Q3 2025 Domino's Pizza Inc Earnings Call
Speaker #1: Good day, and thank you for standing by. Welcome to the third quarter of 2025 Domino's Pizza Inc. earnings conference call. At this time, all participants are in a listen-only mode.
Gregory Lemenchick: Good day, and thank you for standing by. Welcome to the third quarter 2025 Domino's Pizza Inc. 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Gregory Lemenchick, Vice President of Investor Relations and Sustainability. Please go ahead.
Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star (1-1) on your telephone.
Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star (1-1) again. Please be advised that today's conference is being recorded.
Speaker #1: I would now like to hand the conference over to your speaker today, Gregory Lemenchick, Vice President of Investor Relations and Sustainability. Please go ahead.
Speaker #2: Good morning, everyone. Thank you for joining us today for our third quarter conference call. Today's call will begin with our Chief Executive Officer, Russell Weiner, followed by our Chief Financial Officer, Sandeep Reddy.
[Company Representative]: Good morning, everyone. Thank you for joining us today for our third quarter conference call. Today's call will begin with our Chief Executive Officer, Russell Weiner, followed by our Chief Financial Officer, Sandeep Reddy. The call will conclude with a Q&A session. The forward-looking statements in this morning's earnings release and 10-Q, both of which are available on our IR website, also apply to our comments on the call today. Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our filings with the SEC. 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. This morning's conference call is being webcast and is also being recorded for replay via our website.
Speaker #2: The call will conclude with a Q&A session. Before we look at statements in this morning's earnings release and 10-Q, both of which are available on our IR website, please note that the same applies to our comments on the call today.
Speaker #2: Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our filings with the SEC.
Speaker #2: 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.
Speaker #2: 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.
[Company Representative]: 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. With that, I'd like to turn the call over to Russell.
Speaker #2: As such, we encourage you to ask one question only. With that, I'd like to turn the call over to Russell.
Speaker #3: Thank you, Greg, and good morning, everybody. I'd like to start off by saying how incredibly proud I am of our team and our franchisees.
Gregory Lemenchick: Thank you, Greg, and good morning, everybody. I'd like to start off by saying how incredibly proud I am of our team and our franchisees as they continue to bring our Hungry for More strategy to life and deliver best-in-class results. It was a great Q3 for our U.S. business. We grew in all areas key to our success. Our carryout business was positive, our delivery business was positive, and our order count growth was positive. All of this resulted in meaningful market share growth. The momentum we're seeing in the business is due to initiatives that are working across all four of our Hungry for More strategic pillars. When we execute against Hungry for More, we drive more sales, more stores, and more profits. Let's start with our Best Deal Ever promotion, which was a meaningful driver of our strong U.S. results in Q3.
Speaker #3: As we continue to bring our hungry-for-more strategy to life and deliver best-in-class results, it was a great Q3 for our U.S. business. We grew in all areas key to our success.
Speaker #3: Our carry-out business was positive, our delivery business was positive, and our order count growth was positive. All of this resulted in meaningful market share growth.
Speaker #3: The momentum we're seeing in the business is due to initiatives that are working across all four of our hungry-for-more strategic pillars. When we execute against hungry-for-more, we drive more sales, more stores, and more profits.
Speaker #3: Let's start with our Best Deal Ever promotion, which was a meaningful driver of our strong U.S. results in Q3. In my opinion, Best Deal Ever is, well, the best deal in restaurants.
Gregory Lemenchick: In my opinion, Best Deal Ever is, well, the best deal in restaurants. The price point screams renowned value, and the taste drives our most delicious food perceptions. After all, consumers are building and eating their dream pizzas. In a world where prices have gone up and discounts never seem to be on the items you truly want, Domino's gives customers their favorite pizzas at our best price. Best Deal Ever also highlights the operational excellence our system has achieved. We wouldn't have been able to execute this kind of a promotion just a few years ago. The myriad of ever-changing topping combinations customers are putting together requires best-in-class operations that was unlocked by franchisees leveraging our training programs and Domino's systems. Last but certainly not least, Best Deal Ever is driving franchisee profitability.
Speaker #3: The price point screams renowned value, and the taste drives our most delicious food perceptions. After all, consumers are building and eating their dream pizzas.
Speaker #3: In a world where prices have gone up, and discounts never seem to be on the items you truly want, Domino's gives customers their favorite pizzas at our best price.
Speaker #3: The best deal ever also highlights the operational excellence our system has achieved. We wouldn't have been able to execute this kind of promotion just a few years ago.
Speaker #3: The myriad of ever-changing topping combinations customers are putting together requires best-in-class operations that were unlocked by franchisees leveraging our training programs and Domino's systems.
Speaker #3: Last but certainly not least, the best deal ever is driving franchisee profitability. Because of the scale of our media and purchasing power, Domino's can drive the volume it takes to make a great deal like this profitable for franchisees.
Gregory Lemenchick: Because of the scale of our media and purchasing power, Domino's can drive the volume it takes to make a great deal like this profitable for franchisees. In fact, Best Deal Ever has been running longer than we originally planned because our franchisees asked to bring it back. Domino's franchisees are truly hungry for more. Parmesan Stuffed Crust Pizza was another contributor to our strong results in the quarter. This launch has gone extremely well and continues to meet the expectations that we had for it on every level: mix, incremental new customers, and franchisee profitability. Most important, our teams continue to execute this complex product very well, which is key to its long-term success. The new flavors of Bread Bites we just launched marked our second innovation of the year and highlight our innovation with intent approach. Our intent with this innovation was twofold.
Speaker #3: In fact, the best deal ever has been running longer than we originally planned because our franchisees asked to bring it back. Domino's franchisees are truly hungry for more.
Speaker #3: Parmesan stuffed crust pizza was another contributor to our strong results in the quarter. This launch has gone extremely well and continues to meet the expectations that we had for it on every level.
Speaker #3: Mix, incremental new customers, and franchisee profitability. Most importantly, our teams continue to execute this complex product very well, which is key to its long-term success.
Speaker #3: The new flavors of Bread Bites we just launched mark our second innovation of the year and highlight our innovation with intent approach. Our intent with this innovation was twofold.
Speaker #3: First, adding two new flavors, garlic and cinnamon, brings news to the Bread Bites platform that we launched in 2012. Second, by adding these Bread Bites flavors, we were able to remove the more operationally complex bread twists from our menu.
Gregory Lemenchick: First, adding two new flavors, garlic and cinnamon, brings news to the Bread Bites platform that we launched in 2012. Second, by adding these Bread Bites flavors, we were able to remove the more operationally complex bread twists from our menu. In addition, customers prefer the taste of Bread Bites over twists and love that they can get 32 Bread Bites for $6.99 as part of our mix and match deal. Another part of our renowned value barbell strategy is tapping into the aggregator marketplace for pizza delivery. Q3 marked the first quarter where we were fully rolled out on DoorDash, and we remain encouraged about its long-term potential for our business. We continue to expect our sales on DoorDash to grow as awareness and marketing increase and believe this will be a meaningful contributor to our U.S. comps in Q4 and as we move into 2026.
Speaker #3: In addition, customers prefer the taste of Bread Bites over twists and love that they can get 32 Bread Bites for $6.99 as part of our mix-and-match deal.
Speaker #3: Another part of our renowned value barbell strategy is tapping into the aggregator marketplace for pizza delivery. Q3 marked the first quarter where we were fully rolled out on DoorDash, and we remain encouraged about its long-term potential for our business.
Speaker #3: We continue to expect our sales on DoorDash to grow as awareness and marketing increase, and believe this will be a meaningful contributor to our U.S. comps in Q4 and as we move into 2026.
Speaker #3: I wanted to quickly touch on the progress we continue to make on the upgrades to our e-commerce platforms. I'm excited to announce that we are now fully live with our website and mobile web experiences.
Gregory Lemenchick: I wanted to quickly touch on the progress we continue to make on the upgrades to our e-commerce platforms. I'm excited to announce that we are now fully live with our website and mobile web experiences, where our goal prior to full launch was to see our conversion equal to or better than our old platform. The new site does just that. It's much quicker, in particular during the checkout process, which provides a better user experience. The apps come next, and our goal is to have them rolled out by the end of the year. Next is something our entire system is buzzing about. We are bringing all aspects of Hungry for More to life with a completely new brand refresh. It's our first in 13 years. The new campaign makes every aspect of the brand as craveable as what is inside the box.
Speaker #3: Our goal prior to full launch was to see our conversion equal to, or better than, our old platform. The new site does just that.
Speaker #3: It's much quicker, in particular during the checkout process, which provides a better user experience. The apps come next, and our goal is to have them rolled out by the end of the year.
Speaker #3: Next is something our entire system is buzzing about. We are bringing all aspects of hungry for more to life with a completely new brand refresh. It's our first in 13 years.
Speaker #3: The new campaign makes every aspect of the brand as craveable as what is inside the box. The new look and feel will roll out over the coming months along with all of our marketing.
Gregory Lemenchick: The new look and feel will roll out over the coming months in all of our marketing. Hungry for More is no longer just a strategy. It has a look, a sound, and a heartbeat. Seeing everything come to life this year gives me the confidence that in 2026 and beyond, we will be able to achieve our goal of 3% same-store sales in the U.S. and continue to take meaningful market share. We have best-in-class franchisee economics in QSR Pizza, the largest advertising budget, a supply chain with incredible purchasing power, and a rewards program that is bigger than ever. We're just getting started.
Speaker #3: Hungry for More is no longer just a strategy; it has a look, a sound, and a heartbeat. Seeing everything come to life this year gives me the confidence that, in 2026 and beyond, we will be able to achieve our goal of 3% same-store sales in the U.S. and continue to take meaningful market share.
Speaker #3: We have best-in-class franchisee economics in QSR pizza, the largest advertising budget, a supply chain with incredible purchasing power, and a rewards program that is bigger than ever.
Speaker #3: And we're just getting started. As you know, we don't usually do LTOs at Domino's, so everything we have launched over the last two years—aggregator ordering, a new loyalty platform, stuffed crust, and more—is a part of our base and will be part of our growth in the future.
Gregory Lemenchick: As you know, we don't usually do LTOs at Domino's, so everything we have launched over the last two years, aggregator ordering, a new loyalty platform, stuffed crust, and more, is a part of our base and will be part of our growth in the future. We will continue to add new products, technology, and renowned value promotions on top of that. This will be how we drive best-in-class results and long-term value creation for our franchisees and shareholders well into the future. I'll now hand the call over to Sandeep.
Speaker #3: And we will continue to add new products, technology, and renowned value promotions on top of that. This will be how we drive best-in-class results and long-term value creation for our franchisees and shareholders well into the future.
Speaker #3: I'll now hand the call over to Sandeep.
Speaker #4: Thank you, and good morning, everyone. Our third-quarter financial results continue to be impacted by a challenging macro backdrop, but we drove profit growth that was slightly ahead of our expectations due to our strong sales performance and the timing of investments.
Sandeep Reddy: Thank you, and good morning, everyone. Our third quarter financial results continue to be impacted by a challenging macro backdrop, but we drove profit growth that was slightly ahead of our expectations due to our strong sales performance and the timing of investments. Income from operations increased 11.8% in Q3, excluding the impact of foreign currency. This increase was primarily due to higher U.S. franchise royalties and fees and gross margin dollar growth within supply chain. Excluding the impact of foreign currency, global retail sales grew 6.3% in the quarter due to positive U.S. and international comps and global net store growth. In Q3, retail sales grew by 7% in the U.S., driven by same-store sales and net store growth. This growth was slightly ahead of our expectations due to the strong performance from our Best Deal Ever promotion.
Speaker #4: Income from operations increased 11.8% in Q3, excluding the impact of foreign currency. This increase was primarily due to higher U.S. franchise royalties and fees, and gross margin dollar growth within the supply chain.
Speaker #4: Excluding the impact of foreign currency, global retail sales grew 6.3% in the quarter due to positive U.S. and international comps, as well as global net store growth.
Speaker #4: In Q3, retail sales grew by 7% in the U.S., driven by same-store sales and net store growth. This growth was slightly ahead of our expectations, due to the strong performance from our best deal ever promotion.
Speaker #4: We also paced well ahead of the QSR pizza category, which has grown over the last quarter to approximately 1% year-to-date. Same-store sales accelerated to 5.2% for the quarter on the strength of our "best deal ever" promotion and Parmesan-stuffed crust, which drove positive transaction counts.
Sandeep Reddy: We also paced well ahead of the QSR Pizza category, which has grown over the last quarter to approximately 1% year to date. Same-store sales accelerated to 5.2% for the quarter on the strength of our Best Deal Ever promotion and Parmesan Stuffed Crust Pizza, which drove positive transaction counts. Average ticket benefited from 1.3% of pricing and stuffed crust, which carries a higher price point. This was partially offset by a slight decline in our mix due to a higher carryout business that has a lower ticket than delivery. Our carryout comps were up 8.7% due to the previously noted initiatives, as well as continued growth from our loyalty program. Delivery was positive 2.5%, primarily driven by the strength of our Best Deal Ever promotion and stuffed crust. It also benefited from aggregators coming from the launch of DoorDash. Shifting to U.S.
Speaker #4: Average ticket benefited from 1.3% of pricing and stuffed crust, which carries a higher price point. This was partially offset by a slight decline in our mix due to a higher carry-out business that has a lower ticket than delivery.
Speaker #4: Our carry-out comps were up 8.7%, due to the previously noted initiatives, as well as continued growth from our loyalty program. Delivery was positive 2.5%, primarily driven by the strength of our "Best Deal Ever" promotion and stuffed crust.
Speaker #4: It also benefited from aggregators coming from the launch of DoorDash. Shifting to U.S. unit count, we added 29 net new stores, bringing our U.S. system store count to 7,090.
Sandeep Reddy: unit count, we added 29 net new stores, bringing our U.S. system store count to 7,090. International retail sales grew 5.7%, excluding the impact of foreign currency in the quarter. This was driven by net store growth of 185 and same-store sales of 1.7% that met our expectation. In the quarter, we continued to see strength in Asia, which was primarily due to strong comps in India. We have not seen any material impacts to date from global macro or geopolitical uncertainty. I wanted to highlight the refinancing transaction that we completed in the third quarter. We had two tranches of debt totaling approximately $1.15 billion, with a blended interest rate of approximately 4.3% that was due in October of this year. We paid down approximately $150 million of this and refinanced $1 billion in two $500 million tranches at a blended rate of approximately 5.1%.
Speaker #4: International retail sales grew 5.7%, excluding the impact of foreign currency in the quarter. This was driven by net store growth of 185 and same-store sales of 1.7%, which met our expectations.
Speaker #4: In the quarter, we continued to see strength in Asia, which was primarily due to strong comps in India. We have not seen any material impacts to date from global macro or geopolitical uncertainty.
Speaker #4: I wanted to highlight the refinancing transaction that we completed in the third quarter. We had two tranches of debt totaling approximately $1.15 billion, with a blended interest rate of approximately 4.3% that was due in October of this year.
Speaker #4: We paid down approximately $150 million of this and refinanced $1 billion in two $500 million tranches at a blended rate of approximately 5.1%. We were very pleased with the outcome of this transaction.
Sandeep Reddy: We were very pleased with the outcome of this transaction. We expected to have an immaterial impact on our interest expense in 2025 and in 2026 and beyond. As a reminder, our next two tranches of debt come due in July 2027 and total approximately $1.3 billion. Moving to capital allocation, we repurchased approximately 166,000 shares at an average price of $450 per share for a total of $75 million in the third quarter. At the end of Q3, we had approximately $540 million remaining on our share repurchase authorization. Now, turning to our outlook for 2025, we continue to believe that global retail sales growth should be generally in line with 2024. As part of that, we expect the following. First, we continue to expect our U.S. comp for the year to be 3% and to grow our market share meaningfully in QSR Pizza.
Speaker #4: We expect to have an immaterial impact on our interest expense in 2025, and in 2026 and beyond. As a reminder, our next two tranches of debt come due in July 2027 and total approximately $1.3 billion.
Speaker #4: Moving to capital allocation, we repurchased approximately 166,000 shares at an average price of $450.00 per share for a total of $75 million in the third quarter.
Speaker #4: At the end of Q3, we had approximately $540 million remaining on our share repurchase authorization. Now, turning to our outlook for 2025, we continue to believe that global retail sales growth should be generally in line with 2024.
Speaker #4: As part of that, we expect the following: first, we continue to expect our U.S. comp for the year to be 3% and to grow our market share meaningfully in QSR pizza.
Speaker #4: Our comp could be pressured by the macro environment in the U.S., which we have seen intensify across the restaurant industry at the start of our fourth quarter.
Sandeep Reddy: Our comp could be pressured by the macro environment in the U.S., which we have seen intensify across the restaurant industry at the start of our fourth quarter. Second, we continue to expect our international same-store sales growth to be 1% to 2%. This could tilt towards the high end of the range if we do not see any material impacts from macro and geopolitical uncertainty for the balance of the year. Third, our pipeline remains strong in the U.S., where we continue to expect 175 plus net stores and internationally net store growth to be in line with what we had in 2024. We continue to expect operating income growth of approximately 8%, excluding the impact of foreign currency, severance expenses related to the organization realignment we previously announced in Q1, and the refranchising gain in Q2. Thank you. We will now open the line for questions.
Speaker #4: Second, we continue to expect our international same-store sales growth to be 1% to 2%. This could tilt towards the high end of the range if we do not see any material impacts from macro and geopolitical uncertainty for the balance of the year.
Speaker #4: Third, our pipeline remains strong in the U.S., where we continue to expect 175+ net stores, and internationally, net store growth to be in line with what we had in 2024.
Speaker #4: We continue to expect operating income growth of approximately 8%, excluding the impact of foreign currency, 7% expenses related to the organizational realignment we previously announced in Q1, and the refranchising gain in Q2.
Speaker #4: Thank you. We will now open the line for questions.
Speaker #5: Thank you. As a reminder, to ask a question, please press star (1-1) on your telephone and wait for your name to be announced. To withdraw your question, please press star (1-1) again.
Gregory Lemenchick: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Dennis Geiger with UBS. Your line is open.
Speaker #5: Please stand by while we compile the Q&A roster. Our first question comes from Dennis Geiger with UBS; your line is open.
Speaker #6: Thanks, guys. I appreciate it. I wanted to ask a little bit more about the U.S. sales outlook, same-store sales outlook for the year, and the reiterated 2025 guidance for 3%.
[Analyst]: Thanks, guys. Appreciate it. I wanted to ask a little bit more about the U.S. sales outlook, same-store sales outlook for the year. The reiterated 2025 guidance for 3%, you talked about the difficult macro there. Could you just kind of break down maybe anything on what you're seeing at a high level thus far, you know, sort of unpacking that macro dynamic and the impact on the business, and then just the confidence in that number given some of the initiatives that seem to be resonating across the promotional activity and some of the other levers? Thank you very much.
Speaker #6: You talked about the difficult macro there. Could you just kind of break down maybe anything on what you're seeing at a high level thus far, you know, sort of unpacking that macro dynamic and the impact on the business?
Speaker #6: And then just the confidence in that number, given some of the initiatives that seem to be resonating across the promotional activity and some of the other levels.
Speaker #6: Thank you very much.
Speaker #4: Morning, Dennis. Thanks for the question. Yeah, no, I think, as we said in the prepared remarks, we're reiterating our 3% outlook for same-store sales in the U.S.
Sandeep Reddy: Morning, Dennis. Thanks for the question. Yeah, no, I think as we said in the prepared remarks, we're reiterating our 3% outlook for same-store sales in the U.S. I think as far as we're concerned, we've been talking about the macro environment being a key factor all year. This is not new, but I think what we did want to point out was we've definitely been seeing a slowing across restaurant industry sales to start our fourth quarter, and that's just a factor that's out there. As far as we're concerned, we are expecting to continue to gain share against the QSR Pizza industry. We've done so really well so far this year, and we expect to continue to do that in Q4. In terms of initiatives, we actually are running Best Deal Ever, as you know, right now.
Speaker #4: And I think, as far as we're concerned, we've been talking about the macro environment being a key factor all year. This is not new, but I think what we did want to point out was that we've definitely been seeing a slowing across restaurant industry sales to start our fourth quarter, and that's just a factor that's out there.
Speaker #4: But as far as we're concerned, we expect to continue to gain share against the QSR pizza industry. We've done really well so far this year, and we expect to continue to do that in Q4.
Speaker #4: So from the terms of initiatives, we actually are running the best deal ever, as you know, right now. We're excited about DoorDash and the continuing impact of DoorDash, as we called out from the beginning of the year, to be more of a backup impact, so it should continue into Q4.
Sandeep Reddy: We're excited about DoorDash and the continuing impact of DoorDash, as we called out from the beginning of the year, to be more of a backup impact. It should continue into Q4, and we'll have a whole bunch of stuff going on from the renowned value perspective as we move forward. We just want to make sure that we do all the things that we need to do in terms of initiatives and drive them. We're excited about our business, but I think we just wanted to point out that we're observing what's happening in the macro environment.
Speaker #4: And we'll have a whole bunch of stuff going on from the renowned value perspective as we move forward. So we just want to make sure that we do all the things that we need to do in terms of initiatives and drive them. We're excited about our business, but I think we just wanted to point out that we're observing what's happening in the macro environment.
Speaker #5: And Dennis, good morning, it's Russell. I would just say, you know, in this kind of environment, what I'm very confident that we'll continue to do is drive market share.
Russell Weiner: Dennis, morning. It's Russell. I would just say, you know, in this kind of environment, what I'm very confident that we'll continue to do is drive market share. What that does is it really puts distance between us and our competition. It puts pressure on the economics of their stores. Even some short-term restaurant headwinds lead to share gains and long-term gains for Domino's Pizza Inc. in that environment.
Speaker #5: And what that does is it really puts distance between us and our competition. It puts pressure on the economics of their stores, so even some short-term restaurant headwinds lead to share gains and long-term gains for Domino's in that environment.
Speaker #5: Thank you. And our next question comes from the line of David Palmer with Evercore ISI. Your line is open.
Gregory Lemenchick: Thank you. Our next question comes from the line of David Palmer with Evercore ISI. Your line is open.
Speaker #7: Hi, thanks. You know, Russell, I was just hoping maybe you could make a comment about the overall delivery market and what you're seeing, not just from a consumer standpoint, but competitively. It looks like, from where we're sitting, there is a lot of maybe desperate discounting and promotional activity on the third-party sites right now. Effectively, it's the industry's version of stuffing the channel, waiting the quarter. You saw a lot of this activity.
[Analyst]: Thanks. Russell, I was just hoping maybe you could make a comment about the overall delivery market and what you're seeing, not just from a consumer standpoint, but competitively. It looks like from where we're sitting, like there is a lot of maybe desperate discounting promotional activity on the third-party sites right now. Effectively, it's the industry's version of stuffing the channel. Late in the quarter, you saw a lot of this activity, and we're seeing these deals pop up on our app. Could you speak to the broader ecosystem of delivery right now and what's happening there and how you see this playing out? Is this sustainable? What does it mean for you and maybe the pizza category? Thanks.
Speaker #7: And where is this sustainable? You know, what does it mean for you? And maybe the pizza category. Thanks.
Speaker #7: Seeing these deals pop up on our app, could you speak to the broader ecosystem of delivery right now, what's happening there, and how you see this playing out?
Speaker #5: Yeah, David, good morning. You know, I think if you take a look, if you take a step back, that's part of why we're happy that both our delivery business and our carry-out business were up for the quarter.
Russell Weiner: Yeah, David, good morning. I think if you take a step back, that's part of why we're happy that both our delivery business and our carryout business was up for the quarter. There are a lot of pressures out there, but the fact that we're able to sustain that and, maybe use your words in a second, sustain that profitably is really important. I think we got to look back at the notes. I think you used desperate pricing or something like that. I'll compare that to our renowned value. This is value that we put out there that absolutely is aggressive and is aggressive, certainly if you're a competitor of ours with different store level economics, different ability to drive volume, different ability to bring food costs down to a manageable amount. The value we have out there is value we can sustain.
Russell Weiner: Yeah, I think, whereas we've got a lot of growth in carryout and continued growth in delivery, as more and more people come into delivery, they're having to buy their way into it. I think in that kind of marketplace, we succeed. We excel.
Sandeep Reddy: Dave, I'm going to add another thing on this because we've talked about this from the get-go on the aggregator channel, but we are pricing for profitability of the franchisees. No matter what's going on in the delivery channel, we've actually been able to optimize that and will continue to optimize that as we learn more and move along. More importantly, I think just to put context behind what's going on in the delivery business, in a challenged environment to put up like the comps that we did plus the new stores that we've opened, we're talking about close to mid-single digits retail sales growth on the delivery channel in a very tough environment. We feel really good about our delivery business. We understand what's going on in the landscape, but we have the best franchisee economics and we have the best ability to price for profitability in the industry.
Sandeep Reddy: We feel confident that we're doing the right things.
Russell Weiner: We get excited about delivery here at Domino's Pizza Inc. I'd say one addition to that is this is why I'm so bullish about our long-term prospects on aggregators. We deliver like one in every three pizzas out there. We're not at that share yet on aggregators. I think a lot of that is because, one, we just started, we just got on DoorDash, but we're still growing and there is pricing that in some point, in some places for the competition is probably not sustainable. Over time, that's what's going to enable us to grow to our fair share. That's why I think aggregators are a multi-year tailwind for us.
Gregory Lemenchick: Thank you. Our next question comes from Brian Bittner with Oppenheimer. Your line is open.
[Analyst]: Thanks. Good morning. As it relates to your Best Deal Ever promotion, obviously it's part of your renowned value strategy and it's proven to be successful. I think the main question that we get from the investment community is how do you ensure that you aren't training the consumer to rely on that price point or that deal for times when you aren't running it, considering it is the Best Deal Ever. A follow-up to that is just, can you talk about the economics of this for franchisees? I mean, clearly we can see your company-owned margins. It didn't have a big impact on cost margins. Just curious if there's any other tidbits you can add on the economics of Best Deal Ever.
Russell Weiner: Yeah, sure, Brian. I'll take economics first and then we'll go into Best Deal Ever. The best thing I can tell you about the economics is we're on with Best Deal Ever longer than we originally intended because our franchisees called us and told us that they want to continue to lean in because this is driving business in their stores and it's driving profitable business. I think that even beyond numbers speaks to what it's doing in our stores. When you think of Best Deal Ever, this is just part of what we've got in our arsenal, both on renowned value. We've got that, we've got Boost Weeks, we've got Emergency Pizza, carryout tips, all of these things we come up with new every year as a way to kind of reinvent value, but in a way that's really ownable.
Up to that, just can you talk about the economics of this for franchises? I mean, clearly we can see your company on margins. It didn't have a big impact on COGS margins, so just curious if there's any other tidbits you can add on the economics of the best deal ever.
Yeah sure Brian. I'll I'll take economics first and then we'll go into best deal ever. I mean, what I the best thing I can tell you about the economics is um we're on with best deal ever longer than we originally intended because our franchisees called us and told us that they want to continue to lean in because this is driving business, in, in, in their stores and it's driving profitable business. And so I, I think that, you know, even Beyond numbers speaks to what it's doing, you know, in our stores
Russell Weiner: What we'll do is we'll continue to mix this, the renowned value with the most delicious food aspects. You're seeing that actually play out right now on air with the launch of the new product going on at same as Best Deal Ever. The other thing that's really interesting about Best Deal Ever, yeah, it is a great price point, but the amazing thing is when you talk to consumers, when they're able to build any pizza they want to build, they come and their takeaway is not only that it's a good price, but they actually think that the food tastes even better. This is not just a value-driven promotion. It's a most delicious food promotion. We'll continue to weigh that with all the other strong things that we've got on our calendar in our arsenal for the future.
And then, you know, when when you think of best deal ever, the this is just part of what we've got in our Arsenal. Both on renowned value. We've got that, we've got boost weeks. We've got Emergency Pizza, carry out tips. All of these things we come up with new every year as a way to kind of reinvent value but um, in in a way that's really ownable. Um,
And then what we'll do is we'll continue to mix this renowned value with the most delicious food aspects. And so, you know, you're seeing that actually play out right now on air with the launch of the new products going on at the same time as the best deal ever.
The other thing that's really interesting about best deal ever. Yeah, it it is a great price point, but the amazing thing is when you, when you talk to Consumers, when they're able to build any pizza, they they want to build. They come and their takeaway is not only that it's a good price, but they actually think that the food tastes even better. And so this is not just a value-driven promotion. It's a, it's a most delicious food promotion and we'll continue to weigh that with all the other strong things that we've got on our calendar in our Arsenal, uh, for the future.
Gregory Lemenchick: Thank you. Our next question comes from the line of David Tarantino with Baird. Your line is open.
Thank you.
Comes from the line of David Tarantino with a beard. Your line is open.
[Analyst]: Hi, good morning. Russell, I think you mentioned in your prepared remarks your confidence in delivering 3% comps in 2026 and beyond. I think a common narrative on Domino's is that, you know, this year had a lot of sales drivers that are going to be tough to lap. I just wanted to ask you to maybe explain your thought process on how the next few years could evolve and why you're so confident that 3% is the right number going forward. Thanks.
Hi, uh, good morning. Uh, Russell, I think you mentioned in your prepared remarks your confidence.
Russell Weiner: Yeah, thanks a lot for the question. I think some of the reason for the question is maybe we run our business a little bit different than other restaurants. This is not a company that does a lot of limited-time offers. When we launch a product, we launch it because we know it's good enough to stay on the menu and we know it can build over time. That's for menu items and value items. An example is our loyalty program. We launched our loyalty program in 2023. It was bigger in 2024 than it was in 2023, and it'll be bigger in 2025 than it'll be in 2024. David, I think that's the approach to some of these other ones. I just talked earlier about aggregators and how over time we're going to get to our fair share, but we're not there yet.
And delivering, 3% comps in 2026 and Beyond. And I think a common narrative on on dominoes is that, you know, this year had a lot of sales drivers that are going to be tough to lap. So I just wanted to to ask you to maybe explain your thought process on on how the next few years could evolve. And why why you're so confident that um, 3% is the right number going forward, thanks.
Yeah, thanks. Thanks a lot for the question. You know. I think some of the reason for the question is maybe you know, we we we run our business a little bit different than other restaurants. This is not a company that does a lot of limited time offers. Um, and so when we launched a product, we launched it because we know it's good enough to stay on the menu and we know it can build over time and, and, uh, that's for menu, items and value items as an example, as our loyalty program.
We relaunched our loyalty program in 2023.
Russell Weiner: It's not like we launched and hit our maximum for aggregators, for stuffed crusts, for loyalty, for any of these things. What happens is they become part of our base for our future, where we continue to come back to them and grow and then add things on top of that. If this was an LTO business, I think people would need to worry because you're launching something and you're taking away and you got to build on it. This is part of our base and part of our growth moving forward.
It was bigger than 24 than it was in 23, and it'll be bigger in 25. That'll be in 24, and David, I think that's the approach to some of these other ones. I just talked earlier about aggregators and how, you know, over time, we're going to get to our fair share, but we're not there yet.
So, it's not like we launched and hit our maximum.
For aggregators for stuffed crusts for loyalty for any of these things, what happens is they become part of our base for our future, where we can continue to, to come back to them and grow and then add things on top of that. If this was an lto business then I think people would need to worry because you're launching something and you're taking away and you got to build on it. This is part of our base and part of our growth moving forward.
Gregory Lemenchick: Thank you. Our next question comes from Gregory Francfort with Guggenheim. Your line is open.
Thank you. Our next question comes from Gregory Frankort with...
[Analyst]: Hey, thanks for the question. Russell, I just wanted to ask maybe going back to Best Deal Ever, the $9.99 price point is a couple bucks higher than some of your existing value programs. How did customers use $9.99 versus the other two major platforms? Is there a possibility that you would maybe more permanently shift people, shift the customer up a couple bucks, but give them more and maybe make that a more permanent piece of the menu? Thanks.
Guggenheim, your line is open.
Hey, thanks. Thanks for the question. Um, Russ, I just wanted to ask maybe going back to Best Deal ever.
Russell Weiner: Yeah, Greg, you know, like when I explain what we're doing with Best Deal Ever, sometimes my simple explanation is like opening up an ice cream store. Depending on your preference, your first flavor is probably either going to be chocolate or vanilla, and then the other one's going to come in and then maybe a strawberry. You're not going to do a vanilla and then a French vanilla as your second flavor. That's kind of what we're doing with our deals right now. The mix and match at $6.99, those are medium pizzas, and other items are available on the menu, you know, sandwiches, pastas, salads, all those types of things. The large customers is like that chocolate ice cream you added to the vanilla. We're going after somebody else.
The 999 price points a couple bucks higher than than some of your existing value. Um, programs. And how did customers use 999.99 versus the other? The other 2 major platforms? And is there a possibility that you would maybe more more permanently shift, people shift the customer up a couple bucks, but but give them more and and maybe make that a more permanent piece of the menu, thanks.
Yeah. Greg, you know, like, I, I when I explained what we're doing with Best Deal Ever, sometimes, um, my simple explanation, it's like opening up an ice cream store.
Strawberry, you're not going to do a vanilla and then that French vanilla as your second flavor.
Russell Weiner: We're going after someone who, you know, may not want all that food, could be a smaller eating occasion, and is willing to pay a little bit more for what they want. I think this is a really important point, and maybe we can address that later as well. I think one of the reasons Domino's, you know, we had the quarter we had is, yeah, Sandeep talked about their pressures right out there in QSRs today. One of them is economic, but I think the other is what is being offered and not being offered by restaurants out there. I think consumers are looking at deals and saying, this is the deal you want to give me. This is not the deal I want. With Best Deal Ever, we're giving them the deal they want because they can, you know, they can create any pizza they want.
And that's kind of what we're doing with our deals right now. The the mix and match at 699. Those are medium pizzas and other items are available on the menu. You know, sandwiches pasta salads all those types of things. The large customers is like that. Chocolate ice cream added to the vanilla. We're going after somebody else. We're going after someone who, you know, may not want. All that food could be a a smaller eating occasion, and is willing to pay a little bit more for what they want. You know, I, I think this is a really important point and maybe we can address it later as well. I think, 1 of the reasons, Domino's, um, we, you know, we had the quarter we had
Is yeah, Sandeep talked about their pressures, right out there in qsrs today and you know, 1 of the most economic but I think the other is what is being offered and not being offered by restaurants out there. I think consumers are looking at deals and saying well this is a deal. You want to give me this is not the deal I want.
Russell Weiner: These two deals, mix and match and Best Deal Ever, work complementary to each other, which is, I think, why we got the quarter that we got.
And with Dusty Lever, we're giving them the deal they want because they can, you know, they can create any pizza they want. So these two deals, Mix and Match and Best Deal Ever, work complementary to each other. Um, which is, I think, why we got the quarter that we got.
Gregory Lemenchick: Thank you. Our next question comes from Danilo Gargiulo with Bernstein. Your line is open.
Thank you. Our next question comes from Danilo Guo with Bernstein. Your line is open.
[Analyst]: Great, thank you. Russell, I have a very quick clarification and then a question. The clarification is you mentioned that you have not reached the maximum among some of the innovations that you have launched. I was wondering if you have already reached the same 15% sales mix on the Parmesan Stuffed Crust Pizza, given that it has been out for almost six months now. If not, are you planning to do any tweaks to the go-to-market or product to be able to reach that 15%? The real question is you were talking about sharp value, right, and renowned value. We've seen some peers being fairly successful in launching the six-inch personal pizza at very sharp price points, capturing individual consumers, growing lunch dayparts and whatnot. This is one aspect that is still not available on your menu.
[Analyst]: Is there a strategic rationale, like your real estate, margin sustainability, and whatnot, that could prevent or that has prevented Domino's Pizza Inc. from launching it? Thank you.
Russell Weiner: Yeah, thanks a lot, Danilo. We had really high expectations for stuffed crust, both from a mix, bringing in consumers, new consumers, and also operationally from our franchisees. Those high expectations were met, both during launch and since then. I've got actually a fun statistic I'll throw out. It'll be interesting to see what projections are on this one. If you took all the cheeses that are in the stuffed crust, that string cheese, and you lined them up next to each other, you would wrap around the earth and still have a lot left over. We'll see what that means, that model. I'm not going to tell you it's the 15% that you asked or not. I'll tell you, we were really happy with this launch. We're absolutely going to come back and talk to it in the future.
Great. Thank you very quick qualification and then a question. So the clarification is you mentioned that um, you have not reached the maximum among some of the innovations that you had launched. And so, I was wondering if you ever really reached the same, 15% sales mix on the stock Crust Pizza. Given that, you know, it has been out for almost 6 months now and if not, are you playing through any Twix to the go to market or product? Uh, to be able to reach that 15%? And then the real question is you were talking about um, stock value, right? And renowned value, and we've seen some peers being fairly successful in launching the 6 inch, personal Pizza that are very sharp price points. Capturing individual consumers growing launch day parts and whatnot. So this is 1 aspect that is still not available on your menu. So is there a strategic rationale? Like your real estate margin sustainability and whatnot that could prevent or that has prevented Domino's from launching it. Thank you.
Yeah, thanks a lot. To know, you know, we had really high expectations for Stuffed Crust.
Both from a mix bringing in consumers, um, new consumers and all also operationally from our franchises and, uh, those high expectations were met, you know, both during launch. And, um, and you know, and, and since then I, I I've got actually a fun statistic. I'll, I'll throw out, it'll be interesting to see what projections are on this 1. But if you, if we've, if if to give you a sense of how much stuff for us, we've sold is if you if you took all the cheeses that are in the stuffed crust that string cheese and you line them up next to each other.
Russell Weiner: As far as renowned value in the individual pizzas, we've got a lot of items right now that are for individuals that are on our mix and match. We've got sandwiches and pastas and salads and chicken and all those pizzas. When we decide what we promote, Danilo, we make decisions based on the numbers and what it's going to deliver. These smaller kind of lunch single person, they are opportunities, but the opportunities we have that we put our money behind, at least right now, are much bigger than that, we think. That's why you're seeing some of the results that you're seeing in our business. We've got the options there, but we're putting more of our money, we're kind of pouring gas on the fire where it's burning.
You would wrap around the earth and still have a lot left over. Um, so we'll see what, what? What that means that model? If I'm not going to tell you, it's a 15% that you asked or not. But I'll tell you, we were really happy with this launch. Um, we're we're we're absolutely going to come back and talk to it. Uh uh uh, you know, in the, in the future. Um, as far as renowned value in the individual uh pizzas. You know, we've got a lot of items right now that are for individuals that are on our mix and match. You know, we've got sandwiches and pastas and salads and chicken and and all those these pieces when we decide what we promote, uh, Danilo, we we, we we make decisions based on the numbers.
And what it's going to deliver. And you know um these smaller kind of lunch single person, they are opportunities but the opportunities we have that, we put uh our money behind at least right now.
We are much bigger than that, we think. Um, and that's why you're seeing some of the results that, uh, that you're seeing in our business. So we've got the options there, but we're putting more of our money—we're kind of pouring gas on the fire where it's burning.
Gregory Lemenchick: Thank you. Our next question comes from the line of John Ivankoe with J.P. Morgan. Your line is open.
[Analyst]: Hi, thank you. Obviously, there's a lot of pushes and pulls in terms of franchisee economics and your underlying return on investment, you know, for the aggregate units in the U.S. are obviously quite strong. My question is really around U.S. unit development over the next several years. Ending the quarter at around 7,100 units, I think 7,700 is the target in fiscal 2028. Remind me on that. And 8,500 in the TAM. How are you thinking, I guess, firstly about that 8,500? When can we get there? Maybe, in terms of thinking about more near-term visibility, do we expect linear growth in 2026, 2027, 2028, if there's kind of an early indication about the pace of U.S. unit development, given what you're seeing on a trade area by trade area basis? Thank you.
Thank you. And our next question comes from the line of John ivanco with JP Morgan. Your line is open.
Sandeep Reddy: Hi, John. It's Sandeep. I think on the franchisee economics side, as you pointed out, our economics are very compelling. I think the appetite from franchisees continues to be very strong, which is why the pipeline visibility this year, frankly, is a little bit better than last year at the same time. We're very confident in the 175 stores we're talking about for this year. The algorithm was based on 175 plus a year through 2028. We see a good line of visibility based on the economics that we're generating and the white space opportunities that we see, whether they're split stores or whether they're greenfield stores, to see that we have a good line of visibility to the 7,700-ish number on 2028.
And you know maybe you know in terms of thinking about um you know more near-term visibility do we expect linear growth in 2627 28? If there's a, you know, kind of an early indication about the pace of US unit development. Given, what you're seeing on a trade area by trade area basis. Thank you.
Hi John. It's uh Sandy. Um, so look I think on the franchise economics uh side. As as you pointed out, our economics are very compelling and I think the the appetite from franchisees continues to be very strong, which is why the pipeline visibility this year, frankly is a little bit better than last year at the same time and we're very confident in the ones that would be 5 stores. We're talking about for this year and and really the algorithm was based on 175 plus a year, uh, through 2028. And we see a good line of visibility based on the economics that we are generating and the white space opportunities that we see whether they split stores or whether they're green field Stores um, to see that we have uh good line of visibility to the 7700.
Sandeep Reddy: In terms of the 8,500, I'll go back to something that Russell said during the Investor Day, which is we've had long-term targets multiple times over the years, but somehow they start getting bigger and bigger over time. Why? Because what we take into consideration when we're coming up with those long-term markets is the current competitive environment. What has been happening consistently over the past decade is we've been taking share consistently. Competitive stores are closing. We are opening up stores. That opens up even more opportunity for us to open up even more stores around what the stores we're opening at. That 8,500 is a perspective based on where we were in 2023. Two years on, you know what's been happening. We've gained a couple of points of share. A number of competitive stores have closed.
Uh ish number on to on 2028, in terms of the 8,500. I'll go back to something that Russell said during the investor day,
We've had long-term targets multiple times over the years, but somehow they start getting bigger and bigger over time. Why? Because what we take into consideration when we come up with those long-term markets is the current competitive environment.
What has been happening consistently over the past decade is we've been taking share consistently.
Competitive stores are closing, we are opening up stores and actually that opens up even more opportunity for us to open up. Even most stores around what the stores were opening us.
Sandeep Reddy: That is expected to continue happening over the remaining few years of the Hungry for More timeframe of 2028 and probably beyond. That's how we look at the full potential number of stores. I think it evolves over time. We feel very bullish about it.
Russell Weiner: Yeah, that just kind of builds, Sandeep, on what I was talking about before. You know, even at a time where maybe restaurant traffic is pressured, that's actually good for Domino's. One is we know we can provide value to our customers when other folks can't. We think we're going to emerge from that stronger and probably our competitors weaker, which is why that opens up. You know, this is a long-term game for us, and we get excited about that. I think I'll add, just to add to John's question, what makes me excited about our builds this year is we broaden our builder base.
So that 8,500 is a perspective based on where we were in 2023. Two years on, you know, what's been happening. We've gained a couple of points to share. Number of competitors' stores have closed; that is expected to continue happening over the remaining few years of the hungry-for-more time frame of 2028 and probably beyond. And so that's how we look at the full potential number of stores, and I think it evolves over time, and we feel very bullish about it.
Yeah, I'll just that that's kind of that builds Sun, deep on what I was talking about before is, you know, even at a time where, you know, maybe restaurant, um, uh, traffic is is, is is pressured. Um, that's actually good for Domino's. 1 is we know we can, uh, provide value to our customers when other people can't
Russell Weiner: We've got a lot of smaller franchisees who are now adding to that base, so we have more people than we did in prior years building stores, which just talks about not only the health of our business, kind of broad-based, but our ability to handle when you got more people opening. It's easier to hit those store numbers.
But we think we're going to merge from that stronger and and, and probably our competitors are weaker which, which is what, you know, why that opens up. You know what? This is a long-term game for us and we get excited about that. I think I'll add just to, um, at to to John's question, what, what makes me excited about our builds this year? Is we broaden our Builder base? And so we've got a lot of smaller franchises, who are now
Adding to that base. So we have more people than we did, you know, prior years building stores, which just talks about not only the health of our business, kind of broad-based, but our ability to handle when you got more people opening, it's it's it's easier to hit those those store numbers.
Gregory Lemenchick: Thank you. Our next question comes from the line of Lauren Silberman with Deutsche Bank. Your line is open.
[Analyst]: Thank you very much. I have a two-part question. Just starting on the consumer environment, you guys have been calling out the macro challenges as a consumer since the back half of 2024, which we've seen throughout the industry. It sounds like it's incrementally worse. What do you think is driving that weakness more recently in restaurants just broadly? The follow-on to that is just to help level set Q4 expectations. If the macro remains as challenging as you've seen to start the quarter, is Q4 coming in below a 3% comp? Just trying to understand how significant the macro decel is.
Thank you. And our next question comes from the line of Lauren Silverman with Deutsche Bank. Your line is open
Thank you very much. I have a I'll say 2-part question just starting on the consumer environment. You guys have been calling out the macro challenges, it's a consumer since the back half of 24 which we've seen throughout the industry, it sounds like it's incrementally worse.
What do you think is driving that weakness more recently in restaurants, just broadly?
And then the follow-on to that is just how to level set for QX expectations. If the macro remains as challenging as we've seen to start the quarter,
Is Q4 coming in below 3%? Just trying to understand how significant the macro deceleration is.
Sandeep Reddy: Yeah. I think your question is really good, Lauren. I think you're keyed in on what we've been talking about, that really speaking, we saw the macro get really tough starting around the back half of last year, in 2024, starting it really in Q3. I think as we kind of came out of 2024 and built our expectations for 2025, our base expectations were going to be tough macro. That's why we've been talking about the tough macro as something we've been paying attention to all along. So far this year, the macro really has paced as we expected it to in the first three quarters. What we're really pointing out is in the fourth quarter, we started seeing a slowing across the restaurant industry broadly relative to where Q3 was. We're pointing it out.
Yeah, so so I think your your your your question is really good Lauren and I think you're you're keyed in on what we've been talking about that really speaking. We saw the macro get really tough starting around the back half of last year, uh, in 2024, starting in early in Q3. And and I think, as we kind of came out of 24 and built our expectations for 25.
A base expectations were going to be tough macro and that's why we've been talking about the tough micro or something between paying attention to all along and so far this year, the macro really has has paced as we expected it to in the first 3 quarters.
Sandeep Reddy: If it intensifies even further, knowing that we're up against a tough macro environment last year, that could put pressure on our full-year same-store sales number. That's being realistic about it. What we have is a slate of initiatives where we can control our destiny with those initiatives. The macro, if it gets incrementally worse, could be a pressure.
Russell Weiner: I just add to that, kind of repeating what I said before, maybe in a different way, that short-term category pressure leads to long-term opportunity for us and short-term share growth. Thanks, Lauren.
Even further, knowing that we're up against a tough macro environment, last year could put pressure on our same-store sales number. So, that's being realistic about it. But what we have is a slate of initiatives where we can control our destiny with those initiatives. However, the macro environment, if it gets incrementally worse, could be a pressure.
And I just add to that, kind of repeating what I said before. Maybe in a different way, is that short-term category pressure leads to long-term opportunity for us and short-term share growth.
So, thanks Lauren.
Gregory Lemenchick: Thank you. Our next question comes from Peter Saleh with BTIG. Your line is open.
Thank you. Our next question comes from Peter S. with BTIG. Your line is open.
[Analyst]: Great. Thanks for taking the question. Maybe I just wanted to ask a big picture on the pizza category. I think the pizza category was, you guys were commenting that it was about flat for the first half of the year and now seems to be up 1% before maybe weakening a little bit or the entire industry weakening in the fourth quarter. I was hoping you could give us a little bit more color, you know, maybe in the third quarter, that acceleration, what you're seeing by maybe income cohorts, geographies, day parts, just trying to understand maybe what changed or what kind of where the acceleration is coming from in Q3.
Great. Uh, thanks for taking the question. Um, maybe I just want to ask a big picture on the pizza category. I think the pizza category was, you guys were commenting that it was about flat for the first half of the year and now seems to be up 1% before maybe weakening a little bit or the entire industry weakening in the fourth quarter.
Russell Weiner: Yeah, you know, the income cohort pressure on the lower-income customers has been seen throughout restaurants. What I think speaks to the kind of renowned value we have out there is we actually were up amongst all income groups for the quarter. That's our second quarter in a row where we're up against the lower-income customers. No matter what pressure is out there, we seem to be breaking the trend.
I was hoping you could give us a little bit more color. Um you know maybe in the third quarter that acceleration what you're seeing by maybe income cohorts geographies day Parts, just trying to understand maybe what changed or what kind of where the acceleration is coming from in in 3 Q.
Sandeep Reddy: Pete, what I'll add is you're rightly pointing out that we're now at 1% year-to-date. There was an acceleration in the category a little bit compared to the first half of the year. This gets us very close to our 1% to 2% historical growth rate. The pizza category is continuing to grow kind of in the range of what we expected when we set out the Hungry for More algorithm, and our plans are constructed around that. I think that was an important point to make because a lot of some of the questions I was getting was, is the pizza category declining? It's not true. It's up slightly, up 1%, which is close to our history.
Yeah, you know the um the income cohort pressure on the lower income customer has been seen kind of throughout restaurants, what, um, you know, I think speaks to the kind of renowned value. We have out there is we actually were up, uh, amongst all income groups for the quarter and that's our second quarter, in a row where we're up, uh, against um, you know, the the lower income customers so no matter what pressure is out there. Um, you know, we're we're we're we seem to be breaking the trend.
And, and be what?
That is you.
Know that we're not.
I agree a little bit compared to the first half of the year, and really this gets us very close to our 1% to 2% historical growth rate. So, the pizza category is continuing to grow kind of in the range of what we expected when we sent out the Hungry for More algorithm, and our plans are constructed around that. So, I just think that was an important point to make because a lot of some of the questions I was getting were, "Is the pizza category declining?" and it's not true. I mean, it's up slightly, up 1%, which is close to our history.
Gregory Lemenchick: Thank you. Our next question comes from Chris O'Cull with Stifel. Your line is open.
Thank you. Our next question comes from Crystal, with Stifel. Your line is open.
[Analyst]: Great, thanks, guys. This is Patrick on for Chris. My question was on carryout. I mean, you had a nice sequential pickup in the comp. The two-year stack was really healthy this quarter. I was curious if you were able to just disaggregate where that growth was coming from and, you know, how much is higher frequency versus new customer acquisition. Additionally, I know historically you said that there hasn't really been much crossover between carryout and delivery. Just given some of the broader softness in the environment, especially that you're seeing in the beginning of the fourth quarter, is there any evidence that some delivery customers, maybe even on the lower end of the income spectrum for that channel, may be increasingly opting for carryout?
Great. Thanks, guys. This is Patrick on for Chris. My question was on carry out, I mean, you had a nice sequential pickup in the comp the 2-year stack was really healthy this quarter. And I was curious, if you were able to just disaggregate where that growth was coming from and you know how much is higher frequency versus new customer acquisition. But additionally, I know historically you said that there hasn't really been much crossover between carry out and delivery and just given some of the broader softness in the environment especially that you're seeing in the beginning of the fourth quarter. I mean, is there any evidence that
Sandeep Reddy: Yeah, I think, look, on the carryout business, we're just really excited about where the momentum is taking our business. We even talked about it on the last call when we had a, I think, 5.8% if I remember, you served me right, on same-store sales. Now we have an 8.7%. Fantastic. The drivers of carryout were everything that we talked about in the prepared remarks. "Best Deal Ever" was a huge factor. Parmesan Stuffed Crust Pizza is a huge factor. The compounding impact from the Domino’s loyalty program that we talked about in the last call continues to be a factor. Russell just talked about the fact that our loyalty database continues to build upon itself. That's the compounding impact that you're seeing so clearly on the carryout business. We always look at that crossover between carryout and delivery.
Some delivery customers, maybe even on the lower end of the income spectrum for that channel, may be increasingly opting for carryout.
Sandeep Reddy: We really haven't seen a shift on that crossover somewhere in the mid-teens. I think as far as we're concerned, we're getting after an incremental customer for the most part and building their frequency behind all the initiatives that we have.
Yeah, so so I think look on on the carrier business, we're just really excited about where the momentum is taking our business. And we, we even talked about it on the last call. When we, when we had a, a, I think 5, 8, 5 memory, serves me right on same store, sales and now we have an 87 fantastic. And but the drivers of of carry out were everything that we talked about in the prepared remarks. Best deal ever was a was a huge Factor. Parmesan stuffed crust is a huge Factor, the compounding impact from the Loyalty program that we talked about. In the last call continues to be a factor. We rustle, just talked about the fact that our loyalty database continues to build upon itself. That's the compounding impact that you're seeing. So clearly on the carry out business and and look and we we've always looked at that crossover between carry out and delivery. And we really haven't seen a shift on that crossover somewhere in the mid teens. Um,
Russell Weiner: Yeah, and that carryout number is more of a share growth within carryout than it is, you know, taking folks from delivery to carryout. I think also, you know, Sandeep talked about our initiatives, but you'll remember, for example, when we talked about the relaunch of loyalty, there was intent, there was purpose behind that. We redid the program because the original program that was launched in 2015 was more of a delivery program, was more of a program for delivery customers who were high-frequency customers, higher ticket customers. A lot of the growth we're seeing is because of the changes we made in the loyalty program, as well as Best Deal Ever and stuffed crust.
And, and, and so, I think, as far as we're concerned, we're getting off an incremental customer for the most part and building their frequency behind all the initiatives that we have.
A lot of the growth we're seeing is because of the changes we made in the loyalty program, as well as the best deal ever and Stuffed Crust.
Gregory Lemenchick: Thank you. Our next question comes from Andrew Charles with TD Cowen. Your line is open.
[Analyst]: Great, thank you. I was wondering if you could help us understand your confidence in the compounding impact of aggregators in 2026, as it's unclear in the 2.5% delivery same-store sales this quarter that you're seeing a second year of growth within Uber sales.
Thank you. Our next question comes from. Andrew Charles with TD Cowen, your line is open.
Great, thank you. I was wondering if you could help us understand your confidence, in the compounding impact of aggregators in 2026 as it's unclear in the 2.5% delivery. Same store sales this quarter that you're seeing uh, second year of growth with the newer sales.
Russell Weiner: Yeah, the Uber sales are absolutely within our expectations. We're now fully on with DoorDash in Q3, and we're just getting started. Q4 into 2026, we expect aggregators to continue to grow. I see no reason, Andrew, why if we are one out of every three pizza deliveries off aggregators, why we can't be that on. What works on these platforms is what works off the platforms, which is scale, price, and kind of delivery times and location. We own the delivery experience there.
Russell Weiner: We've got a lot of confidence and a lot of room to grow over the next couple of years. It also makes you realize that a lot of what you saw, at least in this quarter, with the positive delivery number, while certainly aggregators were a piece of it, the two biggest things were kind of, I hate using the word self-help, but call it self-inspired initiatives in Best Deal Ever and stuffed crust. I love the health at which we grew our delivery business this quarter.
Yeah. The the Uber sales are absolutely within our expectations. We're we're um, you know, now fully on with door Dash in in Q3. Um, and so, you know, we're we're just getting started Q4 into 2026. We expect aggregators, you know, to continue to grow. I, I see no reason Andrew, why? If we are 1 out of every 3, pizza, deliveries off aggregators why we can't be that on. Because what works on these platforms is what works on off the platforms which is, you know, scale you know price and and uh kind of delivery times and and location. We we own you know, the the delivery experience there. So we've got a lot of confidence and a lot of room to grow over the last over the next couple years also makes you realize that a lot of what you saw at least in this quarter with the Positive delivery. Number while, certainly aggregators were a piece of it that the 2 biggest things were kind of, I hate using the word self-help, but call itself inspire.
Sandeep Reddy: Andrew, I'm just going to point out something that we've talked about previously. To Russell's point, Uber is tracking where we expected it to, and we're very happy with that. If you look at the cadence with which Uber built last year, it took time. It kind of steadily built over the course of the year. This is the first quarter, first full quarter that we've been on DoorDash. It is going to slowly build over time. I think that's why we expect that compounding impact to move all the way through 2026. We're going to have even more time on Uber by that time, in addition to DoorDash getting to a point where it's fully annualized as well. We feel really good about the aggregator business. We really want to manage the delivery business as one whole, understanding that there's going to be 1P and 3P dynamics.
Fired initiatives in Best Deal Ever and Stuff Crust. So, I love the health at which we grew our delivery business this quarter.
Russell Weiner: Yeah, Andrew, back to the question from earlier, we're not going to price competitively, but we're not going to be irrational in pricing. We're going to grow at a steady rate on this channel. I think to compete here in the long term in a sustainable way, you have to offer discounts that you can sustain. We can absolutely do that.
and and Andrew, I'm just going to point out something that we've talked about previously, the Russell's Point Uber is tracking where we expected it to, and we're very happy with that. But if you look at the Cadence with which Uber built last year, it took time, it kind of steadily built over the course of the year and this is the first quarter First full quarter that we've been on door Dash. So, it's going to slowly build over time. And I think that's why we expect that compounding impact to move all the way through 2026. And we're going to have even more time on Uber, by that time, in addition to Door Dash, getting to a point where it's fully annualized as well. So we feel really good about the aggregate of business and we we really want to manage the delivery business as 1 whole understanding that there's going to be 1 p and 3 p Dynamics
Yeah, and Andrew back to the question from earlier. You know, we're not going to, we're going to price competitively, but we're not going to be irrational in pricing. And so we're going to grow at a, at a, at a steady rate on this channel. And and I I I think to buy know to compete here in the long term in a sustainable way. You have to offer discounts that you can sustain and we can absolutely do that.
Gregory Lemenchick: Thank you. Our next question comes from Christine Cho with Goldman Sachs. Your line is open.
[Analyst]: Thank you for taking my question. Really excited to hear about your first brand refresh in 13 years. Could you walk us through some of your major considerations here? What specifically triggered the decision that now is the right time? Are you able to share any additional color related to timeline, required investments, and how it will be split between you and your franchisees? Thank you.
Thank you. Our next question, comes from Christine Cho with Goldman Sachs, your line is open.
Russell Weiner: Yeah, Christine, thanks. You know, the last time we did the brand refresh 13 years ago, I was the Chief Marketing Officer. I can just say I'm jealous at what Kate Trumbull and the team have done with this brand refresh. They've just really taken it to the next level. It was kind of inspired by our Hungry for More strategy. What we saw that we were doing really well is driving renowned value, the R in Hungry for More. What we saw that we had a little bit more opportunity to do is to drive perceptions, not actionable, but perceptions around our deliciousness. What you'll see that the team did is kind of reinvent ourselves with our color palette, food photography that we've just never had before, and doing everything we can to drive deliciousness.
Thank you for taking my question. So uh, really excited to hear about your first brand, refresh in 13 years. Um, could you walk us through some of your major considerations here? What specifically triggered, the decision that now is the right time and are you able to share kind of any additional color related to timeline required Investments and how it would be split between you and your friendships? Thank you.
Russell Weiner: The research that we have shows us that there is not a brand out there in restaurants that does both deliciousness and value very well. We know that if we can do that, we're in territory all by ourselves. At the end of the day when you realize that the middle of your name, Domino's, has in it, you also realize you hit the jackpot. This is really a culmination of Hungry for More, which was a strategy coming to life in something that consumers can hear, can see, and taste every day.
Yeah. Christine uh, thanks. You know, the the the last time we did the brand, refresh 13 years ago, I was the chief marketing officer and I can just say I'm jealous at what K Trumbull and and the team have done with this brand refresh. Um, they've they've just really taken it to the next level and it's it's really it was kind of inspired by our hungry for more strategy and and what we saw that we were doing really well which is driving renowned value, the r and hungry for more. And what we saw that we had a little bit more opportunity to do, which is to drive perceptions not actual, but perceptions around our deliciousness. And so what you'll see that the team did is kind of reinvent ourselves from a with with you know our color palette uh food photography that we've just never had before and and doing everything we can to drive deliciousness, the research that we have, uh, shows us that there's not a brand out there in restaurants that that does both deliciousness.
And, uh, value very well. And, we know that if we can do that, we're in, in, in territory all by ourselves, and then, you know, just at the end of the day, when you realize that, you know, the the middle of your name dominoes has has in it. You you you also realize you, you you hit the jackpot. And so this is really a culmination of hungry for more, which was a strategy coming to life in something that consumers can hear can see and and and taste every day.
Gregory Lemenchick: Thank you. Our next question comes from Brian Harbour with Morgan Stanley. Your line is now open.
Thank you. Our next question comes from Brian Harbor with Morgan Stanley. Your line is now open.
[Analyst]: Hey, morning, guys. Maybe just your comments about some of the pressures picking up more recently, the last four or six weeks or whatever. Is there any texture you'd add to that as you look at your own business, whether it's certain customer groups, you know, any differences delivery versus carryout or, you know, third-party delivery? Could you expand on that a bit?
Hey morning guys. Um, maybe just your comments about some of the pressures picking up more recently, last 4 or 6 weeks or whatever. Is there any texture you'd add to that? As you as you look at your own business, whether it's, um,
Certain customer groups, you know, any differences between delivery versus carryout or, you know, third-party delivery. Could you expand on that a bit?
Sandeep Reddy: Yeah, Brian, I think the comments that we made about what we've seen across the restaurant industry were really broad and intended to be what we're seeing from a macro perspective and certainly a sequential slowing. I think we typically don't talk about current quarter trends, and we're not going to do that on the call over here. We're just pointing out that there has been an intensifying of the macro environment, and that's just a factor that's out there that we've got to keep monitoring. Our initiatives won't change. They're going to be what they were planned to be. That's pretty much where we are.
Russell Weiner: I realized I didn't answer the second part of Christine's question from before on how the costs are split. All of the rollout for the new campaign is funded by our National Advertising Fund, which is a 6% fee that our franchisees pay in. It's fully funded by them.
Yeah, so so Brian I think look the comments that we made about what we've seen uh across the restaurant industry were really Broad and intended to be what we're seeing from a macro um perspective. And certainly a sequential slowing I think we we typically don't talk about current quarter Trends in, we're not going to do that on the call over here but we're just pointing out that there has been an intensifying of the macro environment and and that's just a factor that's out there that we got to keep monitoring. We are our initiatives won't change. They're going to be what they were planned to be uh but it's um that's that's pretty much Where We Are.
And I realize I didn't answer the second part of uh Christine's question from before on on how the costs are split. Um, all of the the roll out uh for the new campaign is funded by our national advertising fund which is a a 6% fee that our, our franchisees uh pay in so it's fully funded by them.
Gregory Lemenchick: Thank you. Our next question comes from Alexander Slagle with Jefferies. Your line is open.
Thank you. Our next question comes from Alex sigil with with Jeffrey's. Your line is open.
[Analyst]: Thanks. Good morning. A question on your expectations for the balance between the carryout growth you're seeing, the delivery growth, and then also between traffic and check, and just how has this played out relative to your expectations, and whether you see this balancing out a bit more as you head into Q4 or 2026?
Thanks. Good morning. Question on your expectations for the balance. Between the carry out growth, you're seeing the delivery growth and then also between traffic and chat. And just how has this played out relative to your expectations and whether you see this balancing out of it more, you know, as you head into 42 or or 26,
Sandeep Reddy: Yeah, Alex, I think we've talked about this from the beginning of the year. This is the year that we expect to see balanced comp growth between ticket as well as order count. Clearly, we're doing things like Best Deal Ever in addition to aggregators that actually are beneficial to order count. We're doing things like Parmesan Stuffed Crust Pizza, which are beneficial to ticket with a higher price point. There's a good balance that's out there. I think in terms of delivery and carryout, we expect to be growing both. The key over here is we're not going to show our cards on exactly how much we're going to grow on each because some of the initiatives may be slanted to one channel versus the other. We don't want to tip our hand to our competitors.
Sandeep Reddy: Overall, it's going to be a whole very balanced approach to how we think this through over time, whether it's in Q4 or beyond into 2026.
Yeah, Alex, I think we've talked about this from the beginning of the year and this is the year that we expect to see, um, balanced calm growth between ticket, as well as Auto count. Um, clearly we're doing things like best deal ever. In addition to aggregators that actually are beneficial to our account. We're doing things like parmesan stuffed crust, which are beneficial to take it with a higher price point. So there's a good balance that's out there. And I think in terms of delivery and carry out we expect to be growing both. Uh, but the key over here is we're not going to show our cards on exactly how much we're going to grow on each. Because some of the initiatives may be started to 1, uh, 1 channel versus the other. And we don't want to uh, tip our hand to our competitors, but overall, it's going to be a whole very balanced approach to how we think this through over time. Um, whether it's in Q4 or Beyond into 2026,
Gregory Lemenchick: Thank you. Our next question comes from Sara Senatore with Bank of America. Your line is open.
Thank you. Our next question comes from
Sarah Senator, with Bank of America, your line is open.
[Analyst]: Hi, good morning. Thanks for the question. Isaiah Austin on for Sara Senatore. Just wanted to ask a quick question around DoorDash. I know it's only been one full quarter, but when you're looking at incrementality, is that still around that 50% range that you were anticipating previously? Do you see any real distinction so far between the DoorDash and the Uber Eats customer? That'll do it.
Russell Weiner: Yeah, it's early in the game, and we still feel pretty confident on the 50% incrementality number. The differences that we're seeing are ones that we expected going in. Uber tends to be a little bit more urban, DoorDash a little bit more rural, and a little higher income on Uber than DoorDash. Obviously, DoorDash is bigger than Uber. We'd expect more volume to come through that channel over time.
Hi, good morning. Thanks for the question, Isaiah. Austin on for Sarah. Um, just wanted to ask a quick question around DoorDash. I know it's only been one full quarter, but when you're looking at incrementality, is that still around that 50% range that you were anticipating previously? And do you see any real distinction so far between the Dash and the Uber Eats customer? Um, and that'll do it.
Yeah, we're we're, we're, uh, obviously it's early in the game and, and we, we still feel pretty confident on the 50% incrementality number. You know, there's, there's the differences that we're seeing are ones that we expected going in. Um, Uber UB Uber tends to be a little bit more urban door, Dash a little bit more Rural and, uh, little little higher, uh, income on, uh, on Uber than door Dash. But obviously door Dash is, uh, is is, is bigger than than Uber. So we'd expect more volume to come through that channel over time.
Gregory Lemenchick: Thank you. Our next question comes from Jeffrey Bernstein with Barclays. Your line is open.
Thank you. Our next question comes from Jeff, Bernstein with Barkley's. Your line is open.
[Analyst]: Great. Thank you very much. Just a question looking outside the U.S. As we close 2025 here, just wondering if you have any initial thoughts that you can share on your confidence in re-accelerating that international unit growth. I think in 2024 and now in 2025, you're talking about maybe 615 units net, which is just sub 4% growth. I know that's below your long-term $9.75 net annually. I think DPE is seemingly the greatest headwind. Any early color as we assume new unit growth visibility probably better than comp. I assume there's some at least idea as to where that directionally could go next year versus this year. Thank you.
Great, thank you very much.
Just a question, uh, looking outside the U.S., um, you know, as we close 2025 here, just wondering if you have any initial thoughts that you can share on your confidence in React that international unit growth.
I think in 24 and now in 2,500 units.
Net, which is just sub 4% growth.
Russell Weiner: Yeah, maybe I'll start off macro, and then Sandeep, feel free to add. You're certainly right. We are working with DPE right now to drive sales, particularly in France and Japan, but throughout their markets because that drives profitability. Sales and profitability, we get store growth. As that continues to go and as they continue to get more confidence, we'll have some more visibility into their growth. I think through all of this, what I want to make sure I point out is that the two markets that we think are going to be the majority contributors to our store growth moving forward, China and India, are just doing amazing. China last year, 240 stores, they talk about being on target for 300 this year. The place that we expect a lot of our future growth right now is strong.
Sandeep Reddy: Yeah, and I'll just probably add a couple of points to that. I think Russell just mentioned China. I think India has got a different fiscal calendar, but it's about 250 stores is what they're expecting for their fiscal calendar. If you think about what's really happened in 2025, we really have been pressured by DPE's store closures, which are around 200 stores that closed in the first quarter. I think what we're saying is, from what we've understood from DPE to this point, most of the store closures should be behind us, assuming that we don't have any further deceleration in same-store sales trends. I think on a going forward basis, we need to make sure that we have good visibility to the potential paybacks from new store openings to really understand what the flex on that is going to be for DPE. They're working on it.
Particularly in in France and Japan but, you know, throughout their markets because that drives profitability and, you know, sales and profitability, we get store growth. And and so as that continues to go and as they continue to get more confidence, we'll have some more visibility into their growth. But I think through all of this, what I, I want to make sure I point out, is that the 2 Market that we think are going to be the majority contributors to our store growth moving forward. Uh, Japan. And I'm sorry China and, uh, and India, uh, are just doing amazing. I mean, China. Last year, 240 stores. They they talk about being on target for, you know, 300 this year. And so, so, uh, the, the place that we expect a lot of our future growth right now, I is strong.
Yeah. And then and now this probably add a couple of points to that, I think, uh, um, North just mentioned China. I think India has got a different fiscal calendar, but it's, it's about 250 stores, is what they're expecting for their physical calendar. But if you, if you think about what's really happened in 25, we really had been have been pressured by DPE store closures which are around 200 stores that they've closed in the first quarter. And, and I think what we're saying is, uh, from what we've understood from DP to this point, most of the store closure closure should be behind us. Uh, assuming that we don't have any further deceleration in since those sales Trends. Um, but I think on a going forward basis, we, we need to make sure that we have good visibility to the potential Payback.
Sandeep Reddy: I think overall, we feel that everything outside of DPE is tracking the plans, both in 2025 as well as in 2026, and that continues to be our expectation.
Bags from new store openings to to really understand what the flex on that is going to be for DPE and and they're working on it. Uh, but I think overall uh we feel that everything outside of DPE is tracking the plans. And so, both in 256 and that continues to be our expectation.
Gregory Lemenchick: Thank you. Our next question comes from Andrew Strelzik with BMO Capital Markets. Your line is open.
Thank you. Our next question.
Comes from Andrew Stroik with BMO Capital Markets. Your line is open.
[Analyst]: Hey, good morning. Thanks for taking the question. I wanted to ask about the brand refresh. In particular, there was a comment in the announcement about defining how Domino's launches bolder menu innovation. The question is, are you thinking about innovation opportunities differently moving forward? How are you thinking about the brand refresh amplifying the impact of innovation moving forward? Thanks.
Hey, good morning, thanks for taking the question. Um, I wanted to ask about the brand refresh and in particular there was a comment in the announcement about defining how dominoes launches Boulder menu Innovation. So
Russell Weiner: Yeah, I think that's a great question. One of the things that we had been stressing since the original relaunch in 2013 was the diversity of all of our menu items, right? We launched mix and match, and we had all these things that you could get for what started at $5.99. It became $6.99. We became very retail-oriented in the price points and, frankly, the product. It was just a kind of little, a lot of show and tell: here's what we have for $6.99. It was kind of flat. What you'll see now, and I think you're seeing this with the Bread Bites launch, is a real focus on the deliciousness of the food that we're talking about. People know a little bit more about our menu. We have a new redesigned website now that helps them explore it a lot better.
You know, the question is, are you thinking about Innovation opportunities differently moving forward and and how are you thinking about the brand, refresh amplifying, the impact of innovation uh, moving forward. Thanks. Yeah, no, thank you. You know, that's a great question. You know, 1 of the things that we had been stressing. Uh, since with the original relaunch in in, in 2013, was the diversity of all of our menu items, right? We launched mixed and matched. And we had all these things that you could get for what started at 5.99, it would became 6.99 and, uh, we became very retail oriented in the price points. And, and frankly, the product, it was just a kind of little, a lot of show and tells, here's what we have for 6.99. It was kind of kind of flat. Um and and and what what you'll see
Russell Weiner: The best thing to drive them to buy Domino's, in addition to renowned value, is just delicious product. The new campaign really focuses on just that.
See now. And I think you're seeing this, you know, with, with the bread bites launch is a real focus on the deliciousness of the food of the food that we're talking about, people know, a little bit more about our menu. We have a new redesign, you know, website, now that helps them explore it a lot better. And so the best thing to drive them uh to buy dominoes in addition, to renowned value is just delicious product. And and so, the new campaign really focuses on on just that
Gregory Lemenchick: Thank you. Our next question comes from Todd Brooks with The Benchmark Company. Your line is open.
Sandeep Reddy: Hey, good morning. Thanks for my question. On Best Deal Ever, Russell, you talked about how the franchisees were so pleased that they looked to extend the program and that was granted, that it's been a successful driver of share within the category. You and Sandeep have both outlined a tough macro. I just wanted to ask, as you look to Q4 and other initiatives that have been planned, the ability to overlay this type of value that's resonating with a consumer in what's going to be a tougher macro environment, is this something that could be extended further? Thanks.
Thank you. Our next question comes from Todd Brooks with the Benchmark company. Your line is open.
Hey, good morning. Thanks for my question. Um, on best deal ever. Uh, Russell, you talked about how the franchisees were so pleased that they
Russell Weiner: Thanks, Todd. You bring up a great point. I'd even take a step back and say we've got an arsenal now of value, whether it's Best Deal Ever, boost weeks, carryout tips, emergency pizza that we could bring at any time. They've already got recognition around the country. We're not starting from scratch, and that gives us optionality. That said, we've built our Q4. We obviously never give forward-looking information on what that is, but we feel really good about the quarter. We've started it with Best Deal Ever, and you'll see us leaning into all aspects of Hungry for More in Q4.
Uh, looked to extend the program, and that was, uh, granted that it's been a successful driver of share within the category. And then, uh, you and Sandeep both outlined a tough macro. I just want to ask, as you look to Q4 and other initiatives that have been planned, the ability to overlay this type of, um, value that's resonating with a consumer in what's going to be a tougher macro environment? Is this something that could be extended further? Thanks.
Is uh, but we feel really good about the quarterly. We've started with best deal ever and you'll see us leaning into all aspects of uh, of Hungary for more and Q4.
Gregory Lemenchick: Thank you. Our final question comes from Zach Fadem with Wells Fargo. Your line is now open.
[Analyst]: Hey, good morning. Thanks for fitting me in. Can you talk about the metrics you look at internally to measure the success of a promotion? In light of the environment today and elevated industry discounting, curious how your promotional success has evolved, better or worse, as industry promo steps up.
Thank you. And our final question comes from Zack Fedom with Wells Fargo. Your line is now open.
Russell Weiner: Yeah, that's a great question. Maybe I'll answer it a couple of ways. One is I think we're really unique in that the discounts we're offering during these tougher macro times are off items that people actually want. A lot of what we're hearing now is the discounts I'm getting out there are not on the main item that I want. How we determine what we put on TV or on the website, you know, Zach, is we got a pretty good formula for success history here, which is essentially we know if we can drive profitable order counts, that works to drive franchisee profitability. Short-term gains in ticket at the sacrifice of order count, once your pricing is in the right realm, are not sustainable. That's what we're seeing now.
Hey, good morning, and thanks for fitting me in. Um, can you talk about the metrics you look at internally to measure the success of a promotion? In light of the environment today and elevated industry discounting, I'm curious how your promotional success has evolved—better or worse—as industry promos step up.
Yeah, that's a, that's a, a great question. I, I maybe I'll, I'll answer it a couple of ways. Um, 1 is, I think we're really unique in that, um, the discounts we're offering during these tougher macro times are off items that people actually want a lot of what we're hearing. Now, Are the discounts I'm getting out there are not on the kind of the main item that I want.
Um, how we determine, you know, what, we we put on on on TV or on the website, you know, Zack is we got a pretty good uh, uh, formula for Success history here, which is essentially, we know if we can drive profitable order counts, um, that works to drive, you know, franchisee profitability, um, short-term gains in tickets at the sacrifice of order count. Once you
Russell Weiner: I mean, if you just looked at Best Deal Ever and said, hey, are you going to get the same volume that you would do on non-Best Deal Ever, then you'd say, oh, I'm not going to do that because we're not putting enough dollars in the bank. Something like Best Deal Ever, we know ahead of time from the research what it's going to drive. We could be a little bit more aggressive on the price point because, you know, we always tell our franchisees, we put dollars in the bank, not percents.
Your pricing is, is is is in the right realm are not sustainable and that's, you know, and that's what we're seeing now. I mean, if you if you just looked at, you know, best deal ever and said, hey are you going to get um the same volume that you would do on non- best deal ever? Um, then you'd say, oh I'm not going to do that because we're not putting enough dollars in the bank.
Sandeep Reddy: I am going to add one thing to what Russell just said. Absolutely, the lagging indicator is going to be franchisee economics and profitability for all the reasons he explained. Really, the leading indicator of that is compounding frequency. If we aren't seeing compounding frequency across our customer base, the likelihood of actually building up into that franchisee profitability is going to be more difficult to achieve. That is something that I have been actually watching continuously happening since we launched Hungry for More. I think the loyalty program ends up being the perfect accelerator for all of that to happen.
But something like best deal ever. We know ahead of time from the research, what it, what it's going to drive and so we could be a little bit more aggressive on the price point because you know, we already tell our franchisees, you know, we put we put dollars in the bank not uh not percents.
And and then I'm going to add 1 thing to what Russell just said, absolutely. The, the lagging indicator is going to be franchise the economics and profitability for all the reasons you explained.
Russell Weiner: Yeah, I think the idea of looking at order counts and frequency, like Sandeep said, is a great way not to just look at our business, but to look at all restaurant businesses. Order counts are key to sustained success.
But really, the leading indicator of that is compounding frequency. If we are on seeing compounding frequency across our customer base, the likelihood of actually building up into that franchise, we profitability is going to be more, um, more more more difficult to get achieve. So, that's something that I've been actually watching continuously happening since we lost hungry for more. And I think the Loyalty program ends up being the perfect accelerator for all of that to happen. Yeah, I I, you know what, I think the idea of looking at order counts and frequency, you know, like, uh, Sandeep said, is a great way not to just look at our business, but to look at all restaurant businesses. Um, order counts are are key to sustained success.
Gregory Lemenchick: Thank you, Zach. That was our last question of the call. I want to thank you all for joining our call today. We look forward to speaking to you all again soon. You may now disconnect.
Thank you, Zack. 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 to you all again soon. You may now disconnect.