Hi, everybody. I'm Brian Bittner, the restaurant analyst at Oppenheimer, and welcome to our 2024 Consumer Conference. We're thrilled to have Domino's Pizza back at our 2024 Consumer Conference. Domino's is the world's largest pizza company, with nearly 21,000 stores in 90+ markets. And at Oppenheimer, we have elevated Domino's to one of our top picks, and we did so in the second half of 2023, and we have reiterated the stock as one of our top picks for 2024, with a $580 price target. While Domino's has a strong track record of impressive growth, we actually believe there remains an attractive opportunity for AUV expansion and powerful unit growth, particularly as the core business is showing signs of operational improvements and the company takes advantage of accretive opportunities out there, like carry-out, third party, third party, and relaunching the loyalty program. And we are really excited to have, from the company, Sandeep Reddy, the Chief Financial Officer, who joined Domino's team in April of 2022, as well as Greg Lemenchick, Vice President of Investor Relations. Thank you both for being with us today. We, we greatly appreciate your time. Thank you. Thank you, Brian, for having us here. We're excited to have this conversation. Great. I would like to begin the conversation by really zooming out, high level here. We're clearly in an operating environment where the industry is feeling the need to get more promotional and value-focused in an effort to bring back that low-end consumer. And it seems like Domino's price value perception, particularly in carry-out, has really improved relative to traditional quick service. And I'd just like you to start off by helping us understand what your views are of the current consumer environment, and how do you believe the Domino's brand is positioned to compete in what arguably is gonna be a more value-focused, competitive environment moving forward? Yeah, no, I think it's a great question, Brian. And if we go back to the last earnings call we did just a few weeks ago, one of the things that I think came out through our conversation was we had seen very strong transaction growth across all income cohorts in the first quarter of the year. And this was not really about what had happened in the first quarter specifically, but it's really a culmination of a value and a pricing strategy that has actually been in operation for the last couple of years. So, we talked specifically about some of the spot pricing that we'd taken in 2022 and 2023, and how that's really coming to bear in 2024. Specifically, in 2022, with the outsized inflation that had actually taken place, we had updated the price of our Mix and Match national offer to $6.99 from $5.99 after a very long time, I think about 12 years. And I think once we did that, we did see, naturally, transactions getting impacted in early 2023. So we were very, very focused right through 2023 in holding the line on pricing and really having conversations with our franchisees about how important that was to sustain profitability growth. Sure enough, that discipline paid off because transaction growth really started inflecting by the time we got into the fourth quarter. And I think from a pricing perspective, we were in a good enough place already from a pricing and flow-through perspective to drive $23,000 in improvement in profit in 2023 for the franchisees in the United States. And as we move into 2024, the disciplines that we had in 2023 haven't gone away. We're just still applying them. But what has ended up happening is, I think if you've taken pricing in excess of disposable income anywhere in the industry, that has actually had an impact in terms of what transaction trends have been in the first quarter of the year and so far in the year, across the industry. But because we've been in the right place from a price value perspective, our customers are very happy with what value we're delivering, and our expectations is for continued transaction growth for the balance of 2024. Frankly, Hungry for MORE is constructed around transaction growth, and that's the way we'll keep on approaching it. That's great. Staying high level, a lot has changed with the Domino's investment story since you presented at this conference last year. You held an Investor Day in December of 2023, where you did unveil your Hungry for MORE strategy, and you communicated annual financial targets for at least 7% or more retail sales growth, which include 3%+ same-store sales growth, 1,100 net new unit growth, and all this translates into 8% or more operating profit growth. These are impressive base case assumptions to communicate to the investment community. Can you just remind the audience maybe the building blocks that drive your confidence in putting out this type of an algorithm? Yeah, no, I think, it's, again, a great question, Brian, so I'll take it in two halves. I'll take the U.S. first, and then let's come to the international business after that. But I think on the U.S. side, specifically, we had two significant catalysts that were already kind of in line and in play by the end of last year. The first is the loyalty program relaunch that launched in the fourth quarter of 2023. And similar to the first time we launched the loyalty program in 2014, we expect this to be a multi-year catalyst. And I think this one that we've just launched in September of 2023 has a significant enhancements, especially for the carryout customer. I think because of that, I think we're accessing a lot more members into the loyalty program and driving a lot more frequency from those members. And I think that will have the long tail in a good way for us as we go along. The second is, I think the conversation we had about the aggregator marketplace, and we launched with Uber in the fourth quarter of last year. And I think what we expected to do was not just do Uber, but over a three-year timeframe, participate with all players in the aggregator marketplace in the United States, and that would include DoorDash and Grubhub and everybody else over time. And I think that also should be a multi-year catalyst in terms of retail sales growth. Those pieces really are the core of what we talked about. And I think, obviously, the strategic pillars that we defined with the MORE pillars, More Delicious Food, Operational Excellence, Renowned Value, and Enhanced by Franchisees, will all be foundational to driving that growth with these catalysts. The international business has a similar kind of thought process, where you will have the MORE pillars enabling that business too. But specifically there, I think, 3% or more same-store sales is where we expect to be running over the five-year time period. We did start a little bit challenged in the first half of 2024, but we did say that we expected that to happen because of the headwinds on the European business, as well as the Middle East crisis that are expected to weigh on the first half of the year. I think from a store count perspective, we were expecting to do 1,100 stores per year. Half of the growth that was expected to come from India and China, which makes a lot of sense. India has just had a recent earnings call. The Jubilant team, our partners there, just had an earnings call where they announced updated targets for India on a medium-term basis. And China has been going from strength to strength. And so overall, I think those are big parts of our growth drivers from a top-line perspective. And the thing about the operating income guidance of 8% or more is, in my mind, this is very healthy growth because it's driven by retail sales growth and transaction-driven retail sales growth, which is really important for it to be sustainable. And that's why our investments that we're making in the P&L are really structured to drive that long-term sales growth and share gain that comes along with it. You know, since the last conference, you have shown turnaround-like improvements in the business from where you were in 2022 and in the first 3 quarters of 2023, and you're now guiding 2024 for same-store sales above the long-term target. You're seeing positive traffic across all income cohorts at a time where the industry's negative. You talked about some of the drivers of this turnaround. I want to follow up on some of those, and the first is on the loyalty relaunch. The rewards relaunch appears to be paying dividends. It's driving accelerated membership growth, increased frequency among existing users. It's bringing in the core carryout customer. Can you just maybe touch on a little more and help investors understand why this relaunch can have a positive impact for multiple years? I know investors are already worried about the 4Q lap this year when you launched it. How could this relaunch have benefits into 2025 and even beyond? It's a great question, Brian, and it's actually something that I've actually. I really welcome the opportunity for you to answer this question. So I'm gonna go back to the first loyalty program, right? We launched it in 2014. So in 2014, we were already on a pretty strong trajectory because of New and Inspired had come a few years before that. Our digital footprint continued to really accelerate, and we had a comp of 7.5% in 2014 before we launched the loyalty program for the first time. Guess what happened? The year after the loyalty program, we accelerated from 7.5%- 12%. That was the first year after the launch. And so after the first year of the launch, you would expect that, oh, you now have tougher comps. But guess what happened in the second year, 2016? We had comps of 10% or more on the back of 7.5 and 12. And so you saw a second leg in terms of growth, compounding the previous growth. And not just in twenty-- not just that year. The year after that, we were 8% or more. And, and so there was a compounding effect from that loyalty program launch, which lasted over multiple years. And I think similar to that program, which was structured around mostly the delivery customer, 'cause at that time, our carryout business was pretty fledgling. This time, the loyalty program is structured around both the delivery as well as the carryout customer, with some significant enhancements. Because we now have redemption tiers that, A, provide much more options in terms of product redemptions, and B, different tiers. You can redeem at 2 transactions, 4 transactions, before you get to the previous 6 transactions. And we're seeing acquisition as well as redemption accelerate on the back of it. So there's plenty of juice left in these, in the loyalty program once we lap the Q4 launch of last year. And that's why we're saying this is a multi-year story. We believe that, and we're seeing evidence of that, and hence the commentary. And another meaningful development since you were here last year is the announcement and the implementation of the Uber Eats partnership. You have a specific goal to be at least 3% mix of sales by the end of this year, and you've talked a lot about what you think the incrementality of that is. Can you just talk to the audience about your confidence in getting to this specific target, maybe particularly as marketing has now turned on and maybe becomes more impactful? Yeah, no, I think the 3% mix was an important milestone to set for investors to understand what the expected cadence was gonna be. And what I would say is, if you go and look at us, the launch, our quarter was Q4, where we initially started. We had a 0.4% mix in Q4. We ended up with a 1.4% mix in Q1, and we did say we're gonna build steadily as we continue to ramp up the marketing towards a 3% exit rate at the end of the year. And we feel that we're on track. I mean, all the plans that we had in the beginning of the launch period, we are actually seeing it materialize. And I think, as we go along, we'll actually evaluate how things are going and what tweaks to make, if any. But what I would say is, the 3% was more, a mix input that we provided to investors to help everybody to just model and think about it. But really what's most fundamental to our story is the algorithm. We're very focused on the 7% retail sales growth and the 8% operating income growth. And how this 3% mix plays into that is good, but it's less relevant than the algorithm itself. It's 7% retail sales growth, 8% operating income growth, and we'll continue to toggle that. And just follow up, and last question on third-party. You do have a long-term goal of getting to about $1 billion of system sales coming from that channel, and you talked at the beginning about how that includes all partners, and assuming DoorDash is obviously a big part of this. Can you help us understand the dynamics around the timing and the opportunity to add additional partners following the Uber Eats launch? When can we expect more on the third-party side? Yeah, I think the exclusivity arrangement that we have with Uber gets to its one-year anniversary mark during the first quarter of 2025. At that point, we have the option to extend the exclusivity arrangement with Uber or partner with others. And I think we will take the call as we look at the economics and we get closer to that time and decide exactly how we'll move forward past that. But we've said, as you rightly pointed out as well, that eventually we're gonna be on everybody in the marketplace. So, and it's really more a question of when and not if. And I wanna now talk about the carryout business. Domino's Pizza has evolved in the U.S. from a delivery business to a total pizza powerhouse. Everyone knows that you've always been the number one share in delivery over many years, but now Domino's is also the number one leader in carryout. In fact, over 50% of your orders in the U.S. are now coming from carryout. Can you explain to the audience how you strategically think about the long-term carryout opportunity moving forward? And why are you so confident that carryout does represent such an incremental and separate growth opportunity for your business relative to delivery? Yeah, no, I think, and a great question, Brian. I think carryout has definitely had tremendous traction the last few years, and we're thrilled to see where we are. But as much as the growth has been phenomenal on the carryout business over the last few years, last 5 years, I would say, what has actually stood out to us is even with all that very strong growth, our share in carryout is just 1 in 5. It's give or take 20%. Our share in delivery is 1 in 3. Why can't we be 1 in 3 in carryout as well? And why should 1 in 3 be the ceiling of what share could go to? And that's really the mindset that is actually driving when we go back to our Investor Day, you heard from Russell, you heard from Joe, talk about getting our fair share. Our fair share starts at a third from the carryout business perspective, and there's probably room above that, both on carryout and, as well as delivery. And I think what we've been seeing is, with the value proposition that we offer our customers and the, the, the tremendous product attributes that we are able to offer as well, we are in a place where we can continue to gain share at a very rapid pace. And we took nine points of share over an eight-year timeframe. There is no reason why we can't see very significant share gains over the next few years with the plans that we've outlined. If we just do the calculations and you assume a 1.5%-2% growth on pizza QSR, which has been the historical rate of growth, inevitably, this means that we continue to gain significant share in the marketplace, and carryout will be a big piece of that. When we think about the delivery business, a big catalyst to that business is improving service. You now have the intense staffing challenges that you dealt with the last couple years arguably behind you for the most part, and you're really starting to see some tangible service improvements. I think you talked about being one minute better year-over-year in your last earnings call. Can you help us understand how you think about what's left in the tank on improving service, particularly as it relates to delivery? Yeah, no, I think, and another great question, because I think, two different things. One is delivery service has improved, timing definitely has improved, and, and we delivered that service with growth, because we actually grew transactions for two consecutive quarters, on the delivery business. And, and I think staffing is in a really good place, and we don't just, don't just have the staffing we need, we have every confidence that as demand continues to grow, we'll have the staffing to fulfill that demand, and, and that's a really good thing. But the layer I'd actually add to this is the service level is not just about times, it's about consistency, and I think Joe Jordan, our President of the U.S., kind of laid that out. A lot of what we're talking about under the MORE strategy, when you look at the operational excellence piece, is about delivering that consistent experience to the customer. And I think it's not just the delivery time, it's the consistency of the delivery time, it's the quality of the product in the box when it gets to the customer. All of it put together, which includes the preparation in the store, as well as the delivery experience to get it in the customer's hands. And that, by the way, doesn't just extend to the delivery business, it's the carry-out business as well. So all of it kind of goes into that equation, and I think that's why I think when you think about the strategy, it really was meant to talk about both delivery and carry-out at the same time, and that's what you're gonna see. Great. And I know we're going rapid fire here, jumping around, but I do wanna talk about digital real quick. It's now over 80% of your sales, best-in-class in the industry. But you're making changes. You've obviously refreshed the loyalty program, which we talked about, and you're making other investments into your e-commerce platform as well, partnering with Microsoft, changing the plumbing of the e-commerce platform. Can you maybe help us understand how impactful these new tech changes could be, and how do you expect those to pay dividends, maybe separate from the loyalty relaunch moving forward? Yeah, no, I think the single biggest thing that I think is going to be very impactful is the update to the e-commerce platform. And the reason I say that is, while we were at the forefront of the digital transformation in the company's consumer experience, about a decade ago, like we talked about earlier, that e-commerce platform really hasn't had much more than small patches and updates had to it over the last 10 years or so, or more than 10 years now. And that e-commerce platform is going to be upgraded, and the development of that should be completed by the end of this year, and we'll be rolling it out as we go into 2025 and beyond. And I think that is going to be significant and a significantly improved experience for the customer. The reason it's gonna be significantly improved is, when you have a platform that is about 10 or 12 years old, like, like we do right now, and you actually put patches on it, sometimes what happens is the customer experience ends up being a little bit slower than ideal because there's latency in the experience when you're actually navigating the website. That latency is gonna get fixed with this update that we're making. But there are certain product features that are already being rolled out in the existing e-commerce platform. So there are little nuances that you may not even perceive, but they've already been implemented. So it's not like it's gonna be a big bang at the end of 2024, where you see a completely new website. It's going to be rolled out in phases, where it's. Where you have an existing customer, you don't wanna disrupt them completely in their experience. You just wanna subtly enhance their experience so they have less friction as they go through it. So that, I'd say, is the biggest showpiece. And I think this hasn't been talked about as much, but if you think about the loyalty relaunch that we did in September of last year, one of the coolest things that I think was done, which wasn't talked about quite as much, was the digital wallet for the Domino's Rewards customers, the loyalty customers. And you actually have all of your points that automatically populate there, and a much more easy experience in being able to redeem those points for different products and redemptions as you go along. That was a huge, huge change, which really didn't get showcased quite as much, but I think I'd really like to talk about it as an example of how we can actually bring technology to bear to remove customer friction. And then I think the other things that we talked about, and Kelly Garcia, our Chief Technology Officer, talked about during Investor Day, is we've been doing AI for years. We continue to be doing AI. So it's happening for sure. The consumer-facing piece is one piece of it, but I think the back of house and store technology is the other piece of it, where we've actually been using it in a big way. Working with Microsoft is to bring that innovation both to the front of the house, as well as the back of the house, by partnering those with tremendous know-how about the Domino's customer, with those with great technology know-how in Microsoft, that can actually partner to actually bring in better solutions, both to the customer experience, as well as the store experience for the, for the team members in the stores. More to come on that. That's something that's still in the early phases, but all of this will become very meaningful. I'll give you the example of how you can get benefits. The digital experience that the customers had over the last decade or 2, a decade or 12 years, had a huge impact in terms of unlocking labor efficiencies in our stores, and that was a big driver of why profitability went up so much. Similarly, these technology experiences will take work out of the stores and make them more effective in meeting and delighting customer experiences. And so I think over time all of this is a connected network of tools and techniques we have to drive long-term franchisee P&L profit. One more thing I wanna touch on as it relates to driving traffic in the U.S., and then we'll move to international, is innovation on the product side. Russell's highlighted that menu innovation now represents an important theme moving forward. He's promised two new impactful new products a year. Seems to be a shift a little bit from management's historical view, on using that as a catalyst. What is it about your data and your insights that's informed you at Domino's that this actually needs to be a part of the core sales strategy now moving forward? Yeah, I think it's really, Brian, one of those things where what we realized is that newness and freshness on the menu is very important to continue to keep excitement high from a consumer perspective. And so last year you saw a couple of innovations in 2023, right? You saw Loaded Tots, which is a completely new platform that came out, but then you saw Pepperoni Stuffed Cheesy Bread in the second half of the year, which was really a renovation of an existing product, but with a really. W ell, really, the Pepperoni Stuffed Cheesy Bread was the innovation. Stuffed Cheesy Bread already was there, but Pepperoni Stuffed Cheesy Bread was the innovation. This year you've seen the New York-style pizza, which addressed a request for a crust that was foldable but a little bit lighter, but still with the body. And sure enough, we've actually gone and done the reformulation of the crust that you're seeing over there. But that, that's one of two, and there's more to come. And what we've realized is that newness is exciting for the customer, and we see a significant mix into that, but we're also not shy of taking items off of the menu to keep down operational complexity in the stores. We've done that in the past, and we may do that in the future as well, just to make sure that the menu doesn't just proliferate and we don't have a lot of waste building into the menu as we go through this, to maximize franchising profitability again. Great. I'd like to touch on international before maybe diving into overall unit growth. Just talk about international by itself. It's, it's an area where you've experienced great success internationally over a number of years. You're now approaching 14,000 international stores, up from 5,000 stores 10 years ago. What, what gives you the confidence that you can accelerate units to this 925 or more pace that you've, you've guided long-term to? You've highlighted markets such as China and India to drive about half of that growth, but there are also some macro challenges around the globe which could arguably put pressure on that target. Just help us understand why international remains such a powerful and confident growth engine for you moving forward. No, I think it's really a great question, and you already answered the question partially yourself, which is India and China are a big piece of this equation as you go, and with pretty significantly compounding growth rate in those two markets as those markets grow and our share grows there. But I think in the long term, there's plenty of potential. We are 90-plus markets, and we have significant master franchisees across our network. In the short term, though, I think you touched on the fact that there are macro challenges, and specifically, I would say two pieces that I would highlight. The first and I think more material piece is our biggest master franchise is Domino's Pizza Enterprises, and they've talked more publicly recently as well about some of the challenges that they're having in their markets. I think that puts some pressure on us in the short term, which we'll have to deal with, but it doesn't change the long-term trajectory of the business and the equation of where we can actually take the business. So overall, we feel pretty good about it, but I think that piece is something that we need to be cognizant of is that there is risk, and we should be aware of that. And the other piece is the Middle East, right? The Middle East, we talked about in the beginning of the year, is going to be a drag, and it has been a drag from a comp perspective, and it's part of the macro noise. And I think you could have some headwinds from that as well as we go through the rest of 2024. But longer term, I think we're very confident. The markets in which we are operating, we actually have great presence in. We have share gain possibilities, which are pretty significant in most of the markets in which we operate, and that will come through unit growth. Sticking with that, international, as it relates to the same-store sales growth piece, on the international side, you do expect same-store sales to remain soft in the first half of 2024, then accelerating to your 3%+ target in the second half of the year. Can you just remind the audience what's driving this acceleration and the confidence behind getting to this 3% pace of comp growth in the second half of the year for the international business? Yeah, no, I think, again, one of the things that we talked about is, we actually are hiring execution of the MORE strategy across all of our international markets, and Australia was one of the first ones out there, which actually went after the, from a product innovation perspective and embraced this back late last year, and they've been seeing great trends through the first quarter of the year. We expect more of that kind of thing as we go through the rest of the year across most of our large international masters. But I think the additional thing is the renowned value pillar, the third pillar that we talked about. We've had Boost Weeks that were launched in Mexico and Canada. More of the same as we go through the year. We could expect to see much more on the promotional side and, and I think those levers can also help accelerate as we move into the back half. So a lot of plans were being put into place, but hadn't really been executed yet in the first and the second quarter. But more of that should come in in the back half, which will enable us to re-accelerate back to the 3%. Great. Just going back to unit growth for the company, goal is to grow about 1,100 units per year. We talked about how 925 of that will come internationally. The other 175 plus is coming from the domestic side, which is very impressive. As it relates to your domestic unit growth piece, it seems like you have a lot of confidence in the pipeline, driven by the fact that you have a record number of up-and-coming franchisees organically graduating through your internal systems, eager to open units and build their businesses. Can you maybe explain the unit growth piece domestically in a little greater detail and the confidence behind that, particularly at a time where I think a lot of the companies are having a hard time expanding in the U.S.? Yeah, no, I think you're absolutely right, Brian. The visibility of the pipeline has been very good since the beginning of the year, and it continues to be very good. Our plans that we communicated are very much in place. First half of the year, relatively flat in absolute number of units to be opened relative to last year, and a slight acceleration in the back half. And all this comes from really good economics and accelerating economics in the stores, and I think our franchisees are extremely bullish. We just had our worldwide rally a few weeks ago. I can tell you, the excitement from the franchisees on the potential growth is just incredible. The energy was very high. The demand is very high. We have a lot of confidence in the U.S. business and the potential for our unit growth there over the next five years. Yeah, I mean, EBITDA per store levels at record levels, I guess, clearly helps that. And, you know, we have only a couple minutes left. I just wanna touch on corporate-wide profitability for a second. Sandeep, you've said since day one coming into the company over two years ago, that you bring a sharp focus to profitability, to G&A leverage, et cetera, et cetera, which I think we all appreciate very much. You've talked about 2024 specifically being a year of more flattish EBIT margins, despite above average same-store sales growth in the U.S., at least. Can you just remind the audience some of the dynamics on margins this year and around the flattish, guidance? I know there's some tech investments, supply chain capacity investments, are a piece of these, piece of this. Can you just unpack it a little more for us? Yeah, I think you answered the question a little bit on the last part there, Brian. I think it's consumer technology, store technology investments, and as well as supply chain capacity to actually make sure that we have enough resources to basically fulfill the demand that we're expecting to see incrementally. Demand coming from both same-store sales transactions, as well as incremental units that we're expecting to continue to grow. And so those are the investments that really weigh on margins a little bit in 2024. But we're expecting to continue margin expansion past 2024, and that's why I said, I think at the early part of the call, I love the algorithm because it's really healthy growth. It's, it's really driven by retail sales growth, which is transaction-driven, that drives profit growth, and that's why I think it's very sustainable if you do it that way. But you've got to make the investments to drive the returns, and I think 2024 is a year that we're choosing to make those investments to make sure that we have the fuel for the next few years. Well, I think that's a perfect way to end it. We're also out of time, and I wanna thank Sandeep and Greg for being with us today. That's Domino's Pizza, one of our top picks at Oppenheimer. Thank you so much for being here. We appreciate your time. Thank you, Brian. Thanks, Brian.