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

John Ivankoe : Hi, thank you. A part from me, first, U.S. unit development 1.9%. You’ve talked about splits of around 50 basis points, So that would suggest something like 25% on average of a split store comes from existing stores. And I wonder as you kind of think about the footprint going forward to 8,000 stores, if there be a way to reduce the sales impact from those splits, because obviously to the most nearby stores, it would be much greater than 25%, so that’s the first part of the question. And then secondly, I think it’s been some time since we talked about the test or some initiatives that you were specifically doing in the Houston market, if I remember correctly. Is there anything to share that you’re seeing there, that I guess in theory we could see publicly if we went and found that selection of stores, that maybe has some application to the Domino’s system from a efficiency effectiveness in store delivery, whatever we can maybe get a little preview of some of those initiatives on this call.

Thank you so much.

Sandeep Reddy: Sure I’ll start off on the impact on the unit growth and a split impact of fortressing basically that you’re referring to John. As you €“ we started already get updating again during the course of ’22 and if you saw we went from I think 0.7% of fortressing impact in the second quarter to 0.5% now. So the impact on fortressing is becoming less and less in terms of what effects it’s got on the same store sales. We don’t see it being a very, very significant impact as we move forward. But as we said again, we going to update it if it really deviates from that. There is plenty of growth still that we actually seen in our runway. We have the opportunity mapped out by our internal teams, and we know that we can definitely go after that in the pipeline that we have from franchisees is on the back half.

Knowing what that opportunity looks like, the economics that they see coming out of it, and so I think we feel pretty good that we had the right balance on that.

Russell Weiner: Yes, I would just add John. We are transforming this company right now. Obviously, the delivery business is a hot topic today, but you know Carryout pizza, Carryout QSR is significantly bigger than delivery QSR and so what we see is every time we open up a new store, not only do our delivery times get tighter. And hot pizza is actually hot food in general by the way, which is why we’re launching our Tots, because people want hot potatoes pun intended. The delivery times get tighter, but also the Carryout volume is very incremental. Consumers don’t want to €“ customer’s don’t want to €“ customers don’t want to walk that far, drive that far to get their pizza. So part of the transformation of this brand into a more complete company is absolutely €“ you know continuing to drive these store growth.

As far as some things that we were doing at Houston, I think rather than me trying to describe things over a call, I would really invite you to come to our meeting later this year, where we’re going to show that stuff live. It’s super hard to describe, but I would say at the end of the day these are processes that enable us to get a hot pizza to customers, obviously in a safe but faster way. But also improve the experience in the store for our team members and the resulting quality of that product. So hopefully, that’s enough to wet your whistle to come to Ann Arbor.

Operator: Thank you. One moment for our final question. And our final question for today comes from the line of David Tarantino from Robert W. Baird. Your question please.