Domino's (DPZ) Q2 2025 Earnings Call Transcript

From an analytical perspective, Interestingly, Image source: The Motley Fool

EDTCALL PARTICIPANTSChief Executive Officer — Russell J

Global Retail Sales Growth: Up 5 (this bears monitoring)

Additionally, On the other hand, And international same-store sales and global net unit growth

Retail Sales: Rose 5, amid market uncertainty

System; carryout performance benefited from Domino’s Rewards user growth

Furthermore, Dery Comps: Dery rose 1

Net Store Growth: 30 net new stores were added, bringing the U

Nevertheless, Aggregator Platforms: National rollout with DoorDash was in the quarter, with material sales contribution anticipated in the second half of the year (Q3 and Q4)

Stuffed Crust Impact: Parmesan-stuffed-crust Pizza launch described by management as meeting high expectations, ducing positive transactions and higher customer praise than any recent duct, in light of current trends

SUMMARYDomino’s Pizza (DPZ -1. 22%) reported accelerating U

On the other hand, Same-store sales and robust fit growth, with management highlighting successful execution of new innovation and aggregator partnerships as core drivers for the period

Strategic investments in training for duct launches and active expansion of the Domino’s Rewards gram amplified performance, while franchisee engagement and refranchising contributed to financial outperformance

Furthermore, No material impact from global macro or geopolitical risks was observed during the quarter, according to management statements (quite telling)

Additionally, Chief Executive Officer Weiner said, “We have never had this many tools at our disposal to capture market. ”Chief Financial Officer Reddy noted that 85% of orders are digital, leading to a cautious, phased rollout for the new e-commerce platform

Management confirmed positive store-level economics for franchisees, with a stated focus on fit dollars rather than margin rate

At the same time, International net store growth remains in line with prior year levels, with significant new unit plans in India and China despite a sequential deceleration in international same-store sales growth from 3, amid market uncertainty

Moreover, The recently refranchised Maryland market was transferred to a franchisee with over two decades of experience at Domino’s across multiple roles

Nevertheless, INDUSTRY GLOSSARYQSR Pizza: Quick Service Restaurant pizza segment, referring to fast-food pizza chains with a focus on dery and carryout, high operational efficiency, and standardized s

Aggregator: Third-party online platforms, such as DoorDash and Uber Eats, that facilitate food dery from multiple restaurants

Refranchising: The practice of selling company-owned restaurants to franchisees, typically to strengthen franchisee economics or focus corporate resources elsewhere (which is quite significant)

However, Comps: Comparable store sales, measuring revenue change at units open for at least one year, in light of current trends

On the other hand, On the other hand, Curement ductivity: Operational cost savings achieved through imved sourcing, supply agreements, and efficiency in purchasing goods and services for the (this bears monitoring), in today's financial world

Unit Economics: Financial performance and fitability of an individual restaurant location, often tracked on an EBITDA or cash flow basis (something worth watching)

Nevertheless, DPE: Domino’s Pizza Enterprises, the master franchisee for including Australia, Japan, and certain European countries

Moreover, Full Conference Call TranscriptRussell Weiner: Thanks, Greg, and good morning, everybody, in light of current trends

Our team drove strong results in the second quarter, considering recent developments

Meanwhile, In the US, both our dery and carryout es were positive, and we drove meaningful market gains

Internationally, we continue to grow despite a challenging macro environment

It's that our Hungry for More strategic pillars are working together to der more sales, more stores, and more fits

At the same time, I'd to highlight some of the initiatives that helped us drive these results

The "M" in Hungry for More stands for most delicious food

Additionally, An important way to drive deliciousness is through new ducts

Late in the first quarter, we added one of the biggest new items in our history, Parmesan stuffed crust pizza, in today's financial world

Sandeep Reddy: This launch has gone extremely well and has met the high expectations that we had for it

Additionally, On every level, it's dering incremental new customers to Domino's, and a high mix that has been in line with our jections

Most importantly, our teams are executing this duct very well

Moreover, This's of that the training investments we made ahead of this launch paid off

In fact, customer praise for this duct has been significantly higher than any of our recent duct launches

In contrast, Customers love Parmesan stuffed crust, considering recent developments

I want to thank our franchisees and our operations team for their continued efforts to achieve operational excellence around this highly complex duct, in today's market environment

This's a point of differentiation for our brand, in today's financial world

The early read shows that the addition of stuffed crust should be a market catalyst for us over time

This's the big reason why Domino's customers would go elsewhere in the past (something worth watching)

The next Hungry for More pillar I'd to highlight is renowned value, which has been a key strength for Domino's (this bears monitoring)

However, We're driving renowned value through national motions, Domino's rewards, and by growing on aggregator platforms, given the current landscape

Additionally, Domino's rewards was a tailwind to our comp in the quarter, particularly the carryout

Nevertheless, You'll recall that growing carryout users was one of the primary reasons we redesigned the loyalty gram

At the same time, Active users continue to grow, and we expect Domino's rewards to be a multi-year sales driver (quite telling)

Meanwhile, We have a strong slate of initiatives ready to go for the rest of the year, inclusive of our best deal ever motion, which is currently running through early August, amid market uncertainty

We will continue to give customers what they want, which is more value in an environment where they remain pressured (quite telling), considering recent developments

Furthermore, The other part of our renowned value barbell strategy is tapping into the aggregator marketplace for pizza dery

Furthermore, In contrast, We recently our national rollout with DoorDash, the largest aggregator in the US (which is quite significant)

On the other hand, This rollout went extremely well as we were able to apply learnings from our prior launch with Uber

Additionally, We will now begin marketing on the platform with investments coming from both sides

The expectation is that our sales on DoorDash will build as awareness and marketing increases (quite telling)

We continue to expect this to be a meaningful driver to our US comp in the back half of the year

Everything we do at Domino's is enhanced by our best-in-class franchisees

You've often heard us talk how our franchisees are the secret sauce to our success, and this continues to be the case (noteworthy indeed)

In the second quarter, we refranchised thirty-six company-owned stores in Maryland to a new franchisee that's not so new to Domino's (this bears monitoring)

At the same time, In fact, he's been a part of the Domino's system for more than two decades, given current economic conditions

However, We continuously assess opportunities to strengthen the brand's position for long-term success, whether that means expanding into new or transitioning existing ones to franchisees to grow their

However, I believe we've never been in a stronger position to drive sustained growth in our US

We have best-in-class franchisee economics in QSR Pizza, the largest advertising budget, the best supply chain, and the rewards gram that has never been bigger

On the other hand, We're now fully rolled out on the two largest aggregators, and with the addition of Stuffed Crust, have all the major crust types on our

However, We have never had this many tools at our disposal to capture market

This will be how we drive best-in-class results and long-term value creation for our franchisees and holders well into the future, in today's market environment

I'll now hand the call over to Sandeep

Sandeep Reddy: Thank you, and good morning, everyone

Our second-quarter financial results continued to be impacted by a challenging macro backdrop, but we dered fit growth that was slightly ahead of our expectations primarily due to the timing of investments

Moreover, Income from operations increased 14

Nevertheless, The increase was primarily due to higher US franchise royalties and fees, gross margin dollar growth within supply chain, and lower G&A expenses

Moreover, Excluding this gain and a small amount of severance-related expenses in Q2 related to our previously announced organizational realignment, our income from operations would have increased 13

Excluding the impact of foreign currency, global retail sales grew 5

This growth was in line with our expectations and paced well ahead of the QSR pizza category, which was roughly flat through the first half of the year

Average ticket benefited from 1, in today's financial world

The analysis reveals was partially offset by a slight deterrent on mix due to a higher carryout that carries a lower ticket visibility (fascinating analysis), in this volatile climate

We have not seen any material impact to date from global macro or geopolitical uncertainty

In the quarter, we saw strength in Asia that was due to continued strong comps in India and in our Americas region, which was driven by Canada and Mexico

Nevertheless, As part of that, we expect the ing (fascinating analysis)

Moreover, This assumes that the pressured macro environment we have seen to the first half of the year in QSR Pizza remains the same (which is quite significant)

But this remains volatile

Conversely, We continue to expect operating income growth of apximately 8%, excluding the impact of foreign currency, apximately $5 million in service expenses related to the organizational realignment we announced in Q1, and the $3

We will now open the line for questions

And our first question for today comes from the line of David Palmer from Evercore ISI

Your question, please

And great to see the acceleration in same-store sales, in today's market environment

I wanted just to bring up of the pushback or the big discussion that we often hear on Domino's and maybe get your broad take on it

Moreover, Furthermore, And that is largely the view that you're entering, you know, perhaps this last year of a third-party marketing lift and that the news has been fantastic here with stuffed crust, and this is your perhaps, your biggest best bet

Moreover, You see your pipeline (fascinating analysis), considering recent developments

Additionally, You see initiatives and other s of scale advantages, your driver economics that'll be reinforced by the things you're doing, the wider net is being cast, maybe some digital platforms that are being built (fascinating analysis)

On the other hand, Russell Weiner: Good morning, David (quite telling)

Additionally, You know, you talk the last year, and your words, I'll use golden when I talk to my mom after the call, definitely

But, you know, to me, what would be helpful is just to take a look at the last decade (an important development)

In contrast, You know, the last decade, essentially, a Point a year every year for the last decade

You're right (this bears monitoring)

What we didn't have at that point was aggregators

What we didn't have at that point was stuffed crust or even New York style pizza, given current economic conditions

In contrast, What we did have were the strongest economics for our four walls

Nevertheless, For franchisees, supply chain pricing that let them keep consumer prices low and value high

And a large ad budget

And the ad budget is important because if you're gonna squeeze percent margins, you wanna throw a lot of volume kinda through that