Sandeep Reddy
Executive Vice President, Chief Financial Officer at Domino's Pizza
Thank you, Russell, and good morning, everyone. As a reminder, in the third quarter, we closed the remaining 143 stores in the Russia market. The 2023 global retail sales growth measures exclude the Russia market and our calculated as a growth in retail sales excluding the retail sales from the Russia market from both 2023 retail sales and the 2022 retail sales base.
Now for our fourth quarter financial results. Excluding the impact of foreign currency, global retail sales grew 4.9% due to positive U.S. comps and global net store growth. U.S. retail sales increased 4.5% and international retail sales, excluding the impact of foreign currency grew 5.2%. During Q4, same-store sales for the U.S. business saw an increase of 2.8%. As Russell noted earlier, our strong comps in the quarter were driven by both delivery and carryout as they were up 2% and 3.9% respectively. For the year, delivery represented 48% of our transactions and 58% of our sales, while carryout represented 52% of our transactions and 42% of our sales. The weight of sales and transactions shifted slightly more to carryout in 2023.
The increase in U.S. Q4 same-store sales was driven by transaction growth from our new loyalty program inclusive of a benefit from Emergency Pizza, pricing of approximately 1% and a 0.4% sales mix from Uber. It will take us some time to determine just how much of that Uber mix is incremental, so more to come on that as we move through 2024 and into 2025. These tailwinds were partially offset by slightly lower average ticket that was the result of higher carryout mix.
Shifting to unit count. We added 92 net new stores in the U.S., bringing our U.S. system store count to 6,854 stores at the end of the year. For the year, we added 168 net new stores, which was a strong increase over the 126 net stores we opened in 2022. U.S. company-owned store gross margin decreased 1.6 percentage points in the fourth quarter of 2023. Excluding the impact from higher insurance costs and an increase in our loyalty liability due to the change in point structure following the relaunch of the Domino's Rewards program, margins would have expanded slightly. Domino's unit economics remained strong with continued EBITDA growth for our U.S. franchisees. We are expecting that our average franchisee profitability per store will come under the $162,000 in 2023, up $23,000 from the prior year.
Shifting to international. Same-store sales excluding foreign currency impact increased 0.1%. The deceleration from the third quarter is being driven primarily by pressures in Europe and geopolitical tensions in the Middle East. Please note that the Middle East represents a relatively small portion of our profits at less than 3% of our operating income. Our international store count increased by 302 net stores in the fourth quarter. For the year, our net store growth in international was 702 units, excluding the Russia closures. In total, for the year, we grew 870 net stores across the globe.
Income from operations increased $8.4 million or 3.4% in the fourth quarter. Excluding the impact of the $21.2 million prior year refranchising gain that we are lapping, income from operations would have been approximately -- would have been up approximately 13% in the fourth quarter and up approximately 10% for the full year.
Now turning to our 2024 outlook, which remains in line with what we shared at Investor Day in December. Our guidance calls for the following in 2024. 7% or more global retail sales growth, excluding the impact of foreign currency. We are expecting our 2024 U.S. comp to be above the 3% long-term guide, as a result of our expected outsized catalysts in Uber and loyalty. As we have communicated previously, we expect our sales with Uber to increase throughout the year as marketing and awareness increases, and we are expecting to exit the year with an overall sales mix of 3% or more. We expect sales with Uber to start ramping up after Q1, which will have only a partial tailwind from marketing.
In the U.S., we are planning for a modest price increase in the low-single-digits. This is inclusive of California where we are expecting to take pricing above that to offset the wage impacts from AB 1228. We expect our international comps to remain soft in the first half of the year due to a continuation of the trends we saw in the fourth quarter, but expect them to accelerate to our 3% or more long-term guidance in the back half of the year.
Now shifting to net stores where we are expecting 1,100 or more, which will be driven by 175 in the U.S. and 925 in International. There was a meaningful uptick in our U.S. net store growth in the fourth quarter, which was slightly ahead of our expectations and the pipeline continues to build. We are expecting net unit growth in the U.S. to be relatively flat to 2023 in the first half of the year and to accelerate slightly in the back half based on current visibility.
Internationally, we are expecting to increase net store growth each quarter over the prior year as we lap the one-time closures we had in 2023 and to step-up significantly in the back half of the year. As previously communicated, we are expecting slightly less than half of our growth to come from China and India. On profits, we are expecting an 8% or more year-over-year increase in operating income, excluding the impact of foreign currency. We do not expect the impact of foreign currency to have a material impact in 2024 based on current FX rates.
A few additional points of color on some of the profit components. We are expecting our food basket to be up 1% to 3%. This has been driven by continued moderation on cheese prices. From a meetings [Phonetic] perspective, we expect the Q1 food basket to be deflationary as we lap the only quarter from 2023 when the basket increased, followed by moderate increases for the remainder of 2024. We are expecting our supply chain margins to be roughly flat for the year, barring any unforeseen shifts in the food baskets.
We are expecting an increase in year-over-year supply chain margins in Q1 due to the expected negative food basket followed by slight moderation for the balance of the year. We expect supply chain margin dollars to grow in line with transaction growth throughout the year. We are estimating that rate inflation across the system, inclusive of California, will be in the mid-single-digits and this has been primarily driven by minimum wage increases. We are expecting our G&A as a percentage of retail sales to be approximately 2.4%, which is in line with 2023.
We also wanted to provide an update on our technology fee for 2024. In Q2 2023, we increased this fee to $0.395 and temporarily lowered our advertising fund contribution percentage by 0.25% to 5.75% for a 12-month period. Starting at the beginning of Q2 2024, we are lowering the technology fee to $0.355 and increasingly add funds back to 6%. As previously communicated, we are expecting operating income margins to be relatively flat compared to 2023.
We do not expect to see cost leverage in 2024 due to investments we are making in consumer technology, store technology and supply chain capacity to support future sales growth in the U.S. We are expecting Q1 margin expansion due to lower inflationary pressures, as previously noted, on our food basket. And we are expecting the Q2 margin rate to be down because of the timing of G&A spend, which will be partially driven by our worldwide rabbi [Phonetic], our gathering of our U.S. and international franchisees that takes place every two years. We expect margins in the back half of the year to be flat.
As I conclude, I wanted to note that we announced a 25% increase in our dividend and increased our share repurchase authorization by $1 billion. All of this has been done in line with our capital deployment priorities.
Thank you. We will now open the line for questions.
