Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — Investor Day (October 2019)
91 slides from Domino's Pizza Enterprises's investor day presentation, Oct 14, 2019
Slide 1: Investor Day Presentation – October 10, 2019
For personal use only Domino’s Investor Day Presentation – October 10, 2019 AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 2: Presented by Don Meij
For personal use only Domino’s Presented by DON MEIJ AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 3: Diversified network of corporate and franchised stores
For personal use only The cornerstone of the Company’s success has been the ability to leverage a diversified Network of both Corporate and Franchised Stores backed by strong store level economic fundamentals and the power and proprietary systems of a global network.
Slide 4: Continued expansion throughout Australia and New Zealand
For personal use only The Company plans to continue its expansion throughout Australia and New Zealand and expects that Domino’s Pizza and its Franchisees will continue to benefit from the economies of scale generated by operating the largest pizza Network in Australia.
Slide 5: Future growth from new stores and sales growth (2004 offer)
For personal use only Future growth is expected from new store openings, growth in sales from existing stores and the potential for new store and menu formats. Domino’s pizza Australia new Zealand ltd share offer - 2004
Slide 6: Our view hasn't changed, but our horizons have
For personal use only Our view hasn’t changed, but our horizons have.
Slide 7: This is a scale business
For personal use only This is a scale business You can’t have 20 or 30 stores. It’s like a 100 storey building, the first 50 or 60 storeys pay for the construction, IT’s When you have those foundations in place that you deliver the real returns. A U S T R A L I A N E W Z E A L A N D B E L G I U M F
Slide 8: Distance and location matter
For personal use only We are a pizza business and distance matters: customers are not going to drive across town to pick up a better deal – you have to be in the right suburb, on the right street, in fact, on the right side of the street. When delivering, time is temperature. Time is money. In every
Slide 9: Customers don't care about lines on maps
For personal use only Customers DON’T CARE ABOUT Lines ON MAPS IN THE BEGINNING THERE WAS DRIVE-THRU
Slide 10: Stores: sales more than trebled
For personal use only 62 STORES Sales more than trebled 131 STORES
Slide 11: Title here
For personal use only TITLE HERE A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 12: Broader horizons
For personal use only BROADER HORIZONS NEW ZEALAND BELGIUM NETHERLANDS FRANCE GERMANY JAPAN A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 13: Runway for growth could run out
But still, we For personal use only TITLE HERE viewed a time when our runway for growth could run out. But still, we viewed a time when our runway for growth could run out. A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U
Slide 14: For personal use only
For personal use only A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 15: Shared procurement, technology, greater access to markets
For personal use only Shared Shared Greater access procurement technology to markets
Slide 16: Our future
For personal use only Our future 1X GDP CHINA +1X POP USA A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 17: The possibility
For personal use only The possibility Burgers Chicken Pizza Other A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 18: Our future: why we exist
For personal use only Our future WHY DO WE EXIST? AT OUR BEST The hard-wired WE SMASH THE human need for PREVAILING WISDOM social connection – WHICH SAYS YOU CAN’T seemingly better HAVE QUALITY, SPEED enabled than ever AND LOW PRICE… before – is breaking down. THUS PUTTING THE WORLD’S MOST People cr
Slide 19: Our pizza brings people closer
For personal use only Our pizza brings people CLOSER
Slide 20: One brand, one core focus, one purpose
For personal use only One brand, one core focus, one purpose.
Slide 21: Growth in the home pizza market
For personal use only The growth in the home pizza market will continue as a result of longer working days and the increase in dual career households supporting demand for freshly cooked, delivered food Domino’s pizza Australia new Zealand ltd share offer - 2004
Slide 22: Time is the enemy of food
For personal use only TIME IS THE ENEMY OF FOOD
Slide 23: Customers see a difference
For personal use only CUSTOMERS SEE A DIFFERENCE! TIME OUT OF THE OVEN “Fresh” “OLD AND COLD” Q1 2016 Quantitative Research
Slide 24: Store delivery times by market
For personal use only Australia Australia 5:27 4:58 Ferny grove Eatons hill Aug 2019 sep 2019 netherlandS japan 3:36 Groningen Floresstraat 2:38 YOTSUYA Jul 2018 Nov 2018
Slide 25: Eatons Hill, Australia, September 2019
For personal use only Australia Eatons hill MONTH OF sep 2019
Slide 26: Technology projects
For personal use only Cognitive rostering Predictive Project 4 ordering Project 3 Project 5 Fast bake Project 2 ovens Ebikes Project 1 GPS
Slide 27: Global leadership presentations
For personal use only Today, you’re going to hear from members of our Global Leadership on how we’re going to apply our deep history of fortressing our business to build scale in the decades ahead.
Slide 28: Domino's Europe
For personal use only Domino’s EUROPE AN DRE TE N W O LDE – CO O EURO PE AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 29: DPE Europe
For personal use only DPE EUROPE Benelux DENMARK 185,000,000 consumers [That’s 55% of all consumers in DPE’s markets] FRANCE GERMANY A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 30: DPE Europe key facts
DPE EUROPE For personal use only • 59% of the size of Queensland • 1,097 stores • 186,500 inhabitants per store • € 713 million in network sales • 65% Digital • Close to 3 stores per franchisee Source:https://thetruesize.com A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R
Slide 31: The French love pizza
For personal use only The French love pizzas 2nd largest market in the world La France est le 2ème pays au monde qui 7.7M eat pizzas consomme le plus de pizzas, après les États-Unis At least France is the 2nd country in the world that consumes the most pizza, after the United States 15% of the USA F
Slide 32: Pizza: part of the culture
For personal use only PIZZA: part of the culture for more than 125 years • 1851 : Start of the Italian Immigration in France • 2 million Italians crossed the borders between 1873 and 1914. • 1891: 1st Pizzerias in Marseille : • 14 years before the 1st Pizzeria in New York • 70 Years before Milan and
Slide 33: Places to buy pizza in France
That is why you can buy pizzas in more than 100,000 For personal use only places Canteen 18% Supermarkets 26% Trucks 6% Delivery & take away 4% Kiosks & vending Machines 1% Pizzeria 45% A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U
Slide 34: DPE Netherlands
DPE NETHERLANDS For personal use only Penetration of Domino’s second highest in total QSR market. Only McDonalds has higher penetration. In the delivery market Domino’s has the highest penetration. # Stores Mc Donalds 245 Domino’s Pizza 285 Subway 213 New York pizza 200 Burger King 63 KFC 68 Kwalita
Slide 35: Market share in pizza and total QSR
For personal use only Market share domino’s 34% in pizza market but just 5% in total QSR Share of Pizza Share of QSR Domino's Share Other Pizza Restaurants Domino's Share Other QSR
Slide 36: Share in QSR market
Asian and Fast food highest share For personal use only in qsr market followed by pizza Share in QSR 8% 9% 25% 9% 12% 23% 14% Asian Burgers / Fries Pizza Sandwhiches Other Meals Grill Dutch/French A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M
Slide 37: TV spend
For personal use only TV SPEND BENELUX Netherlands: Optimal. Belgium and Luxemburg: NO TV FRANCE Very low TV presence GERMANY First very light TV started 2 weeks ago DENMARK NO TV
Slide 38: What if Europe had current penetration
For personal use only What if? Europe had the Europe had the Europe had the Europe had the current current current current penetration of: penetration of: penetration of: penetration of: THE NETHERLANDS THE UK ANZ ICELAND Meaning 1 store Meaning 1 store Meaning 1 store Meaning 1 store per 78,000 per
Slide 39: Fortressing: debunking the myths
For personal use only FORTRESSING Debunking the myths A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 40: Berlin
BERLIN For personal use only A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 41: Berlin
BERLIN For personal use only A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 42: Reduction of run time by fortressing stores
For personal use only reduction of the run time by fortressing stores: the run time decreases with an average of 2 minutes Average Run time Average Run Time 0:19:26 0:18:43 After After Fortressing split 0:18:18 0:18:43 0:18:00 0:18:00 0:17:17 0:17:17 0:16:34 0:16:34 0:16:19 0:15:50 0:15:50 0:15:07 0
Slide 43: Reduced run time cuts wage costs per order
The reduction of the average run time reduces the For personal use only wage costs per ORDER Weekly labour decrease Yearly labour decrease More than 16 hours More than 832 hours
Slide 44: Drive time has a positive effect on NPS
Drive time to the customer has a For personal use only positive effect on nps As the average driving time decreases, the NPS increases 0:00:00 Average drive time to customer 0:01:26 0:02:53 0:04:19 0:05:46 0:07:12 0:08:38 1 2 3 4 5+6 7+8 9 10 Recommendation score
Slide 45: Strong correlation between NPS and same store sales
There is a strong correlation between nps and sss: For personal use only a relatively high NPS translates into relatively high Same store sales Same store sales 14.0% 13.2% 11.8% 12.0% 9.9% 10.0% 8.0% 6.0% 5.5% 4.0% 2.2% 1.8% 2.0% 0.0% < 0% NPS 0% NPS tot 10% NPS 10% NPS tot 20% NPS 20% NPS tot 30%
Slide 46: Orders by delivery area size
Total orders higher for stores with huge delivery areas, For personal use only but orders per household ARE way lower Orders May x #Households delivery area Orders per household, per month 4500 0.30 4208 4000 3602 0.25 0.24 3500 3392 3262 3000 0.20 0.19 2641 2500 0.15 0.15 0.13 2000 0.11 1500 0.10 1
Slide 47: Groningen sales growth from fortressing
For personal use only Groningen has achieved significant sales growth as a result of Fortressing the market with roughly one store per year Sales growth Groningen (CORPORATE MARKET) € 1,800,000 Qtr 2 2018; Groningen 7 € 1,600,000 Qtr 2 2017; Groningen 6 € 1,400,000 Qtr 2 2012; Groningen 3 Qtr 4 2011
Slide 48: Leiden sales growth from fortressing
For personal use only leiden has achieved significant sales growth as a result of fortressing the market. Sales growth Leiden (CORPORATE MARKET) € 1,400,000 € 1,200,000 Qtr 4 2016; Leiden 2 € 1,000,000 Qtr 2 2017; Leiden 3 € 800,000 Qtr 2 2014; Leiderdorp € 600,000 Qtr 2 2015; Oegstgeest € 400,000 €
Slide 49: Aggregators: continuing to debunk the myths
For personal use only aggregators Continuing to debunk the myths A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 50: Aggregators are not new
For personal use only AGGREGATORS ARE NOT NEW 100 % of Digital sales 90 80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dominos.nl Thuisbezorgd A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M
Slide 51: Aggregators: part of a growing market
For personal use only AGGREGATORS: part of a growing market A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P A N G E R M A N Y L U X E M B O U R G D E N M A R K
Slide 52: Digital fortressing
For personal use only Digital fortressing Incremental customers • Use aggregators as 'search engine for food' • If Domino's is not in the search engine, the purchase goes to a competitor Advertising • Lowers the cost of advertising as we rank higher than competitors on price and delivery speed • Con
Slide 53: A digital advertising channel
For personal use only It’s a digital advertising channel Digital Order Share by Lead Source - Jul '19 Branded ROI: 30:1 Branded ROI: 60:1 Paid Search, 17% Paid Search, 23% Non-Branded ROI: 5:1 Branded ROI: 56:1 Paid Search, 6% Non-Branded ROI: 5:1 Non-Branded ROI: 3:1 Aggregator ROI: 12:1 Paid Searc
Slide 54: Aggregator orders: the differences
For personal use only AGGREGATOR orders: THE DIFFERENCES DOMINO’S DIFFERENTIATORS: BOTH ON AND OFF AGGREGATORS WE DELIVER - Our team members - Our single brand – UNIFORMS AND VEHICLES - Our focus on safety - Our commitment to DOMINO’S customer service - Our rewarding careers – training, wages, super
Slide 55: Domino's ANZ
For personal use only Domino’s ANZ N ick Kn ig ht CEO , Aus tralia/ N ew Ze alan d AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 56: ANZ – our growth
For personal use only Anz - Our growth TARGET 825 1200 Fy19 store count 2025-2028 store target
Slide 57: The most penetrated major market in the world?
For personal use only The most penetrated major market in the world?
Slide 58: Market position
For personal use only Market position QSR Market QSR Market $29.7 Billion $29.7 Billion Burgers Chicken Pizza Other Domino's Other Domino’s share of QSR Spend 3.6% Domino’s share of QSR Pizza Spend 43.8% The NPD Group / CREST®, Year End to June 2019
Slide 59: ANZ vs other markets
For personal use only Anz vs other markets 60000 50000 40000 30000 20000 10000 0 ANZ DPZ ANZ DPZ Population per Domino’s store – Data as at FY2019
Slide 60: Pizza category: Australia vs USA
For personal use only Pizza category - The top 4 25000 20000 Domino’s Domino’s Pizza Hut 15000 Pizza Hut Crust Pizza 10000 Little caesars Pizza Capers 5000 Papa johns 0 Australia USA Australia USA Population per store using current, publicly available data
Slide 61: 35,000 people per store is mature
For personal use only “35,000 people per store is mature” “28,000 people per store is not achievable”
Slide 62: Fortressing to grow
For personal use only Fortressing to grow +211% AWUS in 5 years Store Split Performance (2) • Original stores recovered sales in two years. • Territory sales more than doubled in five years. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Existing Store AWUS New Store AWUS (1) AWUS = Average weekly sales
Slide 63: Fortressing benefits
For personal use only Fortressing benefits Additional sales Incremental sales from carry-out customers Additional delivery customers from lower delivery times Operational costs reduce Reduced delivery run times cut labour costs: wages per delivery drop, mileage costs reduced, and alternative vehicle
Slide 64: Fortressing to grow – a territory
For personal use only Fortressing to grow – a territory Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 Original delivery New delivery Orig
Slide 65: For personal use only
For personal use only Longer travel time Higher costs (labour + vehicle) Shorter travel time Lower costs (labour + vehicle) IN THE BEGINNING THERE WAS DRIVE-THRU
Slide 66: For personal use only
For personal use only Shorter travel time Lower costs (including adding ebikes)
Slide 67: Fortressing does not impact pickup sales
Fortressing does not impact pickup sales For personal use only • Pickup sales from originating store are almost entirely unaffected by the split • New stores generate new pickup sales and 1 Year 2 Year 3 Year continue growth Pickup Original Stores Delivery Original Stores Pickup New Stores Delivery
Slide 68: Fortressing to grow – a TV market
For personal use only Fortressing to grow – a tv market $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- 2013 2014 2015 2016 2017 2018 2019
Slide 69: Fortressing to grow – a country
For personal use only Fortressing to grow – a country Existing and New Network Sales FY14 FY15 FY16 FY17 FY18 FY19 $1,169.0m $1,117.1m $1,037.2m $889.2m $272.1m $326.3m $200.0m $731.7m $116.5m $627.6m $57.9m $772.7m $837.2m $845.0m $842.7m $611.9m $673.8m Existing Stores New Store Sales (1) New stor
Slide 70: 35,000 people per store is mature
For personal use only “35,000 people per store is mature” “28,000 people per store is not achievable”
Slide 71: We've already shown it's possible
For personal use only We’ve already shown it’s possible 40000 35000 30000 25000 20000 15000 10000 5000 0 Target (2025-2028) National (2019) Queensland (2019) Population per store
Slide 72: Fortressing with high quality franchisees
For personal use only Fortressing with high quality franchisees 4. New ownership 5. Continuous improvement Recycling of capital with Higher sales and Lifting of sales increases Sale to sale of store improved operations lift DPE royalties and franchisee franchisee profitability revenues (typically eq
Slide 73: Fortressing with high quality franchisees
For personal use only Fortressing with high quality franchisees Franchisee “F” New Franchisee “B” 55.5% 78.3% One driver, one delivery 28.10 minutes 23.16 minutes Faster deliveries -21.2% 28.8% Satisfied customers +24.5% $2942/week Sales growth Profit growth $5618/week $152,983/yr Australian store –
Slide 74: Fortressing with high quality franchisees
For personal use only Fortressing with high quality franchisees Franchisee “F” New Franchisee “B” 78.9% 79.2% One driver, one delivery 20.87 minutes 20.54 minutes Faster deliveries 30.3% 28.3% Satisfied customers +21.6% $1364/week Sales growth Profit growth $3992/week $70,967/yr Australian store – o
Slide 75: Product quality is key
Product quality is key For personal use only Dom pizza checker update matching Captures a photo of the pizza and matches it to an order on the pack screen in under 3 seconds grades Analyses the pizza and displays a grade based on the cheese + border + spread remakes Identifies bad pizzas as a remake
Slide 76: For personal use only
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Slide 77: The adoption process
For personal use only The adoption process Early Network LATE ADOPTERS adopters average Adoption, execution and improvement • Franchisee and operations team alignment • Incorporating Pizza Checker for ‘scorecard’ bonus system • Weekly rankings shared internally • 1:1 follow-ups for stores falling be
Slide 78: In the pipeline
For personal use only In the pipeline Grading v2 increase accuracy of grading across all pizzas and crust types Smarter matching Increase the % of pizzas matched to orders and reduce incorrect matching and partial matches Pizza checker scores displayed on makeline Display the pizza checker scores as
Slide 79: Technology is increasingly expected
For personal use only Technology is increasingly expected
Slide 80: Japan
For personal use only Japan Jo sh Kilim n ik AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK
Slide 81: Japan – delivery pizza market position
For personal use only Japan – Delivery Pizza Market Position Store Count Trend of Japan Pizza Delivery Chains 2,270 2,310 2,210 2,210 2,230 2,160 2,163 2,160 2,134 2,170 2,161 2,145 2,120 8% 26 % 180 181 179 182 205 245 287 432 472 503 550 600 354 537 539 543 542 542 544 2007 2019 YTD 552 551 556 54
Slide 82: Japan – market position
For personal use only Japan – Market Position Market Share of Food Delivery Revenue comparison (Revenue) 3% Domino's 7% 5% Other Pizza Delivery 1% 2% Sushi Delivery 2% Fast Food Other Delivery Chains 3,055,628 Mil Yen 8% Family Restaurant Delivery Fast Food Delivery McDonald’s 72% 524,203 Mil Yen Nu
Slide 83: Japan – barbell strategy
For personal use only Japan – barbell Strategy Pizza is only taking a small slice of the market FREQUENT OCCASION Snacking Lunch at work – desk Drinking at home Main barriers to unlocking other markets lunch are perceived long service times, high cost, Family time together at menu not designed for i
Slide 84: New range pricing
For personal use only New Range Pricing American Classic New Yorker Range Superstar range Pick-Up: Y799- Pick-up: Y2,500- Pick-Up: Y3,800- Delivery: Y1,800- Delivery: Y3,300- Delivery: Y3,800- * Available for BOGO
Slide 85: Japan – new products
For personal use only Japan – New Products • Historically menu offerings have only catered for the one-off/celebration • We are adding a barbell strategy, with two new ranges to target competitor market share A U S T R A L I A N E W Z E A L A N D B E L G I U M F R A N C E N E T H E R L A N D S J A P
Slide 86: Japan fortressing – Nagoya
For personal use only Nagoya Population: 7.5mil Japan Fortressing – Nagoya Population per store: 142,000 Current Domino’s store: 53 New stores New stores in both existing business areas and white spaces where no Domino’s store operates yet Relocation Relocated stores to optimise delivery operations
Slide 87: Japan – fortressing
For personal use only Japan – Fortressing Existing store before DPE Acquisition Existing store Relocated Accumulative Sales of Nagoya New stores in existing business area New stores in white area FY19 new store FY18 new store Inner city of Nagoya FY17 new store FY16 new store FY15 new store Existing
Slide 88: Other markets – further opportunities
For personal use only Other Markets – further opportunities Hokkaido No Domino’s 5,100,000 Gap to Required store count on TV flighted GRP Population 23 24 13 Mid Japan & 5 3 North Coast (1) existing (15)(19) (11) North Japan (26) (22) (23) (23) 350,000 (28) (31) Population (33) Fukuoka & West Japan
Slide 89: Project 3TEN
For personal use only Project 3TEN 14 stores 19.2 min 40%by 2020 Under 10-min. delivery Average Delivery time E-Bike Average delivery time of focusing on e-bikes especially in inner city 14 Japan stores already 350 corporate stores is stores to realise faster delivery, better achieve under 10-min no
Slide 90: Technologies drive sales
For personal use only Technologies Drive Sales 15% 900,000+ Downloads Owned Media COUPON App Current sales through Coupon app has been owned media, eDM and already downloaded into coupon app, is now over 900K devices of approximately 15% of total consumers. sales
Slide 91: For personal use only
For personal use only
Domino's Pizza Enterprises — Investor Day (October 2019) on 6ix