Domino's Pizza, Inc. (NYSE:DPZ) Q3 2019 Earnings Conference Call - Final Transcript

Oct 08, 2019 • 10:00 am ET

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Domino's Pizza, Inc. (NYSE:DPZ) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] And our first question comes from Brian Bittner of Oppenheimer & Co. Your line is now open.

Analyst
Brian Bittner

Thank you. Good morning. Question on the guidance. I assume all of us on this call completely understand the philosophy around changing the structure of how you're communicating your same-store sales guidance, but just a little more color on how you're approaching this 2% to 5% range. It's really not a dramatic change from what you were communicating. And as you know, people are going to be using that range to evaluate your performance from here quarterly and annually. So just a little more color on what that 100 basis point change on both sides of the equation is directly attributable to?

Executive
Richard E. Allison

Sure, Brian, thanks for the question. Listen, as we take a look at it, it really is -- it really is twofold, as I described in my earlier remarks. As we take a look at the US business, first, there is just a level of uncertainty in the near term around some of these competing delivery offers in the marketplace. And we know that has an impact on the comp and therefore felt that we needed to adjust that range down a bit.

We also, as we look forward over the next couple of years, we are moving aggressively to continue our fortressing program and this is not just with our franchisees, but also in our corporate store book business, we believe in this so adamantly that, we have -- as we look at the seven markets that we still play in with our corporate store business, we intend to fortress those seven markets completely within the next three year time horizon.

And we know that will also create some drag on -- additional drag on the comp in the near term. So it really is those two factors that led us to A, restructure the time frame around the comp and then B, to set the ranges at that 2% to 5%.

Analyst
Brian Bittner

Thank you.

Operator
Operator

Thank you. And our next question comes from Nick Setyan of Wedbush Securities. Your line is now open.

Analyst
Nick Setyan

Thank you. We're starting to see some of the QSR competition receiving deals that are actually very favorable to the restaurant. And so, whether or not the third-party providers can sustain subsidization level is a theoretical question, but certainly in the near term, those deals are going to allow -- those QSR, burger players particularly, too, to become incrementally more and more competitive. And so I guess the question is, in the near term, what's the plan to compete both on value and around menu innovation?

Executive
Richard E. Allison

Yeah. So, as we highlighted just a few weeks back, we've got some opportunities we believe to continue to not only reinforce value in the marketplace, but also to reinforce the Domino's Pizza service and the delivery expertise that we've been known for now almost 60 years. So, in the near term, it is staying focused on our $5.99 and $7.99