Domino's Pizza, Inc. (DPZ) Earnings Call Transcript & Summary

Thanks, everyone, for joining us this morning. My name is Chris O'Cull, I'm the restaurant analyst at Stifel. And on behalf of all my colleagues at Stifel, welcome to our Cross Sector Investor Conference. I want to offer a special thanks to my guests this morning, Jeff Lawrence, who is the CFO of Domino's; and Chris Brandon, Director of Investor Relations. Domino's really needs no introductions, so I'll just provide a brief update on the system. It's the largest pizza restaurant chain in the world by retail sales with over 17,000 locations in over 90 countries. The company generates revenue through franchise royalties and supply chain business that sells food, equipment and supplies to franchisees, primarily in the U.S. and Canada as well as revenue from owning and operating a few hundred stores themselves. The pizza category is obviously very mature and highly competitive, but Domino's has achieved a remarkable track record, both here in the U.S. and globally. They've posted 36 consecutive quarters of U.S. comp sales growth and 105 consecutive quarters of international comp sales growth. So with that introduction, I'd like to welcome Jeff Lawrence. Jeff, thanks for participating in our call today.

Thanks, Chris. It's good to be with everyone.

So Jeff, I'd like to start out with some questions here. In the company's last business update, I think it was on May 26, U.S. sales showed a sharp acceleration from early May -- early April to mid-May. The company pointed out that the tailwind from consumer behavior shifting toward delivery and carryout helped that comp. But there were several factors that likely influenced sales, such as the stimulus checks and the company's decision to start offering contactless delivery. So I was hoping you could start by just helping prioritize what factors you believe had the most impact on driving the comp acceleration in the U.S. from early April to mid-May -- or to late-May?

Yes. Chris, it's a real good question. We've been very fortunate with the sales levels through that last business update in the U.S. business obviously with what everybody knows given the COVID crisis and the way consumers are behaving. The boring answer to this and probably the most true answer is, what set us up best for success was what we've been doing for 60 years, which is focused on delivery and carryout. It just so happened that delivery and carryout focus met a crisis where that happened to have been highlighted as far as accessibility and convenience for the consumer. So a lot of it is what we've been doing for 60 years. I will give our operators a lot of credit, though, for the operating changes that they've put in place in a very short amount of time, including our Domino's curbside delivery, our pizza pedestals, I think you've seen some of these -- that you've seen on television. So the rate and change of innovation and execution was really impressive from our operators and our franchisees in the U.S. that just helped to meet the consumer with where they were going, and we were fortunate to roll up some nice sales. So obviously, the challenge is to continue to make it available during the rest of this crisis and come out on the other side hopefully a stronger company.

How much of the incremental sales are coming from existing customers that are increasing their frequency versus maybe lapsed consumers reactivating their usage with the brand? And what I'm -- I'm trying to understand whether customers need to continue ordering at these elevated frequencies and -- to keep the sales momentum going? Or are you able to bring in new customers with this situation?

Yes. I mean definitely, we've had a ton of new customers, right? You've got people that are locked down in their homes and want outside their kitchen meal option. And we're there for them. So trial and new customers have been fantastic. But we have, what we believe to be, a best-in-class loyalty program as well, and that has served us extraordinarily well. Our technology investment, our digital loyalty program, that also has been super important as we've ramped up the volume in the business. So it's a little bit of both, and I can't give you exact numbers. We haven't shared those publicly. But it's a little bit of everything. And listen, coming out of this, I think we're super well positioned. There are a bunch of folks who knew the brand, who hadn't tried the brand in a while that have now been introduced to the brand fresh again. And we're making sure that we're super focused on good execution so that we have a chance to keep those folks. We're obviously continuing to try to get people to move to our digital platforms, our loyalty programs and sign those up. Chris, you know that we're -- we've got best-in-class numbers for active people on our loyalty program. So it's a little bit of everything. Again, we're very blessed and just blessed, I guess would be the best word, to have all this volume coming our way. But we've got to really execute. It is not a given, to your point, coming out on the other side of this crisis that we get to keep all this, but we are going to focus on keeping as much of it as we can. And again, I think our strategy is -- and the investments that we've made precrisis are setting us up extraordinarily well to not only thrive during the crisis, but coming out on the other side. So one other thing I forgot to mention on your last question is, we've continued building in on advertising. There have been a bunch of brands that have kind of pulled back for a variety of reasons. We continue to advertise on TV, on digital. And I think that's another reason why you see us really resonating with consumers during the crisis.

That's helpful. Your digital sales mix has been expanding I know for the last several years. But I think you mentioned recently that it touched 80% in recent weeks. Could you maybe explain why having orders come through the digital platform is important to the company? And maybe why the metric has been increasing? Meaning, is this new customers? Or are you converting phone users to digital? And what you're doing to ensure that consumers do not revert back after the economy -- economies reopen, I guess?

Yes. So I mean, again, you know that one of our big strategies is to be digitally accessible to all of our consumers anywhere and everywhere that they want to experience the Domino's brand. We've been doing that for a very long time. We've been industry leading, but we've still got a lot of work to do and a lot of opportunity. I think this crisis has accelerated that digital penetration. As you just pointed out, we just hit 80% of all sales, which is just fantastic. We know that we can stay or perhaps even go north of that level because we've seen it in Domino's internationally. We have certain countries around the world that have done more than what we do in the U.S. So we are going to continue to push the digital platform. The digital platform, by the way, sounds clean and sounds cool. But every metric that we care about around the consumer is better when they experience Domino's digitally versus the phone or versus the walk-in. They buy more. They're more loyal. They're happier. They're stickier. All the things that we care about. If you're a digital consumer versus a nondigital, it's just better for us and is better for them. So there's a business -- multiple business reasons underlying it as well. But we know we've got to continue to drive that. It's going to continue to be a focus. And I've always made the bad joke that we'll still take phone calls, and maybe it will be my mom, who still uses a rotary phone to order her Domino's. But listen, we know we can go higher over time. That's always been the goal. And I think this crisis has given it a little bit of a boost.

Why has the metric been increasing during the crisis? I mean what's driving that? Is it the new customers that are mixing higher for digital or some other reason?

Yes. I mean, again, it's both. It's both the new people that have been lapsed or even haven't tried the Domino's brand that are coming to us during the crisis. A lot of these customers are digitally savvy. If they're going to now try and give some trial to us, which we have to obviously win the repeat, they're already from -- that -- familiar with the digital economy. They just happened not to have had our app. Maybe they had an app for another chain or things like that. So when they decide that they want to come to the Domino's brand, it's a really easy tap-in for them to go and just download the Domino's app. So it's existing users continuing to failover to digital as well as new users who are also coming in where digital is really just native to them, right? So we're not surprised that they're downloading the app and then using it. And again, I'll give us credit and a little bit of criticism here. Our digital experience is better than, on average, the phone experience, right? We don't always execute flawlessly when you call us. And as a matter of fact, there are some times where we don't pick up the phone fast enough or at all depending on how busy we are. Those are just the brutal realities and opportunities of a retail chain. We're getting better at it every single day, but digital experience is better, better for consumers. So over time, and again, exacerbated kind of by this crisis, we are not surprised that we're driving the digital numbers that we're seeing.

Okay. The company is still planning to launch a new product this summer, which I believe will be its first in 3 years. Has the crisis or the change it has caused in consumer behavior had any influence on your choice of what new product to introduce or maybe even your expectations for how successful it will be?

Short answer is no. Still zeroed in on what we thought it was going to be precrisis. I think really the only change is the way we execute and the way we deliver it will obviously be in a contactless manner, right? And I don't think that's a big issue for us based on what we're planning to launch. But the short answer is these multiple crises in America right now because we'd be remiss if we didn't talk about the racial inequality in the U.S. right now and the crisis there as well as it relates to how we're going to market. So it's basically the same way that we were before. And again, team member safety, customer safety at the forefront of everything we do precrisis and certainly triple down on that with things like the pizza pedestal, the contactless delivery, the contactless carryout, et cetera. So excited to launch the new product coming this summer and, by and large, these crises have not changed our view or timing or how we do that.

Do you guys expect to wait another 2 to 3 years before launching another new product after this one?

Now that is a great question, Chris. You know our thoughts on this. I mean Ritch has been very clear, I think I've been clear, Chris has been clear. We've gone a while without a new product. And as we look back, we do a little bit of a postmortem, maybe we could have launched a product more recently than the last 3 years and kept it a little fresher. I'm glad we're really focused on it now and going to launch something this summer. And listen, we're going to learn from what we do in 2020. So I can't tell the future for sure, but our product development folks have always done a phenomenal job of giving us a lot of options and opportunity to launch new products that are hopefully going to resonate with consumers. So we'll have the opportunity to do it. We'll learn I think from this one. And then I think we'll see where that takes us. But I definitely wouldn't be surprised if we launched something inside of 3 years. Not a guarantee, but we'll see how the marketplace responds to this next launch and pivot from there.

Okay. Great. And we've had a couple of questions come through the dashboard. So let me ask those. One was, can you talk about the shakeout happening in the pizza space and whether that represents an opportunity for Domino's? I know, for example, they're seeing CPK seems to be struggling right now, Zume seems to be shutting down and -- probably a lot of their stores, and I'm sure there's other smaller guys that have been shutting down stores. So what's your thoughts about the current landscape?

Yes. From a -- a couple of thoughts. The first one is we -- as you saw on our Points for Pies campaign, we are fans of restaurants and the restaurant industry at Domino's. Our goal is not to put a bunch of restaurants out of business. Our goal is to hopefully build market share over time and just do it the right way. So to me, reading some of these articles about estimates that 1 in 4 restaurants in America, the last article I read, may never reopen is extraordinarily sad to me and not something that we're really excited about at Domino's, to be honest with you. We're a fan of the restaurant industry. We're a member of this community. And we like our independent restaurants in the towns and communities we live in, for sure. So that would be the first thing I think I'd say. I mean the second thing I'd say from a more economic perspective is, in my opinion, any disruption to an industry is ripe for consolidation or to help consolidation along. And whether it's the crisis around what's going on in the communities today, whether it's the COVID crisis, whether it's the disruption from aggregators that's been happening in the last several years, all of those disruptions I think are opportunities to consolidate share, especially if you're the market leader. So again, we thought there was share to be taken there before all these crises and disruptions. Certainly, there's share to be taken still. But none of it happens if we don't execute. It's there to take. It's got to be won the right way, that's really how we're focused on it. And our share that we have today, we are confident that, that is not the share that we will end up with ultimately. We think we can be a much bigger player in this U.S. pizza industry. And we want to execute out there, make sure that we continue to innovate on things that are going to resonate with the changing consumer and listen, keep this train rolling. That's really what we're focused on and really the 2 views or the 2 lenses that I'm kind of looking at that with right now.

Here's another question. The demand caused by the pandemic has clearly helped offset some of the sporting events and gatherings the last few months. But I would think that changes into the football season potentially could have a greater impact on sales than maybe the basketball or baseball seasons. Can you talk about the importance of football season relative to other sporting events in your business?

Yes. I mean listen, live sports in general, and it depends on where you live and what you like to do, whether you're a soccer guy or a football gal or whatever, pro versus college or a NASCAR fan, live sports matters because you can throw hopefully good creative, and it's demand generation, right? Everybody knows that. That's why we all do it. Having said that, depending on how long this and these crises last, we've been able to do pretty darn well because there's this ebb and flow to the economy being open, people still mostly in their houses, now economies are starting to reopen, et cetera. And we've been able to do extraordinarily well. So -- without any live sports, fundamentally, although I did catch a Bundesliga game over the weekend. Not a huge Bundesliga fan, but I was looking for some live sports and picked down a game this weekend. So as we go forward, football and the fall are certainly very important for us and for anybody that does quick-service restaurant, TV and digital around those events. However, if it's not there and the world's in an unexpected spot, it doesn't mean that sales will necessarily be down. I think we've proven that in the last 60 to 100 days here as you've seen in our business update. So again, no idea what the new normal is going to be. Our job is to continue to just keep our pulse on and to be able to react to it. But all other things being equal, would I love to have a bunch of -- and would we love to have a bunch of live sports back on TV for us to run hopefully really good demand generating creative? Yes, we would. Can we control that? No, we can't. So we'll just continue to try to keep our pulse on it and make sure that we're reaching customers where they are at that time.

Good. Okay. And before I shift over to a discussion around the international business, I wanted to ask a question about unit development in the U.S. Clearly, franchisees are making a lot of money in the U.S., but are you seeing an eagerness from operators to expand? Or is the potential for economic uncertainty overshadowing maybe the strong sales and profit growth you're seeing right now?

Yes. I mean I think that is going to play out, right, Chris? I think you've got -- listen, all the facts are there. The fact is that Domino's has the best box economics. We have a ton of opportunity to continue to roll up market share in this industry, and our operators are the best -- in my opinion, humble opinion, the best operators in this business. So it all lines up the facts. So then it really becomes how you continue to engage your independent entrepreneurs, these franchisees to continue to put capital and invest behind this brand. And that can sometimes get emotional and/or psychological as opposed to economics driving the way. And that's the challenge. Now I will tell you, I don't know if it's going to be binary where you get a bunch of people saying, "Oh, my God, this is a generational moment. I can dominate my community, I can finish fortressing." And there may be some people that pull back and say, "Hey, there's a lot of uncertainty. I just want to see how it shakes out." So I think we're going to see a little bit of all of that, and I don't know yet whether that means we accelerate, we stay the same or we temporarily dip down. Again, just a lot of innings still to play on this. But the good news is the things that we can control, which are awesome box, amazing opportunity, great development team, best operators in the business who understand their economics, all of those things we have in spades, now it becomes let's work through this crisis together, let's communicate really well and let's make sure that we continue to swing hammers if the facts demand that we should swing hammers and build stores. And I'm pretty optimistic about it because I think at the end of the day, economics will rule the day even if there are temporary bumps here and there. And that applies for international as well. So water finds its level at the end of the day, and the Domino's brand is going to be materially larger, in my opinion, in the future, as we've told you guys before, and that's because the economics demand that it should be. Again, short term, does it bounce around high, low, medium? Don't know. But that's why we get to talk to you guys every 90 days and give you update. So extraordinarily excited about the opportunity of the industry, the franchise base that runs our stores, 90-plus percent of our stores. We just got to go execute.

Have you seen any signs that municipalities are beginning to work through their permitting backlogs?

Yes. Again, averages lie here, Chris, but it's a great question. Some are open and humming like they used to be and some are dragging their feet, right? It just depends on where you're at and who's in charge. The good news is -- again, is we have a pretty well-established capability around our development team in the U.S., phenomenal team that really, again, has a pulse on the local communities with our franchise partners, really understand what it takes to get these things built efficiently and get them open on time. I've been really impressed with how our guys have been able to work through it. Obviously, there are some places that are delayed, and that's to be fully expected. But those are going to open as soon as they can open and we're working it hard. And again, every community is different. So averages lie here. But our job here is not to complain about it. Our job is to find a way to win and to get these stores open, and that's what we're going to focus on.

Great. And then let's turn -- let's talk a little bit about the international business. I know in late May, there were less than 900 international stores that were temporarily closed, which was down from, I think, 1,750 units closed in late April. Given what you know about how things are developing, can you provide any color on when the remaining portion of the closed international stores might reopen? Are we talking weeks or months here?

Yes. So again, first thing I would say is, if you would have told me 100 days ago with the way this crisis has unfolded that we would have less than 1,000 stores closed globally, I would have said no way, it'd be way more than that because you got 90 countries and regulators that get to decide 90 different times. And as you know, in the U.S., we got 50 different states and then cities inside a state sometimes they get to decide. So with that many kind of decision rights folks and to have less than 1,000 restaurants closed globally I think is an astounding stat in a good way and shows the resilience of the brand and, I think, the trust that really the global community has in our operators and our brands. So first is I'm thrilled that we only have less than 1,000 stores. As far as when do they open? Again, it is an average lies kind of a thing. Some of them are going to continue to trickle in and we're going to go hopefully to 800, hopefully to 700, et cetera. Some may stay closed. And again, the thing that's going to decide that more than anything is going to be the virus. And I know that's probably a nonsatisfying answer for a lot of the investors on the call, but the virus has determined how this thing is played out, right? We can fight it. We can try to be as resilient as we can. We can be front footed as much as we can but ultimately, the virus mostly decides when these things shut, when these things get to open. So based on your view of where the virus is and the curves by country, et cetera, that is going to be really what's going to happen kind of rate and pace on the 900 stores. And again, the 900 stores is an amalgamation of a bunch of different countries. So I think that, that number hopefully should continue to come down and trail down. It has so far. But there's also the possibility that it could revert if the virus rears its head again.

Are the stores that remain closed located in -- are some of them located in markets that are fully closed? Or are there some cases where you maybe had a fortress market where 1 store is open and 1 is closed in an effort to kind of redirect sales?

Yes. I mean, there's some of that. It's mostly internationally by country. So the India, some of the Middle Eastern countries, Spain. I mean there have been some countries that have been public information where the closures have happened in more than a handful. And sometimes it's geographically within a country, sometimes it's that the federal government has you shut down. So it's a little mixed bag again depending on the decision makers and the country. But we've shown a great resilience and a great kind of operating model resilience to be one of the first people that can open, be in a position to open when the government's ready or the local municipality is ready. And that's hard to do when we've had problems with COVID in stores, our cleaning protocols in the U.S., making sure that we quarantine folks, make sure that they get paid to not come to work, doing all of those things that align with our values I think are very important, but it also means that when it's ready to open again, we're ready to open again. So we're laser-focused to continue to operate as many stores as we can, but safety is always going to be front of mind. And listen, if 900 stores is the right amount of stores that need to stay closed for safety reasons, we're okay with that. We'll open them when they're ready to be opened safely.

As the international markets begin to reopen or these stores reopen, what are the common dynamics between those areas that have been able to return to strength quickly? I mean is it strictly a function of just the government lifting restrictions? Or is it -- is the strength of the market depend on what their momentum was prior to the crisis? Or are there some other factors that can drive strong reopenings?

Yes. I mean it's really more the interplay, Chris, between what's going on with the consumers than it is where comps up 10 or down 10 before the crisis. If you are -- and the U.S. is a great example. I don't think we -- this is going to come as a shock probably. I'm a pretty optimistic guy. I didn't think we were going to do 20 comps last month in the U.S. business coming into this year, which is why we had guidance since withdrawn that we're obviously kind of low single-digit range. But we did. And why did we do that? Well, it was partly Domino's, but it was really that the consumer changed. They were locked in. They had blown through their pantry and they've wanted an experience that was in -- not in my kitchen experience, fundamentally, right? And so I think you're seeing a lot of that in international as well. And depending on what's going on with the consumer, are they still locked down, are the restrictions lifted, is going to drive a lot of the short termism on what happens with total sales in these restaurants. Now long term, and again, we're not reinstating our guidance as of now, but if I -- if you were to say, "Hey, Jeff, what does this brand hold?" 4 months ago, I would have told you 7% to 10% retail sales globally. So that's what I think we can do. Now we got to see what happens on the other side of this crisis, whether that number is higher or lower or in the same range, we have some work to do to really understand and digest and then put that into a good forecast again for you all at some point in time. But there is one thing that I am certain about. Regardless of what happens with this crisis, the Domino's brand will be stronger in the future than it is today. It just will be for a variety of reasons, but I would have told you that 4 months ago, too.

Okay. That makes sense. Would you describe what you're hearing from international master franchisees about their willingness to restart development? I mean I'm just curious how we should balance our thinking around the financial hit that these franchisees have taken from having a portion of their stores closed with the fact that stores remaining open seem to be performing quite well.

Yes. I mean, for us, and we're long-term players, is we want to make sure that the model is tight, very great investment opportunity and that the industry allows for continued growth and market consolidation. And all those things exist in the markets that we operate in. I think that as we think about the rate and pace of unit growth in international, I think we're more concerned about the long game than what happens 3 weeks ago or 3 weeks from now. And that includes in the markets where it's better because you've got franchisees bringing in or you have franchisees kind of taking a pause, right? You're going to have all of those things I think when you're in 90 markets. So I think that -- and again, I get that the market and some of the investment community out there are more short-term focused than they are long term. I will tell you that we're more long-term focused. And whether the short term is a little higher or a little lower or spot on precrisis, what we're more concerned about is what do all these crises mean for the long-term health and viability of the brand. That's really what we're focused. So how do the -- how do our operating procedures need to change long term? How do we go to market? How do we understand the consumer? And how they're ebbing and flowing over time? Those are the things that we really need to focus on because those are the things that are going to determine the long-term unit growth story for Domino's. And again, we are going to grow and, at some point, we will give you a new guide as to unit growth expectations. But we got to get through this crisis, make heads or tails of what it all means and then get back to you all with a forecast at some point. We're just not ready to do that because the world is still in too much flux.

Just a follow-up to that. What are you looking for in terms of the normalcy, I guess, in order to be able to give the Street an update on kind of what the long-term outlook for the brand can be?

Chris, you broke up just for a second. Could you say that one more time, please?

I'm just wondering, what are you looking for in terms of normalcy? Or what factors are going to influence you in determining when to provide the Street with an update on what your long-term outlook is going to be for the brand?

Yes. We haven't put a time line out yet internally or externally certainly as to when we may give guidance again on retail sales and units and comps and such that we've historically been able to give. But listen, when we're in a position we feel like we've got enough confidence that we can give that to you and we can live up to that, we'll do that. That could be sooner, that could be later. We know that we want, you may say need, but we definitely want to give you all something. But in fairness, again, we don't want to give you something and have to change it 3 months later because the crisis somehow ebbs and flows again, et cetera. So we just want to get through this crisis. We want to understand what it means for the business. And as soon as we do all that, we want to give you all another set of guidance that we think we can live by. Now in the meantime, we're going to continue to try to grow this brand without guidance. So -- and we are going to hustle just as much with guidance as we do without guidance, so rest assured. But to answer your question more specifically, no, we have not circled July, September, January as the time where we want to give you guidance again. Again, the virus will determine and our understanding of what it means to the business will determine when we do that. And as soon as we're ready, we will fire.

Great. And then just a couple of questions that are outside of the international business and the U.S. I guess to some extent indirectly is related to the supply chain. And one of the things that may have been lost in the shuffle here is that you guys recently opened a new supply chain center in South Carolina, I think at the end of March. What are the advantages or benefits are you expecting from this new center for the company and the franchisees? And how should we think about just the operating cost and the way that this business will affect -- or this new center will affect the P&L?

Yes. So we don't give guidance on margins for supply chain. But if you look back at history, you can see that at least in the past, the operating margins and the EBITDA margins have performed within a fairly tight range. So I can tell you, I don't think the margins there are going to double and I don't think they're going to halve, is kind of my half of an answer. It has had a pretty steady performance over time in the past, although, again, we don't guide going forward. As it relates to the new capacity that we built in South Carolina, it's a couple of things. The first one was, we needed New Jersey and Carolina to keep up with the growth of this brand. We didn't have a choice. We needed our proprietary fresh dough. We needed dough lines because we were running out of capacity on the Eastern Shore Board. And we would really like to get dough to all the people on this call and your favorite pizza. We can't do that if the Maryland, the North Carolina, the Georgia, the Connecticut center are all running nearer to capacity. So one is, we needed it. We didn't have a choice. Two is, it's a risk management play as well. It's a redundancy. It's a risk management. What happens -- we didn't think about this when we built it in this sense. But we did definitely think about it as far as redundancy is, is on -- in the New York area, we were servicing that out of Connecticut. What happens if Connecticut goes down? And we used to say, what if Connecticut supply chain center catches fire? Now we would say, what happens if they had a COVID outbreak, right? Well, we got a big problem. And that area is one of our biggest markets. And what are we doing? I mean we're -- now we're shipping 7-day a week dough in from Michigan and Kentucky and Maryland, and that becomes a big strain on the system, and we want to be able to provide a full range of products without interruption to the customer base. So had to do it, great for risk management. We opened up Carolina on time and on budget. And we are now going to focus on opening up Katy, Texas, which, Chris, you know was the third in the 3 that we've announced to the marketplace. And then, quite frankly, we're going to reassess. And it kind of ties into your earlier question around where do we think the guides are going to go. Based on how we see the U.S. business growing in the future, postcrisis, we're going to determine whether we need more centers and more capacity in the future. So really excited that we got Carolina open on time and on budget, love what it does for capacity, love what it does for risk management. Don't expect dramatic changes in operating margin on a consolidated basis for supply chain as folks like to model that, I don't think. And not to be forgotten, that supply chain business has a really good return on invested capital and a real steady and stable amount of cash flow that comes from that while at the same time providing 50% of the profits back to the franchisee, which is baked into that $143,000 of profitability, which is best in class. So it works extraordinarily well, love the way it kind of go -- moves from a whiteboard to actual financials. And I would -- again, I would be remiss if I didn't give a shout out to our supply chain experts who have been on the front line of this crisis. You're doing heroic things to continue to keep our plants open, safe, operating and supporting this 20-plus percent surge, which we could never have drawn up in a million years. And they're keeping up. We are not running out of product, by and large, in our more than 6,000 stores in the U.S. business. So kudos to that business as well, more than $2 billion in annual turnover and excited about what that business is doing for us and our franchisees.

Great. And then just one last question. Domino's has obviously got one of the best technology platforms in the industry and maybe in retail, and the company has obviously a great franchise network that's very profitable. I'm just curious if the company would ever consider expanding beyond pizza. For example, would Domino's consider acquiring another brand to kind of leverage these advantages?

Yes. First of all, you never say never. And listen, all strategic options are always on the table for a brand of our size and opportunity. However, the strategic opportunity, everything from -- and we've heard all of them. We thought about all of them. Do you roll up a master? Do you buy another brand? Do you license your technology, right? These are all things that we thought about in the past and we continue to think about. But Chris, we are a small #1 player that we like to say. Our market share in the U.S. business, particularly, isn't a dramatic overwhelming #1 player. And given the fragmentation of the industry, our focus has served us extraordinarily well to get from 10% to basically 20% of the U.S. pizza industry in broad terms over the last 7, 8 years. So focus matters. We are aware of the strategic opportunities out there. As we sit here today, nothing to announce, no imminent plans, but we're going to continue to assess the opportunities. We know that over time, particularly if we're able to roll up a dramatic additional amount of market share, those things may be more attractive to us over time. But as of right now, our focus is serving us well. We've got a ton of market share to roll up in this $37 billion, $38 billion U.S. pizza industry. Similar thoughts apply to us I think internationally. And if we can keep our eye on the prize, I think that's going to serve us extraordinarily well certainly in the medium term.

This is very helpful, Jeff. Thank you for the time this morning and thank you, everyone, for participating in our conference. But again, very helpful, Jeff. And again, I appreciate your time.

Always a pleasure talking with you, Chris. We appreciate what you're doing. You're clearly one of the best in the industry, and we learn from you all the time. So we hope everyone out there is staying safe, and we look forward to seeing you hopefully non-virtually sometime soon.

Thanks. Take care.

Thanks, everyone.