Domino’s Pizza, Inc.
CEO : Mr. Russell J. Weiner
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | -3.8% YoY | 9.7% | 9.1% | 2023-07-24 |
Russell Weiner says,
Delivery Growth and Aggregator Marketplace
- Domino’s is focused on restoring delivery growth in the United States.
- Efforts to improve service, staffing, and drive value and innovation are expected to drive order counts in the delivery segment.
- The recently announced agreement with Uber Eats is expected to bring a large and growing cohort of delivery customers to Domino’s.
- Domino’s plans to tap into the aggregator marketplace, which has seen significant growth in sales for quick-serve pizza restaurants.
- The opportunity represents over $1 billion in incremental sales for Domino’s U.S. business.
New Loyalty Program
- A new and improved loyalty program will be launched in the U.S. in September.
- The program will reduce the requirements to earn and redeem loyalty points, benefiting both carryout and delivery customers.
- It is expected to help retain current and attract new customers.
Innovation and Product Launches
- Domino’s will be launching two exciting innovations in the U.S. market in the third quarter.
- Domino’s Pinpoint Delivery, launched in late June, allows customers to receive their order nearly anywhere by dropping a pin on the app.
- Pepperoni Stuffed Cheesy Bread, launching in late August, is a new addition to Domino’s Stuffed Cheesy Bread platform.
- The stuffed cheesy bread line is a significant part of the menu mix and provides a healthy margin for franchisees.
Momentum and Future Impact
- Domino’s expects its momentum to build starting in Q4 and significantly impact the performance of the business in 2024 and beyond.
- EBITDA growth for franchisees is expected to continue as a result of sales building initiatives.
Financial Performance
- Further details on Q2 financial results will be provided by CFO, Sandeep Reddy.
Sandeep Reddy says,
Pricing
- Average price increase across the U.S. system in Q2 2023 was 3.9%.
- Expecting average pricing to be similar in Q3 and decrease to approximately 2% in Q4.
- The pricing change from October 2022 will moderate in Q4.
Cost Efficiencies and Margin Recovery
- Operating income margin grew by 240 basis points versus Q2 2022.
- Full-year operating income margins in 2023 expected to reach or exceed 2019 levels.
Positive Same Store Sales Growth
- Positive same store sales growth in U.S. and international businesses for the third consecutive quarter.
- Operating income improvement driven by same store sales growth excluding foreign currency impact.
Financial Results
- Excluding the negative impact of foreign currency, global retail sales grew 5.8%.
- U.S. retail sales increased 1.7%.
- International retail sales, excluding currency impact, grew 10.1%.
- U.S. same store sales increased 0.1% driven by higher average ticket, partially offset by order count declines.
- Q2 delivery same store sales declined 3.5% in the U.S.
Unit Count and Store Growth
- Added 27 net new stores in the U.S. in Q2 2023, with a net store growth rate of 1.8%.
- International same store sales increased 3.6%.
- International store count increased by 170 net new stores.
- Anticipate returning to full-year net store growth in 2024 after store closures in 2023.
- Trailing four quarter global net store growth rate was 4.7%.
Capital Structure Update
- A debt leverage ratio of 4 times to 6 times is appropriate for the company.
- Expect to use free cash flow for business investments, shareholder returns, debt retirement, and opportunistic borrowing or refinancing.
Q & A sessions,
Revenue Growth from Uber Partnership
- Domino’s Pizza expects to gain $1 billion in revenue from its exclusive partnership with Uber for the U.S. aggregator pizza delivery business.
- This is a signal of the company’s fair share of the $5 billion market.
New and Improved Loyalty Program
- Domino’s is introducing a new loyalty program that aims to provide better value to customers and increase engagement.
- The program will offer lower hurdles for carryout customers to earn points and will have various redemption options.
- The changes in the loyalty program are intended to scope the changes and opportunities in the business.
Focus on Carryout Business
- Domino’s is focused on gaining its fair share of the carryout market, aiming for one out of every three carryout sales.
- The company has gained $2.5 billion since leaning into carryout in 2011 and expects to gain another $2 billion.
- They recognize that carryout customers are looking for value and aim to provide competitive prices.
Improved Business Fundamentals
- Domino’s has improved the underlying fundamentals of the business, including profitability for franchisees and improved service.
- Service times have improved by almost 2 minutes compared to last year.
- The company’s innovative approach focuses on purposeful innovation, including product launches and technology advancements.
Strong Growth Prospects for Store Expansion
- Domino’s expects store growth to inflect towards the end of the year and into 2024.
- The company’s track record of profitability and low store closures demonstrates the potential for further store expansion.
- Domino’s is already a $1 billion business globally and expects incremental growth in international markets.
No bad stock 