Domino’s sees takeout as a lever for growth


ANN ARBOR, MICH. — “(Domino’s franchisees) delivered one in three pizzas before the pandemic, and they deliver about one in three pizzas by mail,” Russell Weiner, CEO of Domino’s Pizza, Inc., said during a conference call on March 13. october. Call to discuss third quarter results.

“What is new and what they should be congratulated on is that we have now emerged as the No. 1 takeaway brand,” Mr. Weiner said. “So from a total pizza market share standpoint, we’re up 200 basis points compared to three years ago, and that’s just an incredible achievement.”

Same-store takeout sales in the quarter increased nearly 20% compared to the third quarter of 2021. Based on the third quarter of 2019, takeout sales increased 35% compared to the third quarter of 2019 the company said.

“As you know, although Domino’s started out as a pizza delivery company, we started focusing on the takeout segment with specific offerings in 2011,” Mr. Weiner said. “That effort has paid off, as shared NPD data shows we became the #1 takeout pizza brand in the US late last year. We continued to grow the takeout business in the third quarter.”

Dominos net income for the third quarter ended September 11 was $100.5 million, or $2.79 worth of common shares, down from $120.4 million, or $3.24 per share, in the third quarter. quarter of 2021. The decrease was mainly due to a higher provision for income taxes and lower income from operations. The provision for income taxes increased $16.9 million in the third quarter of 2022 due to a higher effective tax rate, which increased with excess tax benefits from stock-based compensation.

Investors were enthusiastic the day Domino’s results were announced. Shares of the Ann Arbor-based company traded as high as $335.92 on the New York Stock Exchange on Oct. 13, up 11% from the previous day’s close of $301.76.

Quarterly sales reached $1,070 million, 7% more than the $998 million for the same period of the previous year.

Same-store sales in the United States increased 2% from the third quarter of 2021. Same-store sales increased nearly 18% compared to the third quarter of 2019.

In the first two quarters of 2022, Domino’s faced a shortage of drivers. Mr. Weiner said the company saw progress during the quarter as a result of his initiatives in this area. While Domino’s only has visibility into its corporate stores, the number of job applications and new hires has increased throughout the year, the company said.

“And at the end of the quarter, we were back more or less to 2019 levels in terms of applications and new hires per week,” Weiner said. “Staffing remains a constraint, but my confidence in our ability to solve many of our delivery labor challenges has grown in recent quarters. Our delivery service also showed improvement during the quarter. While we still have work to do to return to our high delivery service standards, I am encouraged by the progress we have made so far.”

Sandeep Reddy, chief financial officer, said the company continues to examine and evolve its pricing architecture.

“During the third quarter, the average price increase that took place across our US system was 5.4%,” Mr. Reddy said. “We will be adjusting our takeout mix and match deal from $5.99 to $6.99 on October 17. As a result of this update, we expect realized pricing to increase by approximately 7% in Q4.”

Domino’s has been restructuring efficiencies in its cost structure to ensure revenues consistently grow faster than expenses, Mr. Reddy said.

“We saw a sequential improvement in year-over-year operating income margin contraction as a percentage of revenue from 180 basis points in the second quarter to 160 basis points in the third quarter. We need to continue this trend.”

The company achieved a sequential improvement in U.S. same-store sales from a 2.9% decline in the second quarter to a 2% gain in the third quarter, driven primarily by a smaller decline in the number of orders.

“Excluding the negative foreign currency impact, global retail sales grew nearly 5% in the quarter, resulting in a three-year build-up of over

28% compared to the third quarter of 2019,” said Mr. Weiner. “We and our franchisees opened more than 200 net new stores during the quarter and more than 1,100 during the four quarters thereafter.”

Subsequent to the end of the third quarter, Domino’s sold 114 company-owned stores in Arizona and Utah to franchisees for $41.1 million and expects to post a profit on this transaction in the fourth quarter of 2022. Accounting for this transaction was still in process. on October 13.


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