Domino’s Pizza, Inc. (NYSE:DPZ) Q4 2022 Earnings Call Transcript

Russell Weiner: Yeah sure, thanks. Well, I just want to reiterate our positive look to the change we made in our mix and match, moving to $6.99 both delivering Carryout. It was absolutely the right thing. You know, as you know our franchisees and local stores control their own menu pricing and delivery fees and things like that and all the models in the world, all the experience in the world with the headwinds and changes in food cost and labor and things like that pretty quick. And I think if we were to look at some of our stores, things that are not on promotion. So, menus and maybe some case delivery fee our price may have got a little bit of a head. We need to be of value, not just international offer. Sometimes people want medium two type pizzas, a lot of times they want medium two types pizzas, but sometimes they want other things too.

And it’s just making sure that we have the right value across the other pieces of our menu. We’ll be working with our franchisees on that.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Lauren Silberman from Credit Suisse. Your question, please.

Lauren Silberman: Thank you for the question. I appreciate all the commentary on franchise EBITDA and payback. Can you just level set where development costs are running today? I think they were around 3,500 in €“ those were in 2019. Just to figure out what that is now. And then, Sandeep, I think you might have said franchise EBITDA could actually grow in ’23, versus €˜22. Did I understand that correctly?

Sandeep Reddy: Yes, thanks Lauren for the question. And I’ll start with the last part, then we’ll go back to the first part. So I think in terms of franchise EBITDA, we expect ’23 to be improved versus 2022 for sure, given the pricing changes that we made towards the back half of the year and the lowering pressure from food basket and costs that we anticipate in ’23. But I think in terms of the development cost, the answer is, it kind of varies. It depends on where exactly they are building stores, and there’s a big range in terms of development costs around the country. And so as we’re coming out of this constrained environment, where we had permitting and store construction issues, we are basically saying that there is some cost pressure for sure, but I think getting into specific from what that number is, is probably not right until we see this play out over the course of ’23.

And I think at the right time will be in a position to give you a better update in terms of the where things are at. But essentially from a payback standpoint, the three year range of payback is still very much what franchisees are looking at, and that’s why they are making the investments they are making.

Operator: Thank you. One moment for our next question. And our next question comes from the line of John Ivankoe from JPMorgan. Your question, please.