Domino’s Pizza, Inc. (NYSE:DPZ) Q2 2023 Earnings Call Transcript

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Andrew Charles: Great. Thank you. I’m trying to fuse a two-part question on Uber into one-part, so please bear with me here. But first, just given the reduction in ad fund earlier this month, will Uber Eats be funding advertising the platform in 2024? And then, secondly, I appreciate that you’re structuring the partnership with franchisee profitability at the center. And so, what I’m curious about is qualitatively, not quantitatively, will the commission borne by franchisees be a fixed fee for these orders or a percent of the order volume?

Russell Weiner: Well, let me first answer the — and I appreciate that. That’s pretty good, the one-part question. I’m going to have to — I’m not as good as you, so I’m going to have to give you a two-part answer. On the Uber piece of it, the — first, on the marketing funds. The marketing funds that we talked about earlier that are being used right now to cover some of the tech investments we’re trying to do, that are marketing related by the way, came out of a surplus of that budget. And so that money was never could have been, should have been spent this year or even next year. And so we have plenty of money to continue to do what we do every year, which is increase the amount of GRPs and — out there to our customers despite inflationary environment.

So that hasn’t held us back at all. I’ll let Uber comment on what kind of funding they plan to do. I think I talked to you a little bit about how our funding or marketing message is going to be driving within the platform. Sandeep, you want to talk a little bit about the commission structure?

Sandeep Reddy: Yes. And I think it’s a really good question, and there’s quite a few things that are in there. And so, I’m going to actually kind of unpack them a little bit for you. So, I’ll start with the tech fee itself. Well, the tech fees based on order counts. So every incremental order that actually comes through the platform, a tech fee will apply, same with any other order. So I think that’s one. And I think the rest of it is what will royalties be payable on basically in terms of what we report. It’s really the food sales as well as the delivery fee. So, our calculation of same store sales and retail sales will include those. And if there are any service fees or service charges that Uber actually charges, those really won’t to appear in our numbers, those will be directly from Uber. So hopefully that helps you kind of understand the structure of how this is going to work.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Jim Sanderson from Northcoast Research. Your question, please.

Jim Sanderson: Hey, thanks for the question. Just wanted to follow up to the discussion on Uber and marketing programs. I’m wondering if you plan to participate in some of the free delivery charges or free promotions that we see often on third-party aggregators? And if there’s any concern that, early on, you might see some cannibalization of your own delivery business? Thanks.

Russell Weiner: Yes. Our delivery fee and franchisee level delivery fees, they’re all contemplated in our pricing structure. And so, no, I don’t think that’s going to be affecting our profitability at all. And as we’re on the platform, anything they want to do with their customers to drive them to buy Domino’s Pizza, that’s really upside for us.

Jim Sanderson: That would be at their expense?

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