Domino's Pizza Group plc (DOM) Earnings Call Transcript & Summary

Thanks for your attendance. I really appreciate it. As you know, my name is Andrew Rennie, CEO of DPG. Beside me is Richard -- is Edward Jamieson, our CFO. I want to give you our results this morning and then look forward to Q&A. First of all, I want to say thank you. Thank you to all my team and all our franchise partners and all the team members. We have about 40,000 team members in DPG now. And all their hard work is what's provided these numbers, which I'm very, very proud of. Really privileged to be part of a company and a brand that's 40 years old this year in the U.K. The brand is 65 years globally, but 40 years old in this country. And I think the one thing I'd sort of -- the word I'd pick out, particularly in this crazy world at the moment, is how resilient this brand continues to be and this company is in the U.K. off the hard work of many, many franchisees and their team members over decades. And my goal is that make sure that we've got a strong, robust business that continues to deliver for another 40 years at least. And we're thinking about that every single day. It's not just about the here and now, but about the long-term success of this business. Okay. So what do we do? First of all, we really focus on delivery. Our franchise partners and our team members really focus on the metrics, which I'll talk about later on in the presentation, that really help to underpin value for our customers. Because at the end of the day, without that 71 million customers that we served last year, what do we have? We have nothing. So we're always thinking about those customers, how do we make sure that we give better value every single day. And value isn't just representing price, it's representing the quality of the product, which we're extremely proud of, and the quality of the service. And not many people can deliver 71 million orders in sort of 24.5-minute average delivery times. And we've got stores that are doing that on average in 18 minutes. It's quite incredible. As you know, we agreed a new 5-year framework with our franchisees, no longer called the MOU. It's called the PGF, profit growth framework, for very good reasons. It's focused on driving profits for franchisees and for our business through growth, customer growth and store growth. So we're really proud of that. And that creates stability and alignment with ourselves and our franchise partners who are the backbone of this business. We've made really strong strategic progress with our corporate business in Ireland. One of our parameters we spoke about -- I spoke about back in 2023, which I'll recover later in the presentation, is about focusing on the core. We're making money out of selling pizzas to customers like our franchisees do. We see a lot of upside in Ireland, in the island of Ireland, and hence, what we'll talk about later on our new acquisition or the increased shareholding in the Victa ownership in Northern Ireland there. We've got great franchise partners in Ireland, and there's a lot more white space there than there is in the U.K. So we really think we can drive that organic growth and be a bigger part of that success. We continue to have a disciplined approach to buying another business, another brand. We've got a really strong balance sheet. I'll talk more about that later on. And at the end of the day, our secret sauce, we like to call it, are our people, our market position, which continues to grow. Even in these tough conditions, our market share continues to grow quite significantly, particularly these last few months. And our franchise partners, they're the real differentiators that we have between, I think, many other brands. I think of it this way is that I'm steering the ship into some pretty strong headwinds this year, and the ship is in really good shape. 2024, we put in really good shape with lots of customer growth, and you saw it build each quarter by quarter. We've got a great crew, really strong, robust ship, and that's how we're going to navigate this next in 2025. I'll talk about that more soon. But first, I'll hand over to Edward to talk about the numbers. Thanks very much.

Thank you, Andrew, and good morning, everybody. Our intense operational focus and our strategy is gaining traction. We're deploying capital effectively, and we're seeing attractive growth across key metrics. We finished 2024 with a strong balance sheet, important in this uncertain environment. I'm now going to run you through the key takeaways from our 2024 financial results and update you on our early trading outlook and guidance for the year ahead. So in 2024, we delivered growth in order count, in like-for-like sales, in profits and the dividend. Total system orders grew 1.7%, primarily driven by good performance in the delivery channel. Importantly, our like-for-like performance improved every quarter and was overall up 0.7% for the year. DPG's underlying EBITDA was up 6.4%, which flowed through to underlying earnings per share, which was up 13.3%, also benefiting from the lower share count. Consistent with our progressive dividend policy, we've again increased the full year dividend by 4.8%, and this is supported by our robust free cash flow, which, while down versus last year, was flat after adjusting for working capital fluctuations. Let me now go through some of the drivers of these numbers in more detail. So turning to the next slide. On Slide 6, we've summarized the key data on system sales and order count. Starting on the left-hand side, you can see that our system sales and total order count were primarily driven by the delivery channel. The chart on the right-hand side shows how trading momentum accelerated throughout the year with delivery orders growing for 3 consecutive quarters, a meaningful improvement after 10 consecutive quarters of declining volumes. Our collection order growth was still in growth for the overall year. You can see how our like-for-like sales improved every quarter, and we finished the year well with Q4 like-for-like sales up 3% in what remains an uncertain environment. Andrew will cover the operational drivers of this improvement in more detail later in the presentation. Slide 7 shows the year-on-year movements of system sales and DPG revenue. While system sales grew, DPG revenue was broadly flat, primarily driven by a decrease in our supply chain revenue. As I explained last year, food input prices fell in 2024. And in line with our model, the benefit of these lower prices was passed through to our franchise partners. As we'll see in a moment, this naturally had an impact on the supply chain EBITDA as well. Corporate stores revenue was up, driven by the revenue from the acquisition of Shorecal in April, offset by the loss of revenue following the disposal of our corporate stores in London completed in July. Shorecal has performed well since we acquired control and in line with our expectations. And EBITDA margin as a percentage of system sales was up 30 basis points to 9.1%, largely driven by the supply chain margin. Let's now look at the components of underlying EBITDA. Before I do so, let me point out we've moved to a fully allocated IFRS 16 reporting approach, and so some of the comparables have changed a little. Overall, DPG EBITDA was up 6.4% to GBP 143.4 million, with lower supply chain EBITDA more than offset by other factors, primarily growth in corporate store EBITDA and lower technology costs. Once again, our supply chain operation delivered an outstanding performance with accuracy and availability stats of 99.97% in the year. Pete Trundley and his brilliant team continue to deliver for our franchise partners and for our customers, and I'd like to thank all of them for their hard work and effort last year. We continue to drive efficiencies in the supply chain, but we could not entirely offset the profit impact of lower revenue resulting from food price deflation. As with revenue, corporate store growth reflects the Shorecal acquisition and London store sale. As I've covered before, we've been investing substantially in the development of our technology platforms, in particular, a new ERP and e-commerce system. With these programs largely complete, platform costs halved to GBP 4.4 million in FY '24. Operationally, we've already rolled out our ERP system across half our supply chain centers and expect this will complete across the whole network by the end of H1. We expect to complete the full cutover to the new e-commerce platform in early H2. So moving to the income statement. EPS is up 13.3% based on a 6.4% increase in EBITDA, an 8.4% growth in PBT and the benefit of a lower share count following the group's buyback activities. Looking at the line items, depreciation and amortization was GBP 3.2 million lower due to lower amortization charges from legacy IT systems. Finance costs increased GBP 3.5 million, driven by higher average levels of debt in the year, which I'll come to in a moment. And our effective tax rate has remained broadly stable at around 25.5%. Turning next to free cash flow, a strong feature of our capital-light business and where, on an underlying basis, we again generated around GBP 100 million. The principal difference between FY '24 cash generation and the prior year was working capital. As I outlined at the results in August, there was a GBP 10.7 million outflow in H1. And as I guided, this mostly reversed in H2. Excluding the working capital swings, you can see that the group generated around GBP 100 million in each year. Non-underlying cash outflows in FY '24 with the corporation tax payable on the profit on sale of the London corporate stores and advisory costs from Shorecal. I'll now turn to how we deployed this cash generation about how we invest, recycle and return capital. We introduced the capital allocation framework in March 2021 and use it to make decisions on free cash flow deployment and our approach to leverage. We continue to invest in the core business to drive long-term sustainable growth and to pay a progressive dividend to shareholders. We also continue to selectively invest in additional accretive growth opportunities, which we can partially fund through recycling capital. Finally, we assess if we have excess capital considering our investment opportunities and leverage. And if we have, we return this to shareholders. Since 2021, we've announced nearly GBP 500 million of shareholder returns. We've increased dividends again today, and we remain committed to returning excess capital in the future. We do all of this within our target leverage range of 1.5 to 2.5x. Let me now turn to how we deployed our capital in 2024. So as I outlined earlier, we generated GBP 84.7 million of free cash flow in the year. We're highly cash generative, and so we're able to both invest in the business and return to shareholders. The first priority is to invest in the core business. And to that end, we invested GBP 18.5 million in capital expenditure in the year, including the completion of work to expand our Irish supply chain center. Secondly, we paid dividends of GBP 42 million, reflecting our sustainable and progressive dividend policy, and we've grown dividends again. Combined with share buybacks executed in the year, we returned GBP 67.9 million to shareholders in 2024. Applying our disciplined approach to accretive investment in recycling capital, we spent GBP 27.1 million in the year. This comprised GBP 48.7 million in the Shorecal acquisition, GBP 11.4 million in the DP Poland stake, partially offset by a cash inflow from the disposal of the London corporate store estate. The net effect was a GBP 32.7 million increase in net debt to GBP 265.5 million, giving leverage of 1.93x in the middle of the target range of 1.5 to 2.5x, so a strong balance sheet position. Today, we have announced an additional accretive investment in our Northern Irish JV for GBP 25.6 million. This is a combination of GBP 7.2 million of equity and GBP 18.4 million of debt and, on a pro forma basis, takes our leverage to around 2.1x. This increases our shareholding in the JV from 46% to 70%, further enhancing our ability to drive growth in Ireland, and Andrew will cover this in more detail later. We've guided CapEx to be circa GBP 25 million in FY '25 as we continue to invest more in our system to support sustainable growth. We see opportunities for further automation across our supply chain center, and we are accelerating projects across our existing centers to focus on this opportunity. When we announced the new Profitability and Growth Framework with our franchise partners, we also announced that we plan to open a fifth U.K. supply chain center. CapEx spend on this, this year is expected to be around GBP 5 million on the initial work and relates to increasing the distribution capacity of our network. We also plan to invest in the continued innovation of our app to drive frequency. And finally, there will be some new store CapEx in Shorecal as we unlock the growth opportunity. Moving to outlook and guidance. We made good strategic progress during 2024, with trading momentum accelerating as the year progressed. In the first 10 weeks of the year, our growth has been positive with total system sales up 2.4%, total orders up 0.7% and like-for-like sales up 0.7% despite the U.K. economic environment remaining uncertain. We expect FY '25 underlying EBITDA to be in line with current market expectations, excluding the positive impact of the Victa investment. We expect Victa to contribute around GBP 3 million to underlying EBITDA this year, will be EPS neutral this year with earnings accretion next year. Our full technical guidance is laid out below. Thank you. And let me now pass you back to Andrew.

Thanks, Edward. These numbers here are the ones I'm particularly proud of if we look at the year that was, purely by focusing on operations, really relentless focus on what we do every day, how we deliver to our customers. When you see that the delivery times of sub-25 minutes with more than 80% of our delivers -- our orders delivered on time, the app orders going up another couple of points, the ecosystem of our universe of our customers inside our database growing and franchise EBITDA continue to grow even after a huge impost of the National Living Wage last year was huge, and our franchisees still managed to get over the top of that. Extremely proud of those numbers. If we go through to the next slide, the long-term growth in core business, right? As I said before, we've been around for 40 years. We want to be around for another 40 years. We'll be crossing over 1,400 stores this year. We'll be exceeding those numbers. That's a huge milestone. There's not many brands that are more than 1,400 stores in the U.K. and Ireland. We continue to focus on these key 4 points: franchisee profitability, value for money for our customers, digital and convenience, and we'll talk more about those now. But they're consistent. They're the same focus. We're not changing strategy. It's the same strategy we've had now since I've been here. Value for money. If you look at these metrics here, this is part of the value equation, right? When people can consistently get their orders on time, that means that they're hot and they're fresh, they taste better, and they're more likely to come back to you compared to other competitors who may not be so consistent with their delivery times, et cetera. This is not easy, right? These are best-in-class numbers globally, particularly when you're talking about the scale that we have. We worked very hard for this. As I said before, we've got 40,000 Dominoids, we call an army of Dominoids around the country who every day wake up and are passionate about making sure that customers get an incredible service. And from the outside, it probably looks easy. But when you think about 80% of our orders coming 20% of the time, right, you're talking about hundreds of orders over a 2-hour window quite often. In the rain, the snow, the hail, you name it, our guys just keep delivering and keep providing. It's one of our IPs. If you think about it, we've got 40 years of this inherent knowledge that's been built up. And we have people that are inside our business that have been there 30-plus years that have been doing it over and over again. So it really is part of our magic. Moving on to the next slide. We don't forget that every day, we have to look after our customers. Without those customers, we don't have a business. So we're constantly focused about how do we make sure that our customers are getting better value for money. Last year, we really focused on delivery service, and you saw massive momentum throughout the year. We're really proud of that nearly 8% in order count growth in Q4. But this year, we're going to add the extra part of that lever. We've got 2 parts of the engine: we can drive delivery and collection. And this year, we're going to start stoking up the fires in the collection engine as well because consumers are seeking out more value, and collection is a great value offering. Now for franchisees, it's got great margins. So it's actually -- it wins for both sides, both the franchisees and for our customers. The thing that we have that's a competitive advantage for our business is that with almost 1,400 stores, we have -- we're really close to our customers. So the proximity to them is the #1 driver of a collection -- customer's decision process. So by having so many points of sale, we are closer to the customers to be able to drive this part of the business unlike others. And if you look at things like our GBP 4 lunch, it still continues to drive, particularly perception about value and the collection angle, we're going to drive more and more this year, which has been omnipresent. We're circa 35% collection of orders; the U.S. at 55%. So there's a massive delta there that we can pick up on and grow into, I believe. We move on to the next slide, digital acceleration. I think the key message here is, one, first, Phase 1 has worked really well. We're moving to Phase 2 to 3 million customers in our database. But what does this do for us? What it does is that loyalty widens that moat on our business, makes that even more tougher to penetrate our business because we have all these people inside our ecosystem. We've got 13 million customers in our database. We can talk to them more frequently. We can reward them now. And having that knowledge allows us to drive incrementality in frequency. So that's going in a really good direction. So we're really proud of the team and the digital team and all the work they've done, the marketing team. It's really the knowledge and the data we have is quite amazing really when you think about it. So that's going in a really good direction. We'll continue to step that up this year. Next slide, convenience. As I said before, getting closer to our customers is really important, not only from a delivery perspective, but also it's really important from a collection perspective. We still -- there's still 15% of the U.K. and Ireland that's white space. You can't get a Domino's Pizza delivered there at the moment. So we still have all this growth to go into. The small territories continue to outperform. We have franchisees that opened. In fact, one of our franchisees opened a store about 3 weeks ago, broke the national new store opening sales record, hadn't been broken in 10 years in a tiny village about half the size of our traditional stores. It's just -- this goes to show the pent-up demand of the brand in these small towns. So we can't wait to take the brand that these people have been waiting for, for 40 years to their villages. We had 21 different franchise partners opened those 54 stores last year. So we have a broad spectrum of franchisees doing so. And it's a good balance between splitting stores, so carving out stores and getting close to the customers and giving better service and new territories. We've got a strong pipeline for 2025. Like most years, it's always more back-ended because it takes a while to get the hopper filled up, but we feel pretty confident about that. And the ROIs of the stores are incredible. So that certainly drives it. This is all underpinned, of course, by that PGF we put into place that underpins that growth in that store count. If we come on to the next slide, we've fully rolled out Uber Eats now. So we've got Uber Eats and Just Eat who have been great partners, very incremental partners, very complementary to our business. Overall, it's a small but important part because there's the incrementality. So we continue to work with them in a very positive way, and I think they're pretty happy with the relationship they've got with us as well. So we'll continue to work with those partners and keep to leverage and maximize those relationships. We go to the next slide. All the hard work of the franchisees and all their team members provide these incredible market gains. If you look at across the last couple of years, we've opened over 115 stores where others have closed sort of similar amounts. That's not an accident, right? That's through many, many years of hard work, of great service, of consistent service, consistent value. So we continue to grow market share. The last couple of months have been incredibly good market share gains for us as well. So in a market that's tough and up and down and all over the place, we're winning. And I think it sort of, again, speaks to the strength of the brand. Next slide. So if we look at our business, what we're trying to do is build a larger, more cash-generative business. As Edward said, we've basically got GBP 100 million free cash flow. We want to continue to grow that. We continue to invest in the core. The island of Ireland strategy, we think, is the right thing to do because we've got more growth that we can help drive there. The PGF with the franchisees has created alignment with them and also stability for themselves and ourselves through the next 5 years and past and beyond. The focus on the core business, as I said, with Shorecal and the corporate store disposals, we're doing what we said we would do. The small investment in Poland, we said we wanted to just invest there and wait and see. We think that there's good upside there. So we continue to be confident about that investment. And we continue to recycle capital, and we'll continue to do so for shareholders' benefits. Next slide. Again, same story, long-term sustainable growth underpinned by the PGF, we believe. This target of 1,600 is not a pipe dream; and even 2,000, I don't think, is a pipe dream. I will be here to come back and cut the ribbon on 2,000 stores. I'm determined to do that. It will happen. I really believe that because the brand is just so strong and so loved in this country, loved by not only our team, but loved by our customers. It's quite incredible. The amount of times we get pulled up in shops, and I get stories from people of my age talking about how they're Domino's converts and now their teenage children sort of beat them up about ordering Domino's as well. So it's generational. It's quite incredible. But we've got a clear plan to keep delivering on earnings, right? It's not for us, it's -- at the end of the day, it's still about EPS, it's still about EBITDA, right, delivering those 2 key metrics. And I know I'm probably getting some people beat me up today and say, well, yes, why aren't you announcing more buybacks? That's because we have a focus on driving the EBITDA with some growth opportunities. And as Edward said, if those growth opportunities don't come to fruition, and there's a few on the pipeline that we're looking at right now, we will do more buybacks like we did last year. But we're pretty confident we've got some things in the pipeline that excite us greatly. Moving on to the next slide. The PGF, we've probably said enough about it already. Just for me, it's most important for the franchisees that we put it to bed, we can focus about the core business now. It's behind us. It helps drive order count growth. It's more investment into digital. It's investment into smaller towns. They're all things that matter to us, for our shareholders, they matter to our customers and they matter to our franchisees. So we think that it's a win-win-win for all stakeholders. And it's about driving profitability for everybody involved, not just one party. Moving ahead to the next slide. As Edward spoke about, we had the acquisition. We're already a 46% shareholder of that business. So we know that business very well. We took a bigger stake there. Why? Because we believe in Ireland, in the whole of the island of Ireland. We believe the growth there. We think we can help grow faster there. I've got a great franchisee up there. Mike, who's leading the business, will continue to lead it, but we'll play a bigger part in the direction of that business, which we're excited about. It also allows us to leverage infrastructure that we've already invested in Ireland. As Edward said, we've invested in the commissary over there and upgraded that. We've already got the Shorecal business. So we're really, really confident and really happy about that investment. And again, it's an investment in the core. It's an investment in the business we know and understand very, very well. Again, rolling over the next page, Shorecal continues to do fantastic. We're really happy. We really like and love what we see in Ireland and the upside there. So we will continue to double down on that. Just an interesting point is that the previous record of organic openings in the island of Ireland previous to last year was 8 stores. Last year, we did 16. We doubled the organic growth in Ireland last year. So long -- strong leadership there with our team in Shorecal with Stoffel helping to lead that with Mike up in the north. So they're business partners of ours, and they continue to be really great business partners and lean in. So we're really, really happy about that. Moving on to the next slide, not too many to go, guardrails, really good guardrails in place. Our Board has got a very clear mandate about what we can and what we can't do. We feel like we're building a big business. We want to add to that. I think one of the things that I've misunderstood is about the infrastructure, and Edward alluded to it before about Pete Trundley and the team and our supply chain is incredibly high-quality, world-class supply chain. And we think -- and not only think, we know, particularly with all this automation, we're speeding up, accelerating that automation, it creates more capacity. So therefore, that capacity, we can fill that capacity up, not only with more Domino's stores, but with other things that really complement what we're doing. So you've got to have scalability, you got to have synergies, you got to be profitable. So there are things that we're looking at very, very closely. We've analyzed a lot of things, and we'll only take the things that really, we think, will have a big benefit to our business and for our shareholders. And I want to reiterate what Edward said is that our current pipeline of opportunities we're looking at, we could fund all of those with our existing balance sheet capacity, right? We don't need to go out and raise equity like some people might assume. Next slide. So this is a slide I showed back in December '23. I want to sort of give myself a bit of a scorecard here how we're tracking to what we said we would do. We said we would grow corporate stores and joint ventures, et cetera. We've done that with Shorecal. We've done that with -- we've recycled the capital out of London and put that into Ireland with our Victa investment. We continue to evaluate in a very disciplined way that second brand opportunity. And we made a small investment into the international markets without doing something stupid and wasting capital. We think it's been well deployed, and we think that it's going to pay off in the near term. So we feel as though that we're doing what we said we would do for the market, which is really important for us. And with that, we get down to the last 2 slides, which is sustainability, very important to us. We published our first-ever sustainability report in 2024. Nutritional here, we've been focused on this for a couple of years now. Things like -- we launched the Loaded Veg, 160 calories, going really well. We've got pizzas at 190, 200 calories. We got our Cheeky Little Pizzas at 400 calories. We're giving customers choice because of those in the family who do want a lighter meal, which is fantastic. So we're able to provide that. The good thing about pizza is you can make it as healthy or as indulgent as you want. We're also focused on reducing carbon. So we put the initiatives in place there, and we've signed up to the free commitments on those. And we're also making sure that we have better products in place for packaging that are more recyclable, et cetera. So they're very important to us and very important to our team members as well. So we are on the train for that. And the last one, disciplined execution delivers growth. So we continue to make progress, and we have strong momentum. This is a dynamic business that we can flex. We're going to flex more into collection this year, not taking our eye off delivery. In fact, we're going to double down on delivery. We're going to go even harder now that we've got the momentum, we're going to drive it harder. But consumers are going -- are looking for value, which we understand, right? It's a tough market out there. Delivery and collection really plays to that. And having been in a few markets and been around for over 30 years, I've seen this before, I can assure you that, that really helps to drive growth. I think the big thing for me is this business is resilient, right? It continues to deliver. It continues to -- the thing that amazes me is that we had a -- our net debt went from 1.8 to 1.9, right, across the last 12 months. And inside of that, we had acquisitions, we had buybacks and we had dividends. And we still only moved to 0.1. So still a sub-2 balance sheet, really strong. And I think it's sensible in times like this. Franchisees are aligned with our new PGF. So we've got stability there. We're focused on investing in the core, like we've done with Shorecal and now Victa. So we're really focused on the core. We continue to recycle capital like we did with the London stores, but with some more capital, we will recycle that and continue to reinvest that in ways that will drive more growth. And at the end of the day, our strength is our people and our franchise partners in this environment. People that have been around for decades have been through the tough times, and this brand continues to sail through those waters with a really strong crew and a strong ship. So with that, I will open the floor up to questions. Thank you very much.

Over to Ross.

Ross from RBC. First of all, on the loyalty scheme, could you give us any indications of what you've observed from customers, customer behavior? Number two, the M&A pipeline now funded from the balance sheet. What's changed in the plan there? And how have your aspirations shifted in terms of a second brand? And then finally, new stores in excess of 50 for this year. That's obviously including an acceleration at Shorecal, Victa. Could you talk a little bit to the appetite in the rest of the group, please?

Yes, sure. So we'll talk about the last point first. So look, there's appetite there. Finding stores is not easy in this market for planning, et cetera, can take a couple of years sometimes. So you do have to think a couple of years out with your pipeline. The plan is to do in excess of 50. Maybe it's a lot more than that, who knows, but planning is a really -- a big variable these days, but we feel confident to say 50, which will be the third year in a row above 50, which I think is pretty incredible. There's not too many brands, I think, that are outgrowing that, maybe one that I know of. So that's the first one. Your other point was around the loyalty. Look, we're seeing some really good numbers in terms of our lower users, smaller users, if you like, less frequent users who are really engaging with the offers that we're putting there. We've kept it really simple. The team kept -- the amount of data we have is quite incredible. So that helps us make decisions for the future of it. But so far with what we've launched, we're really happy with. We're just dialing up slowly. We don't want to do a holus-bolus because you can trip over yourself. But certainly, what we've seen so far is that there's an incrementality, particularly those lower to medium users, which is great. Did I miss any other questions, Ross, about...

M&A.

M&A. So look, we haven't changed our strategy in that. The M&A is still very clear. The Board is still very clear on our capital framework. We want to get a brand that fits with us, so it will be food and beverage that can be franchised, that we can apply all the synergies and leverage that we have through our commissaries, our digital, our data on consumers. I mean we're literally -- with 13 million customer base, we're literally in every second household. We have incredible market share with the Domino's brand. We won't be taking our focus off that. That's the golden goose. But we're thinking about the medium to long term here. We're thinking about a brand that can become 500, 800, 1,000 stores in the future. So we're treading very carefully. We've got a few things we're looking at, at the moment quite seriously that we think could fit that basket, but we'll jump through all the hoops to make sure they tick the boxes. So we're not going to do anything silly. And we feel pretty confident we'll make the right choice. Thank you. Douglas?

Douglas Jack at Peel Hunt. I've got 3 questions, please. The first one is for Edward. The technology platform costs in 2024, there were GBP 4.4 million charged to OpEx. What's the equivalent do you think would be in 2025 given all the things that are going on? How have your value for money scores moved in the year? And last question was about the average number of households per store, where are you at now? And how does that compare to the U.S. and Australia?

Good questions. Edward, do you want to handle the first one?

Yes. If I handle the first one, so as I said, sort of -- so we completed the sort of the e-commerce build, and so we're completing the cutover of that. The ERP, we expect to deploy by the end of H1 in full. So there'll be very limited cost this year.

On your other 2 questions, Douglas, so first of all, the consumer research tells us that consumers think we're the best value that they have seen since 2020 from Domino's. So we're sort of going back in time to create better value, which is fantastic. And then it comes from a combination of great value offerings that our stores are offering, GBP 4 lunch, GBP 7.99 Collection Perfection, et cetera, but also the delivery service because value really represented by the whole package, right? As I've spoken about before, I won't bore you again, but the whole value equation is more than just the price because you can get a pretty poor product at a cheap price and it's late and it's cold and it's worth nothing in effect, right? So customers are telling us with the research we get that they're very happy with that. And the market gains that we're getting big steps forward shows that that's also playing through. And then your other question was around house count. So yes, house counts are coming down, but there's still around 20,000 addresses per store at the moment. If you look at places like Netherlands, New Zealand, Australia, U.S., they're -- U.S. numbers, I don't know specifically off the top of my head. I don't want to quote the wrong number. The others I know and they're closer to sort of 10,000, 11,000, 12,000 addresses, so almost half of what we are. So if you did the exact math, it means that we should be probably 2,800 stores. We're focused on 1,600 or 1,400 this year and then 2,000, so we don't want to get ahead of ourselves. Maybe when we get to 2,000, we'll have to reevaluate that. But at the moment, we have a clear path to a couple of thousand stores quite comfortably. Thank you. Yes, over the front here to Richard first.

Richard Stuber from Deutsche Numis. Three questions, please. The first is on franchisee profitability. I know that's a core pillar of yours. It was up 7% this year. Given sort of higher labor costs again and potentially sort of food costs and fuel costs, do you expect franchisee profitability to continue to grow again this year? Second question is on current trading like-for-likes, 0.7%. I think another sort of QSR company said that January was particularly weak, February was a lot better. Could you give any more granularity around January versus February in current trading? And the third question is on the loyalty program. I know you've done a few trials going well, but how have you actually -- have you tweaked the generosity that you've given to clients -- to customers? Anything around what's changing and, therefore, I guess, why it takes so long for you to roll out in full next year?

Sure. Good questions, Richard. So first of all, franchisee profitability is extremely important to us because they are the backbone of this business for growth. So look, we've got a plan in place where we think we can get back to the same sort of number. If we can get back to the same sort of number with all the imposts that are coming towards us, us and ourselves, the franchisees would be grateful for that. Would we like more? Yes. Will we go after more? Yes. But getting back to that current number would be a great outcome. We have a plan. We think we can get there. We don't know what the world holds in front of us. It changes every day at the moment, but we feel pretty comfortable we've got a plan to get there. That's for sure. Your other question was around loyalty. Have we tweaked it? We've tweaked a little bit. I would say that we've got the offering sort of where we want it to be at the moment. It seems to be resonating with customers, but we'll continue to evaluate that, particularly as we go into this bigger group, right? We've gone from 630,000 to sort of 3 million at the moment. That's where we get a lot more data there that will give us a lot more indication what we do the year after. But certainly, from what we've seen, the incrementality at the moment, we're very happy with it, particularly the customers that we're targeting, so very positive. And then your other question was around January, February. So look, I think the reality is it's depending on what you're rolling over has something to do with it. It's also depending on where you're spending your marketing. January, February typically are some of our slowest months of the year. So we're also saving our gun powder for later in the year when we think strategically they'll have bigger bang for our buck. So could we have driven higher sales in those months by throwing more marketing at it? Definitely, without a doubt. But we decided not to do that like last year because we want to use it for certain parts of the year that we have strategic sort of initiatives. So it would be wrong for me to comment which was good and which was bad. One was okay and one was better, you could say that. But it's too lumpy to sort of break it out and explain why. So -- but we -- from a strategy point of view, budgeting point of view, it was sort of as we expected. Over to the UBS team.

Hai from UBS. So I have a couple of questions, please. In terms of the like-for-like shape for the rest of the year, where do you see the volume and price dynamic? And that's the first question.

Yes. Is that the first question? Yes, so we definitely see both. We had a lot of volume last year. As you know, we specifically went after volume. We actually took ticket down last year. We think because we took ticket down and we focused on growth and order count growth last year, we have the right and the ability to take both this year. So we're very focused on both. Collection will be a big driver of volume. And delivery, we hope to get volume as well, but we also have the ability, we think, to take a bit of price as well later in the year. So that's our key focus.

Have you taken pricing through the first 2 months?

No. Not at this stage, no.

No? Okay. Second question, just a follow-up on the point about franchise profitability. When you say you want to get to similar sort of numbers, are you talking about absolute EBITDA or are you talking about margins?

Absolute.

Absolute. And then lastly, on the M&A side. So you've got 2.1x net debt/EBITDA after the extra acquisition in Ireland. So that leaves you, based on just a quick calculation, GBP 80 million -- GBP 80 million, GBP 90 million if you're guiding for GBP 270 million net debt by the end of the year. Is that the sort of number you're looking for in terms of growth opportunities that you're willing to spend?

You know what, I don't want to speculate on what we will or won't spend. What I'll say is that we -- with the balance sheet we have and our cash flow, and we have the ability to recycle some capital as well, is that we have some ability to buy some things out there at the moment that aren't super expensive, to be fair, in the scheme of things. So yes, we think it's pretty realistic and disciplined to go about it that way. So we're not expecting to go anything crazy.

And sorry, lastly, comments on activity, competitive activity on loyalty? Papa John's just revamped their loyalty scheme to a lot more competitive. Do you think that affects anything on your side?

No. I don't look at competitors. What I've worked out 30 years ago was that I have more to lose by not focusing on what we do than we're focusing on the competitors. So we focus every day about what we can do better. And I can't control what competitors do, but I can focus -- I can control what we do. So that's what we've done. It's been working, and that's why our market shares continue to grow. Because the other thing to factor in too is that when you look at our store count, not only is it sort of 3, 4x the size, if you look at it in terms of sales, it's more than that again, all right? Because our average unit sales are over double and triple in some cases, so the market share we have is phenomenal. And more importantly, the distribution we have is huge. That proximity to customers, that's where our big advantage is. We have a structural difference between a lot of our competitors. Thanks, Hai. Straight behind you, Sharon.

Katie Cousins from Shore Capital. Just a couple of follow-on questions actually from what's already been asked. So in the year-to-date numbers, the price is pretty low, well, implied price compared to what some of your peers are saying. So how much is promotional activity wrapped up in that? Also, the weather impact on the year-to-date numbers, if there's been any there? And then also just on app numbers and order frequencies, how does that compare to the wider group?

Yes. I would say that our promotional activity is the same as it was this time last year. It hasn't really changed. We've always got promotional activity going. I would say that weather -- what I've learned in this country, the weather is either s*** or really s***. So excuse my French. Look, you have to take swings or roundabouts. So sometimes the weather is in your favor, sometimes it's not. The good thing is when you've got a collection and delivery business, you can sort of -- you play to both. So I wouldn't say that weather has had a huge impact on us. It tends to be controlled by what we do. When we do really good promotions, when we do really good -- give really good service, when we're really on our game, we get better results. That's the reality. And when we deploy our capital in marketing, et cetera, we can get an even bigger jump, right? But we have to be quite strategic about where we spend that and when we spend that. So as I said before, we're spending that in the right places this year because we think there's a couple of inflection points throughout the year where it's more important to invest than others. What was the other question?

Just on frequency per customer for your app versus elsewhere.

Yes. So on app, it's better on app, there's no doubt about that as it is with loyalty as well. And that's the other big advantage about loyalty is it's through app only. So it helps enhance those numbers. But at the moment, we're not seeing any massive changes in frequency. Again, we can control that to a certain degree, but I haven't seen any massive changes at this stage. There's no doubt the consumer is looking for value. And thankfully, we are a really good value offering, right? And collection can really play into that this year more so than it has in the past. So we think we have that extra engine to drive that.

So we can still assume around about once every 12 weeks or once a quarter?

Yes, correct. Correct. Yes. Thanks, Katie. Thanks very much. Over here.

Anubhav Malhotra from Panmure Liberum. A couple of questions from me, please. Firstly, on the supply chain automation investment, what sort of returns are you expecting? Maybe if you could guide us in terms of payback periods on that GBP 10 million you're investing there? And then maybe on the stores in Ireland, what do you see the potential number of stores in Ireland specifically? I know you have given a target for the group as a whole, but maybe what's the plan for Ireland? And in the first couple of months of this year, the order counts that you have -- the like-for-like growth that you have delivered, 0.7%, does that imply your volumes are probably negative in the first 2 months or not really?

Yes. So the first one is, no, I'd say volumes aren't negative. No, it's -- because we're actually -- ticket is down a little bit, so it's actually the opposite. Ireland, I won't give you a specific number because the reality is with planning, it can vary so much. I would just say that as we showed with last year, we doubled the previous record with organic openings, and we'd like to do that again. Not that I can say it'll double, but if I can hit those sort of numbers, again, I'd be really happy. But it's never that easy, right? It's availability of sites. And then your other question was around...

Supply chain.

Supply chain, yes. So automation, so look, really happy the automation is now underway. Look, the ROIs, we don't break them out specifically, but they're anywhere because every -- each piece has a different ROI, right, depending on what part of automation you're doing. But they're all generally between 3 and 5x, right? So they're pretty accretive. So we're pretty excited about that, hence, why we're also accelerating that rollout. So it's something that we're probably going to naturally do over 4 or 5 years, we're going do over 2 or 3 years. So we're quite happy with that. And I think the other call-out is that last year, we spent GBP 18.5 million on CapEx, quite light, right? We're going to spend a bit more this year, but we're going to get automation gains from that. And on that GBP 18.5 million, we upgraded one of our commissaries in Ireland as well. So I think those metrics are pretty positive. No more? Well, I'd like to thank your attendance. Thank you very much. I hope you see that in a crazy world, Domino's continues to deliver, it's that one constant. So go out there and order more pizza. Thanks very much. Have a good day. Bye-bye.