Domino's Pizza Inc · NASDAQ:DPZ
Domino's Pizza — Investor Day (January 2014)
89 slides from Domino's Pizza's investor day presentation, Jan 15, 2014
Slide 1: Building Brand Domino's
Exhibit 99.1 Building Brand Domino’s January 15, 2014
Slide 2: Patrick Doyle
Patrick Doyle President, Chief Executive Officer
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation and our accompanying comments include “forward-looking statements.” These statements relate to future events or our future financial performance and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results,
Slide 4: Building Brand Domino's
Building Brand Domino’s Patrick Doyle – Domino’s Dominance Russell Weiner – Brand Leadership Ritch Allison – Global Brand Momentum Kevin Vasconi – Technology Innovations Mike Lawton – Financial Updates
Slide 5: A Dominant Force in the Pizza Industry
A Dominant Force in the Pizza Industry 2008 Today Message Uninspired Unique Product OK Quality New to Online Technology Digital Leader Ordering International Strong Accelerating
Slide 6: A Category That Has Market Share Growth Potential
A Category That Has Market Share Growth Potential Major Chains Share of Dollars 96% 82% 71% 40% QSR QSR Mexican QSR Sandwich QSR Pizza Hamburger Year ending September 2013. Source: The NPD Group/CREST®.
Slide 7: Domino's is Growing Delivery Share
Domino’s is Growing Delivery Share 18.8% 31.3% 31.1% 18.8% Domino’s Major Competitive Pizza Chains Small Pizza Chains Pizza Independents 23.1% 29.7% 17.5% 29.7% Years ending September 2008 and 2013, share of delivery consumer spending. Source: The NPD Group/CREST®.
Slide 8: Leading in Digital
Leading in Digital Share of U.S. Digital Dollars – QSR Pizza Estimated Domino’s Global Digital Sales of Almost $3 Billion a Year* 7.8% 7.8% 31.3% 53.1% Domino’s Major Competitive Pizza Chains Small Pizza Chains Pizza Independents January-September 2013. Share of consumer online and mobile app order
Slide 9: Relative Strength of Major Players is Impacting Regionals and Locals
Relative Strength of Major Players is Impacting Regionals and Locals QSR Pizza Store Count Change 2.3% 2.3% 1.1% 2.2% 1.7% 1.4% 1.0% 1.3% 1.6% 1.4% 0.8% 0.5% -0.2% 0.1% -0.7% -0.3% -2.6% Major QSR Pizza Regionals Locals -6.9% 2008 2009 2010 2011 2012 2013 Source: The NPD Group/CREST®; March unit cha
Slide 10: Dom world has Changed... For the Better
Dom world has Changed... For the Better
Slide 11: Domino's Largest Opportunity is to Improve Stores
Domino’s Largest Opportunity is to Improve Stores Primary Opportunities 1) The restaurant has pleasant ambience 2) The restaurant is family-oriented 3) I feel comfortable in the store Brand Equity Study – August 2013
Slide 12: Image 2000 is Years Old
Image 2000 is 17 Years Old Lacks purpose/alignment with revitalized brand Not customer friendly Outdated and worn
Slide 13: New Store Rollout Mandated Worldwide
New Store Rollout Mandated Worldwide
Slide 14: U.S. Reimage Costs
U.S. Reimage Costs Estimated cost of $40-55K per store Some stores will be relocated New stores estimated cost roughly $250,000 to $350,000 U.S. and international franchisees will generally have up to four years to reimage based on the number of stores U.S. incentives for new stores and certain relo
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Slide 16: Russell Weiner Chief Marketing Officer
Russell Weiner Chief Marketing Officer
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Slide 18: September 22, 2008
September 22, 2008
Slide 19: U.S. Same Store Sales
U.S. Same Store Sales 8.0% 6.7% 6.8% U.S. Same Store Sales 6.0% 1995—2008 4.9% 4.5% 4.0% 4.0% 2.8% 2.6% 2.2% 1.8% 2.0% 1.3% 0.0% 0.0% -2.0% -1.7% -4.0% -4.1% -4.9% -6.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 20: Russell Weiner, CMO
Russell Weiner, CMO November 2008 Investor Meeting Ann Arbor, Michigan
Slide 21: The Next Days…
The Next 90 Days… Forge a Lighthouse Identity for the Domino’s brand – Informed by our past and inspired by the future – Grounded in consumer insights Lighthouse drives brand decisions – Advertising & Communications – Innovation – Store design
Slide 22: Innovation Philosophy…
Innovation Philosophy… Long-Term Approach 30 days and 30 years Quality, Quality, Quality! We’re delivery. We’re service. We’re 30 minutes… AND the FOOD is great (Deliciously Fast) Born out of a rational business need…Developed with an emotional POV that makes it uniquely Domino’s Drive incremental g
Slide 23: Did We Do What We Said We Would Do?
Did We Do What We Said We Would Do? Re-introduced an unexpected new Domino’s to the world – Brand – Product
Slide 24: Figured Out Who We Were
Figured Out Who We Were: An honest, transparent pizza company that is always trying to get better
Slide 25: Focused on Having the Best Food
Focused on Having the Best Food: Re-created our 50-year-old recipe from the crust up
Slide 26: New Approach Significantly Improved Taste Credentials
New Approach Significantly Improved Taste Credentials 10 8 6.55 2 0 7.94 8.92 Q3 2009 Q3 2011 Q3 2013 Source: Study Logic; Question asked of consumers who ate Domino’s in the past 7 days: “Please rate the overall brand “Taste” you received during this visit for your order (1-10 Poor/Excellent)”
Slide 27: Great Beverage Partner
Great Beverage Partner New contract with Coca-Cola® #1 beverage company We are the only national pizza chain partnered with them Favorite Brand vs. Nearest Competitor 2.1x 2.9x 6.3x 5.6x 2.1x SOURCE: USE B-Cubed. 12 month Ending May 2013. Total Population 13-64.
Slide 28: Did We Do What We Said We Would Do?
Did We Do What We Said We Would Do? Re-introduced an unexpected new Domino’s to the world – Brand – Product Re-defined innovation – No in and out/limited time products – 85%+ of menu is new – Expanding and adding new channels
Slide 29: E-commerce
E-commerce Se Wi Waa BS ha a Ma ae B= YOUR EASY ORDER Me THE FAMILY'S FAVORITE
Slide 30: Carryout
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Slide 31: Did We Do What We Said We Would Do?
Did We Do What We Said We Would Do? Re-introduced an unexpected new Domino’s to the world – Brand – Product Re-defined innovation – No in and out/limited time products – 85%+ of menu is new – Expanding and adding new channels Re-claimed sales momentum – Pizza – QSR
Slide 32: We Have Significantly Outgrown the Pizza Competition
We Have Significantly Outgrown the Pizza Competition +17.0% +2.0% +7.0% +9.9% +8.0% +3.6% +3.0% +3.4% +3.5% +3.1% 0.0% +0.5% -9.0 % 0.0% 0.0% 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012
Slide 33: And Are Leaders in the Broader QSR Category as Well
And Are Leaders in the Broader QSR Category as Well U.S. Same Store Sales 2009 + 2010 + 2011 + 2012 17.0% 17.0% 14.5% 10.3% 7.0% 2.0% 2.2% Pizza Hut Wendy’s Papa John’s Dunkin’ McDonald’s Starbucks Domino’s Donuts Pizza Calculated by adding same store sales from years ending 2009, 2010, 2011, and 20
Slide 34: Momentum Continued in 2013
Momentum Continued in 2013 U.S. Same Store Sales 9.0% Q1 2013 Q1-Q3 2013 8.0% Q2 2013 6.7% 6.0% 6.2% Q3 2013 5.4% 4.0% 4.2% 3.1% 3.4% 1.6% 1.8% 1.7% 0.7% 1.0% 0.7% 0.4% -1.0% -1.0% -1.2% -2.0% Pizza Hut Wendy’s Papa John’s Dunkin’ McDonald’s Starbucks Domino’s Donuts Pizza Source: Reported U.S. same
Slide 35: We Have Become a Completely New Brand
We Have Become a Completely New Brand
Slide 36: We are now translating our new brand into retail…
We are now translating our new brand into retail… Domino’s Pizza Theater
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Slide 39: New stores, Re-images, Re-locations
New stores Re-images Re-locations
Slide 40: eS” Demine’s
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Slide 50: Pizza Theater Was Researched Extensively
Pizza Theater Was Researched Extensively
Slide 51: Pizza Theater is a Winning Image for Domino's
Pizza Theater is a Winning Image for Domino’s Salt Lake City Gulfport Virginia Beach Net Promoter Score Rating of Interior Rating of Comfort Cleanliness Saw Food Being Cooked/Prepared Employee/Customer Engagement Houston Las Vegas
Slide 52: New, More Modern Uniforms Better Represent the Brand
New, More Modern Uniforms Better Represent the Brand
Slide 53: And Our Re-imagined Car Topper Will Drive Awareness of Our New Logo
And Our Re-imagined Car Topper Will Drive Awareness of Our New Logo
Slide 54: What Should You Expect From Domino's in The Future?
What Should You Expect From Domino’s in The Future? The same winning formula! Brand First Broad, Best-in-class Long-term consumer innovation research and approach analytics
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Slide 56: Richard Allison
Richard Allison Executive Vice President, International
Slide 57: International is a Growth Engine
International is a Growth Engine Proven international franchise business model 30 years of experience with seasoned team Great local partners Healthy and balanced growth Delivering growth in developed and emerging markets Consistent growth at 3x market growth rate SSS growth driven primarily by orde
Slide 58: Robust Topline Growth
Robust Topline Growth Sales have grown at 12.9% CAGR over last eight years Q3 2013 TTM Retail Sales (millions) Retail Sales $4,000 $ 4.1B $3,500 $ 3,861 $ 3,519 $3,000 $ 2,952 $2,500 $ 2,452 $ 2,531 $2,000 $ 2,222 $ 1,870 $1,500 $ 1,679 $ 1,459 $1,000 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 59: Strong Store Growth
Strong Store Growth Store count more than doubled since 2004—pace of growth accelerated Store Count CAGR 2004 – 2013 Q3 6,000 5,627 8.3% 5,327 5,000 4,835 4,422 4,072 4,000 3,726 3,469 3,223 2,987 3,000 2,749 2,000 1,000 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3 2013
Slide 60: Leading the Competition
Leading the Competition Net Store Growth: Domino’s International consistently outgrowing top two competitors 492 Papa John’s 500 454 Pizza Hut 413 Domino’s 300 257 200 175 100 74 86 2010 2011 2012 YTD Q3 2013 Note: PJ’s figures do not include AK, HI and Canada; PH figures include licensees.
Slide 61: Healthy Growth
Healthy Growth Order growth: the engine of long-term sales growth Indexed Store Level Growth 1.3 Sales 1.2 Orders 1.1 Ticket 1.0 0.9 2010 2011 2012 2013 Weighted all store indexed growth TTM through Q3 2013
Slide 62: Driving Profits
Driving Profits International EBITDA tripled from 2004 to 2012; 14% CAGR EBITDA (in Millions) 125 114.1 104.9 100 92.8 79.6 75 64.4 67.2 57.8 50.4 50 44.1 37.8 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3 TTM
Slide 63: Leveraging Technology
Leveraging Technology Rolling out existing • Domino’s Pulse in more than 3,300 international tools to international stores* markets • Over 2,000 stores have Pulse Web Reporting* Accelerating • Established Global CEO Council import/export of ideas • Held first Global CIO Conference Expanding in-house
Slide 64: Global Digital Strength
Global Digital Strength TTM Q3 digital sales have hit an estimated $1.3B Markets with online ordering average approximately 36% digital sales as of Q3 Nine markets are over 40% digital sales as of Q3 Almost 60% of total sales in Australia are online The goal is to extend this to 80% in the next thre
Slide 65: Welcome Pizza Lover
Ss Domino's’ * WELCOME PIZZA LOVER uk ireland {Domino's SZ = tes 177 4Mnya Tou
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Slide 67: Kevin Vasconi
Kevin Vasconi Chief Information Officer
Slide 68: Who Do We Benchmark?
Who Do We Benchmark? In digital we pay less attention to: And more attention to:
Slide 69: A Holistic View of E-commerce
A Holistic View of E-commerce (DIGITAL SALES) ( x x ) Visits Conversion Ticket Engagement & Platforms Technology
Slide 70: U.S. Digital Sales Continue to Rise
U.S. Digital Sales Continue to Rise Q3 YTD Up 26% Digital Sales $1.4B Q3 TTM $1.1B $922M $770M $539M 2009 2010 2011 2012 2013
Slide 71: Digital Growth Fueled by Mobile Sales Growth
Digital Growth Fueled by Mobile Sales Growth Q3 YTD Up 89% Mobile Sales $459M Q3 TTM $296M $107M $11M $33M 2009 2010 2011 2012 2013
Slide 72: Digital Sales Already More Than 60%
Digital Sales Already More Than 60% In these DMAs: Sacramento San Francisco New York Washington, D.C. Baltimore Boston Dallas—Ft. Worth
Slide 73: Domino's Covers 95% of the Smartphone Market
Domino’s Covers 95% of the Smartphone Market iPhone® Android™ Kindle ™ Windows 8 - More than 6 million downloads —More than 4 million downloads —90k downloads —70k downloads - Ranked #2 in the free Food and —Ranked #3 in the free Lifestyle —Ranked #36 in the free —Ranked #1 in the Food + Dining Drin
Slide 74: Profiles Simplify Reordering for Returning Customers
Profiles Simplify Reordering for Returning Customers Profiles Phase 1—Launched August 2013 Link to Saved Easy Order Year End 2013 +7M total distinct profiles Links to Past +3M tokenized credit cards Five Orders Local Store Offer
Slide 75: DPZ Platforms that Allow Consumers to Easily Order
DPZ Platforms that Allow Consumers to Easily Order Anytime, Anyplace At home… On the move… In the living room… At work… Digital Provides a Ubiquitous Customer Relationship
Slide 76: Latest Innovation
Latest Innovation
Slide 77: Video
Video
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Slide 79: Michael Lawton Chief Financial Officer
Michael Lawton Chief Financial Officer
Slide 80: Franchisee Profitability
Franchisee Profitability $49,000 to $75,000 / year 2008 2009 2010 2011 2012 Estimating $81K—$85K per store in 2013 Average store economics are internal Company estimates based on results reported by franchise owners. Estimates are projections as of January 2014.
Slide 81: Franchisee Lending Sources for Reimaging
Franchisee Lending Sources for Reimaging Five national lenders with specific programs for DPZ franchisees – Balboa Capital – Direct Capital – IRH – Macquarie – Navitas Lease Corp No obligation to use these lenders – Credit analysis and pricing are up to each lender (no corporate subsidies or guarant
Slide 82: Looking Ahead: 2014
Looking Ahead: 2014
Slide 83: Looking Ahead at 2014
Looking Ahead at 2014 Commodities Food basket outlook is favorable Projected flat to -2%
Slide 84: Looking Ahead at 2014
Looking Ahead at 2014 G&A Range of $240—$244 million Technology innovation Technology upgrades International growth Lower non-cash compensation
Slide 85: Looking Ahead at 2014
Looking Ahead at 2014 Impact of Currency Market currently projecting negative impact Diversified portfolio of more than 70 markets 10% dollar move vs. DPZ currency basket = approximately 12 cents EPS
Slide 86: Long Range Outlook Change
Long Range Outlook Change Cap Ex Long range outlook of $35—$45 million Limited capital required due to franchise model Company store reimaging – lead the way Technology Supply chain centers
Slide 87: Long Range Outlook Change
Long Range Outlook Change Domestic Same Store Sales Range of 2%—4% Raising based on brand positioning and momentum Technology advantages Market share gain
Slide 88: Long Range Outlook
Long Range Outlook Global Domestic International Global Net Units Same Store Same Store Retail Sales Sales Sales +4% to +6% +2% to +4% +3% to +6% +6% to +10% Cap Ex: $35—$45 million Tax Rate 37%—38% 37% to 38% Outlook does not constitute specific earnings guidance. Domino’s does not provide quarterl
Slide 89: Q&A
Q&A