India through global fortressing strategy

Domino’s Supply Chain and Innovation

• Domino’s opened a new supply chain center in Merrillville, Indiana in September 2022, representing a testing ground for the future of Domino’s supply chain
• Continuing to leverage internal best practices around delivery service, as well as innovations in this area, like our new electric delivery fleet, should help continue to improve the delivery business

2022 Q4 Results

• The fourth quarter saw mixed results, particularly with the challenges in the US delivery business
• Consumers returning to pre-COVID eating habits meant some sit-down business that was a source of volume for restaurant delivery orders returned to that channel
• Inflation impacted delivery due to the added expenses of fees and tips in that channel

Q & A sessions,

Impact of Delivery Category on Business

• 60% of the company’s sales are from delivery.
• The pizza delivery category was down, but Dominos gained share.
• Carryout business is up 14% to 15% in Q4 and $1 billion over the last three years.
• Dominos opened more organic stores internationally than ever before in history.

Improvements in Delivery and Operations

• Working with aggregators globally and improving the ordering experience and loyalty program.
• Efforts to improve service times and operations, with hires and innovation in technology and processes.
• Corporate stores have reached pre-pandemic hiring levels, turnover is down, and hiring is more efficient.
• About half of the stores are on call centers to improve the ordering experience.
• Launched an EV fleet of 800 vehicles, attracting a new pool of drivers.

Unit Growth Update and Rationale

• Unit growth update has been lowered from 6% to 8% to 5% to 7% due to constraints in the U.S. delivery business.
• Headwinds from 2022 are expected to continue into the first half of 2023.
• The pipeline for 2023 looks encouraging, and there are compelling franchising economics.
• Franchise EBITDA is expected to improve in 2023, and paybacks continue to be strong at roughly three years.

Improvement in Margins

• Guiding principle is that revenue should grow faster than expenses.
• G&A is expected to be margin accretive, even at the low-end guidance range on global retail sales.
• The company experienced headwinds in foreign exchange, which negatively impacted operating margins in 2022.
• Corporate store sales will help margins, but pre-pandemic margins in 2019 are further away than 2023 due to time and other factors.