Q4 2023 Domino's Pizza Inc Earnings Call

Thank you for standing by and welcome to Domino's Pizza's fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

Operator: Thank you for standing by, and welcome to Domino's Pizza's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again.

If your question has been answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program, Greg Levin check Vice President Investor Relations. Please go ahead, Sir good morning, everyone. Thank you for joining us today for our fourth quarter conference call.

Operator: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Greg Lemenchick, Vice President, Investor Relations. Please go ahead, sir.

Greg Lemenchick: Good morning, everyone. Thank you for joining us today for our 4th Quarter conference call. Today's call will begin with our Chief Executive Officer, Russell Wiener, followed by our Chief Financial Officer, Sandeep Reddy, and the call will conclude with a Q&A session. The forward-looking statements in this morning's earnings release and 10-K, both of which are available on our IR website, also apply to our comments on the call today. However, actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our filings with the FDA.

Gregory Francfort: Today's call will begin with our Chief Executive Officer, Russell Leaner, followed by our Chief Financial Officer Sandy Brenna.

The call will conclude with a Q&A session.

Gregory Francfort: Forward looking statements in this morning's earnings release and 10-K, both of which are available on our IR website also apply to our comments on the call today.

Gregory Francfort: Actual results or trends could differ materially from our forecast.

For information please refer to the risk factors discussed in our filings with the SEC.

Greg Lemenchick: In addition, please refer to the 8K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also being recorded for replay via our website. We want to do our best this morning to accommodate as many of your questions as time permits. As such, we encourage you to ask one question or... With that, I'd like to turn the call over to Russ. Thanks, Greg. I thought you were going to sing the opening, as we discussed, but I guess we'll let that pass today.

Gregory Francfort: In addition, please refer to the 8-K earnings release to find disclosures and reconciliations.

Gregory Francfort: non-GAAP financial measures that may be referenced on today's call.

Gregory Francfort: This mornings conference call is being webcast and is also being recorded for replay via our website.

Gregory Francfort: We want to do our best this morning to accommodate as many of your questions as time permits.

Gregory Francfort: Such we encourage you to ask one question only.

With that I'd like to turn the call over to Russell.

Russell Leaner: Thanks, Greg.

Russell Leaner: I thought you were going to assume the opening as we discussed but I guess, we will let that path today welcome to your first call here on Dominos and good morning to everyone joining us.

Russell Wiener: Welcome to your first call here on Domino's, and good morning to everyone joining us. Our strong Q4 demonstrated that our Hungry for More strategy is already delivering. Our positive U.S. same-store sales and transaction growth in both delivery and carryout underscore the strength and momentum that we're building in our business. These results and the initiatives that I'll cover today give me confidence in Domino's ability to continue to drive meaningful value.

Russell Leaner: Our strong Q4 demonstrated that are hungry for more strategy is already delivering results are positive U S same store sales and transaction growth in both delivery and Carryout underscore the strength and momentum that we're building in our business. These results and the initiatives that I'll cover today gives me confidence in Domino's ability to.

Continue to drive meaningful value for shareholders.

Russell Wiener: We're excited to share an update on the business through the lens of our Hungry for More strategy. As a reminder, Hungry for More is our new strategy around what we're going to do to deliver, over the course of the next five years, more sales and more stores. The Bulletproof Executive 2013, We're going to accomplish this through our four more pillars, M-O-R-E, that I'll share a brief description of. Let's start with M. M is for the most delicious.

Russell Leaner: We're excited to share an update on the business through the lens of our hungry for more strategy now as a reminder, hungry for more is our new strategy around where we're going to do to deliver over the course of the next five years more sales more stores and more profit.

Russell Leaner: To accomplish this through our four more pillars MLR.

Russell Leaner: Now I'll share a brief update on let's start with them and Thats, where the most delicious food now we know we have the most delicious food in the industry, but you don't want is time to talk about it more it's time to to show it more and we're already doing that.

Russell Wiener: Now, we know we have the most delicious food in the industry, but you know what? It's time to talk about it more. It's time to show it more, and we're already doing it. We're currently on air with Pan Pizza Advertising for the first time since 2014. We call pan pizza our best-kept secret.

Russell Leaner: We're currently on air with Pan Pizza advertising for the first time since 2014.

Russell Leaner: We call Pan Pizza are best kept secret.

Russell Wiener: It's time to change. Pizza is a delicious product made with fresh, never frozen... It also showcases the variety of crusts we have.

Russell Leaner: It's time to change that Pan Pizza is a delicious product made with fresh never frozen dough.

Russell Leaner: It also showcases a variety of crust we have to offer.

Russell Wiener: You're probably also noticing a shift in our advertising as we're beginning to romance the product more. The deliciousness of our, You can expect this to continue throughout. The O in Hungry for More stands for Operational Excellence.

Russell Leaner: You are probably also noticing a shift in our advertising as we're beginning to romance the product more to showcase the deliciousness of our food.

Russell Leaner: You can expect this to continue throughout the year.

Russell Leaner: The all in hungry for more stands for operational excellence and this is how we're going to deliver on our promise to have the most delicious food bye.

Russell Wiener: And this is how we're going to deliver on our promise to have the most by consistently driving a great experience with our product. As we've noted before, we made meaningful strides operationally in 2023 with our Summer of Service program, which resulted in service time back to pre-COVID. But we're never satisfied, and we want to continue to get better.

Russell Leaner: By consistently driving a great experience with our products.

Russell Leaner: As we've noted before we made meaningful strides operationally in 2023 with our summer of service program, which has resulted in service times being back to pre COVID-19 levels.

Russell Leaner: But we're never satisfied and we want to continue to get better our operators and our franchisees we are hungry for more.

Russell Wiener: Our operators and our franchises... We are hungry for more. In 2024, we're rolling out a new service program. We're calling that More Delicious Operations.

Russell Leaner: In 2024, we're rolling out a new service program, we're calling that more delicious operations.

Russell Wiener: This program will be a series of three product trainings focused on our dough, how we build and make our product, and how we cook. All of this is being done with a keen focus on driving more consistency in our food by providing the proper training for our team members. Our third pillar is R for renowned value. We've always been known as a premier value player, and we believe this can continue to be a differentiator for us in 24, through our improved loyalty program, our national promotion, and I'll roll out on. Domino's Rewards is off to a great start and was a key driver of our strong comp performance in the fourth quarter when we saw positive sales and transactions in both our U.S. delivery and carry-out business. We bought those in Fowler

Russell Leaner: This program will be a series of three product training sprints focused on our Doe, how we build and make our products and how we cook.

Russell Leaner: All of this is being done with a keen focus on driving more consistency in our food by providing the proper teaching tools and processes for our team members to succeed.

Russell Leaner: Our third pillar is our for non value, we've always been known as a premier value player and we believe this can continue to be a differentiator for us in 'twenty four through our improved loyalty program, our national promotions and our rollout on Uber.

Russell Leaner: Domino's rewards is off to a great start and with a key driver of our strong comp performance in the fourth quarter. When we saw positive sales and transactions in both our U S delivery and Carryout businesses.

Russell Leaner: We've also seen the following.

An uptick inactive members were up 3 million active members in 2023 with 2 million plus since our relaunch in September.

Russell Wiener: An uptick in active members. We are up 3 million active members in 2023, with 2 million plus since our relaunch in September. Domino's Rewards ended the year with approximately 33 million active members. A big driver of the increase in active members as well as the early success of the program was our emergency pizza promotion, an innovative marketing initiative that drove increased order counts and acquisition of customers into Domino's. We're seeing more redemptions than ever before, and we're seeing them at those lower tiers that we... And we know that this program has driven incremental profit dollars for our franchisees, so customers are getting more, and franchisees have earned more profits. Truly a win-win.

Russell Leaner: Domino's rewards ended the year with approximately 33 million active members.

Russell Leaner: A big driver of the increase in active members as well as the early success of the program was our emergency Pizza promotion, which was an innovative marketing initiative that drove increased order counts and acquisition of customers into Domino's rewards.

Russell Leaner: We're seeing more redemptions than ever before and we're seeing them at those lower tiers that we implemented.

Russell Leaner: And we know that this program has driven incremental profit dollars for our franchisees. So customers are getting more and franchisees have earned more profits truly a win win.

Russell Leaner: Finally, we're seeing more carrier users light users into the program than we were prior to the re launch so Domino's rewards is working as we intended.

Russell Leaner: National promotions will be another way will drive renowned valued in 'twenty four and right now were on air with our perfect combo promotion.

Russell Leaner: We believe this is the best deal in the <unk> industry to feed a family.

Russell Wiener: Finally, we're seeing more Karen users and light users in the program than we were prior to. So, Domino's Rewards is working as... National Promotions will be another way we'll drive renowned value in 24, and right now, we're on air with our perfect combo. We believe this is the best deal in the QSR industry to feed a family, highlighting the depth. The Bulletproof Executive 2013, We also brought back our carryout special boost week in January for the first time. January 2020

Russell Leaner: It highlights the depth, we have in our menu.

Russell Leaner: We also brought back our Carryout special boost week in January for the first time since January 2020.

Russell Leaner: And this performance exceeded my expectations, clearly customers want and value and we are driving it profitably for our franchisees.

Russell Leaner: While providing value through our own channels as one part of our barbell strategy tapping into the aggregated marketplace is the other.

Russell Leaner: We're very excited about this new sales layer, which we believe is a different and largely incremental customer that we had not been able to reach in the past.

Russell Leaner: Our entrance into this marketplace with Uber is on track.

Russell Leaner: As we are now fully rolled out across our U S system, We've gone live with the marketing and formally kicked off our one year exclusivity period in Q1.

Russell Wiener: And This performance exceeded my expectations. Clearly, customers want value, and we are driving it profitably for our franchises. While providing value through our own channels is one part of our barbell strategy, tapping into the aggregator part market. The Bulletproof Executive 2013, We're very excited about this new sales layer, which we believe is a different and largely incremental customer that we had not been able to... Our entrance into this marketplace with Uber is on track, as we are now fully rolled out across our U.S. We've gone live with the marketing and formally kicked off our one-year exclusive.

Russell Leaner: Sales of our building in line with increased marketing, which has been great to see and we expect those orders to continue to grow throughout the year, it's an equal share more about our sales expectations in 2024 for Uber in his comments.

Russell Leaner: Now everything we do at Domino's is enhanced by our best in class franchisees. The E and are hungry for more strategy in.

Russell Leaner: In 2023, we continue to enhance our U S franchisee base by adding more than 60, new franchisees to the system.

Russell Leaner: The most in 15 years.

Russell Leaner: Every one of these new franchisees started with domino's, either as a delivery driver or from within our system. This remains the secret sauce to our success.

Russell Leaner: We ended 2023 slightly ahead of our expectations on U S store growth and profits, adding 168, net new stores and finishing the year with estimated average franchisee profitability per store of $162000.

Russell Wiener: Sales are building in line with increased marketing, which has been great to see, and we expect those orders to continue to grow throughout. Sandeep, we'll share more about our sales expectations for Uber in his copy. Now everything we do at Domino's is enhanced by our best-in-class franchises. E and are hungry for more strategies.

Russell Leaner: This highlights the momentum we expect to continue into 2024.

Russell Leaner: I couldnt be more excited about 2024 and beyond for Domino's Pizza. Our foundation has never been stronger and our vision has never been greater we made a ton of progress in 2023, and our strong start to 24 gives me confidence in our ability to win with customers and drive return for Domino's franchisees and shareholders.

Russell Wiener: In 2023, we continue to enhance our U.S. franchisee... by adding more than 60 new franchisees to the system, the most in 15 years. Every one of these new franchisees started with Domino's either as a delivery driver or from within our... This remains the secret sauce to our success. We ended 2023 slightly ahead of our expectations on U.S. store growth and profits, adding 168 net new stores and finishing the year with estimated average franchisee profitability per store of $162,000. This highlights the momentum we expect to continue. I couldn't be more excited about 2024 and beyond for Domino's Pizza. Our foundation has never been stronger in our ambition, and everybody. We made a ton of progress in 2023, and our strong start to 2024 gives me confidence in our ability to win with customers and Drive Return for Domino's franchise.

Russell Leaner: Now with that I'll turn things over to Sandeep.

Sandeep: Thank you Russell and good morning, everyone.

Sandeep: As a reminder, the third quarter, we closed the remaining 143 stores in the Russian market.

Sandeep: The 2023 global retail sales group measures exclude the Russia market and our calculated of the growth in retail sales, excluding the retail sales from the Russian market.

Sandeep: 2023, retail sales and the 2022 retail sales please.

Sandeep: Now for our fourth quarter financial results.

Sandeep: Excluding the impact of foreign currency global retail sales grew four 9% due to positive U S comps and global <unk> growth.

Sandeep: U S retail sales increased four 5% and international retail sales, excluding the impact of foreign currency grew five 2%.

Sandeep: During Q4 same store sales for the U S business, So an increase of two 8%.

Sandeep: As Russell noted earlier, our strong comps in the quarter were driven by both delivery and Carryout as they were up 2% and three 9% respectively.

Sandeep: For the year delivery represented 48% of our transactions and 58% of our sales one carryout represented 52% of our transactions and 42% of our sales.

Sandeep: The weight of sales and transactions transactions shifted slightly more to carry out in 2023.

Sandeep: The increase in U S Q4, same store sales was driven by transaction growth from our new loyalty program.

Russell Wiener: With that, I'll turn things over to you. Thank you, Roswell, and good morning, everyone. As a reminder, in the third quarter, we close the remaining 143 stores in the Russian... The 2023 Global Retail Sales Growth Measures exclude the Russian market and are calculated as the growth in retail sales excluding the retail sales from the Russian market from both the 2023 retail sales and the 2022 retail sales. Now for a fourth quarter finale.

Inclusive of a benefit from emergency pizza.

Sandeep: Pricing of approximately 1% and a 0.4% sales mix from Google.

Sandeep: It will take us some time to determine just how much of that Uber mixes incremental so more to come on that as we move through 2024 and into 2025.

Sandeep: These two wins were partially offset by slightly lower average ticket was the result of higher Carryout mix.

Sandeep: Shifting to unit Count we added 92 net new stores in the U S, bringing our U S system store count to $68 54 stores at the end of the year.

Sandeep: For the year, we added 168, net new stores, which was a strong increase over the 126 net stores we opened in 2022.

Sandeep: U S company owned store gross margin decreased one six percentage points in the fourth quarter of 2023.

Sandeep Reddy: Excluding the impact of foreign currency, global retail sales grew 4.9% due to positive U.S. comps and global net stocks. U.S. retail sales increased 4.5 percent, and international retail sales, excluding the impact of foreign currency, grew 5.2 percent. During Q4, same-store sales for the U.S. business saw an increase of 2.8%. As Russell noted earlier, our strong comps in the quarter were driven by both delivery and carryout, as they were up 2% and 3.9%. For the year, delivery represented 48% of our transactions and 58% of our sales, while carry out represented 52% of our transactions. The weight of sales and transactions shifted slightly more to carry out. The increase in U.S. Q4 same-store sales was driven by transaction growth from our new loyalty program.

Sandeep: Excluding the impact from higher insurance costs, and an increase in our loyalty liability due to the change in point structure. Following the relaunch of the Dominoes rewards program.

Sandeep: Margins would've expanded slightly.

Sandeep: Domino's unit economics remain strong with continued EBITDA growth for our U S franchisees.

Sandeep: We are expecting that our average franchisee profitability per store will come in at a $162000 in 2023 up $23000 from the prior year.

Sandeep: Shifting to international.

Sandeep: Same store sales, excluding foreign currency impact increased 0.1%.

Sandeep: The deceleration from the third quarter is being driven primarily by pressures in Europe and geopolitical tensions in the middle East.

Sandeep: Please note that the middle East represents a relatively small portion of our profits at less than 3% of our operating income.

Sandeep: Our international store count increased by 302 net stores in the fourth quarter.

Sandeep: For the year on net store growth of international was 702 units, excluding the Russia closures.

Sandeep: In total for the year.

Sandeep: Grew 870 net stores across the globe.

Sandeep: Income from operations increased $8 4 million or three 4% in the fourth quarter.

Sandeep: Excluding the impact of the $21 $2 million prior refranchising gain that we are lapping income from operations would have been approximately would've been up approximately 13% of the fourth quarter and up approximately 10% for the full year.

Sandeep Reddy: Inclusive of a benefit from emergency pricing of approximately 1% and a 0.4% sales mix. It will take us some time to determine just how much of that Uber mix is incremental, so more to come on that as we move through 2024 and into 2025. These tailwinds were partially offset by a slightly lower average ticket that was the result of higher clarity.

Sandeep: Now turning to our 2024 outlook, which remains in line with what we shared at Investor Day in December.

Sandeep: <unk> costs for the following in 2024.

Sandeep: 7% of all global retail sales growth, excluding the impact of foreign currency.

Sandeep: We are expecting our 2024 U S comp to be above the 3% long term guide as a result of our expected outsized catalysts and Uber and loyalty.

Sandeep Reddy: Shifting to unit count, we added 92 net new stores in the U.S., our U.S. system slow count to 6854 seconds at the end. For the year, we added 168, which was a strong increase over the 126 net stores we opened. U.S. company-owned store gross margin decreased 1.6 percentage points in the fourth quarter of 2020, including the impact of higher insurance costs and an increase in our loyalty liabilities due to the change in point structure following the relaunch of the Domino's Rewards Program. Margins would have expanded slightly.

As we have communicated previously we expect our sales with Google to increase throughout the year as marketing and awareness increases and we are expecting to exit the year with an overall sales mix of 3% or more.

Sandeep: We expect sales with Uber to start ramping up after Q1, which will have only a partial tailwind from marketing.

Sandeep: In the U S. We are planning for a modest price increase in the low single digits.

Sandeep: This is inclusive of California, where we're expecting to take pricing above that to offset the wage impacts from AB 228.

Sandeep: We expect our international comps to remain soft in the first half of the year due to a continuation of the trends we saw in the fourth quarter, but expect them to accelerate two or 3% on more long term guidance in the back half of the year.

Sandeep Reddy: Domino's unit economics remains strong with continued EBITDA growth for our U.S. franchise. We are expecting that our average franchisee profitability per store will come in at $162,000 in 2020, up $23,000 from the prize. Shifting to international, Seems to have sales excluding foreign currency impact increased 0.1%. The deceleration from the third quarter is being driven primarily by pressures in Europe and geopolitical tensions. Please note that the Middle East represents a relatively small portion of our profits at less than 3% of our operating capital. Our international store count increased by 302 net stores in the fourth quarter.

Sandeep: Now shifting to net stores, where we're expecting 1100 on war, which will be driven by 175 in the U S and 995 internationally.

Sandeep: There was a meaningful uptick in our U S net store growth in the fourth quarter.

Sandeep: Which was slightly ahead of our expectations.

Sandeep: The pipeline continues to build.

Sandeep: We are expecting net unit growth can be used to be relatively flat to 2023 in the first half of the year and to accelerate slightly in the back half based on current visibility.

Sandeep: Internationally, we are expecting to increase net store growth each quarter over the prior year as we lap the onetime closures. We had in 2023 had to step up significantly in the back half of the year.

Sandeep: As previously communicated we are expecting slightly less than half of our growth to come from China and India.

Sandeep: On profits, we would expect to get 8% or more year over year increase in operating income excluding the impact of foreign currency.

Sandeep: We do not expect the impact of foreign currency to have a material impact in 2024 based on current FX rates.

Sandeep: A few additional points of color on some of the profit components.

Sandeep: We are expecting our food basket to be up 1% to 3%.

Sandeep Reddy: For the year, our net store growth in international was 702... Scratch that Russia, in total for the year. We grew 870 net stores across, Income from operations increased $8.4 million or 3.4%, excluding the impact of the $21.2 million prior re-franchising that we are not. Income from operations would have been approximately, would have been up approximately 13% in the fourth quarter and up approximately 10% in the second quarter. Now turning to our 2024 outlook, which remains in line with what we shared yesterday in December. Our guidance calls for the following... 7% or more global retail sales growth, excluding the impact of foreign currency. We are expecting our 2024 U.S. comp to be above the 3% long-term guide as a result of our expected outsized capital.

Sandeep: This is being driven by continued moderation on cheese prices.

Sandeep: From a cadence perspective, we expect the Q1 food basket to be deflationary as we lap the only quarter from 2023, when the basket increased.

Sandeep: Followed by moderate increases for the remainder of 2024.

Sandeep: We are expecting our supply chain margins to be roughly flat for the year.

Sandeep: Barring any unforeseen shifts into food baskets.

We are expecting an increase in year over year supply chain margins in Q1 due to the expected negative food basket.

Sandeep: Followed by slight moderation for the balance of the year.

Sandeep: We expect supply chain margin dollars to grow in line with transaction growth throughout the year.

Sandeep: We are estimating that freight inflation across the system inclusive of California will be in the mid single digits and this has been primarily driven by minimum wage increases.

Sandeep: We are expecting our G&A as a percentage of retail sales to be approximately two 4% which is in line with 2023.

Sandeep: We also wanted to provide an update on our technology for you for 2024.

Sandeep: In Q2, 2023, we increased the speed to 39 five.

Sandeep: And temporarily lowered our advertising fund contribution percentage by two 5% to 575% for a 12 month period.

Sandeep Reddy: The Bulletproof Executive 2013, As we have communicated previously... We expect our sales with Uber to increase throughout the year as marketing and awareness increases, and we are expecting to exit the year with an overall sales mix of 3% or more. We expect sales with Uber to start ramping up after Q1, which will have only a partial tailwind from March. In the U.S., we are planning for a modest price increase in the low-single digits. This is inclusive of California, where we're expecting to take pricing above to offset the wage impacts from AB 1220.

Sandeep: Starting at the beginning of Q2 2024, we are lowering the technology for years to 35 <unk> and.

Sandeep: And increasingly AD fund back to 6%.

Sandeep: As previously communicated we are expecting operating income margins to be relatively flat compared to 2023.

Sandeep: We do not expect to see cost leverage in 2024 due to investments we are making in consumer technology store technology and supply chain capacity to support future sales growth in the U S.

We are expecting Q1 margin expansion due to lower inflationary pressures as previously noted on our food basket.

Sandeep: And we are expecting the Q2 margin rate to be down because of the timing of G&A spend which will be partially driven by our worldwide Ravi a gathering of our U S and international franchisees that takes place every two years.

Sandeep: We expect margins in the back half of the year to be flat.

Sandeep Reddy: We expect our international comps to remain soft in the first half of the year due to a continuation of the trends we saw in the fourth quarter, but we expect them to accelerate to our 3% or more long-term guidance in the back half of the year. Now, shifting to net stores, where we are expecting $1,100 or more, which will be driven by $175 in the U.S. and $925 in the nation. There was a meaningful uptick in our U.S. natural growth in the fourth quarter, which was slightly ahead of our expectations.

Sandeep: As I conclude I wanted to note that we announced a 25% increase in our dividend and increased our share repurchase authorization by $1 billion.

Sandeep: All of this is being done in line with our capital deployment priorities.

Speaker Change: Thank you we will now open the line for questions.

Speaker Change: Certainly ladies and gentlemen.

Speaker Change: We'd like to remind you to please limit yourselves to one question you may get back into the queue. As time allows one moment for our first question.

Speaker Change: And our first question comes from the line of Brian Bittner from Oppenheimer. Your question. Please.

Brian John Bittner: Thank you and good morning.

Brian John Bittner: Clearly your underlying core business is showing very nice signs of improvement positive traffic in both the carryout business and delivery business prior to any Uber benefits and I understand improvements in the core business can continue moving forward, maybe even perhaps accelerate and they remain important.

Sandeep Reddy: And the pipeline continues. We are expecting net unit growth in the U.S. to be relatively flat to 2023 in the first half of the year and to accelerate slightly in the back half based on current... Internationally, we are expecting to increase net store growth each quarter over the prior year as we lap the one-time closures we had in 2020 and have to step up significantly in the backup. As previously communicated, we are expecting slightly less than half of our growth to come from China. On profits, we are expecting an 8% or more year-over-year increase in operating profits, excluding the impact of foreign currency. We do not expect the impact of foreign currency to have a material impact in 2024 based on current evidence.

Brian John Bittner: Now you are fully rolled out with Uber and our our conversations with the investment community suggests the expectations for Uber Uber mix. Currently is still relatively low maybe that one to one 5% range and you talked about getting to 3% by the end of the year. So can you talk about.

Brian John Bittner: This improvement should unfold as the year unfolds and maybe unpack the marketing that's getting turned on how is that bolstering your expectations for where the Uber mix will go.

Sandeep Reddy: A few additional points of color on some of the profits. We are expecting our food basket to be up 1% to 3%. This has been driven by continued moderation on cheese prices. From an ingredients perspective, we expect the Q1 food basket to be de-fished, as we left the only quarter from 28, followed by moderate increases for the remainder of. We are expecting our supply chain margins to be roughly flat for the year, barring any unforeseen shifts in. We are expecting an increase in year-over-year supply chain margins in Q1, due to the expected negative food bus, followed We expect supply chain margin dollars to grow in line with transactions throughout. We are estimating that labor rate inflation across the... Inclusive of California, will be in the mid-single digits, and this is being primarily driven by minimum weight. We are expecting our GNA as a percentage of retail to be approximately 2.4%, which is in line with 20. We also wanted to provide an update on our technology fee for 2024. In Q2 2023, we will increase this fee to $39.50 and temporarily lower the Advertising Fund Contribution by.25, 5.75% for a 12-year-old.

Brian John Bittner: <unk>.

Speaker Change: Good morning, Brian.

Speaker Change: How are you Doug.

Speaker Change: Let me talk a little bit about what we're seeing as far as the cadence of the flow of orders from over time.

Brian John Bittner: You've talked about the point for in Q4, and we're seeing a meaningful uptick in in Q1, we just turned the marketing on.

Brian John Bittner: And so essentially saying with Uber, so essentially what we expect to see as awareness grows is that percent of sales grow and we feel like we're still in line for the 3% exit rate that we are.

Brian John Bittner: We spoke about.

Thank you one moment for our next question.

And our next question comes from the line of Lawrence <unk> from.

Lawrence: Deutsche Bank your question please.

Lawrence: Thank you very much congrats on the quarter I wanted to ask about value.

Lawrence: In January around the weeklong Carryout from Alex I haven't seen the floor can you talk about the rationale behind that any commentary on.

Lawrence: Of that performing.

Lawrence: Are you willing to talk about January just given a little bit of noise across the industry and then more broadly how youre thinking about value and any incremental value offers through 'twenty four thank you very much.

Speaker Change: Yes Laurent.

Speaker Change: When do you think about are hungry for more strategy. We're now in value is a big piece of it.

Speaker Change: The Carryout special isn't something new it's something we've brought back I think I'll ask when we ran it was 2020.

Speaker Change: And.

Speaker Change: Frankly.

Speaker Change: It's going to be part of our portfolio moving forward as well as 50% off as well as our mix and match deal values is a key component not only price, but value from a loyalty standpoint in value in the agri.

Sandeep Reddy: Starting at the beginning of Q2 2024, we are lowering the technology fee to $35.5 and increasing the ad fund. As previously communicated, we are expecting operating income margins to be relatively flat compared to... We do not expect to see cost leverage in 2020 due to the investments we are making in consumer technology, store technology, and supply chain capacity. Please support future sales. We are expecting Q1 margin expansion. Due to lower inflationary pressures as previously noted in our food basket, and we are expecting the Q2 margin rate to be down because of the timing of GNA spend, which will be partially driven by a worldwide rally, a gathering of our U.S. and international franchisees that takes place every year.

Speaker Change: Aggregator space. So, yes, the weeklong carryout wasn't anything new but what I will tell you it performed extraordinarily well im really happy with the way.

Speaker Change: The way it works.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question.

Speaker Change: Comes from the line of.

Gregory Francfort: Gregory Frankfurt.

Gregory Francfort: Your question please.

Gregory Francfort: Hey, Thanks for the question.

Gregory Francfort: Just looking at unit growth this quarter.

Gregory Francfort: Domestic side really strong pick up in terms of openings.

Speaker Change: International maybe a little bit on the software side.

Speaker Change: Looking into next year can you maybe talk about your confidence in.

Speaker Change: That accelerating on a global basis next year, and then maybe what that looks like both domestic and international standpoint. Thanks.

Speaker Change: Yeah, we still feel really strongly about the guidance, we gave the 1100 plus.

Speaker Change: Stores 5500 over the next five years you saw some really nice momentum at the end of the year in the U S. In 2023, we expect to see more.

Operator: We expect margins in the back half of the year to be. As I conclude, I wanted to note that we announced a 25% increase in our dividend and increased our share repurchase authorization by $1 billion. All of this is being done in line with our capital deployment priorities. Thank you. We will now open the line. Thirdly, ladies and gentlemen, we'd like to remind you that please limit yourself to one question. You may get back into the queue as time allows.

Speaker Change: More at the end of the year in 2024.

Speaker Change: Internationally I think we've got a lot of closures behind us that was probably one of the things that was driving that.

Speaker Change: The number of this year, but those closures really focused on three areas on Domino's Pizza enterprises, and they talked about their number Russia.

Speaker Change: Russia, and Brazil, those three were over 80% of our closures and no other market closed more than more than five stores and so as we look forward, we feel really confident about.

Operator: One moment for our first question, and our first question comes from the line of Brian Bittner from Oppenheimer. Your question, please. Thank you. Good morning.

Speaker Change: Openings in I'm sure someone will ask a little bit later, but when you look at the profitability of our U S. Franchisees you look at the fact that for that.

Speaker Change: We had more new franchisees in 2023 that we have in the last 15 years.

Brian John Bittner: Clearly, your underlying core business is showing very nice signs of improvement, positive traffic in both the carry-out business and delivery business prior to any Uber benefits. I understand improvements in the core business can continue moving forward, maybe even perhaps accelerate, and they remain important, but now you are fully rolled out with Uber. Our conversations with the investment community suggest the expectations for Uber Mix currently are still relatively low, maybe that 1 to 1.5 percent range, and you talked about getting to 3 percent by the end of the year. So can you talk about how this improvement should unfold as the year unfolds and maybe unpack the marketing that's getting turned on?

Speaker Change: They are bullish about domino's pizza and theyre spending their money that way.

Speaker Change: Greg I'm, just going to add something in terms of the international store openings in particular I think we.

Speaker Change: We provided some milestone milestones to say that every quarter, we expect it to actually grow against last year as we lap the closures and then significantly accelerated.

Speaker Change: More in the back half of the year, so very confident in where we are with store openings in international and we've been talking to our master franchisees and have good visibility to our expectations there.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Andrew Charles from TD Cowen Your question. Please.

Andrew Charles: Great. Thank you Russell within guidance for outsized 24 U S. Same store sales can you talk about your expectations for call. It core traffic growth with 224 same store sales will look like when you exclude the 3% mixed remover in the low single digit pricing.

Russell Wiener: How is that bolstering your expectations for where the Uber Mix will go? Thank you. Good morning, Brian. How are you doing?

Andrew Charles: Trying to get at is do you believe similar to <unk> that you can drive positive carryout and delivery transactions, excluding the impact of Uber.

Russell Wiener: Let me talk a little bit about what we're seeing as far as the cadence of the flow of orders from Uber. Sandeep talked about the.4 and Q4, and we're seeing a meaningful uptick. If you won, you know, we just turned on the marketing. And so essentially, and same with Uber, so essentially, what we expect to see is awareness, is that percent of sales grow, and we feel like we're still in line for the three percent exit rate that we, uh, The Bulletproof Executive 2013. Thank you.

Russell Leaner: Yeah, Andrew absolutely when I think about <unk>.

2023, it was kind of a tale of two stories for US. The first part of the year was all about addressing the base and fixing things like delivery times, and getting delivery times back to where they needed to be and getting franchisee profitability back where it needed to be so that in Q4, we are able to really lean into the hungry for more strategy.

Russell Leaner: You saw it all in action you saw most delicious food with innovation.

Russell Leaner: You saw renown value.

Russell Leaner: From a promotional standpoint with with loyalty and so all of those things are going to be able to continue throughout 2024 with us.

Operator: One moment for our next question, and our next question comes from the line of Lauren Zuberman from Deutsche Bank. Your question, please. Thank you very much.

Russell Leaner: Improved base that we've got so I expect both carryout and delivery orders to be positive.

Operator: Congratulations on the quarter. I wanted to ask about value. In January, you ran the week-long carryout promo, which I haven't seen before. Can you talk about the rationale behind that? Any commentary on how you saw that perform?

Russell Leaner: Yes.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Dennis Geiger from UBS. Your question. Please.

Dennis Geiger: Great. Thanks, Good morning, guys and thanks for all the color on the loyalty program.

Lauren Zuberman: And to the extent that you're willing to talk about January, just given a little bit of noise across the industry, and then more broadly, how you're thinking about value and any incremental value offers through 24. Thank you very much. Lauren, you know, when you think about our Hungry for More strategy, renowned value is a big piece of it, and the carryout special isn't something new. It's something we brought back; I think the last time we ran it was in 2020.

Dennis Geiger: Wondering if you could just talk a little more about loyalty in the U S and sort of expectations for the program. Looking ahead I think recently, you've kind of talked about that as being the biggest contributor to U S. Same store sales growth. This year curious if that if that expectation still holds.

Speaker Change: Yes, it does.

Speaker Change: The loyalty program was just off to its off to a great start I'll just repeat numbers that we had in the opening remarks, because I just like them so much.

Speaker Change: We added 3 million folks last year $2 million of them came with the new program and so it is important to note because I'll talk about emergency pizza in the second and that effect on loyalty there, but the loyalty program out of the gate before even emergency pizza was doing exactly what we needed to do which was engaged lower frequency users.

Russell Wiener: Frankly, that's going to be part of our portfolio moving forward, as well as 50% off, as well as our mix-and-match deal. Value is a key component, not only price, but value from a loyalty standpoint, and value in the aggregator. So yeah, the week-long carryout wasn't anything new, but what I will tell you, it performed extraordinarily well. I was really happy with the way it went.

Speaker Change: Engage carryout users than we brought in this powerhouse of <unk>.

Speaker Change: Emergency pizza that continue to to inflect those numbers and we have ideas like that in the future that we'll be able to.

Speaker Change: Drives there will be advantages and there are advantages to be in a domino's rewards customer.

Russell Wiener: Thank you. One moment for our next question. The next question... comes from the line of Gregory.

Speaker Change: I'll give you a little bit more color about the users.

Speaker Change: Exactly what we thought it would which is driving frequency, especially among the lower frequency customers as I said before also the carryout customers and even though we have these lower tier levels.

Operator: Your question, please? Hey, thanks for the question. Just looking at unit growth this quarter, the domestic side, a really strong pickup in terms of openings. International, maybe a little bit on the softer side.

Speaker Change: Down to two purchases now can get you a free item.

Speaker Change: Because of the food cost at these various tiers, it's actually a positive for the franchisees. So really as I said a win win a better program, that's more engaging to customers and more profitable for our franchisees.

Gregory Francfort: As you guys look at the next year, can you maybe talk about your confidence in that accelerating on a global basis next year and then maybe what that looks like from a domestic and international standpoint? Thanks. Yeah, we still feel really strongly about the guidance we gave, you know, the 1100 plus stores, the 5500 over the next five years. You saw some really nice momentum at the end of the year in the US.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of David Palmer from Evercore ISI. Your question. Please.

David Palmer: Thanks, Good morning, Great update.

David Palmer: I'm getting some feedback as im asking so I'll try to get through this.

David Palmer: I wanted to ask you about a couple of profit drivers for this upcoming year that being company owned stores and supply chain.

Russell Wiener: In 2023, we expect to see more closures at the end of the year in 2024. You know, internationally, I think we've got a lot of closures behind us. That was probably one of the things that was driving, you know, down the number this year. But those closures really focused on three areas, on Domino's Pizza Enterprises, and they talked about their numbers, you know, Russia and Brazil. Those three were over 80% of our closures, and no other market closed more than five stores.

David Palmer: The company store line.

David Palmer: Probably the only area of the P&L that was slightly disappointing on the on the quarter, but for the year. It looked like the company stores profitability was down maybe 10%.

David Palmer: Your franchisees did a lot better than that they were up double digits. This last year. So any sort of color you would make in the quarter and for the year and more importantly, how are you.

David Palmer: Are you thinking about margins for company stores long term that had been as high as 23, five or so consensus for 'twenty four is more like 18%. So I'm just wondering how youre thinking about company operated and then supply chain.

Russell Wiener: So we look forward, we feel really confident about openings, and you know, I'm sure someone will ask a little bit later, but when you look at the profitability of our U.S. franchisees, you look at the fact that we had more new franchisees in 2023 than we have in the last 15 years. They're bullish about Domino's Pizza, and they're spending their money that way. And Greg, I'm just going to add something in terms of the international... We provided some milestones to say that every quarter... As we lap the closures and that significantly, more in the back half of the year, so very confident in where we are, and we've been talking to our master friends. Thank you for one moment for our next question. And our next question comes from the line of Andrew Charles from TD Cowen. Your question, please. Great, thank you.

David Palmer: Any comments there obviously very strong on the supply chain in the fourth quarter, how youre thinking for 'twenty four.

Speaker Change: Thanks for the question, David So I think on the company stores in the prepared remarks, I actually called out a couple of impacts in the fourth quarter that actually impacted our margins.

Speaker Change: One of them really was insurance costs and the other one was the.

Speaker Change: The accrual because of the points that I've actually got generated with a new loyalty program.

Speaker Change: I think when you take out those two impacts our margins actually expanded so.

Speaker Change: Good thing about this is I think be the loyalty program has worked extremely well from a transaction perspective for company stores and we expect this to be.

Speaker Change: Secondly, driving profit dollars and we expect to revert to margin expansion in 2024.

Speaker Change: And frankly, I think we expect to continue to build on our margins as we move forward even beyond 2024.

Andrew Charles: Russell, within guidance for outsize 24 US same store sales, can you talk about your expectations for core traffic growth or what 2024 same store sales will look like when you exclude the 3% mixed from Uber and the low single-digit pricing? What I'm trying to get at is that, similar to 4Q, do you believe, excluding the impact of Uber, you can drive positive carry out and delivery transactions? Thanks. Yeah, Andrew, absolutely, you know, when I think about 2023. It was kind of a tale of two stories for us.

Speaker Change: So and then I would go to the supply chain profit really really happy about our supply chain profitability that we generated in the in the fourth quarter, a big driver of supply chain profitability. All year was the productivity improvements that we saw specifically driven by procurement.

Speaker Change: Food costs, and I think that was.

Speaker Change: A big element of what we saw as we pivot to 2024 the expectation on supply chain is it's going to be supply chain profit dollars, because it's going to be driven by our transaction growth and as Russell talked about earlier, we're expecting to see transaction growth before and after the impact of <unk> and all of that is going to fly through.

Speaker Change: The supply chain P&L and expect that to actually drive significant profit dollar growth for the supply chain business.

Speaker Change: Yes, I'd just add those same transactions also add up to low fees online ordering fees as well right.

Russell Wiener: The first part of the year was all about addressing debate, getting franchisee profitability back where it needed to be, so that in Q4, we were able to really lean into the Hungry for More strategy, and you saw it all in action. You saw the most delicious food with innovation. You know, you saw renowned value from promotion with loyalty. And so all of those things are going to be able to continue throughout 2024 with this. I expect both carryout and delivery orders.

Yeah.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of David Tarantino from Baird. Your question. Please.

David E. Tarantino: Hi, good morning.

David E. Tarantino: Very nice to see the order counts.

And both delivery and Carryout, but I wanted to ask specifically about the emergency pizza promotion and.

David E. Tarantino: And whether you could try to frame up how much of a lift that might have.

David E. Tarantino: Cause for the transaction growth and I know there is a component about customer acquisition in there. So just wanting to sort of get a sense of how youre thinking about the trend coming out of that promotion, which were attended I think recently thanks.

Russell Wiener: The Bulletproof Executive 2013. Thank you. One moment for our next question, and our next question comes from the line of Dennis Geiger from UBS. Your question, please. Great, thanks.

Speaker Change: David I'll start maybe sandy if you can give some color to this one too.

Speaker Change: Emergency Pizza was.

David: Resounding success, it really was and.

David: When I look back and just again, giving compliments to our marketing team. This is your traditional buy one get one free.

Dennis Geiger: Good morning, guys. And thanks for all the color on the loyalty program. Wondering if you could just talk a little more about loyalty in the US and sort of expectations for the program looking ahead. I think recently you've kind of talked about it as being the biggest contributor to US same store sales growth this year. Curious if that expectation still holds.

David: That has been marketed in such a way that it really breakthrough we've done buy one get one frees before they've done nothing like that.

David: Think about emergency pizza, what I like is not only what it did to order count. It also drove people into our loyalty program because you need to be a loyalty member in order to.

David: To get your emergency pizza.

David: I think last.

David: We have a new thing in our Arsenal now.

David: Bruce weeks have worked really well for us.

David: We've got this emergency pizza.

David: Now and I expect this to <unk>.

Russell Wiener: Thank you. Yeah, Dennis, you know, the loyalty program was, It's off to a great start. I'll just repeat the numbers that we had in the opening remarks because I just like them so much. You know, we added three million folks last year.

Speaker Change: From our perspective, and so this is something we will be able to use in the future as well. So I think if you add some color. Yes, I think Russell is exactly right and I think to think about what's.

Speaker Change: What's happening with emergency pizza, so brilliant marketing innovation from our marketing team, but but I think the broader constructive it is thinking about domino's rewards the loyalty program.

Speaker Change: And that essentially creates that.

Russell Wiener: Two million of them came with a new program, and so it's important to know, because I'll talk about emergencies, second and that effect on loyalty there, but the loyalty program came out of the gate before even emergency pizza was doing exactly what it was doing and others. Thank you. Engage, Carry Out.

Speaker Change: Key platform to our third pillar renowned value so at the beginning of the quarter and the fourth quarter. We had pepperoni stopped cheesy bread, which was a special offer that was SP being connected to the loyalty program.

Speaker Change: Then after that we got emergency pizza and Theres, a number of different promotions that we can continue to bring along onto dominoes reward. So the driver rather than looking at emergency pizza.

Speaker Change: By itself is really a domino's rewards.

Russell Wiener: Then we brought in this powerhouse of, you know, emergency pizza that, you know, continued to inflect those numbers. And we have ideas like that in the future that we'll be able to drive. There will be advantages, and there will be disadvantages. Go.

Speaker Change: And how much which could drive in transaction growth for us. This is a significant pillar of how are we going to drive transaction growth in 2024, both in delivery as well as K, yes that was a big learning from us for the first.

Speaker Change: The loyalty program, we had a piece of the pie rewards we advertised on TV, we have a rewards program and what we've learned over time is.

David Palmer: I'll give you a little bit more color about the users doing exactly what we thought they would, you know, driving especially among the lower frequency customers for all sorts of carryout customers. And even though we have these lower tier levels, you know, we're down to two purchases now can get you a free item. Because of the food costs at these various tiers, it's actually a positive for the franchisees. So really, as I said, a win-win, a better program that's more engaging for customers and more profitable for our franchise. Thank you one moment for our next question. And our next question comes from the line of David Palmer from Evercore ISI. Your question, please. Thanks. Good morning.

Speaker Change: Actually the best way to tell people that you have a rewards program is have a really compelling promotions, whether it's a new product or something like.

Speaker Change: Our emergency pizza that the only way you can get it.

Speaker Change: If you sign up for the program and once you sign up for the programs are in this flywheel of frequency driving point levels that we've never had before and so I think emergency pizza was a highlight but sandeep talked about that type of mechanism driving people into the loyalty flywheel is something we're going to continue to play will continue to run.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of John <unk> from Jpmorgan. Your question. Please.

Sandeep Reddy: Great update. I'm getting some feedback as I'm asking, so I'll try to get through this. I wanted to ask you about a couple profit drivers for this upcoming year, that being company-owned stores and the supply chain. For the company store line, it was probably the only area of the P&L that was slightly disappointing for the quarter. But for the year, it looked like the company store profitability was down maybe 10%.

Speaker Change: John you might have your phone on mute.

John: Apologize can you hear me now yes, okay perfect. All right you are on speaker button Alright, This will work.

John: First in terms of the.

Some of the slowdown that we saw the brand saw in Continental Europe was there any learning lessons that you could apply there, perhaps as Europe potentially visa as a leading indicator to the U S. How you to get in front of some economic changes that would actually allow the performed.

John: The brand performed better in the U S and perhaps it has in Europe at least in the last quarter is the first question and then secondly.

Sandeep Reddy: Your franchisees did a lot better than that. They were up double digits this last year. So any sort of call-outs you would make in the quarter and for the year? More importantly, how are you thinking about margins for company stores long-term? They had been as high as 23.5% or so, but consensus for 24% is more like 18%.

John: Obviously, there is no direct P&L impact in advertising allocation.

John: There is a direct P&L impact in terms of the online ordering fee in terms of reducing that online ordering thier cutting in at least marginally relative to what it was in 'twenty three I mean, what was the reasoning behind that was that really franchise driven obviously.

Sandeep Reddy: So I'm just wondering how you're thinking about company-operated and then supply chain. Any comments there? Obviously, very strong on the supply chain in the fourth quarter. What are you thinking for 24%? Thanks.

John: The economics at the franchise level would suggest that they could bear that higher fee, but just wanted to have a sense of why you felt that reduction was necessary to make thank you. So much.

Speaker Change: Good morning, John I'll take the first question, maybe Sandeep you will take the second one our European business is really strong and we believe some of the pressures we're seeing in there are generally two.

Sandeep Reddy: Thanks for the question, David. So I think in the company stories and the prepared remarks, I actually called out a couple of impacts in the fourth quarter that actually impacted us. All of them were insurance costs, and the other one was the accrual because of the points that actually got generated with the new loyalty program. And I think when you take out those two impacts, our margins actually expand. So the good thing about this is I think the loyalty program has worked extremely well from a transaction perspective for company stores, and we expect this to be significantly driving profit dollars, and we expect to revert to margin expansion. Thanks for watching. So and then I would go to supply chain profit. We're really happy about the supply chain profitability that we generated in the 4th quarter. A big driver of supply chain profitability all year was productivity. This is all specifically driven by procurement, and I think that was a big element of what we saw. As we pivot to 2024...

Sandeep: Transitory in nature.

If you listen to the call from DTE Domino's Pizza enterprises.

Sandeep: Our master franchisee over several market, but especially France there've been some challenges there and thats one of our larger markets in Europe were partnering closely with them right now on those challenges what I point to for GP in general there are green shoots in a lot of the markets where there really.

Sandeep: Really leaning in and so.

Sandeep: For example, Australia New Zealand the numbers there are fantastic.

Sandeep: One of the reasons why if they are leaning into the end the most delicious food part of hungry for more I mean, I don't think anyone's doing it better than than they are right now.

Sandeep: They give us they give a little insight into Japan into the first kind of six seven weeks of the second half and how that seems to have turned a corner, Germany is positive. So we're working on France together and.

Sandeep: And that's certainly a business that needs to turn.

Speaker Change: Yeah, and I'll just finish off on hardwood Russell just said if you remember what I talked about in the prepared remarks, we expect to see pressure in the first half of the year on international business, but exactly why we expect to see an improvement in the back half is because of all the more initiatives. Australia is one example, but taking those learnings and applying them across the international markets.

Sandeep Reddy: The expectation for supply chain is that it's going to... The Bulletproof Executive 2013, As Russell talked about earlier, we're expecting to see transaction growth before and after the impact of Uber, and all of that is going to apply to Uber. Supply Chain P&L, and expect that to drive a significant profit dollar growth for the company. And I just add, those same transactions also add up to OLO fees and online orders. Thank you. Please take a moment for our next question. And our next question comes from the line of David Tarantino from Baird. Your question, please. Hi, good morning.

Speaker Change: Should enable us to offset any other headwinds that we have as we go into the back half improvement to our to our long term guidance and then specifically to your question on the advertising fund and be online fee now, let's go back to about a year ago, and I think about a year ago, where we were it was franchisee profitability was not.

The best place, we've come off a big decline in franchisee profits in 'twenty, two and we saw an opportunity because of the buildup in the reserves with the AD fund.

Speaker Change: And essentially take a 25 basis point 12 month hiatus from.

Speaker Change: From the advertising fund contributions.

Speaker Change: Did want to continue investing in our technology solutions and so we did pick up the technology.

Speaker Change: <unk> view that as a temporary increase in that kind of an offset between the excellent contribution of a technology fee now that we've actually come to the point, where we think it meets its time to restore the iPhone to the 6%.

Speaker Change: We are actually adjusted the technology, if you get to 35 five cents.

David E. Tarantino: It's very nice to see the order counts up for both delivery and carryout, but I wanted to ask specifically about the emergency pizza promotion and whether you could try to frame up how much of a lift that might have caused for the transaction growth. And I know there's a component about customer acquisition in there, so just wanting to sort of get a sense of how you're thinking about the trend coming out of that promotion, which ended, I think, David, VO, chanting, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H

Speaker Change: Other way to look at it is we actually went up from 31, 5% to 35, five and if you look back at our history, we have consistently increased our technology fee.

Speaker Change: Because we're making investments on technology for our franchisees, which drives the fight we looked at growth.

Speaker Change: And eventually drives global retail sales.

Speaker Change: Our royalty dollars as well.

Speaker Change: So that is the rationale I think.

Speaker Change: Where we are all of this is included in the $170000 or more.

Speaker Change: And the franchisee EBITDA that we're expecting for 2024, and we feel very good about it.

Speaker Change: Yes.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Chris <unk> from Stifel. Your question. Please.

Chris: Thanks, Sandeep could you breakdown, how much of the $23 million of the year over year supply chain profit dollar growth came from the productivity improvement versus the volume growth.

Chris: Do you expect any productivity improvements to continue.

Chris: In that segment into 'twenty four.

David E. Tarantino: When I look back, and I'm just again giving compliments to our marketing team, this is your traditional buy one, get one free offer that has been marketed in such a way that, you know, it really breaks through. We've done buy one, get one free before they've done nothing. When I think about emergency pizza, what I like is not only what it did to the order count, but it also drove people into the loyalty program.,,, to get your Mercy.

Sandeep: Thanks, Chris Thanks for the question.

Sandeep: A significant portion of the.

Sandeep: Profit dollar growth that we saw in 2003 came from the productivity improvement that you saw it was pretty outsized in I think it was it was probably a function of where the markets were especially after the outsized inflationary period of 2022 that we were able to get such significant improvements in 'twenty three.

And as we move forward in 2000 and for this is definitely going to be a focus, but it's not going to be as outsized as it wasn't 23, we do expect to get some benefits, but I think we also have to make investments in capacity like I talked about both at Investor day and earlier on the call today. So.

Russell Wiener: I think last. We have a new thing in our arsenal. You know, Boost Weeks have worked really well for us. We've got this emergency pizza piece now, and I expect this to be ownable from our perspective, and so this is something we'll be able to use in the future as well. Sandeep, you wanted some color?

Sandeep: That's why I think as we look at 'twenty four.

Sandeep: Really expect profit dollar growth to be driven by transaction growth and productivity improvements that we can see if anything should be an offset to some of the investments that we're making in the business, but the nice thing about what our supply chain team has done.

Sandeep Reddy: Yeah, no, I think Russell's exactly right, and I think the thing about what's happening with emergency pizza is it's a brilliant market. But I think the broader construct of it is... And that essentially creates that platform for our third pillar, renowned value. So, at the beginning of the quarter, in the fourth quarter, we had pepperoni stuff, which was a special offer that was actually a connection.

Sandeep: Productivity, we gained in 2023.

Sandeep: It's not going back.

Sandeep: And so I would think about that as kind of accruing forward, so well done.

Sandeep: By us indeed in NRG.

Sandeep: Yes.

Speaker Change: Thank you one moment for our next question.

Sandeep Reddy: Then, after that, we got a... And there's a number of different promotions that we can continue to bring along on Domino's Rewards. So the driver, rather than looking at emergency pizza by itself, is really Domino's Rewards and how much we can drive in transaction growth for us. This is a significant pillar of how we're going to drive transaction growth or both in delivery. Yeah, that was a big learning from us. The loyalty program we had, you know, with Piece of the Pie Rewards. We advertised on TV, "hey, we have a rewards program." And what we learned over time is actually the best way to tell people that you have a rewards program is to have a really compelling promotion, whether it's a new product or something like, you know, emergency pizza, that the only way you can get it is if you sign up for the program. And once you sign up for the program, you're in this flywheel of frequency-driving point levels that we've never had before.

Speaker Change: Yes.

Speaker Change: And our next question comes from the line of Peter Saleh from <unk>. Your question. Please.

Peter Saleh: Great. Thanks for taking the question.

Peter Saleh: I wanted to come back to the loyalty conversation Russell I think you mentioned.

Peter Saleh: $2 million plus new loyalty members since launch and I think at the Investor Day.

Peter Saleh: December you had mentioned there was about 1 million.

Peter Saleh: Incremental so just curious if you could comment was there a meaningful acceleration in new loyalty members in December do you expect that trend to continue in 'twenty four and then is there any way to parse out how many of those are coming are more carryout customers versus traditional delivery.

Yes, Peter there are I'd say a couple of meaningful.

Peter Saleh: Moves in the loyalty program first of all it's just the launch of the loyalty program right. We saw a meaningful increase and Thats, what we talked about one of them.

Peter Saleh: With you in December and then building on top of that we had some more momentum.

Russell Wiener: So I think emergency pizza was a highlight, but as Sandeep talked about, that type of mechanism driving people into the loyalty flywheel. Playbook, Thank you one moment for our next question. And our next question comes from the line of John Ivankoe from J.P. Morgan. Your question, please. John, you might have your phone on mute.

Peter Saleh: Driven by emergency Pizza, So I'd say loyalty program on its own did well.

Peter Saleh: Is doing very well.

Peter Saleh: Add a little more gas on the fire with emergency pizza.

Peter Saleh: And as we continue into Q1 now with emergency Pizza behind US, we're still very happy with the way that's growing and we've got programs like Sandy talked about earlier that we will continue to drive that business.

John William Ivankoe: I apologize. Can you hear me now? Yes. Okay, perfect. All right. You're on speaker, but all right, this will work.

Peter Saleh: Other thing and you talked about this that I'm really happy with us.

Peter Saleh: Objective here.

Peter Saleh: Was to engage carryout customers and to get engaged light users and we are absolutely doing that with the program.

Russell Wiener: First, in terms of some of the slowdown that we saw, the brand saw in continental Europe, were there any learning lessons that you could apply there perhaps as Europe potentially being a leading indicator to the U.S. of how you could get in front of some economic changes that would actually allow the brand to perform better in the U.S. than perhaps it did in Europe, at least in the last quarter? That was the first question. And then secondly, obviously, there's no direct P&L impact on advertising allocation, but there is a direct P&L impact in terms of the online ordering fee. In terms of reducing that online ordering fee or cutting it at least marginally relative to what it was in 1923, I mean, what was the reasoning behind that?

Peter Saleh: We can see that even out of the gate so far.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Sara Senatore from Bank of America. Your question. Please.

Sara Harkavy Senatore: Thank you.

Sara Harkavy Senatore: A clarification and then a question for clarification.

Sara Harkavy Senatore: Can you beat the company margins.

Speaker Change: <unk>, excluding and Sharon.

Sara Harkavy Senatore: Doug I guess, given your production growth and lower commodity costs.

Sara Harkavy Senatore: We should carry out with Keybanc typically higher margin rate I would have bought more than slightly so I guess.

Sara Harkavy Senatore: As we think about.

Sara Harkavy Senatore: That business, we should be focus now I guess increasingly on profit dollar growth as opposed to margin rate expansion similar to how you think about supply chain or maybe my my interpretation of up slightly is not quite right and then the question is about the industry and that.

Russell Wiener: Was that really franchise driven? Obviously, the economics at the franchise level would suggest that they could bear that higher fee, but just wanted to have a sense of why you felt that that reduction was necessary to make. Thank you so much. Morning, Jon. I'll take the first question. Maybe Sandeep, you'll take the second one.

Sara Harkavy Senatore: In the Pizza segment, and so you often have better insights into the competitive dynamic than I do.

Sara Harkavy Senatore: Any of the category improvement.

Sara Harkavy Senatore: Finally, I think back maybe normalization in terms of.

Sara Harkavy Senatore: Sales mix, but anything you can say about what to what extent with share gains by Domino's versus <unk>.

Russell Wiener: You know, our European business is really strong, and I believe some of the pressures we're seeing there are generally, you know, transitory in nature. If you listen to the call from DPE, Domino's Pizza Enterprises, our master franchisee in several markets, but especially France, there have been some challenges there, and that's one of our larger markets in Europe. We're partnering closely with them right now on those challenges. What I point to for DPE in general is that there are green shoots in a lot of the markets where they're really leaning in. And so, you know, for example, Australia and New Zealand; the numbers there are fantastic. One of the reasons why is that they're leaning into the and the most delicious food part of Hungry for More. I mean, I don't think anyone's doing it better than they are right now.

Sara Harkavy Senatore: Perhaps the green shoots in the category. Thank you.

Speaker Change: Thanks, Sarah So I'll take the first one on Russia will take the share question. So.

Speaker Change: Look in terms of company margins, specifically called out.

<unk> of those two and margins expanding slightly outside of that.

Speaker Change: And I think it's been consistent if you look at the first three quarters. Our margin has expanded and I think in the fourth quarter, excluding the impact of those two items that we called out insurance.

Speaker Change: Anti liability.

Speaker Change: Margins expanded so the great thing about the loyalty liability adjustment business.

Speaker Change: We expect to have incremental transactions or redemptions on the loyalty program. So.

Youre right look for profit dollar growth on the supply chain.

Speaker Change: On the company stores.

Speaker Change: But I think we also do believe that there is an opportunity to expand margins. In addition to driving profit dollar growth as we leverage the fixed cost structure of the company stores. So look for bolt on company stores. This milestone.

Speaker Change: Thanks, Yes.

Speaker Change: And on the state of the industry I think.

Russell Wiener: They give a little insight into Japan during the first kind of six, seven weeks of the second half and how that seems to have turned a corner. Germany is positive. So we're working on France together, and that's certainly a business that needs... Yeah, now let's finish off on what Russell just said, and... If you remember what I talked about in the prepared remarks, we expect to see pressure. First half of the year on international business, but this is exactly why we expect to see an improvement in the back office because of all the new initiatives, but taking those learnings and applying them across the international market should enable us to offset any other headwinds that we have, pence, pence, pence, pence. And then specifically to your question on the advertising fund and online. Now, let's go back to about a year ago.

Speaker Change: This has it really been looking forward to 2020 for a lot of what we expect is <unk> why theyre to be real pressure on orders and transactions.

Speaker Change: We don't expect that to be the case.

Speaker Change: With Domino's and I think will be unique in that area in 2024.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Brian Harper from Morgan Stanley. Your question. Please.

Brian Harper: Yes, thanks, good morning.

Brian Harper: I wanted to ask about.

Brian Harper: Your international sales outlook as well.

Brian Harper: How much of this do you think is kind of market specific execution issues and I'm, referring to just some of the countries that have been a little bit slower.

Versus kind of macro pressures and.

Brian Harper: As you have that outlook for kind of improvement through the year or does that depend on some of those macro pressures easing like for example, if you think about India or could you maybe comment on some of the other markets that you didn't address before.

Sandeep Reddy: And I think about a year ago, where we were was franchisee profitability was not, The Bulletproof Executive 2013, I... And we saw an opportunity, because of the buildup in the reserves of the advertising fund, to essentially take a 25-basis point, 12-month hiatus from the advertising fund contract. But we did want to continue investing in our technology. That's where we did take up the... The Bulletproof Executive 2013, I'll do that as a temporary..., kind of an Ad Fund. Now that we've actually come to the point where, Time to restore the ad fund to 6%! We have actually adjusted that.

Speaker Change: Yes, well actually maybe I'll start out talking about India.

Speaker Change: Speaking over the weekend to Harry <unk>, who is the chairman of <unk> I mean, that's a great example of both the dynamics you talked about and so obviously, they're pushing the business there are some headwinds.

Speaker Change: But how are we talked about is what's going on in the rest of the industry and why he's bullish and while he's looking for the future and while theyre talking about too.

Speaker Change: <unk> stores to grow in 2024 is because he is here he is growing share and so what I love about our franchisees is that there are future focused and I think you'd see a lot of.

Sandeep Reddy: Technology Updated 35.5 Another way to look at it is, we actually went up from 31.5... Look back at our history with consistency. Because we're making investments in technology for our... drives the five-wheel of and eventually drives global retail sales and our And so that is the rationale, I think, where we are. All of this is included in the $170,000 or more in the franchise, the EBITDA that we're, Page PAGE of NUMPAGES hcf.org Thank you. One moment for our next question. And our next question comes from the line of Chris O'Connell from Stifo. Your question, please. Thanks.

Speaker Change: A lot of folks are doing what they're doing in India and that's why we think the second half is going to have returned to that 3%.

Speaker Change: We talked about anything to add.

Speaker Change: No I think Russell is exactly right.

Speaker Change: Think it's all tied back to the hungry for more strategies being applied across the entire system, but the international markets.

Speaker Change: Earnings from markets like Australia being applied.

Speaker Change: Our CPE and essentially all of the other markets as well as embraced hungry for more and that's really what we're looking to drive.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line then you look at it from.

Speaker Change: Right.

Speaker Change: Your question please.

Speaker Change: Thank you I have a quick clarification and then a question. So the clarification is Russell you mentioned that you were expecting some real pressures in the industry, but not for bill can you clarify whether the increase in transactions that you've seen in the fourth quarter is across all the income cohort.

Chris O'connell: Sandy, could you break down how much of the 23 million of the year over year supply chain profit dollar growth came from the productivity improvement versus the volume growth? And do you expect any productivity improvements to continue in that segment into 24? Thanks, Chris.

Speaker Change: And then the question is.

Speaker Change: Can you talk about the speed of delivery in the channel versus your own channel understanding that you're using your own drivers anyway, and maybe how does the delivery timing compared versus your peers today.

Sandeep Reddy: Thanks for the question. A significant portion of the profit-dollar growth that we saw from the productivity, Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com/policies, such as significant, And as we move forward in 24, this is definitely going to be a focus, but it's not going to be as outsized.

Speaker Change: On the on.

Speaker Change: The transactions piece we.

Speaker Change: We believe that our transactions being positive is something that like I said is that it is unique in the industry.

Speaker Change: We will get more share information as that comes out and we'll certainly share that with you.

Speaker Change: On speed of delivery.

Speaker Change: The biggest comparison.

Speaker Change: The biggest comparison, we have is versus ourselves and every day, we expect to get better than the day before so we're happy that we're back to 2019 levels. We're now moving more volume into that delivery network and.

Sandeep Reddy: We do expect to get some benefits, but I think we also have to make investments in capacity, like I told you and earlier in the call today. So that's why I think as we look at 24, really expect profit-dollar growth to be driven by... and Productivity Improvements. If anything should be an alternate example...

Speaker Change: We're doing everything we can not only to make sure that the.

Speaker Change: The delivery times are where they need to be but more importantly, we haven't talked a lot about this is that the quality is there and so when you think about are hungry for more pillars. The first Ami is about most delicious food and so just delivering a pizza.

Russell Wiener: But the nice thing about what our supply chain team has done is the productivity we've gained in 2023 is not going back. And so I would think about that as kind of accruing forward. So, well done by us.

Speaker Change: <unk> is one thing it's got to be great.

Speaker Change: <unk>.

Speaker Change: One of the things that I talked about hopefully there are no Boston Red Sox fans on that.

Speaker Change: Our call today by Yankee fan and theirs.

Speaker Change: Amos player, Joe Dimaggio, who theres, a quote somebody asking onetime Hawaii play so hard every game.

Peter Saleh: Thank you. One moment for our next question, and our next question comes from the line of Peter Saleh from BTIG. Your question, please. Great. Thanks for taking the question. I want to come back to the loyalty conversation.

Speaker Change: And what he said was.

Speaker Change: There's going to be someone who sees me for the first time in that game and so I'm playing for them and that is how we need to approach, making our pizza.

Speaker Change: Every pizza Youre, making it is for your mob right and Thats. What some of these spreads are all about with more delicious operations, we're making promises and our advertising we need to deliver it and it's more than just time its quality its consistency in all of those and we'd like to say a downloads. We don't sell a million piece of the day. We our goal is to sell one pizza de.

Russell Wiener: Russell, I think you mentioned two million plus new loyalty members since launch. And I think at the Investor Day in early December, you had mentioned there were about a million incremental. So just curious if you could comment, was there a meaningful acceleration in new loyalty members in December? Do you expect that trend to continue in 24? And then is there any way to parse out how many of those are coming in as carry out customers versus traditional delivery? Alright, yeah, yeah, Peter, there are, I'd say, a couple of meaningful videos driven by emergency pizza.

Speaker Change: 1 million times, and that's kind of the new thinking behind delicious operations.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Jeff Bernstein from Barclays. Your question. Please.

Jeff Bernstein: Great. Thank you very much just following up from the Investor Day, you guys talked about.

I guess post two point out technology, and I think you mentioned there'll be a complete overhaul throughout 2024 and in conjunction with your Microsoft partnership.

Speaker Change: Talking about AI tools and whatnot, what you are clearly very.

Speaker Change: Topical so I'm wondering if you could talk a little bit about the greatest changes.

Russell Wiener: So I'd say the Loyalty Program on its own did well. It's doing very well. We have added a little bit more gas to the fire with emergency pizza, and as we continue into Q1 now with emergency pizza behind us, we're still very happy with the way that it's growing. And we've got programs like Sandy talked about earlier that will continue to drive that. The other thing, and you talked about this, that I'm really happy with... The big objective was to engage carry-out customers and to engage light, and we are absolutely doing that with the program. We can see that even out of the gate.

Speaker Change: What are the most likely incremental benefits to the front of the back of the house and maybe the timeframe to see those benefits. Obviously, it's been like you said a long time coming with this major overhaul. So just trying to get a sense for what we're going to see as we look through 'twenty four thank you.

Speaker Change: Yes, thanks for the question.

Speaker Change: It's a good time for me to clarify that I think that the.

Speaker Change: The future of the benefits of pulse is actually now right, we talked about Domino Pos and.

Speaker Change: And accelerating the areas within the circle of operations that make the biggest difference in our business and so yeah next next generation pulses in stores now some stores in the U S will be rolling out to a bigger degree later on in 2024, but the most important elements of ones that are going to drive the <unk>.

Sara Harkavy Senatore: Thank you. One moment for our next question. And our next question comes from the line of Sara Senatore from Bank of America. Your question, please. Thank you.

Speaker Change: Operational efficiencies the more delicious food.

Speaker Change: Improved atmosphere working atmosphere for our.

Sara Harkavy Senatore: I guess the clarification is, you know, Sandeep, you said company margins would have been up slightly, excluding insurance and loyalty liability. I guess given transaction growth and lower commodity costs and the shift to carry out, which I think is typically a higher margin rate, I would have thought them up more than slightly. So I guess, you know, as we think about that business, we should be focused now, I guess, increasingly on profit dollar growth as opposed to margin rate expansion, sort of similar to how you think about supply chain, or maybe my interpretation of that slightly is not quite right. And then the question is about the industry and the pizza segment. And so, you know, you often have better insights into the competitive dynamics than I do. Was there any category improvement?

Speaker Change: Our team members those are out in the Domino Pos tools and Donald is tools work with.

Speaker Change: Current pulse and the next generation of pulse, so hopefully that clarifies it.

Speaker Change: Microsoft They answered your Microsoft question is.

Speaker Change: We're working really in two areas with Microsoft Degenerative AI. One is on the consumer ordering side, we are not waiting for the new website to come into.

Speaker Change: See something on that.

Speaker Change: Youll see some of that in 2024.

Speaker Change: And then also on the.

Speaker Change: On the store side and what can we do with generative AI to make the experience.

Speaker Change: Better on our team members in store and so we'll have more to talk about both of those in 2024.

Speaker Change: Yes.

Speaker Change: Thank you one moment for our next question.

And our next question comes from the line of Andrew <unk> from BMO capital markets. Your question. Please.

Speaker Change: Yes.

Speaker Change: Hi, This is Joe on for Andrew Charles Thank you for taking the question. So I'm curious as to how you would characterize the current competitive environment and what youre seeing from a promotional standpoint.

Sandeep Reddy: You know, we're finally, I think, back to maybe normalization in terms of sales mix, but anything you can say about, you know, to what extent we share gains by Domino's versus, you know, finally seeing perhaps a green shoot in the category? Thank you. Sara. So I'll take the first one, and Rosalyn will take the shared question.

Joe Dimaggio: And I was wondering if you could provide any incremental details regarding product innovation and the two new products that you are planning to launch this year. Thank you.

Speaker Change: Yes sure.

Speaker Change: I don't really like to talk a lot about competitors I mean as a competitor we have of ourselves and we try to get better than ourselves every day and I think youll see that in our Q4 results I talked in general about it probably being a year that is less about order counts and we'll see how folks adjust to that.

Russell Wiener: So, look, in terms of company margins, we specifically called out the impacts of those two and margins expanding slightly outside of that. And I think it's been considered that in the first three quarters, our margins expanded. The Bulletproof Executive 2013, Margins are expanded, so the great thing about the Loyalty and Liability Adjustment is that we expect to have incremental transactions in the Loyalty Program. You're right, look for profit-dollar growth in the company's stores, but I think we also do believe that there's a... Span, in addition to driving problems... to leverage the fixed cost structure of the company's stores, so look for

Speaker Change: And when they do we'll be happy to comment on that.

Speaker Change: Through the.

Speaker Change: Through the year I didn't quite hear your second question can you repeat the second even though we only supposed to ask one.

Speaker Change: I'm joking.

Speaker Change: Oh, yeah products. Thank you very much.

Speaker Change: On the product side, a couple of things one is we're really happy that we've got our Pan pizza out there now but.

Speaker Change: But that's not a new product and you should know that is not counted among the kind of two plus new products, we're going to have this year, but what you do see with that is.

Sandeep Reddy: Thanks, yeah, and on the state of the industry, I, You know, and this is really even looking forward to 2020. A lot of what we expect is, QSRY, there to be real pressure on orders and transactions. We do expect that with Domino's, and I think we'll be Title Microsoft Office Word Document MSWordDoc Word Document.8, Thank you one moment for our next question.

You haven't talked about Pan pizza since 2014, so while I'm not counting on my list of new products, its something thats new to a lot of people in and something that has really shot if you look at the way we shot that commercial.

Speaker Change: In the new way of kind of romancing the deliciousness of our pizza. So we're out with product news.

Brian Harber: And our next question comes from the line of Brian Harber from Morgan Stanley. Your question, please. Yeah, thanks. Good morning.

News on our product for the first time in a long time, but that's not part of our two new product scheme for this year.

Russell Wiener: I wanted to ask about just your international sales outlook as well. You know, how much of this do you think is kind of market-specific execution issues? And I'm referring to just some of the countries that have been a little bit slower versus kind of macro pressures. And as you have that outlook for kind of improvements through the year, does that depend on some of those macro pressures easing, like, for example, if you think about India, or can you maybe comment on some of the other markets that you didn't address before? Uh, yeah, well, actually, I'll start out I mean, that's a great example of both of the dynamics you talk about.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Chris <unk> from RBC capital markets. Your question. Please.

Chris: Hi, Thanks, Good morning Russell.

Chris: You mentioned the U S system added more than 60, new franchisees I think that was the most in 15 years you said.

Chris: On the back of that how are you thinking about the evolution of the domestic franchisee base and just the balance of openings coming from new franchisees versus longer tenured franchisees going forward. Thanks.

Speaker Change: Yeah. Thanks, a lot for the question.

Speaker Change: When we have calls like this and what I, what I tell people as you ever I'm wondering how the Domino's Pizza brand is going to do in the future you look at you look at what your franchisees are doing.

Speaker Change: And franchisees right now from a profit standpoint, obviously really positive versus versus where they were the year before we open up more stores.

Russell Wiener: And so, you know, obviously, they're pushing the business there. There are some headwinds. But, you know, what Harvey talked about was what's going on in the rest of the industry and why he's bullish, and while he's looking for the future, and while, you know, they're talking about, you know, 200 stores to grow in 2024, it's because he's growing share. And so, what I love about our franchisees is that they're future-focused, and I think you see That's why we think the second half is going to return to that 3% we talked about. No, I think Russell's exactly right.

Speaker Change: Really heavy towards the end of the year when things became clear there yet we're still.

Speaker Change: Very positive that we're going to beat that number in 2024 and hit our 175 plus the algorithm.

Speaker Change: The 60 to me means that we've got young up and comers within our system that for the first time in 15 years.

Speaker Change: It's bigger than our bigger than we have had in 15 years, which means they see a really positive future.

Speaker Change: And the cool thing is as you look into 2000 and for what I can tell you is two things. One is we already have 170, new potential franchisees that are either in or have graduated our franchise management school, which is the last step you do before you either build a store by store and we have 50.

Russell Wiener: We think it's all tied back to the hungry. Learnings from markets like Australia are being applied, and all of the other marketers. Thank you for one moment for our next question. And our next question comes from the line of Danilo Cardulo from Newark, New Jersey.

Speaker Change: Already waiting on opens or transfers within the system.

Speaker Change: We're in February.

Speaker Change: And so I think some of the momentum you saw is going to continue it at.

Yes.

Speaker Change: That just shows what they are feeling about the brand and where where they want to invest.

Danilo Cardulo: Your question, please. Thank you. I have a quick clarification and then another question.

Speaker Change: Yes.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Merit Jensen from HSBC. Your question. Please.

Russell Wiener: So the clarification is, Russell, you mentioned that you're expecting some real pressure in the industry, but not for Domino's. Can you clarify whether the increase in transactions that you've seen in the fourth quarter is across all the income cohorts? And then the question is, can you talk about the speed of delivery in the Uber Eats channel versus your own channel, understanding that you're using your own drivers anyway?

Yes, Hi, I know, we've spoken about it a number of times in terms of the loyalty program, but given the mention of the liability the loyalty liability from the relaunch is there a way or how would you suggest we sort of track that.

Merit Jensen: Look at the breakage levels and sort of see where that may be going in the future and how we should sort of map that out obviously as you mentioned is that it's a positive thing Sir thank you.

Russell Wiener: And maybe how does the delivery timing compare versus your peers today? Um, you know, on the, uh, on the transactions. We believe that our transaction positive is something that, like I said, is that weekend.

Speaker Change: Yes. Thank you for the question look I mean, I think the way to look at this is it.

Speaker Change: Appropriate accounting treatment, if youre going to expect to see more redemptions and thats great.

Speaker Change: She wants to go to the breakage accrual, but I think the whole point with us our Domino's rewards program is working as we intended more transaction is expected to come in more redemptions I expect it to come in and I think.

Russell Wiener: We'll get more share information as that comes out, and we'll.., you know, share that with you. On speed of delivery, you know, the biggest comparison we have is versus ourselves. And every day, you know, we expect to get better than the end of the day before. So we're happy that we're back to 2019 levels.

Speaker Change: I think Sarah asked a question earlier look for profit dollar growth. In addition to margin expansion as we move forward, especially on the company stores in 2024, and we will continue to provide disclosure as we move forward, but but that's how I would actually measure performance fungus.

Russell Wiener: We're now moving, you know, more volume into that delivery network. And, you know, we're doing everything we can not only to make sure that the delivery times are within, but more importantly, we haven't talked a lot about this, is that the quality... So, when you think about our Hungry for More pillars, the first M is about the most delicious. So just delivering a pizza, you know, on time is one thing; it's got to be great. And, you know, one of the things I talk about, hopefully, there are no Boston Red Sox fans on the call today. I'm a Yankee fan, and there's a famous player, Joe DiMaggio, who has a quote. Somebody asked him one time, you know, why he plays so hard every day, and what he said was...

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yeah.

Speaker Change: And our next question comes from the line of Brian <unk> from Piper Sandler Your question. Please.

Brian: Okay. Thank you just a follow up on the topic of Domino's advertising.

Brian: Understanding it's just getting started it will ramp throughout the year could you just discuss any learnings you've had here is it going and how you would have thought if anything with the effectiveness surprised you either positively or negatively and I ask in the context of just it's a new activity for Domino's, but I know you've been preparing to get ready for it. So just any thoughts on that strategy.

Speaker Change: Yeah. Thanks Ryan.

Speaker Change: Theres two advertising Zhao for Domino's on Uber, one Domino's and the other is over and I think what we're seeing on that platform is it's very promotional driven.

Russell Wiener: There's going to be someone who sees me for the first time in that game, and so I'm playing for them. And that.., how we need to approach it. Um, you know, every pizza you're making is for your mom, right?

Speaker Change: And the nice place. The nice thing is when you think of marketplaces and exceed it selling on marketplaces, that's what we do whether it's the <unk>.

Speaker Change: Google marketplace or.

Speaker Change: In this case Uber and so it's responding how you would think it is very much promotional driven but we know how to excel in those areas, which is why we are confident that our percent of sales for mover is going to increase to that 3% exit rate we talked about.

Russell Wiener: And that's what some of these sprints are all about, with more delicious operations. We're making promises in our advertising. Deliver It, and it's more than just time, it's quality, and all of those.

Speaker Change: Yes.

Speaker Change: Thank you one moment for our next question.

Russell Wiener: You know, we'd like to say at Domino's we don't sell a million pizzas a day; we, our goal is to sell one pizza a day a million times, and that's kind of...

Speaker Change: And our final question for today comes from the line of Jon Tower from Citi. Your question. Please.

Jon Tower: Great. Thanks, I appreciate it a quick clarification and then a question clarification loyalty liability I'm, assuming that was just a one time true up if you could clarify that'd be great and then the question is on the frequency shifts you're seeing in the loyalty program any way you could give us some sort of.

Jeff Bernstein: Thank you. One moment for our next question. And our next question comes from the line of Jeff Bernstein from Barclays. Your question, please. Great. Thank you very much.

Russell Wiener: Just following up from Investor Day, you guys talked about your, I guess, Pulse 2.0 technology, and I think you mentioned there'll be a complete overhaul in 2024. And in conjunction with your Microsoft partnership, talking about AI tools and whatnot, which are clearly very topical, so I'm wondering if you could talk a little bit about the greatest changes or the most likely incremental benefits to the front or the back of the house and maybe the time frame to see those benefits. Obviously, it's been, like you said, a long time coming with this major overhaul. So just trying to get a sense for what we' It's a good time for me to clarify that I think the future of the benefits of Pulse is actually now, right?

Jon Tower: Benchmark as to where some of the more loyal customers, who are spending either frequency last year and what it's looking like so far since you've made the shifts in late 'twenty three.

Speaker Change: So I'll take the first part of the question Jon and it is a.

Jon Tower: One time thing.

Speaker Change: Because I think.

Jon Tower: The significance of the change of the New program was what was the trigger.

Jon Tower: It doesn't mean, it's never going to happen and also because I think you always have to continue to monitor your breakage and if you do need to make a true up you will make a true up but but given the new program launching I think this was much more of a onetime event because of the new program launches.

Jon Tower: And I think on the auto frequency shifts Russell will take that Chris.

Russell Leaner: Yeah, well, what I can tell you macro we're still just a couple of months into this thing as what we thought we would see with regards to carrier customers and lighter user engagement we are seeing.

Speaker Change: We will do John is make sure throughout the year when we got more information under our belt and we're able to give.

Russell Wiener: We talked about DomOS and accelerating the areas within the circle of operations that make the biggest difference in our business. And so, yeah, you know, Next Generation Pulse is in stores now, and some stores in the U.S. will be rolling it out to a bigger degree later on in 2024. But the most important elements, the ones that are going to drive operational efficiency, the more delicious food, the, you know, improved atmosphere, working atmosphere for our team members, those are in the DomOS tools. The DomOS tools work with Current Pulse and Next Generation Pulse.

Speaker Change: Perspective, because remember.

Speaker Change: Loyalty programs are not just about the first use or the second half, it's about lifetime value and use overtime and so as we get more color on that.

Speaker Change: Well sure.

Speaker Change: Thanks, John that was our last question of the call.

Speaker Change: Want to thank you all for joining our call today and we look forward to speaking with you. All soon you may now disconnect have a great day.

Okay.

Speaker Change: Thank you ladies and gentlemen for your participation today's conference. This does conclude the program you may now disconnect good day.

Speaker Change: Okay.

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Speaker Change: Okay.

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Russell Wiener: Hopefully, that clarifies it. The Microsoft question: the answer to your Microsoft question is, you know, we're really working on two areas with Microsoft and Genitive AI. One is on the consumer ordering side. We are not waiting for the new website. See something on that so you'll, and that in 2024. And then also on the store side, and what can we do with Generative AI? https://www.youtube.com or www.youtube.com or www.youtube.com. Thank you.

Andrew Charles: One moment for our next question. And our next question comes from the line of Andrew Strozik from BMO Capital Markets. Your question, please. Hi, this is Jared Lubinsky. I'm on behalf of Andrew Strelzak.

Speaker Change: Yes.

Speaker Change: [music].

Jared Lubinsky: Thank you for taking the question. So I'm curious how you would characterize the current competitive environment and what you're seeing from a promotional standpoint and was wondering if you could provide any incremental details regarding product innovation and the two new products that you are planning to launch this year. Thank you. Yeah, sure. I don't really like to talk a lot about competitors.

Speaker Change: Thank you.

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Okay.

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Russell Wiener: I mean, the competitor we have is ourselves, and we try to get better than ourselves, you know, every day. www.youtube.com.uk They do work. We'll be happy to comment on that... I didn't quite hear your second question. Can you repeat the second question? Even though we're only supposed to ask one. I'm joking.

Russell Wiener: Oh yeah, products. Thank you very much. Yeah, on the product side, a couple things. One is we're really happy that we've got our pan pizza out there now. But that's not a new product, and you should know that it is not counted among the kind of two-plus new products we're going to have this year. But what you do see with that is, you know, we haven't talked about pan pizza since 2014. So while I'm not counting it on my list of new products, it's something that's new to a lot of people and something that is really hot.

Russell Wiener: We shot that commercial in a new way of kind of romancing the deliciousness of our pizza. So we're out with product news. The Bulletproof Executive 2013,.

Chris Cotterell: . Thank you. One moment for our next question. And our next question comes from the line of Chris Cotterell from RBC Capital Markets. Your question, please. Hi, thanks. Good morning.

Russell Wiener: So Russell, you mentioned the US system added more than 60 new franchisees. I think that was the most in 15 years. On the back of this, how are you thinking about the evolution of the domestic franchisee base and just the balance of openings coming from new franchisees versus longer tenured franchisees going forward? Thanks. Yeah, thanks a lot for the question. You know, when we have calls like this, and what I always tell people is, if you're ever wondering how the Domino's Pizza brand is going to do in the future, you look at your franchise and franchisees right now from a profit standpoint. We're really positive versus where they were the year before.

Speaker Change: Okay.

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Russell Wiener: We opened up more stores really heavily towards the end of the year when things became clear there. Yet, we're still very positive that we're going to beat that number in 2024 and hit our 175, The Algorithm. The 60, to me, means that we've got young people within our system who, for the first time in 15 years, bigger than or bigger than we have had in 15 years, which means they see a really positive future. And the cool thing is, as you look into 24, what I can tell you is two things. One is that we already have 170.

Russell Wiener: Potential Franchisees that are either in or have graduated our Franchise Management School, which is the last step you do before you either build a store or buy a store. And we have 50 already waiting on openings or transfers within the system. You know, we're in February, and so I think some of the momentum you saw is... And, you know, that just shows what they are feeling about the brand and where they want to invest. Thank you. One moment for our next question, and the next question comes from the line of Meredith Jensen from HSBC. Your question, please.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

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Meredith Jensen: Yes, hi, I know we've spoken about it a number of times in terms of the loyalty program. But given the mention of the liability, the loyalty liability from the relaunch, is there a way or how would you suggest we sort of track that and look at the breakage levels and sort of see where that may be going in the future and how we should sort of map that out? Obviously, as you mentioned, it's a positive thing.

Sandeep Reddy: So thank you. Yeah, thank you for the question. And look, I mean, I think the way to look at this is through appropriate accounting treatment.

Sandeep Reddy: But I think the whole point of our Domino's Rewards Program is working as we intended. More transactions expected. More redemptions expected.

Sandeep Reddy: And I think Sarah asked the question earlier, look for profit dollar growth in addition to margin, The Bulletproof Executive 2013, And we'll continue to provide disclosure as we move forward, but that's how I would actually measure it. Thank you for one moment for our next question. And our next question comes from the line of Brian Mullen from Piper Sandler.

Brian Mullen: Your question, please. And thank you. Just to follow up on the topic of Domino's advertising on Uber, understanding it's just getting started. It will ramp throughout the year. Could you just discuss any learnings you've had here? Is it going how you would have thought? Has anything with the effectiveness surprised you, either positively or negatively?

Speaker Change: Okay.

Speaker Change: [music].

Russell Wiener: And I ask in the context of just it's a new activity for Domino's, but I know you've been preparing to get ready for it. So, any thoughts on that strategy?

Russell Wiener: Yeah, thanks, Brian. You know, there's two advertising now for Domino's on Uber. One is Domino's and the other is Uber. And I think what we're seeing on that platform is, you know, it's very promotionally driven. The nice thing is when you think of marketplaces and excelling on marketplaces... That's what we do, you know, whether it's the Google marketplace or, you know, in this case, Uber. And so it's, It's very much promotionally driven, but we know how to excel in those areas, which is why we're doing it. But I'm not confident that our percent of sales will be that high. Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

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Jon Tower: One moment for our next question. And our final question for today comes from the line of Jon Tower from Citi. Your question, please. Great, thanks.

Speaker Change: Okay.

Speaker Change: Okay.

Jon Tower: I appreciate it. Quick clarification, not a question. Clarification: the loyalty liability, I'm assuming that was just a one-time true up. But if you can clarify, that'd be great.

Speaker Change: Okay.

Speaker Change: Okay.

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Sandeep Reddy: And then the question is about the frequency shifts you're seeing in the loyalty program. Anyway, you can give us some sort of, you know, benchmarks as to where some of the more loyal customers were spending either frequency last year and what it's looking like so far since you made these shifts in late 23. So I'll take the first part of the question, Jon, and it is a one-time thing because I think the significance of the change in the new program was what was the trigger. But that doesn't mean it's never going to happen again, either, because I think you always have to continue to monitor your breakage.

Speaker Change: Okay.

Speaker Change: Okay.

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Speaker Change: Okay.

Speaker Change: Thank you.

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Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

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Sandeep Reddy: And if you do need to make a true-up, you will make a true-up. But given the new program launch, I think this was much more of a one-time event because of the new program. I think about the frequency shifts.

Russell Wiener: Yeah, well, what I can tell you macro, you know, we're still just a couple months into this thing, and what we thought with regard to Kera Customers and Lighting. What we will do, Jon..., www.youtube.com.uk, I'm going to wrap up this webinar by asking you to use the Q&A feature in your browser to ask us any questions. And if you do, feel free to ask us any questions.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

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Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Russell Wiener: And we'll see you next time. Thank you. Bye. All right.

Speaker Change: Okay.

Speaker Change: [music].

Russell Wiener: Thank you. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.

Russell Wiener: Bye, or the second, about lifetime value and use over time. And so as we get more color on that. Thanks, Jon.

Russell Wiener: That was our last question of the call. I want to thank you all for joining our call today, and we look forward to speaking with you all soon. You may now disconnect.

Speaker Change: Thanks.

Speaker Change: Okay.

Operator: Have a great day. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

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Speaker Change: Thank you.

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Operator: Good day... You can find these coils, shapes, & designs in our ETSY store!

Operator: Link in the description below Thanks for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? This is a production of the Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you for standing by and welcome to Domino's Pizza's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Thanks.

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Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again.

Speaker Change: Thank you.

Speaker Change: Okay.

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Greg Lemenchick: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Greg Lemenchick, Vice President, Investor Relations. Please go ahead, sir.

Speaker Change: Okay.

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Greg Lemenchick: Good morning, everyone. Thank you for joining us today for our 4th Quarter Conference Call. Today's call will begin with our Chief Executive Officer, Russell Wiener, followed by our Chief Financial Officer, Sandeep Reddy, and the call will conclude with a Q&A session. The forward-looking statements in this morning's earnings release and 10-K, both of which are available on our IR website, also apply to our comments on the call today. However, actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our filings with the FDA.

Speaker Change: Okay.

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Speaker Change: Okay.

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Greg Lemenchick: In addition, please refer to the 8K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also being recorded for replay via our website. We want to do our best this morning to accommodate as many of your questions as time permits. As such, we encourage you to ask one question or... With that, I'd like to turn the call over to Russ. Thanks, Greg. I thought you were going to sing the opening, as we discussed, but I guess we'll let that pass today.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Thank you for standing by and welcome to Domino's Pizza's fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on <unk>.

Greg Lemenchick: Welcome to your first call here on Domino's, and good morning to everyone joining us. Our strong Q4 demonstrated that our Hungry for More strategy is already delivering. Our positive U.S. same-store sales and transaction growth in both delivery and carryout underscore the strength and momentum that we're building in our business. These results and the initiatives that I'll cover today give me confidence in Domino's ability to continue to drive meaningful value.

Speaker Change: Telephone if your question has been answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded.

Russell Wiener: We're excited to share an update on the business through the lens of our Hungry for More strategy. As a reminder, Hungry for More is our new strategy around what we're going to do to deliver, over the course of the next five years, more sales and more stores. The Bulletproof Executive 2013, We're going to accomplish this through our four more pillars, M-O-R-E. Then I'll share a brief update. Let's start with M. M is for the most delicious.

Speaker Change: Now I'd like to introduce your host for today's program, Greg Levin, Vice President of Investor Relations. Please go ahead Sir.

Gregory Francfort: Everyone. Thank you for joining us today for our fourth quarter conference call.

Gregory Francfort: Today's call will begin with our Chief Executive Officer, Russell Leaner, followed by our Chief Financial Officer Sandeep Reddy.

Paul will conclude with a Q&A session.

Russell Wiener: Now, we know we have the most delicious food in the industry, but you know what? It's time to talk about it more. It's time to show it more, and we're already doing it. We're currently on air with Pan Pizza Advertising for the first time since 2014. We call pan pizza our best-kept secret.

Gregory Francfort: The forward looking statements in this morning's earnings release and 10-K, both of which are available on our IR website also apply to our comments on the call today.

Gregory Francfort: Actual results or trends could differ materially from our forecast.

Gregory Francfort: For more information please refer to the risk factors discussed in our filings with the SEC.

Gregory Francfort: In addition, please refer to the 8-K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call.

Russell Wiener: Time to change. Pizza is a delicious product made with fresh, never frozen... It also showcases the variety of crusts we have.

Gregory Francfort: Mornings conference call is being webcast and is also being recorded for replay via our website.

Russell Wiener: You're probably also noticing a shift in our advertising as we're beginning to romance the product more to showcase the deliciousness of our. You can expect this to continue throughout. The O in Hungry for More stands for Operational Excellence.

Gregory Francfort: We want to do our best this morning to accommodate as many of your questions as time permits as such we encourage you to ask one question only.

Gregory Francfort: With that I'd like to turn the call over to Russell.

Russell Leaner: Thanks, Greg I thought you were going to assume the opening as we discussed but I guess, we'll let that pass today welcome to your first call here on Dominos and good morning to everyone joining us.

Russell Wiener: And this is how we're going to deliver on our promise to have the most by consistently driving a great experience with our products. As we've noted before, we made meaningful strides operationally in 2023 with our Summer of Service program, which resulted in service time back to pre-COVID. We're never satisfied, and we want to continue to get better.

Russell Leaner: Our strong Q4 demonstrated that are hungry for more strategy is already delivering results are positive U S same store sales and transaction growth in both delivery and Carryout underscore the strength and momentum that we're building in our business. These results and the initiatives that I'll cover today gives me confidence in Domino's ability to.

Russell Leaner: Continue to drive meaningful value for shareholders.

Russell Wiener: Our operators and our franchises... We are hungry for more. In 2024, we're rolling out a new service program. We're calling that More Delicious Operations.

Russell Leaner: We're excited to share an update on the business through the lens of our hungry for more strategy now as a reminder, hungry for more is our new strategy around where we're going to do to deliver over the course of the next five years more sales more stores and more profits were going to accomplish this through our four more pillars MLR.

Russell Wiener: This program will be a series of three product trainings, focused on our dough, how we build and make our product, and how we cook. All of this is being done with a keen focus on driving more consistency in our food by providing the proper training for our team members. Our third pillar is R for renowned value.

Now I'll share a brief update on let's start with them.

Russell Leaner: But for the most delicious food now we know we have the most delicious food in the industry, but you don't want is time to talk about it more it's time to show up more and we're already doing that.

Russell Wiener: We've always been known as a premier value player, and we believe this can continue to be a differentiator for us in 24, along with our Improved Loyalty Program, our National Promotions, and our rollout on... Domino's rewards is off to a great start and was a key driver of our strong comp performance in the fourth quarter, when we saw positive sales and transactions in both our U.S. delivery and carry-out business. We've also seen the power... An uptick in active members. We are up 3 million active members in 2023, with 2 million plus since our relaunch in September. Domino's Rewards ended the year with approximately 33 million active members.

Russell Leaner: We're currently on air with Pan Pizza advertising for the first time since 2014.

Russell Leaner: We call Pan Pizza are best kept secret.

Russell Leaner: It's time to change that Pan Pizza is a delicious product made with fresh never frozen dough.

Russell Leaner: It also showcases a variety of crust we have to offer.

Russell Leaner: You are probably also noticing a shift in our advertising as we're beginning to romance the product more to showcase the deliciousness of our food.

Russell Leaner: You can expect this to continue throughout the year.

Russell Leaner: The all in hungry for more stands for operational excellence and this is how we're going to deliver on our promise to have the most delicious food bye.

Russell Leaner: By consistently driving a great experience with our products.

Russell Leaner: As we've noted before we made meaningful strides operationally in 2023 with our summer of service program, which has resulted in service times being back to pre COVID-19 levels.

Russell Leaner: But we're never satisfied and we want to continue to get better our operators and our franchisees we are hungry for more.

Russell Wiener: A big driver of the increase in active members as well as the early success of the program was our emergency pizza promotion, which was an innovative marketing initiative that drove increased order counts and acquisition of customers into Domino's. We're seeing more redemptions than ever before, and we're seeing them at those lower tiers that we... And we know that this program has driven incremental profit dollars for our franchisees, so customers are getting more, and franchisees are earning more profits. Truly a win-win.

Russell Leaner: In 2024, we're rolling out a new service program, we're calling that more delicious operations. This.

Russell Leaner: This program will be a series of three product training sprints focused on our Doe, how we build and make our products and how we cook.

Russell Leaner: All of this is being done with a keen focus on driving more consistency in our food by providing the proper teaching tools and processes for our team members to succeed.

Russell Leaner: Our third pillar is our for non value, we've always been known as a premier value player and we believe this can continue to be a differentiator for us in 'twenty four through our improved loyalty program, our national promotions and our rollout on Uber.

Russell Wiener: Finally, we're seeing more CARA users and light users in the program than we were prior to. National Promotions will be another way we'll drive renowned value in 24, and right now, we're on air with our perfect combo. We believe this is the best deal in the QSR industry to feed a family, and highlights the depth, have, We also brought back our carryout special boost week in January for the first time since 2020, and his performance exceeded my expectations.

Russell Leaner: Domino's rewards is off to a great start and with a key driver of our strong comp performance of the fourth quarter. When we saw positive sales and transactions in both our U S delivery and Carryout businesses.

Russell Leaner: We've also seen the following.

An uptick inactive members were up 3 million active members in 2023 with 2 million plus since our relaunch in September.

Russell Leaner: Domino's rewards ended the year with approximately 33 million active members.

Russell Leaner: A big driver of the increase in active members as well as the early success of the program was our emergency Pizza promotion, which was an innovative marketing initiative that drove increased order counts and acquisition of customers into Domino's rewards.

Russell Wiener: Clearly, customers want value, and we are driving it profitably for our franchises. While providing value through our own channels is one part of our barbell strategy, tapping into the aggregator part market is the other.

Russell Leaner: We're seeing more redemptions than ever before and we're seeing them at those lower tiers that we implemented.

Russell Wiener: We're very excited about this new sales layer, which we believe is a different and largely incremental customer that we had not been able to reach before. Our entrance into this marketplace with Uber is on track, as we are now fully rolled out across our U.S. We've gone live with the marketing and formally kicked off our one-year exclusive. Sales are building in line with increased marketing, which has been great to see, and we expect those orders to continue to grow throughout. Sandeep will share more about our sales expectations for Uber at his company. Now everything we do at Domino's is enhanced by our best-in-class franchises and our Hungry for More strategy. In 2023, we will continue to enhance our U.S. franchise by adding more than 60 new franchisees to the system, the most in 15 years. Every one of these new franchisees started with Domino's, either as a delivery driver or from within our...

Russell Leaner: And we know that this program has driven incremental profit dollars for our franchisees. So customers are getting more and franchisees have earned more profits truly a win win.

Russell Leaner: Finally, we're seeing more carrier users light users into the program than we were prior to the relaunch so domino's.

Russell Leaner: Working as we intended.

Russell Leaner: National promotions will be another way will drive renowned valued in 'twenty four and right now were on air with our perfect combo promotion.

Russell Leaner: We believe this is the best deal in the <unk> industry to feed a family.

Russell Leaner: It highlights the depth, we have in our menu.

Russell Leaner: We also brought back our Carryout special boost week in January for the first time since January 2020.

Russell Leaner: And as performance exceeded my expectations, clearly customers want and value and we are driving it profitably for our franchisees.

Russell Leaner: While providing value through our own channels as one part of our barbell strategy tapping into the aggregated marketplace.

Russell Leaner: The other.

Russell Leaner: We're very excited about this new sales layer, which we believe is a different and largely incremental customer that we had not been able to reach in the past.

Russell Leaner: Our entrance into this marketplace with Uber is on track.

Russell Wiener: This remains the secret sauce to our success. We ended 2023 slightly ahead of our expectations on U.S. store growth and profits, adding 168 net new stores and finishing the year with estimated average franchisee profitability per store of $162,000. This highlights the momentum we expect to continue. I couldn't be more excited about 2024 and beyond for Domino's Pizza. Our foundation has never been stronger in our ambition. We made a ton of progress in 2023, and our strong start to 2024 gives me confidence in our ability to win with customers and Drive Return for Domino's Franchise. And with that, I'll turn things around.

Russell Leaner: As we are now fully rolled out across our U S system, We've gone live with the marketing and formally kicked off our one year exclusivity period in Q1.

Russell Leaner: Sales of our building in line with increased marketing, which has been great to see and we expect those orders to continue to grow throughout the year, it's an equal share more about our sales expectations in 2024 for Uber in his comments.

Russell Leaner: Now everything we do at Domino's is enhanced by our best in class franchisees the E and are hungry for more strategy.

Russell Leaner: In 2023, we continue to enhance our U S franchisee base by adding more than 60, new franchisees to the system.

Russell Leaner: The most in 15 years.

Russell Leaner: Every one of these new franchisees started with domino's, either as a delivery driver or from within our system. This remains the secret sauce to our success.

Russell Leaner: We ended 2023 slightly ahead of our expectations on U S store growth and profit, adding 168, net new stores and finishing the year with estimated average franchisee profitability per store of $162000.

Sandeep Reddy: Thank you, Russell, and good morning, everyone. As a reminder, in the third quarter, we close the remaining 143 stores in the Russian... The 2023 Global Retail Sales Growth Measures exclude the Russia market and are calculated as a growth in retail sales excluding the retail sales from the Russian market from both the 2023 retail sales and the 2022 retail sales. Now for our fourth quarter finale. During the impact of foreign currency, global retail sales grew 4.9% due to positive U.S. comps and global net stock. U.S. retail sales increased 4.5 percent, and international retail sales, excluding the impact of foreign currency, grew 5.5 percent.

Russell Leaner: This highlights the momentum we expect to continue into 2024.

Russell Leaner: I couldnt be more excited about 2024 and beyond for Domino's Pizza. Our foundation has never been stronger and our vision has never been greater we made a ton of progress in 2023, and our strong start to 2004 gives me confidence in our ability to win with customers and drive return for Domino's franchisees and shareholders.

Russell Leaner: Now with that I'll turn things over to Sandeep.

Sandeep Reddy: Thank you Russell and good morning, everyone.

Sandeep Reddy: As a reminder, the third quarter, we closed the remaining 143 stores in the Russian market.

Sandeep Reddy: The 2023 global retail sales group measures exclude the Russia market.

Sandeep Reddy: Calculated of the growth in retail sales, excluding the retail sales from the Russian market.

Speaker Change: Both the 2023 retail sales and the 2022 retail sales please.

Speaker Change: Now for our fourth quarter financial results.

Speaker Change: The impact of foreign currency global retail sales grew four 9% due to positive U S comps and global net store growth.

Sandeep Reddy: During Q4, same-store sales for the U.S. business saw an increase of 2.8%. As Russell noted earlier, our strong comps in the quarter were driven by both delivery and carryout, as they were up 2% and 3.9%. For the year, delivery represented 48% of our transactions and 58% of our sales, while carryout represented 52% of our transactions.

Speaker Change: U S retail sales increased four 5% and international retail sales, excluding the impact of foreign currency grew five 2%.

Speaker Change: During Q4 same store sales for the U S business saw an increase of two 8%.

Speaker Change: As Russell noted earlier, our strong comps in the quarter were driven by both delivery and Carryout as they were up 2% and three 9% respectively.

Speaker Change: For the year delivery represented 48% of our transactions and 58% of our sales while carryout represented 52% of our transactions and 42% of home sales.

Sandeep Reddy: The weight of sales and transactions shifted slightly more to carry out. The increase in U.S. Q4 same-store sales was driven by transaction growth from our new loyalty program, all inclusive of a benefit from emergency.

Speaker Change: The rate of sales and transactions transactions shifted slightly more to carry out in 2023.

Speaker Change: The increase in U S Q4, same store sales was driven by transaction growth from our new loyalty program <unk>.

Speaker Change: Inclusive of the benefit from emergency Pizza.

Sandeep Reddy: Pricing of approximately 1% and a 0.4% sales mix. It will take us some time to determine just how much of that Uber mix is incremental, so more to come on that as we move through 2024 and into 2025. These tailwinds were partially offset by a slightly lower average ticket that was the result of higher clarity.

Speaker Change: Pricing of approximately 1% and 0.4% sales mix from Google.

It will take us some time to determine just how much of that Uber mixes incremental so more to come on that as we move through 2024 and into 2025.

Speaker Change: These tail winds were partially offset by slightly lower average ticket was the result of higher Carryout mix.

Sandeep Reddy: Shifting to unit count, we added 92 net new stores in the U.S., our U.S. system slow count to 6854 seconds at the end. For the year, we added 168, which was a strong increase over the 126 net stores we opened.

Speaker Change: Shifting to unit Count we added 92 net new stores in the U S, bringing our U S system store count to $62 54 stores at the end of the year.

Speaker Change: For the year, we added 168, net new stores, which was a strong increase over the 126 net stores we opened in 2022.

Sandeep Reddy: Company-Owned Store Gross Margin decreased 1.6 percentage points in the fourth quarter of 2020, including the impact of higher insurance costs and an increase in our loyalty library, as well as due to the change in point structure following the relaunch of the Domino's Rewards Program. Margins would have expanded slightly. Domino's Unit Economics remains strong with continued EBITDA growth for our U.S. franchise. We are expecting that our average franchisee profitability per store will come in at $162,000 in 2020, up $23,000 from the prize. Shifting to international, sales seem to have sales excluding foreign currency impact increased 0.1%. The deceleration from the third quarter is being driven primarily by pressures in Europe and geopolitical tensions. Please note that the Middle East represents a relatively small portion of our profits at less than 3% of our operating capital. Our international store count increased by 302 net stores in the fourth quarter.

Speaker Change: U S company owned store gross margin decreased one six percentage points in the fourth quarter of 2023.

Speaker Change: Excluding the impact from higher insurance costs, and an increase in our loyalty liability due to the change in point structure. Following the relaunch of the Dominoes rewards program.

Speaker Change: <unk> would have expanded slightly.

Speaker Change: Domino's unit economics remain strong with continued EBITDA growth for our U S franchisees.

Speaker Change: We are expecting that our average franchisee profitability per store will come in at a $162000 in 2023 up $23000 from the prior year.

Speaker Change: Shifting to international.

Speaker Change: Same store sales, excluding foreign currency impact increased 0.1%.

Speaker Change: The deceleration from the third quarter is being driven primarily by pressures in Europe and geopolitical tensions in the middle East.

Speaker Change: Please note that the middle East represents a relatively small portion of our profits at less than 3% of our operating income.

Speaker Change: Our international store count increased by 302 net stores in the fourth quarter.

Sandeep Reddy: For the year, our net store growth in international was 502,... excluding Russia, total for the year. We grew 870 net stores across... Income from operations increased $8.4 million or 3.4% in the- excluding the impact of the $21.2 million prior re-franchising, that we are not. Income from operations would have been approximately, would have been up approximately 13% in the fourth quarter and up approximately 10% for the second quarter.

Speaker Change: For the year on net store growth of international was 702 units, excluding the Russia closures.

Speaker Change: In total for the year.

Speaker Change: We grew 870 net stores across the globe.

Speaker Change: Income from operations increased $8 4 million or three 4% in the fourth quarter.

Speaker Change: Excluding the impact of the $21 $2 million prior refranchising gain that we are lapping income from operations would have been approximately.

Speaker Change: Have been up approximately 13% of the fourth quarter and up approximately 10% for the full year.

Sandeep Reddy: Now turning to our 2024 outlook, which remains in line with what we shared yesterday in December. Our guidance calls for the following... 7% or more global retail sales growth, excluding the impact of foreign currency. We are expecting our 2024 U.S. comp to be above the 3% long-term guide as a result of our expected outsized capital. The Bulletproof Executive, 2013.

Speaker Change: Now turning to our 2024 outlook, which remains in line with what we shared at Investor Day in December.

Speaker Change: Our guidance calls for the following in 2024.

Speaker Change: 7% of all global retail sales growth, excluding the impact of foreign currency.

Speaker Change: We are expecting our 2024 U S comp to be above the 3% long term guide as a result of our expected outsized catalysts and Uber and loyalty.

Speaker Change: As we have communicated previously we expect our sales with Google to increase throughout the year as marketing and awareness increases and we are expecting to exit the year with an overall sales mix of 3% or more.

Sandeep Reddy: As we have communicated previously... We expect our sales with Uber to increase throughout the year as marketing and awareness increase, and we are expecting to exit the year with an overall sales mix of 3% or more. In the U.S., we are planning for a modest price increase in the low single digits. This is inclusive of California, where we're expecting to take pricing above to offset the wage impacts from AB 1220.

Speaker Change: We expect sales with Uber to start ramping up after Q1, which will have only a partial tailwind from marketing.

Speaker Change: In the U S. We are planning for a modest price increase in the low single digits.

Speaker Change: This is inclusive of California, where we're expecting to take pricing above that to offset the wage impacts from AB 228.

Sandeep Reddy: We expect our international comps to remain soft in the first half of the year due to a continuation of the trends we saw in the fourth quarter, but we expect them to accelerate to our 3% or more long-term guidance in the back half of the year. Now, shifting to net stores, where we are expecting $1,100 or more, which will be driven by $175 in the U.S. and $925 in the nation. There was a meaningful uptick in our U.S. natural growth in the fourth quarter, which was slightly ahead of our expectations. And the pipeline continues.

Speaker Change: We expect our international comps to remain soft in the first half of the year due to a continuation of the trends we saw in the fourth quarter, but expect them to accelerate two or 3% on more long term guidance in the back half of the year.

Speaker Change: Now shifting to net stores, where we're expecting 1100 on war, which will be driven by 175 in the U S and 995 internationally.

Speaker Change: There was a meaningful uptick in our U S net store growth in the fourth quarter.

Speaker Change: Which was slightly ahead of our expectations and the pipeline continues to build.

Sandeep Reddy: We are expecting net unit growth in the U.S. to be relatively flat to 2023 in the first half of the year and to accelerate slightly in the back half based on current... Internationally, we are expecting to increase net store growth each quarter over the prior year as we lap the one-time closures we had in 2020 and had to step up significantly in the back half. As previously communicated, we are expecting slightly less than half of our growth to come from China. On profits, we are expecting an 8% or more year-over-year increase in operating income, excluding the impact of foreign. We do not expect the impact of foreign currency to have a material impact in 2024, based on current evidence.

Speaker Change: We are expecting net unit growth can be used to be relatively flat to 2023 in the first half of the year and two accelerated slightly in the back half based on current visibility.

Speaker Change: Internationally, we are expecting to increase net store growth each quarter over the prior year as we lap the onetime closures. We had in 2023 had to step up significantly in the back half of the year.

Speaker Change: As previously communicated we are expecting slightly less than half of our growth to come from China and India.

Speaker Change: On profits, we would expect to get 8% or more year over year increase in operating income excluding the impact of foreign currency.

Speaker Change: We do not expect the impact of foreign currency to have a material impact in 2024 based on current FX rates.

Sandeep Reddy: A few additional points of color on some of the profits. We are expecting our food basket to be up 1% to 3%. This has been driven by continued moderation on cheese prices. From a convenience perspective, we expect the Q1 food basket to be deflationary, as we left the only quarter from 28...

Speaker Change: A few additional points of color on some of the profit components.

Speaker Change: We are expecting our food basket to be up 1% to 3%.

Speaker Change: This is being driven by continued moderation on cheese prices.

Speaker Change: From a cadence perspective, we expect the Q1 food basket to be deflationary as we lap the only quarter from 2023, when the basket increased.

Sandeep Reddy: , followed by moderate increases for the remainder of the year. We are expecting our supply chain margins to be roughly flat for the year, barring any unforeseen shifts in. We are expecting an increase in year-over-year supply chain margins in Q1, due to the expected negative food bus, followed by slight moderation for the balance. We expect supply chain margin dollars to grow in line with transactions throughout. We are estimating that labor rate inflation across the... Inclusive of California, will be in the mid-single digits, and this is being primarily driven by minimum weight. We are expecting our GNA as a percentage of retail to be approximately 2.4%, which is in line with 20. We also wanted to provide an update on our technology fee for 2024. In Q2 2023, we increase this fee to $39.50 and temporarily lower the Advertising Fund Contribution by 0.25% 5.75% for a 12- Starting at the beginning of Q2 2024, we are lowering the technology fee to $35.5 and increasing the ad fund back.

Speaker Change: Followed by moderate increases for the remainder of 2024.

Speaker Change: We are expecting our supply chain margins to be roughly flat for the year.

Speaker Change: Barring any unforeseen shifts into food baskets.

Speaker Change: We are expecting an increase in year over year supply chain margins in Q1 due to the expected negative food basket.

Speaker Change: Followed by slight moderation for the balance of the year.

Speaker Change: We expect supply chain margin dollars to grow in line with transaction growth throughout the year.

Speaker Change: We are estimating that freight inflation across the system inclusive of California will be in the mid single digits and this has been primarily driven by minimum wage increases.

Speaker Change: We are expecting our G&A as a percentage of retail sales to be approximately two 4% which is in line with 2023.

Speaker Change: We also wanted to provide an update on our technology for you for 2024.

Speaker Change: In Q2, 2023, we increased the speed to 39 five.

Speaker Change: And temporarily lowered our advertising fund contribution percentage by two 5% to 575% for a 12 month period.

Speaker Change: Starting at the beginning of Q2 2024, we are lowering the technology for years to 35 five.

Speaker Change: And increasingly AD fund back to 6%.

Sandeep Reddy: As previously communicated, we are expecting operating income margins to be relatively flat compared to... We do not expect to see cost leverage in 2020 due to the investments we are making in consumer technology, store technology, and supply chain capacity. Please support future sales. We are expecting Q1 margin expansion due to lower inflationary pressures, as previously noted in our food basket... And we are expecting the Q2 margin rate to be down because of the timing of GNA spend, which will be partially driven by a worldwide rally, a gathering of our U.S. and international franchisees that takes place every year.

Speaker Change: As previously communicated we are expecting operating income margins to be relatively flat compared to 2023.

Speaker Change: We do not expect to see cost leverage in 2024 due to investments we are making in consumer technology store technology and supply chain capacity to support future sales growth in the U S.

Speaker Change: We are expecting Q1 margin expansion due to lower inflationary pressures as previously noted on our food basket.

Speaker Change: And we are expecting the Q2 margin rate to be down because of the timing of G&A spend which will be partially driven by our worldwide Ravi a gathering of our U S and international franchisees that takes place every two years.

Sandeep Reddy: We expect margins in the back half of the hour to be. As I conclude, I wanted to note that we announced a 25% increase in our dividend and increased our share repurchase authorization by $1 billion. All of this is being done in line with our capital deployment priorities. Thank you. We will now open the line. Thirdly, ladies and gentlemen... We'd like to remind you that please limit yourselves to one question. You may get back into the queue as time allows. Please wait for our first question. And our first question comes from the line of Brian Bittner from Oppenheimer.

Speaker Change: We expect margins in the back half of the year to be flat.

Speaker Change: As I conclude I wanted to note that we announced a 25% increase in our dividend and increased our share repurchase authorization by $1 billion.

Speaker Change: All of this is being done in line with our capital deployment priorities.

Speaker Change: Thank you we will now open the line for questions.

Speaker Change: Certainly ladies and gentlemen.

Speaker Change: We'd like to remind you to please limit yourselves to one question you may get back into the queue. As time allows one moment for our first question.

And our first question comes from the line of Brian Bittner from Oppenheimer. Your question. Please.

Brian John Bittner: Your question, please. Thank you. Good morning.

Brian John Bittner: Thank you and good morning.

Clearly, your underlying core business is showing very nice signs of improvement, positive traffic in both the carry-out business and delivery business prior to any Uber benefits. I understand improvements in the core business can continue moving forward, maybe even perhaps accelerate, and they remain important, but now you are fully rolled out with Uber. Our conversations with the investment community suggest the expectations for Uber Mix currently are still relatively low, maybe that 1% to 1.5% range. You talked about getting to 3% by the end of the year. Can you talk about how this improvement should unfold as the year unfolds and maybe unpack the marketing that's getting turned on? How is that bolstering your expectations for where the Uber Mix will go?

Brian John Bittner: Clearly your underlying core business is showing very nice signs of improvement positive traffic in both the carry out business and delivery business prior to any Uber benefits in <unk>.

Brian John Bittner: I understand the improvements in the core business can continue moving forward, maybe even perhaps accelerate and they remain important but now you are fully rolled out with Uber in our conversations with the investment community suggests the expectations for Uber Uber makes currently it's still relatively low maybe that one to one five.

Brian John Bittner: 5% range and you talked about getting to 3% by the end of the year. So can you talk about how this improvement should unfold as the year unfolds and maybe unpack the marketing that's getting turned on how is that bolstering your expectations for where the Uber mix will go.

Thank you. Morning, Brian. How are you doing? Let me talk a little bit about what we're seeing as far as the cadence goes.

Speaker Change #100: Thank you.

Speaker Change #101: Good morning, Brian.

Speaker Change #102: How are you Doug.

Speaker Change #102: Let me talk a little bit about what we're seeing as far as.