Ritch Allison
Chief Executive Officer at Domino's Pizza
Thanks, Jessica. I'll begin my comments with a look at our U.S. business. Retail sales grew 1.1% in the third quarter, lapping a 21.3% increase from Q3 2020. Our 1.9% same store sales declined during the quarter, was offset by the positive impact of 232 net new stores that we have opened over the trailing four quarters. Domino's trailing four-quarter U.S. retail sales, excluding the impact of the 53rd week of 2020, were up 9.5%, a truly impressive achievement by our franchisees and operators, which shows the tremendous amount of growth in the brand across the U.S.
Now let's take a few minutes to further break down the U.S. retail sales growth into it's two components: store growth and same store sales. Our 45 net new stores in Q3 was a sequential improvement over Q2, but still came in softer than we would like to see. While cash on cash returns remain very strong and we continue to see a robust pipeline of future openings, we and our franchisees had a number of store openings delayed due to a variety of factors. We and our franchisees saw delays in construction, equipment, utility hookups and inspections. In addition, franchisee staffing challenges also resulted in some delays. We remain very bullish on the unit growth potential in the U.S., but believe that we may continue to see some of these challenges in the months ahead.
Now let's turn to same store sales. As we continue to experience COVID overlaps, we believe it's instructive to look at the cumulative stack of comparable U.S. same store sales anchored back to 2019 as a pre-COVID baseline and we'll continue to do so for as long as we believe it is useful in understanding our business performance. At 15.6% for Q3, we saw a sequential decline of the two-year stack when compared to the second quarter, bringing us back more in line with the two-year stack we saw in Q1 of this year.
So what changed from Q2 to Q3. Jessica highlighted several key drivers that I'll expand on here. First, we believe that government stimulus had an impact on our sales in Q2 that waned in the third quarter as we moved further away from the spring one-time payments and as other enhanced benefits tapered off. Second, we saw more pronounced staffing challenges across the country, resulting in reduced operating hours and service challenges in a number of stores across the network. We believe these challenges posed a more significant headwind on orders and sales during the third quarter than they did during the first half of this year.
We and our franchisees are taking a number of actions to address the staffing issues. A new applicant tracking system rolled out a few weeks ago that will make it easier for candidates to apply for openings and to be onboarded at both corporate and franchise locations across our U.S. system. We are also sharing operational best practices to eliminate unnecessary time-consuming tasks in the operation of stores, like pre-folding boxes, for example. They can drive both team member and customer satisfaction.
In our corporate stores, we have recently implemented meaningful increases in team member compensation and are also piloting new approaches to team member onboarding, training and development. While I'm optimistic about the efforts that we and our franchisees have underway, we believe that staffing may remain a significant challenge in the near term as the labor market continues to evolve.
Now I'll share a few thoughts specifically about the carryout and delivery businesses. We saw a positive carryout same store sales growth during Q3, as we continue to build awareness of Domino's car side delivery. We are on air for several months with a fun campaign highlighting our car side delivery two-minute guarantee. This campaign hits on two key elements of the Domino's brand. service and value. I'm very pleased with our car side delivery performance as our franchisees and operators have enthusiastically embraced this new service method.
Our research shows. It's also bringing in new customers. We have consistently averaged below two minutes out the door and on our way to the customer's cars. In fact, we have many stores across the country that are consistently below 1 minute. It's a great technology enabled way to serve our customers and will remain an important part of our long-term strategy to serve our existing carryout customers and to attract new QSR drive through oriented customers going forward.
I'm also excited to talk about our latest menu innovations. Just this past Monday, we went on air to launch three great new products to support our signature $7.99 carryout offer. We call them dips and twists and they hit the mark for great taste and consumer appeal with terrific economics for our franchisees. I'm excited about the impact these can have on sales and on store level profitability. I really hope you'll get out and try them. We have one sweet and two savory dip options in this new product line. Baked apple, five Cheese and my personal favorite cheesy marinara.
Turning to our delivery business. Q3 saw a same store sales decline relative to 2020, but delivery sales remain significantly above 2019 levels. During the quarter, we believe that the stimulus wind down and the staffing challenges that I referenced earlier, had a disproportionate impact on our delivery business. Just a few weeks ago, we launched a new ad campaign to support the delivery business. It plays on a key tension that consumers have with third-party delivery apps, the surprise fees that are often charged for service, for small orders or simply because you live in a certain zip code. Consumers also tell us that they hate the fact that these charges are often confusing, hidden or buried in the receipt.
Domino's and our franchisees never charge surprise fees. We charge one transparent delivery fee. So, we decided to give our customers surprise frees instead of surprise fees. During this campaign, one out of every 14 digital delivery orders receives a free item. That item could be a pizza, stuffed cheesy bread, lava cakes or any one of a number of other great items. Over the course of the campaign, Domino's and our franchisees will give away $50 million worth of surprise frees to delivery customers. Now this campaign supports two of our key brand attributes: value and transparency. I'll also share a few important milestones that occurred in the U.S. during the quarter. First, we broke ground. Just a few weeks ago on a new supply chain center in Indiana, which we expect to complete and open by the end of 2022. And second, we are now running a pilot version of our new Pulse point-of-sale system in a live store environment and we will continue to invest in that multi-year project going forward.
So, as we look forward in the U.S. business, I remain optimistic about our ability to continue driving long-term growth. We'll manage through the staffing and other challenges in the short term. Frankly, that's what Domino's franchisees and operators do and have always done and will continue to leave the brand with a clear focus on long-term profitable growth for our franchisees and DPZ. I'll end the U.S. discussion with a big thank you to our U.S. franchisees, our corporate store operators and our supply chain team members for their ongoing efforts to serve their customers, their team members and their communities.
Now moving on to international. It was another outstanding quarter of performance for our international business. Our 16.5% international retail sales growth, excluding foreign currency impact, was supported by a very strong 8.8% comp. When you look at it on a trailing four-quarter basis, excluding the impact of foreign currency and the 53rd week of 2020, Domino's International retail sales grew by 16.2%. As I discussed earlier with our U.S. business, we are also watching the two-year comp stacks for international, anchoring back to pre-COVID 2019. Q3 represented a 15% two-year stack, which was very consistent with the second quarter.
International store growth was a highlight during the quarter. Our international master franchisees opened 278 net new stores during the quarter, which increased the trailing four-quarter pace to 892 stores for the international business. This acceleration and international store growth combined with our U.S. store growth has driven the global pace of store growth back into our two to three-year outlook range of 6% to 8% global net unit growth.
I was also very pleased to see that we had only nine closures in international and only 10 closures on a global basis during the quarter. This low level of store closures is driven by two factors. First, our outstanding unit level economics and second and very importantly, the strong commitment of our franchisees across the globe. During the quarter, COVID continue to have a significant impact on many of our international markets and we expect COVID to remain a challenge in many parts of the world for some time to come.
At the end of the quarter, we estimate Domino's had fewer than 175 temporary store closures, with many of those located in India and New Zealand. I'll highlight a few of the international markets that contributed significantly to our growth during the quarter. We successfully converted 52 stores in Poland as Dominion pizza rebranded to become part of the Domino's family. This provides important scale for us in Poland, fast-forwarding us to 119 total stores in the market at the end of the third quarter. We now have 24 international markets with 100 or more Domino's stores.
We opened our 93rd international market during the quarter, officially welcoming Lithuania to the Domino's family. We're off to a great start there with the first store opening and we have a second one coming very soon. India resumed an impressive pace of store growth, while becoming the first Domino's market outside the U.S. to reach 1400 stores. I could not be more proud of Jubilant, our master franchise partner, and the efforts they have made to fight through COVID, taking care of their people, while still growing their business.
Japan had another outstanding quarter, passing the 800-store milestone and continuing its impressive streak of growth. The transformation of the market by master franchisee Domino's Pizza Enterprises has been remarkable. China delivered double-digit same store sales growth, while continuing its strong pace of store growth. With each passing quarter, we become even more confident about the long-term growth potential for the Domino's brand in China.
In addition to those markets, the U.K., Mexico, the Netherlands, Turkey and Colombia were additional large market highlights in a strong quarter of performance across our international business. And along with those markets, we also saw robust regional growth across the Middle East and Northern Africa during the quarter. I have long been convinced that we have the best international franchise partners in the restaurant business and they certainly prove me right during the third quarter. As we look forward, we have so much opportunity ahead of us to continue driving long-term growth for Domino's outside the U.S.
So in closing, I'm pleased with our third quarter results. Our outstanding franchisees and operators continue to battle through a challenging set of circumstances, while delivering strong growth for the Domino's brand around the world. These passionate Dominoids combined with our outstanding unit level economics, position us incredibly well for the future. There is no doubt that we will continue to experience challenges with COVID, with staffing, and other factors. We also expect inflationary headwinds to continue impacting Domino's and the broader restaurant industry over the coming quarters. But we will face all of these challenges and headwinds from a position of strength and with the unwavering commitment of our franchisees and team members who proudly wear the Domino's logo. My team and I are proud to serve them each and every day. So thank you again for joining us today. And we'll now be happy to take your questions.