DOMINOS PIZZA INC Q1 FY2025 earnings call

Russell Weiner highlighted the execution of the Hungry for MORE strategy, driving market share gains across US and international businesses. The 'M' in Hungry for MORE represents most delicious food, with the launch of Parmesan Stuffed Crust pizza in early March as an example of 'innovation with intent'. Operational excellence is crucial, with improvements in service and Dom.OS technology. Renowned value is driven through national promotions, Domino's Rewards, and aggregator platforms. A partnership with DoorDash was announced, with national launch expected in May and rollout completed by the end of Q2, anticipating approximately 50% incrementality. Organizational changes were made, including elevating Joe Jordan to Chief Operating Officer and promoting Weiking Ng to Head of Domino's International, with a focus on a faster, more efficient structure aligned with the Hungry for MORE strategy.

In the first quarter, global retail sales excluding foreign currency grew 4.7%. US retail sales increased 1.3%, with the US system store count reaching 7,031 after adding 17 net new stores. International retail sales, excluding the impact of foreign currency, grew 8.2% in the quarter. However, net stores in international markets decreased by 25 in Q1, primarily due to closures from Domino's Pizza Enterprises (DPE) in Japan. US same store sales declined by 0.5% in Q1, while international same store sales came in at 3.7%.

Global retail sales growth is expected to be generally in line with 2024. US same store sales are expected to be 3%, with lower performance in the first half compared to the back half due to the timing of initiatives; macro pressures could affect achieving this target. International same store sales are expected to grow by 1%-2% as there are macro and geopolitical pressures globally. Operating profit growth is anticipated to be approximately 8% excluding the impact of currency and around $5 million in severance expenses related to organizational realignment. US food products are mostly sourced domestically, so tariffs are not expected to materially impact operating profit.

Geopolitical and macroeconomic pressures can impact international same store sales growth. Persistent macroeconomic pressures may put pressure on achieving the US same store sales target of 3%.

Q: Danilo Gargiulo asked about international geopolitical pressure and consumer weakness.

A: Sandeep Reddy responded that geopolitical volatility could impact demand, and this is incorporated in the 1%-2% international same store sales guidance.

Q: Brian Bittner asked about DoorDash mix relative to Uber.

A: Russell Weiner stated that DoorDash pizza sales on the platform are 2x Uber, and expecting approximately 50% incrementality.

Q: David Tarantino asked about the impact of the stuffed crust pizza.

A: Russell Weiner said the launch had limited impact in Q1 but was pleased with the performance, with a high mix of orders including stuffed crust pizza.

Q: David Palmer asked about the mix and incrementality of the stuffed crust pizza.

A: Russell Weiner said more information on incrementality and repeat will be provided, and the stuffed crust pizza gives a halo to the brand in terms of deliciousness.

Q: Dennis Geiger asked about US sales initiatives.

A: Sandeep Reddy talked about the value platform, growth of the loyalty program, and focus on carryout customers.

Q: Peter Saleh asked about domestic unit growth and tariffs.

A: Sandeep Reddy said the domestic unit growth guidance remains unchanged, and franchisee enthusiasm is strong.

Q: Gregory Francfort asked about aggregator customer behavior.

A: Russell Weiner said aggregator customers may have a smaller group size compared to website customers.

Q: Chris O'Cull asked about the impact of the Best Deal Ever.

A: Russell Weiner said the Best Deal Ever had no limitations, leaned into customer value, and was pleased with the performance.

Q: Sara Senatore asked about the US outlook and macro.

A: Russell Weiner and Sandeep Reddy said the calendarization of macros and potential deceleration can impact the US same store sales.

Q: Andrew Charles asked about DoorDash incrementality denting Uber.

A: Russell Weiner said customers choose aggregators based on their loyalty, and the focus is on the overall delivery business.

Q: John Ivankoe asked about delivery same store sales and new stores.

A: Russell Weiner said store splits drive carryout and efficient delivery.

Q: Christine Cho asked about Canada strength and international unit growth.

A: Russell Weiner said Canada embraced the Hungry for MORE strategy, and Sandeep Reddy talked about DPE closures and international market trends.

Q: Lauren Silberman asked about 3P incrementality and carryout comp.

A: Russell Weiner said DoorDash is 2x Uber, and carryout comp was impacted by calendarization.

Q: Jon Tower asked about Dash clarification and stuffed crust sizes.

A: Sandeep Reddy and Russell Weiner talked about Dash incrementality and the dough and size of the stuffed crust pizza.

Q: Brian Harbor asked about international units and macro impact.

A: Sandeep Reddy said normal closures are expected, and macro and geopolitical pressures impact international same store sales.

Q: Andrew Strelzik asked about reinvestment of restructuring savings.

A: Sandeep Reddy said savings are reinvested in consumer technology, store technology, and capacity investments.

Q: Jeffrey Farmer asked about US customer demographics.

A: Russell Weiner said lower-income customers are part of the QSR landscape, and Domino's is set up to offer value.

Q: Jeff Bernstein asked about market share gains.

A: Russell Weiner and Sandeep Reddy said the pizza category grows at ~1%-2%, and Domino's gained share in a tough environment.

Q: Alexander Slagle asked about DoorDash and delivery efficiency.

A: Russell Weiner said DoorDash helps rural and suburban stores, with no change in delivery drive times.

Q: Zach Fadem asked about Uber mix and Boost Weeks.

A: Sandeep Reddy said Uber mix is not discussed, and Boost Weeks are customer acquisition vehicles.

Q: Logan Reich asked about competitive intensity.

A: Russell Weiner said competitors launched stuffed crust pizza, and Domino's has better economics.

Q: Todd Brooks asked about market share gains since the Hungry for MORE launch.

A: Russell Weiner said there is a ~1 share point gain per year, and Domino's is better poised with market share, advertising, and franchisee profitability.