Domino's Pizza Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
October 14, 2025

Key Takeaways

  • Positive Sentiment: The Best Deal Ever promotion drove strong U.S. comps, boosted order count growth and delivered profitable volume for franchisees, contributing to market share gains in Q3.
  • Positive Sentiment: The launch of Parmesan Stuffed Crust Pizza exceeded mix and new-customer targets while maintaining operational execution and franchisee profitability.
  • Positive Sentiment: Domino’s is now fully live on DoorDash in the U.S., with sales expected to ramp in Q4 and become a meaningful contributor to delivery comps in 2026.
  • Positive Sentiment: The upgraded website and mobile web platforms are fully live and exceeding conversion goals, with new mobile apps scheduled to roll out by year-end.
  • Negative Sentiment: Management noted an intensifying challenging macro environment in early Q4 that could pressure full-year same-store sales despite reaffirming a 3% U.S. comp target for 2025.
AI Generated. May Contain Errors.
Earnings Conference Call
Domino's Pizza Q3 2025
00:00 / 00:00

There are 2 speakers on the call.

Operator

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 draw 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, Greg Lemenchick, Vice President of Investor Relations and Sustainability. Please go ahead. 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.

Operator

The call will conclude with a Q and A session. The forward looking statements in this morning's earnings release and 10Q, 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 8K 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. 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.

Operator

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.

Operator

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 Dom.OS systems. Last but certainly not least, Best Deal Ever is driving franchisee profitability.

Operator

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.

Operator

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 increases and believe this will be a meaningful contributor to our U.S. comps in Q4.

Operator

As we move into 2026, 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.

Operator

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.

Operator

As you know, we don't usually do LTOs at Domino's, so everything we have launched over the last two years, aggregator, ordering, 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 1

Thank you and good morning everyone. Our third quarter financial results continued 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.

Operator

In.

Speaker 1

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. 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 Domino's carryout business that has a lower ticket than delivery.

Speaker 1

Our carryout comps were up 8.7% due to the previously noted initiatives as well as continued growth from our Domino's Rewards 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. 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 continue 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 1

I wanted to highlight the debt 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 on 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. We expect it 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.

Speaker 1

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, 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.

Speaker 1

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. 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.

Operator

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 and A roster. Our first question comes from Dennis Geiger with UBS. Your line is open. 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.

Operator

Could you just kind of break down maybe anything on what you're seeing at a high level thus far, 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 1

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. 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. 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.

Speaker 1

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. 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. I think we just wanted to point out that we're observing what's happening in the macro environment.

Operator

Dennis, good morning. I would just say 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 in that environment. Thank you. Our next question comes from the line of David Palmer with Evercore ISI. Your line is open. Thanks, Russell. I was just hoping maybe you can 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 promotional activity on the third-party sites right now. Effectively, it's the industry's version of stuffing the channel.

Operator

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. Yeah, David, good morning. 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 carryout business were up for the quarter. There are a lot of pressures out there, but the fact that we're able to sustain that, and I'll maybe use your words in a second, sustain that profitably is really important. 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.

Operator

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, but the value we have out there is value we can sustain. 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. In that kind of marketplace, we succeed, we excel.

Speaker 1

Dave, I'm going to add another thing on this because we 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 we'll 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 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.

Speaker 1

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. We feel confident that we're doing the right things.

Operator

We get excited about delivery here at Domino's Pizza. I'd say one addition to that is this is why I'm so bullish about our long term prospects. On aggregators, we deliver 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 got on DoorDash, but we're still growing and there is pricing that 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. Thank you. Our next question comes from Brian Bittner with Oppenheimer. Your line is open. 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.

Operator

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 COGS margins. Just curious if there's any other tidbits you can add on the economics of Best Deal Ever. Yeah, sure, Brian. I'll take economics first and then we'll go into Best Deal Ever.

Operator

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. What we'll do is we'll continue to mix this, the renowned value, with the most delicious food aspects.

Operator

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. 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. Thank you. Our next question comes from the line of David Tarantino with Baird. Your line is open. Hi, good morning, Russell.

Operator

I think you mentioned in your prepared remarks your confidence in delivering 3% comps in 2026 and beyond. A common narrative on Domino's is that 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. 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.

Operator

That's for menu items and value items. An example is our loyalty program. We relaunched 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. It's not like we launched and hit our maximum for aggregators for stuff, trust 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.

Operator

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. Thank you. Our next question comes from Gregory Frankhort with Guggenheim. Your line is open. 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 999 versus the other two major platforms? Is there a possibility that you would maybe more permanently shift the customer up a couple bucks, but give them more and maybe make that a more permanent piece of the menu? Thanks. Yeah.

Operator

Greg, you know, when I explain what we're doing with Best Deal Ever, sometimes my simple explanation, it's 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. 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.

Operator

We're going after someone who 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. Maybe we can address that later as well. I think one of the reasons Domino's 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.

Operator

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. Thank you. Our next question comes from Danilo Gargiulo with Bernstein. Your line is open. Great, thank you. Russell, 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 stuffed crust pizza, given that, you know, 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.

Operator

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 lunch day parts and whatnot. This is one aspect that is still not available on your menu. 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, 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.

Operator

If you, if we, to give you a sense of how much stuffed crust we sold, 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 is, I'm not going to tell you it's 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. As far as renowned value and 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 pieces.

Operator

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. 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. Thank you. Our next question comes from the line of John Ivankoe with JP Morgan. Your line is open. Hi. Thank you. Obviously there's a lot of pushes and pulls in terms of franchise economics and your underlying return on investment for the aggregate units in the U.S. are obviously quite strong. My question is really around U.S.

Operator

unit development over the next several years. 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 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.

Speaker 1

Hi John, it's Sandeep. I think on the franchisee economics side, as you pointed out, economics are very compelling and 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 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 are 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 good line of visibility to the 7,700ish number on 2028 in terms of the 8,500.

Speaker 1

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.

Operator

Why?

Speaker 1

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. Competitor stores are closing, we are opening up stores, and actually that opens up even more opportunity for us to open up even more stores around what the stores were opening us. 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, number of competitor 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. That's how we look at the full potential number of stores. I think it evolves over time and we feel very bullish about it.

Operator

Yeah, that builds, Sandeep, on what I was talking about before. 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. 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. We've got a lot of smaller franchisees who are now adding to that base. We have more people than we did prior years building stores, which just talks about not only the health of our business, kind of broad based, but our ability to handle.

Operator

When you got more people opening, it's easier to hit those store numbers. Thank you. Our next question comes from the line of Lauren Silberman with Deutsche Bank. Your line is open. 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 at the 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 how level set 4Q expectations. If the macro remains as challenging as you've seen to start the quarter, is 4Q coming in below a 3% comp? Just trying to understand how significant the macro decel is.

Speaker 1

Yeah. I think your question's really good, Lauren, and 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 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.

Speaker 1

Look, I mean 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.

Operator

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. Thank you. Our next question comes from Peter Saleh with BTIG. Your line is open. 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.

Speaker 1

I was hoping you could give us.

Operator

A little bit more color maybe in the third quarter, that acceleration, what you're seeing by maybe income cohorts, geographies, dayparts. Just trying to understand maybe what changed or kind of where the acceleration is coming from in 3Q. Yeah, the income cohort pressure on the lower income customers had been seen kind of throughout restaurants. What you know, 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, and that's our second quarter in a row where we're up against, you know, the lower income customers. No matter what pressure is out there, you know, we seem to be breaking the trend.

Speaker 1

Pete, what I'll add is you rightly pointed out that we're now at 1% year to date, and 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 Domino’s “Hungry for More” strategy, 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.

Operator

Thank you. Our next question comes from Chris O'Cull with Stifel. Your line is open. Great, thanks guys. It's 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 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, I mean, 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.

Speaker 1

Yeah, so 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 fighting 5.8%, if my memory serves 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 is a huge factor. The compounding impact from the 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.

Speaker 1

We always look at that crossover between carryout and delivery, and 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 off an incremental customer for the most part and building their frequency behind all the initiatives that we have.

Operator

Yeah, and that carryout number is more of a share growth within carryout than it is taking folks from delivery to carryout. I think also 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. Thank you. Our next question comes from Andrew Charles with TD Cowen. Your line is open. Great, thank you.

Operator

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 second year of growth within Uber sales. 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.

Operator

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.

Speaker 1

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 full quarter that we've been on DoorDash, so it's going to slowly build over time. 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 DoorDash getting to a point where it's fully annualized as well. We feel really good about the aggregator business and we really want to manage the delivery business as one whole, understanding that there's going to be 1P and 3P dynamics.

Operator

Yeah. Andrew, back to the question from earlier. You know, we are going to price competitively, but we are not going to be irrational in pricing. We are going to grow at a steady rate on this channel. I think I know 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. Thank you. Our next question comes from Christine Cho with Goldman Sachs. Your line is open. 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, and 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.

Operator

Yeah, Christine, thanks. The last time we did the brand refresh, 13 years ago, I was the Chief Marketing Officer. I can just say I am jealous at what Kate Trumbull and the team have done with this brand refresh. They have just really taken it to the next level. It was inspired by our Hungry for More strategy and what we saw that we were doing really well, which is driving renowned value, the R in Hungry for More. What we saw that we had a little bit more opportunity to do, which is to drive perceptions, not actionable, but perceptions around our deliciousness. What you will see that the team did is reinvent ourselves with our color palette, food photography that we have just never had before, and doing everything we can to drive deliciousness.

Operator

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 are in territory all by ourselves. At the end of the day, when you realize that the middle of your name, Domino's, has mmm 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. Thank you. Our next question comes from Brian Harbour with Morgan Stanley. Your line is now open. Hey, morning guys. Maybe just your comments about some of the pressures picking up more recently, last four or six weeks or whatever.

Operator

Is there any texture you would add to that as you look at your own business, whether it is certain customer groups, any differences, delivery versus carryout or third party delivery? Could you expand on that a bit?

Speaker 1

Yeah. Brian, I think, look, 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, but 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 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.

Operator

I realize 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, so it's fully funded by them. Thank you. Our next question comes from Alex Sligle with Jefferies. Your line is open. Thanks. Good morning. Question on your expectations for the balance between the carryout growth you're seeing, the delivery growth, and then also between traffic and check. Just how has this played out relative to your expectations and whether you see this balancing out a bit more as you head into 4Q or 2026?

Speaker 1

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 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 slotted to one channel versus the other, and we don't want to tip our hand to our competitors.

Speaker 1

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.

Operator

Thank you. Our next question comes from Sarah Senatori with Bank of America. Your line is open. Hi, good morning. Thanks for the question. Isaiah Austin on for Sarah. 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 Dash and the Uber Eats customer and that'll do it? Yeah. Obviously 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.

Operator

Obviously DoorDash is bigger than Uber, so we'd expect more volume to come through that channel over time. Thank you. Our next question comes from Jeff Bernstein with Barclays. Your line is open. Great. Thank you very much.

Speaker 1

Just a question.

Operator

Looking outside the U.S. as we close 2025 here, just wondering if you have any initial thoughts that you can share in 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 975 net annually and I think Domino’s Pizza Enterprises is seemingly the greatest headwind. Any early color as we assume new unit growth, visibility probably better than comp. Assume there's some at least idea as to where that direction could go next year versus this year. Thank you. Maybe I'll start off macro and then Sandeep, feel free to add. You're certainly right.

Operator

We are working with Domino’s Pizza Enterprises right now to drive sales, particularly in France and Japan, but throughout their markets because that drives profitability and sales, and profitability begets store growth as that continues to go. As they continue to get more confident, we'll have some more visibility into their growth. 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.

Speaker 1

Yeah. 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 Domino’s Pizza Enterprises 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 Domino’s Pizza Enterprises 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 Domino’s Pizza Enterprises.

Speaker 1

They're working on it. I think overall we feel that everything outside of Domino’s Pizza Enterprises is tracking the plans, both in 2025 as well as in 2026, and that continues to be our expectation.

Operator

Thank you. Our next question comes from Andrew Strelczyk with BMO Capital Markets. Your line is open. Hey, good morning.

Speaker 1

Thanks for taking the question.

Operator

I wanted to ask about the brand refresh and 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. Yeah, no thanks. 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. 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 and 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.

Operator

It was kind of flat and 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. 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. Thank you. Our next question comes from Todd Brooks with The Benchmark Company. Your line is open. 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.

Operator

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 and what's going to be a tougher macro environment, is this something that could be extended further?

Speaker 1

Thanks.

Operator

Thanks. I mean, you bring up a great point and 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 and 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. Obviously we've started with Best Deal Ever and you'll see us leaning into all aspects of Hungry for More in Q4. Thank you. Our final question comes from Zach Fatem with Wells Fargo. Your line is now open. Hey, good morning and thanks for fitting me in. Can you talk about the metrics you look at internally to measure the success of a promotion?

Operator

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? Yeah, that's a great question. Maybe I'll answer it a couple 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, Zach, is we've 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.

Operator

That's what we're seeing now. 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? 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 we always tell our franchisees we put dollars in the bank, not %.

Speaker 1

I'm 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 explained. 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's something that I've 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.

Operator

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. Thank you, Zach. 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.

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