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

Please welcome, VP of Finance, Ryan Goers.

Good morning. On behalf of our Chief Executive Officer, Russell Weiner and the executive leadership team, I'd like to welcome you to Domino's 2023 Investor Day. Thank you all for joining us today, both here in Ann Arbor and virtually via the webcast. We're excited to spend some time today giving an update on our business strategy and long-term outlook. Now before we get into the materials, just have a few housekeeping items and some important information on this slide I'd like to go over. Today's presentation features forward-looking statements that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from our forecast. For more information, please refer to our risk factors discussed in our filings with the SEC. Certain non-GAAP financial measures are used in today's materials as well. For definitions, I invite you to look at the slide here as well as reconciliations to these measures included throughout the presentation. Next, in today's materials, you'll see some historical comparisons to 2015. Now, why 2015? This was the year that we launched our original loyalty program in the U.S., and we believe it's meaningful to look at our performance over this time frame, especially with our recently relaunched Domino's Rewards. Finally, I'd like to give a brief rundown of today's agenda. Today, we'll begin with presentations from members of our executive leadership team. This will be followed by a Q&A session. Today's event will wrap up at 12 Eastern Time. And with that, I'd like to welcome our Chief Executive Officer, Russell Weiner, to the stage.

Well, thank you, everybody. Good morning. Welcome to beautiful Ann Arbor, Michigan. Welcome to Domino's. For those of you who are calling in on the webcast, I wish you could be here, but glad you're calling in. So as I said, you're here in Ann Arbor on Domino's Farms, but we're particularly -- we're in a building that we call the Domino's Innovation Garage. And this was a purpose-built building we built a few years ago. And the idea was if you were going to innovate, if you're going to come up with next-generation innovation, then you need to have your departments together to cohabitate, to work together. And so if you're wondering where our next-generation customer or a store or a team member, innovation comes from, it comes from here. And so we were thinking if we're going to talk about the future of Domino's Pizza, what better place to talk about the future of Domino's Pizza, then where we create the future of Domino's Pizza. So welcome to the DIG, everybody. We're excited today. We're going to introduce you to a really exciting new strategic plan for -- over the next 5 years, I'm going to top line it. And then various members of our executive team will talk to you about how we're going to implement that across our business. So Joe Jordan on the U.S. business; Kelly Garcia will talk to you about how technology is going to help all this stuff come to life; Art D'Elia and his team will be bringing all of this to our franchisees around the globe. And then at the end, Sandeep will take all the zeros and ones and add them up and talk to you about our algorithm. Then we're going to have a Q&A and Cindy Headen, our Head of Supply Chain, is going to join us up here on stage for that portion of the session. And we got other folks from our team here. Here's the rest of our executive team. I want to thank them all for coming today. We've got 170 years of Domino's experience on this page. But more importantly, everyone on this page and in this room has what our franchisees and team members have across the world, which is pizza sauce in our veins. That folks, that's our special sauce, all right? So we compete in this global pizza category, $94 billion. You can see it's bigger outside of the States. It's actually growing a little bit more outside of the States. But what's really important for you to take away other than it's a large category, it's a fragmented category. And when you look -- Ryan said that we're going to look back to kind of 2015, when you look over this time period, you'll see what that meant. Having a fragmented category when you're the market leader and you've got technology and insights like we do, you can still share. And that's really been what the last 8 years have been all about. And as we look forward, the fragment -- the category is still that way. And so we're really bullish about what that means from a share growth perspective. So what does it look like to be the #1 pizza company in the world? 94 markets, over 20,000 stores, trailing 12 months, $18 billion, and we're 99% franchised, and they are 1,000% our secret ingredient. When you look at our footprint globally, it's really diversified. So about half of our business is in the U.S. And as you know, 4% of the world's population is in the U.S. So 96% of the population is where we sell the rest of our pizza, which is why you can tell how excited we are about the prospects for our international business. And the other thing about having a footprint like this is it mitigates risk. So if there are currency issues maybe in one part of the world, you're not going to have them in another part of the world. So we're going to take -- before we look forward, we're going to take a little bit of a look back to 2015. But actually, before we do, I want to let you know, a special day coming up Saturday, it's our birthday. All right? We're going to be 63 years old this Saturday. And so I want to look back to when we were 55 years old back in 2015 and give you a sense of how big we were then, but also what have we been doing over the last 8 years, not that the past is indicative of the future. We're going to paint a nice future today, but I want you to understand where we've come from. All right, so it took us 55 years to become a $10 billion company, right? In 8 years, we added $8 billion more. It took us 55 years to open up 13,000 stores around the world. It took us 8 years to get to 20,000. In 2015, our operating income for the entire company was $400 million. It took us 8 years to double it. All right, to give you a sense about what the last 8 years have looked like, and you've seen what that has meant in total shareholder returns. But here at Domino's Pizza, we like to talk about what's working, what we like to fix, what's not working. And I'd be remiss if I didn't talk about the last 2 years when I'm on this slide. And so I want you to specifically look at the red numbers, which is our U.S. delivery business. Internal headwinds, external headwinds, I don't care, we're a pizza delivery company. Those numbers should not be red. And what you'll hear today is how we're going to turn this around and what that does -- looks like moving forward. And it's great because we're going to add that business to the green, which is our carryout business, double-digit 20-plus percent over the last 2 years. When we get both of these engines running, we are unstoppable. So how do we address some of the business challenges that we showed in the prior page? We really kind of focus down to having to fix 3 things. I see a lot of nodding heads. That's good. Capacity, we had to address inflation and innovation. I remember, Sandeep, when you and I had our first earnings call. One of the things we were talking to you all about was the fact that, we couldn't handle all the wine that was coming our way. Yes, it was COVID, and there were lots of volume, but there's not an excuse, right? We were short staffed, we couldn't answer all the phone calls. We had a capacity issue. And what it caused us to do, actually in this room right here, because this is where we innovate this stuff, is to rethink the way we make pizza, rethink our circle of operations. And so we've completely reinvented the way we make pizza. We've got technology in back of that all now empowering our operations in a smarter way than ever. And then we brought our franchisees actually into this room because this room actually becomes a Domino's Pizza store. And so what we did was we trained them on the new circle of operations. They got to know how the tech works. And the best franchisees in the world left to go back to their stores, even better. And the proof in the pudding is the results, which is our delivery times are back to where they were prior to COVID. Staffing levels are there as well. So that's capacity. Inflation is something really everyone had to deal with, and so did we. We used the same tools we have over the last 15 years that I've been here to take some really smart pricing both on our menu with logo coupons, our national offer evolved. And the result from that because it's still a great value for customers is at the same time, our franchisee store EBITDA is actually now higher than pre-COVID levels, okay? So capacity and delivery time back to pre-COVID levels, franchisee profitability higher. Innovation. Well, when you have got capacity constraints, the last thing you're going to do is put innovation through that because you don't want to overwhelm the system. And so we took a little bit of a break. But what you're going to see from us is there is a renewed focus on innovation, both product innovation and technology innovation. We're launching this new strategy today with you, but we've launched it internally already. So there's a lot of stuff that's starting to come out, right? You've seen our new loyalty program that was just relaunched. We'll have some exciting data to share with you today. Kelly will talk to you about the rewrite of our e-commerce platforms. And then product innovation, we're continuing to lean in on product innovation, 2 new products as -- a year. The last time we had 2 new products at this level was 2011, all right? And so I want to let you know that this is the rate 2 plus of innovations you should expect from us on the product side every year moving forward. All right. So what I'd like to submit is that we've addressed these challenges and we've never been a better Domino's Pizza than we are today. The foundation of Domino's Pizza has never been stronger. Now right now, this is just a line on a PowerPoint slide, right? The most powerful point is not written, it's the numbers. And so what I wanted to do is give you a little bit of a look into Q4 because I want you to understand, this is not just me saying our foundation is stronger, I want to tell you with the numbers that show you how we're making progress. And so remember those red numbers on the prior page, where we talked about how the delivery business was negative. Q4 to date I'm going to strip out any incremental volume we may have gotten from Uber -- from the Uber pilot. So this Domino's delivery business for the U.S. in and of itself in Q4 is positive. And the delivery transactions also are positive. Both of those things, excluding the effect of Uber. So the strategy that you're going to see today that has already been launched internally is already having a positive effect. And it's important that this foundation be stronger because if you know Dominoids here, right, our ambition has never been bigger, right? We may be the #1 pizza company of the world, but I want you to know that we are just getting started and that this team is hungry for more. [Presentation]

All right. So Hungry for More that's the name of our strategy that we're launching, and I want to give you a sense of what you should expect from it over the next 5 years. Hungry for More will deliver 3 things: More sales, more stores and more profits. And we'll give you a sense of what this means for our outlook in a second. But I want to really explain the strategy first because I want you to understand how we're going to go ahead and do this. So Hungry for More, we've got 4 strategic imperatives that we're going to push across our global enterprise. And what I want to do on this page is -- I'm just going to top line them and then on the next few pages, I'll go a little bit deeper. So the M in Hungry for More stands for most delicious food; the O, operational excellence; R is for renowned value, and you should know that everything we do is to enhance and will be enhanced by our best-in-class franchisees. Let's dig a little deeper. More, the M, most delicious food. We have the most delicious food in the business. But we don't talk about it enough. We talk about value. We talk about technology. We haven't romanced our products the way we know that we can. And so you're going to see us really take that up a level in our marketing. Staying with innovation. Innovation certainly sells new products, but what we've learned is innovation halos from a deliciousness standpoint to the rest of the portfolio. So we're going to do more innovation. And we're going to do more renovation. You may say, "Well, what's renovation?" Well, the single biggest product launch we've had at least since I've been here, was the renovation of our base pizza, and you can get a lot out of renovation, too. So the most -- having the most delicious food is something we have, it needs to be something that we drill home with customers all around the world. Most delicious food delivered through operational excellence, all right? Our customers and our team members, the 2 most important constituents we have, they want the same things. They want convenience, and they want consistency. That leads to a great work environment, and that leads to a great pizza-eating experience at home. And so what you're going to see today is a lot of the back-of-house innovations that we've done is to improve this experience for our team members and our customers. Renowned value, you're probably not surprised to see value on a Domino's slide. But deals is just one part of it. You've known us for Mix & Match for the last dozen-plus years. But value is loyalty. Value is, "Hey, I don't want the same thing as everybody, give me what I want, not just price, but product experience, what should I see? What's my experience?" And you're going to see a future of seamless personalized e-commerce experience that take this idea of value for everyone to value for every ... one, right? Everyone's got their own picture of value in their head. The aggregator marketplace. We're entering that new marketplace. That's a very different customer. And so while the best prices will be on dominos.com, this is a customer that's a lot less price sensitive. And we think going into next year with some of the headwinds the restaurant industry is going to be facing. This is really positive for Domino's Pizza. Now we'll still be value, we'll be at a premium on these sites, but we'll still be a value to aggregator customers. Our franchisees. The cool thing is when we have something great that comes out of this building, we take it all over the world. When we have something great from all over the world that comes back to this building. It's the domino effect. It's a beautiful thing to watch. And when we do that, what we'll do is we'll continue to get the best unit economics in the business and the best store growth in the business. What we also do, though, is we get the next generation of franchisees really excited. We say this all the time. I know you know this, but you can't become a franchisee at Domino's Pizza unless you work at Domino's Pizza. And so we've got -- since I've been here in 15 years, never had more people in our franchise management school and we've never had more people finished with it, ready to sign and open a new store. So our franchisees and our future franchisees are really excited about what we're delivering. So Hungry for More. It's going to deliver new long-term guidance. What do you think it's going to be? Well, more, come on. It's early. All right. More, yes. What I want to do is show you over the next 5 years, we'll look at our old guidance and a kind of the update to the right. And so our current guidance is 4% to 8% for sales, global retail sales. Our new guidance is 7% plus. I want to explain this a little bit. You're saying, "Hey, why do you walk away from a range?" Well, a range when you're at almost $20 billion, that's a pretty big range. And so what we want you to understand is what we are holding ourselves accountable for at the minimum, okay? So 7% is the floor, but in keeping with our -- name of our strategy, we are hungry to deliver more. So think about 7% as the floor, but everyone in this room and across the world that wears this logo, we're going to be doing our best to deliver more. Stores next, 5% to 7%, again, we're going to go away from a range to a number. 1,100 around the world. These are net numbers and Sandeep will break down the U.S. and international look for you in a little bit. But again, 1,100 is the floor. We're looking to deliver more. And then operating income, so a profit measure. We didn't guide on this before. But we want you to understand is our -- we are determined to take this incremental sales volume and translate it into profit that outgrows our sales. 8% is the floor where our goal is to deliver more. I like to put things into perspective. These are numbers, but let's put them into perspective a little bit. And what I'm going to do is put in perspective the floor numbers. So remember, we're hungry for more, we're going to try to deliver more. But if we just deliver the floor, what do the next 5 years look like for Domino's Pizza? What are we going to accomplish? So over the next 5 years, 7% is $7 billion in global retail sales. So what is that? That is the equivalent of taking the #10 QSR today and adding it to the current Domino's business in 5 years. Next is stores. If we open the floor that we talked about, the 1,100 a year that gets to 5,500 over the next 5 years, that's comparable to going back to 2017 and taking all the stores in our U.S. business and putting them on top of our current business. We're going to do that in 5 years or more. And then lastly, on profit. I showed you earlier, our operating income in 2015 was $400 million. We're going to achieve that over the next 4 years -- I'm sorry, over the next 5 years, all right? So more sales, more stores, more profit, a little more perspective for you on what that means for this team. So now to take you through what that means for our U.S. business, I'd like to invite up Joe Jordan.

Good morning, everyone. I'm Joe Jordan, President of our U.S. business and Global Services. I've been with the brand for 12 years now, joined back in 2011 as part of our U.S. marketing team, worked for 7 years in U.S. marketing, the last 4 years as our Chief Marketing Officer, then got the chance to run our international business, moved over to our Amsterdam office, ran that business for 4 years throughout COVID, which was certainly an interesting time in international. And then about 1.5 years ago, came back to run the U.S. business as well as some of our global functions. And I am really excited to share with you today how we're going to take Hungry for More and bring that to life in the U.S. And it starts with the incredible foundation that we have in this U.S. business. We're incredibly fortunate to be in this position to activate from. So we're already #1 in QSR -- pizza QSR. About 6,800 stores, $9 billion in trailing 12-month sales. But the figure on this page that I get most excited about and I think is most promising for our future. And for what I'm going to be talking about in the rest of my time is the 3-year payback. So that's driven by 2 things for us: One, it's our relatively lower store build costs. We operate a delivery carryout model. You hear a lot about that from probably other concepts that you cover now. That's always been our model. Relatively smaller footprints with relatively lower build costs, but we drive a lot of profit out of those stores. And that leads to industry-leading paybacks. And Russell had the opportunity to pre-share a little intra-quarter trading information about how Hungry for More is already paying dividends, and Sandeep gave me approval to share one more and steal a little bit of his thunder. And it relates to store paybacks and that EBITDA. So Russell and Sandeep have been updating you on our projections for franchise EBITDA in the U.S. throughout the year, and that's gone up each time they've updated you. I'm going to update you one more time and take it up one more time. We now believe that franchisee profit in the U.S. for 2023 is going to be $160,000 per store. So the strategy is already beginning to show some benefits and this incredibly strong foundation for us to build off of. And how did we get here? I do -- I want to spend most of my time talking about Hungry for More and how we're going to be activating going forward. But I think it is worthwhile to take a little bit of time to share some context for how got here because it shows the incredible opportunity that we still have available in the U.S. pizza market. All right. So what you see here, again, going back to 2015, as Ryan mentioned. We've grown about 9 points -- 9.4 points in share since 2015. And we've sourced that from -- throughout the category. So the other bars you're seeing here are the 3 biggest national competitors combined, regional chains, which is anyone with 3 or more stores and then the independents. You can see actually pretty evenly we've grown from all 3 of those groups. And that's driven over the last 8 years, $4 billion in incremental sales for the U.S. business. So going back to our birthday, it took us 55 years to get to $5 billion in the U.S. It only took us 8 years to get to the next $4 billion, which is pretty remarkable growth for a business of that age. And the way we did that was by building on a strength that we already had, delivery, and really developing a new strength and becoming the leader in carryout. We run 2 businesses out of our stores. We have our delivery business that is now half of our transactions. We have this new -- still relatively new to us, when you think about a 63-year-old brand carryout business that is half of our transactions. A little bit lower in sales due to the higher ticket in delivery, but we've got these 2 businesses that work out of the same footprint, out of these same stores and that is largely incremental. We've shared these numbers in the past, but mid-teens is the overlap for consumers between these 2 categories. So by and large, this carryout business has been incremental. And these 2 businesses contributed to our growth, that $4 billion that I talked about pretty equally. So if we double-click on that. This is delivery, we grew just under 5 share points since 2015. Again, we took that from -- across the category, primarily the national competitors as well as the independents, and that drove just about half of the $4 billion sales growth that I mentioned. Two things I want to point out before I leave this slide. One is, if you look at our share, our 31% share, that is larger than the 3 largest national competitors combined. That's a lot of power, a lot of scale that we have when it comes to marketing investments, when it comes to technology investments that the competitors just can't match. And then you combine that with the fact that the 31% is only a 31%. I know a lot of you cover other concepts within QSR. We are a dominant #1, but we're only selling 1 in 3 pizzas. The opportunity for us to continue to grow share within delivery within the U.S. is significant. And it's even more so in carryout. So carryout, we've more than doubled over the last 8 years. 11 points of share growth going to 20.2%. And again, growing from across the category to drive $2 billion in incremental sales growth, half of the growth that we saw over the last 8 years. And here, the story for the future is even better. We're a dominant #1 again, a 20% share, but only 1 in 5 pizzas are being carried out from a Domino's store at this point. So this context, this execution over the last 8 years, our position in the industry and the remaining opportunity in a very fragmented market, leads us to set a pretty aggressive goal once again. It took us 55 years to get to $5 billion in the U.S. Got $4 billion in the last 8 years. We're going to get another $3 billion in the next 5 years. And we're going to do that across those different segments that I talked about. Again, right now, we're 1 in 3 delivery pizzas, we can grow that. Right now, we're 1 in 5 carryout pizzas, we can grow that. And importantly, for this number, right now, we are 0 in 5 billion aggregator pizzas. And obviously, we're going to grow that as well. All right. So now that's the context. I now want to talk about how we're going to get there in the context of the Hungry for More strategy, and it starts with food. We are a restaurant. That's why people come to us, and we're in a great position here. We have great food. We have industry-leading food. We are really proud of what comes out of our stores. Russell talked about that. But we don't necessarily always get credit for it from our consumers, and importantly, from non-users of the brand as well. We've spent a lot of our time talking about technology and value, and we have the opportunity to romance the food that we have in our stores. This is -- what you're seeing on the screens now is indicative of how you're going to see our food portrayed in our marketing going forward. Not just in our marketing, but Kelly is going to talk about, our revamped e-com going forward. We have the opportunity to drive craveability, to drive deliciousness and change the consumer perceptions around what they can get from Domino's. We have no freezers in our stores, no fryers in our stores, everything is made fresh to order. We're really proud of the food that comes out of a Domino's store. You'll all get to try a good bit of it later today. We're going to make sure that consumers are aware of that. That's one way we're going to drive deliciousness. The other that Russell started to talk about is innovation. And innovation can drive a lot of different business objectives for it. It help us acquire new customers. It can help us drive frequency. It can help us drive ticket. But what we've learned as well is that well-executed product innovation halos back on the rest of our product portfolio. If we do that right, it drives the deliciousness perceptions, the taste perceptions for the total brand. And we've got a fantastic base to build off of here. Pizza, obviously, the core of our menu, 60% of our sales. About 9 out of every 10 orders that go out of our stores have a pizza in it. We've got 5 different pizza crusts. I don't know how many of you knew that we actually had the 5 different pizza crusts that you see on the screen. Combine that with our sauces, our different cheeses, our toppings, there's over 35 million ways make a Domino's Pizza. We can talk more about that. We can drive again that craveability and deliciousness and maybe we can have a little bit of reinvention and renovation around our pizza lines. And then we have a breadth in our menu that is unparalleled in the industry as well. And you look at just some of the products. Sandwiches, pastas, breads, chicken, tots now, desserts, salads. We have all these other options. They've grown to be a pretty meaningful portion of our business. And they provide an opportunity for both renovation, pepperoni stuffed cheesy bread this year, lifted the whole line, pretty simple innovation and tots, creating new platforms and new categories for us. So as Russell said, what you should expect to see from us is what you saw this year. Again, the first time since 2011, we've been on air with 2 new product innovations. You're going to see 2-plus product windows, product news from us in '24 and going forward, to drive that deliciousness, to drive that craveability. All right. So we have these great products. And when you taste them today coming out of our test kitchen, they are amazing. The job of operations or one of the essential jobs of operations is making sure that they're delicious for every customer around the country, every day, every week. That's what we're after with optional excellence. We reinvented our pizza a dozen years ago at this point. We never reinvented our operations. We have now. We've taken best practices from around the country from around the world, new tools and most importantly, perhaps new technologies that Kelly will talk even more about to take friction out of the store, to give a better experience for our customers and for our employees. Because before our stores weren't necessarily driving deliciousness for us. They probably looked a little bit more like a box factory than a pizza restaurant, if you went into them on a busy night. But we're taking steps to change that. And instead of continuing to talk about it, I'm going to show you in a video. [Presentation]

All right. So that video introduces you to the concept of Dom OS, the Domino's operating system which is the combination of tools, processes and fundamentally technologies that they work to optimize and orchestrate the experiences in our store. Kelly is going to talk a lot more about that in a couple of minutes. But in the meantime, this is -- you see this -- a lot of this is already live in our stores. Our employees are benefiting from it. Our customers are benefiting from it. Whether it's runners in stores, whether it's DJ, whether it's not having to fold the box, refold the box, unfold the box, those processes are in our stores, and they're starting to already give customers better experiences. More accurate orders, quicker orders. It's taking -- it's really underpinned that the improvements that Russell and Sandeep have already talked to you about. Getting back to pre-COVID service levels has been underpinned by the benefits that Dom OS is driving. And there is a lot more to come. When I do want to spend a little bit more time on is the more consistent product. One of the key benefits that we can offer customers is consistency and experience, whether it's consistency in product, consistency in service, consistency in value, that is a key reason why they come to us. We know the value of them being able to know what they're going to get from Domino's. We've done more consumer work over the last 12 months and know more about the consumer now than we have at any point in the 12 years I've been here, certainly. And we know what drives satisfaction. And for example, delivery on the screen here, these are some of the key factors that drive customer satisfaction in delivery. These are the things that drive satisfactory and then, therefore, drive retention and drive frequency and repeat. Under each one of these. We know what are the key levers we can be driving in our stores. We know what are the key KPIs our teams should be looking at. And this is really the blueprint, the underpinning for Dom OS and what we need to be focused on to take friction out of our stores. I'm not going to take the time to go through all these in detail, but I do want to spend a little bit more time one I started talking about, consistency. So for years, when you talked about delivery, a lot of companies have talked about speed, how quickly can you safely deliver food. And speed is important, but it's not necessarily paramount. So imagine 2 different delivery experiences, one where you get it 15 minutes the first week, you get it in 35 minutes the next week. An average of a 25-minute delivery time, that's pretty good. Another customer gets it in 25 minutes both times. That's a more consistent experience. And we know from looking at our stores, looking at comparable stores that the more consistent store actually ends up driving incremental sales and delivery. The customers who are more satisfied, come back more often. When you have increased variability, the opposite happens. So I wanted to share this just as an illustration of the types of insights that we're using, the types of KPIs that we're using to improve our service and to drive future enhancements in Dom OS. All right. So we've got our great products. We're making them constantly. Now we want to offer them to consumers at a great value. That is, again, one of our core strengths as a brand. It's something consumers give us a lot of credit for. I want to talk about 3 different elements of value today, our national promotions, the relaunch of our loyalty program and our rollout on aggregators. National promotions, in particular, our Mix & Match. They have been a core part of the brand since New and Inspired. For $5.99, we were on that again for over a decade, week-long carryout, $7.99 for a large pizza. We have combos that are at the same price they were at back in 2011, 2012. That creates, again, this theme of consistency for the consumer. They can come to us and know what they're going to get. They don't have to go hunt and peck on the website, am I getting a good deal or am I getting a bad deal this week, am I being shocked by the ticket at the -- in my shopping cart at the end of my shopping experience? Or do I know because I've paid the same price every time that I've come to Domino's in the last 5 years. That creates a lot of value for the customer. It also creates value for us as marketers. We're not out there talking about the deal of the week. It's $13.99 this week, $12.99, $14.99. We can spend our considerable marketing war chest talking about other things, building the brand, creating craveability and deliciousness. So national offer is a core part of who we are as a brand, you're going to continue to see that from us and consistency in those offers from us. Two, I want to spend a little bit more time on our loyalty and aggregator marketplace. And starting with loyalty. I was fortunate enough to be part of the launch team for loyalty back in 2015. Kelly and I got to work on that with a lot of the other folks in the room, that program worked really well for us, Piece of the Pie rewards. 30 million-ish active members in that program. And it drove a lot of data for us. A lot of information about those customers, what they liked, what they didn't like. And as with any loyalty program over time, you need to use that data to recreate it. And ideally, create more value for the customer while still driving profitability for our franchisees. And the insights that we had, and Russell and Sandeep have shared this somewhat on recent calls, there's 3 primary ones. We had a lot of inactive members. So I mentioned 30 million-ish active members, over 45 million inactive members. So those are people who raised their hand, signed up for the program, want to be part of this, but there wasn't enough stickiness in it. There wasn't enough value in it yet for them to stay active in the program. One of those big reasons was frequency, which is also called out. In the old program, you needed to order 6x to get a reward. Many of our customers have fewer than 6 occasions a year. Not getting a reward in a full calendar year is not going to drive the stickiness retention, frequency that we need to. And lastly, carryout. When we launched back in 2015, carryout certainly wasn't half of our business. It is now and our carryout -- our primary carryout deal, our flagship offer, the weeklong carryout I talked about, $7.99. You had to spend $10 to actually get points before. So if you were a carryout customer, half of our business, bought our national deal, you were potentially not getting points and not part of that program. So we addressed that with the relaunch earlier this year. We took that minimum spend threshold down from $10 to $5 and we created multiple redemption tiers. So not just the 60-point tier that we had, but a 40-point tier, a 20-point tier. And it's working. So we're driving more reactivated members. We're up over 2 million members year-to-date, 1 million-plus since the relaunch with a significant increase in reactivation since that relaunch. We're seeing more redemption and we're seeing more redemptions than ever before across the board, but we're seeing them at those lower tiers. We're seeing them at that 40-point tier, the 20-point tier. The great thing about that is, again, it's giving value to the customers. But those redemptions, the cost per point for our franchisees for the food cost for the redemptions has actually gone down. So customers are getting more and it's costing the franchisees less. And then carryout lastly, as we've seen that remarkable growth and that upswing in activations and active members, that's been disproportionately driven by carryout. We're seeing more carryout users and light users in the program than we were prior to the relaunch. So off to a great start, and we are just getting started on loyalty. All right. Aggregators. Another one I was fortunate enough to have some experience with before taking this job. In international, over the last couple of years, we embraced order aggregation. And we put in place a process to determine which markets should actually work with order aggregators. And probably more importantly and more applicable to the U.S., how they should work with aggregators. So everything from ensuring that we have the best deals on our own channels, that we're investing in our own channels, things like e-com rewrite, loyalty relaunch as well as getting the data to ensure that we're pricing appropriately on our own channels and aggregators to maximize incrementality and incremental profit for our franchisees. And so looking at all that in that context of that international billion-dollar business that we've built, it's the right time for us to be here in the U.S. It's now a scaled marketplace. It's a $5 billion marketplace in pizza that we're not competing in. It's a differentiated customer versus our core customer. It's a younger customer, less price sensitive, more affluent. And the overlap is relatively minimal with our existing customers. So 35% overlap we estimate across the major players. And actually, with Uber, it's a bit lower than that. And really importantly, this overlap had been growing as the aggregators were growing rapidly during COVID, but it's actually flattened out. And actually even come down a little bit in recent quarters. Maximizing our ability to ensure that we're driving incrementality and not just moving customers from our channel over to the aggregators. So all of this sets the stage for what we believe is a $1 billion opportunity over the next 3 years through our participation in aggregators. And again, that's us going out there and getting our fair share. We deliver 1 in 3 pizzas throughout the category. We believe we can deliver 1 in 3 pizzas within aggregators. All right. The last piece and my favorite piece as well as I know Russell's, our franchisees. I've been here for 12 years. I've gotten to know a lot of our franchisees really well. They're my favorite part of this business. They are the most differentiating factor, in my opinion, of our business. You can try to copy our national offers, you can look at what we're doing on our website but can't recreate our franchisee base. They're the original inspiration for Hungry for More and a really special group. We've got about 730 of them right now with 9 stores on average. And as Russell said, they all came up through the system, substantially all of them, 95% plus, started in the stores. They started as drivers, they started as pizza makers, they fell in love with the brand and decided to make it their lives, not just their jobs, not just an investment. It's their lives when you talk to our franchisees. The pizza sauce is in the veins, and they are all in on this brand. The great part about this as well is that there's the next generation who want to be all in. Russell talked about that, the largest class that we've ever had. We have a program called FMS, Franchise Management School, where if you are already part of the system and know what it is to run a store, you're a GM, you're a supervisor. You're a corporate employee in some of our corporate stores. You can raise your hands to be part of this program. We've currently got 170 folks in different stages of that program, 50 of them ready to open their stores. And part of the leaning in for our franchisees as well as why so many of our GMs and supervisors want to become franchisees is it's turned out to be a pretty lucrative endeavor for our franchisees. And that's front and center for everyone in this building here in Ann Arbor and around the country, driving those 3-year paybacks, again, industry-leading paybacks. And the way we've done that is by building the right stores. And as we've built stores, we leaned heavily on fortressing. 1 out of every 3 of our stores is greenfield, 2 out of every 3 are fortressing. That's been our history. We anticipate that's going to be the approach going forward as well. And given it's 2 out of 3, I did want to take a chance to talk a little bit more about fortressing. So what you see on the left here, is the before. This is a store down in Tuscaloosa. Now that is red, not crimson. This -- I picked this map before the college football playoff was set, I promise. This is not a crimson blue, do not read into this as to which store is doing better at this point. But the store on the left is in Tuscaloosa, college town, great store, a lot of volume surrounded by competitors. All right, easy enough for that franchisee to just keep going. But what they did instead was open that second store. All right, what did that do to the first store? Yes, it took some of the addresses away from that store. The delivery business went down a little bit at first. But you know what the delivery area got tighter. They could service those delivery customers more efficiently and more effectively, it's a shorter drive, customers are getting more consistent, hotter pizza. Those volumes came up. That store has bounced back. And now we've got this other store to the north that has 80% incremental carryout business. This is what we've seen fortress after fortress store. Carryout customers are not going to drive far to get to another -- they're not going to drive past another restaurant to get to yours. So by opening these restaurants, we're driving a largely incremental carryout business. And as we've grown our carryout business, that's enabled us to open more and more stores that maybe wouldn't have been viable before, profitable stores. So this whole cluster now, this cluster of 2 stores -- those 2 stores are each doing about the volume that, that first store had been and it's a much more profitable venture for that franchisee. And this is how we've gotten to where we are. And importantly, on a competitive angle, if we don't open these stores, our competitors will. But just as importantly when we open it, it makes it harder for the competitors to open. And when you look at the share gains and you look at the store trends over the last 8 years, I think you'll see that borne out in a pretty striking way. All right. So we're at 6,800 stores. Right now, our 2028 target is 7,700 stores -- 7,700 plus, 7,700 is our floor. And we're taking our long-term potential up in the U.S. What we previously shared was 8,000 stores. We're taking that to 8,500. The reason we can do that again is that carryout business. It lets us go to lower household areas for greenfield stores and makes those splits, those fortresses that may not have been profitable before, more profitable. All right. So that's a quick high-level view of how More is going to play out in the U.S. I have confidence in this plan, in this brand, our franchisees, most of all. I hope that came through. And to help tell a little bit more about how technology is actually going to bring this to life in the U.S. and globally, I'll invite up Kelly.

All right. Thank you, Joe. Good morning, everyone. My name is Kelly Garcia, and I'm our Chief Technology Officer. I started with Domino's, just a short while after Joe in 2012 to help transform our digital technology and our digital technology teams, not just to support the U.S. but also to take that technology internationally. In 2018, I was promoted to Chief Technology Officer. In 2020, took over all of technology, but held on to that Chief Technology Officer title. And in all the years we've been doing technology at Domino's, we really have created an incredible foundation of technology and technology capabilities that positions us very well to leverage technology across all 4 pillars of our Hungry for More strategy. And the way that we're going to do that is by continuing to provide smarter solutions for our stores as well as our customers. And for our customers, what that means is providing world-class e-commerce ordering platforms that showcases our most delicious food in breakthrough ways and providing personalized experiences that really delivers on renowned value. For our stores, we're going to provide technology to our best-in-class franchisees that optimizes every area of the circle of operations and orchestrates order flow to ensure operational excellence. And that technology, it will drive efficiency in the store. But the other thing that it will do is just make it easier and more enjoyable for our Domino's team members. So let's first take a look at our plans in customer technology. And we'll start by talking about our ordering platforms. We have a great history of delivering frictionless experiences for our customers. We now have 18 ordering platforms, so that customers can order in whatever way is best for them. And that relentless pursuit of frictionless ordering has led to 15 consecutive years of digital sales growth. Now $7.5 billion in digital sales for the trailing 12 months. And if I look at that number and I smile because I know when Joe and I actually started in this business, it was less than $750 million. So that's an astounding number for me to look at. And I also look at that number on the right, which is digital sales mix. We're now at 85% digital sales mix. And a lot of questions that we get from the folks in this room is how high do we think that digital mix can go? So we thought we'd give you a look at the data one click down. So when we look at digital sales mix in the U.S. by service method, what you'll see is our delivery business is just over 90% digital sales mix. So that's nearly a fully digital business. There's some opportunity there, but we know there's going to be customers that are going to continue to want to leverage the phone. However, when you look at carryout, we have a lot of opportunity there with carryout at 75% digital sales mix to really drive a higher level of digital penetration. Now there's a reason why it lags delivery. I mean historically, our delivery business, as Joe talked about, was a much larger percent of our business. So in digital, we focused a lot of our energies and effort at making that experience seamless for our delivery digital customers. We have to, in this next generation of digital technology, make sure that we're providing a great experience, not just for our delivery customers but also for our carryout customers. And as a reminder, every customer that we transition from phone to digital has a slightly higher ticket. They engage in our loyalty program, so frequency goes up. And then, of course, we're removing those phone calls out of the store, which just simplifies operations for our team members. So as Russell and Sandeep announced on previous earning calls, we're replacing our ordering platforms from the ground up, right? And one of the key things that we're looking at there is really optimizing those experiences for both delivery and carryout customers. But in the pursuit of the most delicious food, it will have a new modern look and feel, but it will romance through new visualizations and new product builder experiences to really drive that craveability. We're also streamlining navigation. And we're streamlining navigation and we're streamlining the builders and the way that people engage with our products to drive product exploration, but also to remove friction, to remove clicks from that experience, which will result in a happier experience for the customers and ultimately better conversion. But -- and as the technologist, we get to build this from the ground up. So every aspect of the site will be faster. But not just faster for our customers because we get to redo the technology, Remember, I was here when we put this technology in, we can look at the platforms, and we can make it faster for our marketing teams and our technology teams to then deliver faster innovation in the future. Now I thought I'd give you a little bit of expectation on when you might start seeing this technology come out. Well, one, we've completed design and that design was based on extensive consumer research and consumer usability testing, and our teams are full go on development right now. But this is a significant project. We're not waiting for us to be completely done with 100% of the things that we want to see before you start seeing those elements. So you'll start seeing elements of the design in January. And let me just explain the philosophy of the way we think about this a little bit. When I look at large technology projects like this, what we always try to do internally because speed is important, speed wins, is look at how we take elements and pull the value as far forward as possible. So we've looked at all the things that we've learned in this research and the things that we know can add value today and things we can seamlessly integrate in with our current technology. We've A/B tested. We have a series of A/B testing going on now. We're seeing really good results. And we're going to start launching those things in January. We have 3 things slated for the first quarter. And until everything is done, we're going to continue to pull that value into the existing sites. So you'll start seeing it early next year. Now not everything can be pulled forward like that. It's just not possible to -- for all the ideas that we want to do to have everything come in. So we expect development to be done later next year in the fourth quarter. And at that point, we'll start moving customer traffic over and measuring, making sure that it's delivering the value that we expect to see. And remember, we should be pretty honed in on that because we'll get a good set of data from what we've already launched. And when we see full value generation, everybody is coming over. And we'll never stop improving. We'll continue to iterate and to drive value. And again, because the tools are more modern, we'll be able to do that more faster than we have in the past. Now let's talk about another customer initiative that we have going on, which is personalization. Now this isn't new for us, right? We've been doing personalization for years at various levels across digital marketing, and in our e-commerce platforms. But when you think about 2 of our Hungry for More strategic pillars, which is most delicious food and renowned value, what we recognize, as Russell mentioned, is that those 2 things, deliciousness and value are innately personal to each individual. What I find delicious is not what you find delicious. What I think is valuable is not what you think is valuable. So we have an opportunity to provide deeper levels of personalization that will lower friction in the experiences. And ultimately, drive frequency and optimize lifetime customer value. Now the really fortunate thing at Domino's is we have a really massive, rich data set on our customers based on all the activity that we've had over years. That -- data is currency in this world of technology. And so that will really fuel this deeper levels of personalization. But what we don't have right now are the technologies and platforms to really unlock that level of personalization. So in 2024, we are implementing brand-new data platforms that can integrate in all of the richness of our data in real time with new machine learning models and new personalization engines. That is really, really cool to me as a technologist. But to the customers and to you, what's cool, is it will provide these hyper-personalized experiences in the near term. So we'll be able to provide pre-configured pizzas that meet customers' definitions of deliciousness, we'll be able to surface the right offers to them. In the long term, where this goes is very personalized and unique value propositions. So packaging together because, again, value is more than price. Packaging together dynamic rewards, dynamic pricing, dynamic offers and dynamic experiences really to individualize all that very specifically for each customer. And so we're excited to start this journey of going deeper in personalization in 2024. Now the last thing I'll talk about around customer. We have entered into an alliance with Microsoft, to figure out how to leverage generative AI to really change the ordering process. Not just for us, but they're interested in figuring out how to change it more broadly across retail. And for us, what that looks like is how do we create a personal pizza ordering assistant. What's easier than going to your assistant saying, "I need this because I have a work meeting or I need this because I have an Investor Day." Nothing is easier than that. So this experience will be more human-like. It will be based on generating complete orders based on your occasion, so family dinner, watching football with friends or even planning an Investor Day. But the point is how do you take that cognitive load, we've all been the person in charge of ordering pizza. It's not always the fun process. How do we take all that data and make it easier. And we'll also make it fun. We'll generate images of your full order. It will be a mixture of human-like experience as well as UI/UX. The teams are hard at work at this now. And we're expecting to beta, which will start simple and grow in experience next year. Okay. That's what we have in store for customers. Now let's talk about our stores. Dom OS, Joe introduced Dom OS. Dom OS is a collection of smart tools that run our circle of operations. It's also a tool that allows us to orchestrate the flow of those orders. To understand this, you really have to understand our operational flow. So the best way to understand that is Tracker, right? So remember, Tracker is orders, right? The orders placed, then prep, that's make line, then in the oven, right? That's the oven, then -- or it's baked and then the oven, then we have quality, right? And that's our team members at the cut table and then it's out for delivery and that's dispatch. What Dom does -- Dom OS does is orchestrate everything across that. So he keeps one of those eyes on the customer a store operations. And what Joe talked about is some of the new tools that we've launched in this area. So a smart make line that's watching what the customer is doing online. And underneath, that's a complex machine learning algorithm that then says, when do we think and what do they think they're going to order and then puts it on the make line. Next year, we're going to enhance this. And we're going to start working on leveraging more of the data from the stores so that we can orchestrate, "Well, gosh, what's the right time to drop that on the make line." We talked about dispatch in that order. It's watching where the drivers are and it's helping the store team members and our drivers connect better, and we'll continue to enhance that next year as well. But we have a new -- a few new things that we're going to come out with. No, as I was talking about that circle of operations, the tools that we didn't talk about was anything to help that quality step. That step that's right in between the make line and dispatch. This is the most complicated air proned step in our -- entire process. You can think about it on a Friday night with all the pizzas coming off the line. How you keep that? How do you know exactly what to do in post-bake operations and how do you make sure it's all assembled perfectly for the order? We have a new set of technology that will help make that easier and more consistent, but it will also provide Dom OS more data that we can help reduce food waste and add into this overall ecosystem. Dom OS is also not just about the circle of operations. Dom OS is about all of the operations. So we have a new labor tool we're going to beta next year. The new labor tool will be integrated in with another model that we have to provide forecast, which our franchisees can optionally use. This, we believe, will drive better schedules, more accuracy to the labor schedules that are there, but also provide team members more flexibility and engagement. Now all of this technology works with our proprietary point-of-sale called PULSE. PULSE has been with us for some time. It's our foundation. It's gone through 38 major releases and 1,000 minor releases. And we have a new version of this foundation coming out, we call it New PULSE. Similar to that philosophy that I've talked about, we've detached all of these experiences that drive value today from the launch of this foundation. And we expect that we begin full U.S. rollout of our new foundation, our next version of PULSE to the U.S. by the end of next year. All of this technology, we're building to support the globe. And to hear more about that, I'll invite up Art D'Elia.

Thanks, Kelly. Good morning, everyone. My name is Art D'Elia, and I've been with Domino's for about 6 years now. Previously as the CMO. And for the last 18 months, have had the privilege of working on our international business, which is a pretty special business. It's a business that not only brings the joy of pizza to hundreds of millions of people around the world, but it's also a business that exports the American Dream through a powerful franchising model that has created thousands of successful entrepreneurs in all parts of the world. I'll start today by talking to you about the unique category that we compete in globally. Who doesn't love pizza? The answer to that question is no one on this planet. Why? Because pizza is arguably the most adaptable cuisine that exists. The ability to tailor pizzas to meet local taste preferences and dietary requirements is unmatched by any other food. Pizza is also highly convenient, especially Domino's Pizza, which was designed to be delivered before delivery was even a thing. Additionally, hardly any other food can match the value for money that pizza delivers. Pizza is accessible to everyone, even lower income tiers in emerging markets. For example, you can get a Domino's Pizza in India for INR 49, that's only about $0.60. And lastly, but maybe most importantly, pizza is a highly emotional category. While most QSR categories are just functional, pizza is associated with birthdays, holidays and other celebrations all around the world. This is why, for example, you don't hear consumers say, "Let's have a chicken party." No, you hear consumers around the world say, "Let's have a pizza party." So for all of those reasons, the QSR pizza category has become one of the largest and fastest-growing categories around the world. And we expect this $53 billion category to continue to grow for the foreseeable future. Now just like here in the U.S., we have also become the #1 player in the QSR pizza category internationally. And over the next 5 years, we expect to extend that leadership position. The key to us becoming the #1 player is our advantaged master franchisee model. 100% of our international business is franchised across 93 markets with over 13,400 stores that are managed by 46 master franchisees. These master franchisees have the local know-how and the right proximity to help us run exceptional operations in all parts of the world. And our model is further enhanced by the fact that 7 of these master franchisees are public companies that operate 80% of our international restaurants. Now you all know well in this room, the obligations that come with being a public company give us an added layer of alignment with these partners, especially when it comes to brand protection and delivering sustainable profitable growth. And the results from this model clearly speak for themselves. The Domino's International business has delivered 30 consecutive years of positive same-store sales growth and now generates over $9 billion in retail sales. There are very few global QSR concepts that have consistently produced the organic growth that the Domino's International business has delivered. But we, along with our master franchisee partners are as hungry as we've ever been for more sales. And that's why we're going to partner together on our Hungry for More strategy, which is as applicable to our international business as it is to our domestic business to grow our retail sales by over $4 billion for our International business over the next 5 years. To put that number in perspective, there are less than 10 U.S.-based QSR concepts that generate over $4 billion outside of the U.S. Now it probably comes as no surprise that unlocking that growth potential starts with ensuring that we continue to have the most delicious food in every international market that we compete in. We have a dedicated International marketing team, along with a dedicated International analytics and insights team. Both of these teams are focused on sharing best practices on menu innovations and consumer research techniques with our master franchisees to help them continue to successfully launch new incremental product innovations. And we've had a lot of exciting product launches across our international system this year. Pizza innovations like this new Smokehouse range from Australia. This is a lineup of premium top pizzas with smoked meats like pork belly and you can see from the image here that the team in Australia has literally translated our Hungry for More strategy on their advertising. They've also done a really nice job of delivering the deliciousness in their consumer communication that Joe spoke to you about earlier. We're also working with markets to launch new pizza inspired product platforms like this new Loaded Wedges range from the U.K. This is a great example, along with our loaded tots here in the U.S. of how to take a common QSR menu item like French fries and modify it to make it unique and ownable to Domino's. We're also continuing to work with our master franchisees to capitalize on that adaptability of pizza that I spoke to you about earlier to deliver deliciousness through locally relevant products like this black tiger shrimp pizza from South Korea, or like this Quattro pizza from Japan. And you can see it has 4 different quadrants of toppings to provide Japanese consumers with a bento box-like eating experience. Now we are really proud of the new products that have been launched across our international markets this year. But I can tell you, we are even more excited about the new product pipelines that our master franchisees have developed for the future. Now you can develop great product recipes in your R&D test kitchens but ultimately, the success of those products are dictated by how well your restaurants can execute them. And that's why operational excellence is such a key component of our international growth strategy. A lot of QSR systems operate restaurants around the world with multiple cooking platforms and significant variations in their back-of-house operations. The Domino's International stores only have one cooking platform. And we don't have significant variability in our circle of operations. They're all very similar. And what this allows us to do is better leverage our global scale and more easily share best practices than other QSR systems. It means that the operations innovations being developed right here in this Innovation Garage in Ann Arbor, Michigan, can easily be adopted by a Domino's store in China or Poland or Mexico or any of our other international markets. It means that the Domino's operating systems that Kelly spoke to you about earlier can also be more easily adopted by our master franchisees. And again, this portfolio of common purpose built store technologies provides our master franchisees for the option for an unparalleled global technology stack. And these technologies are going to become increasingly important in running operational excellence. You can see from the slide here that actually a lot of our Domino's International stores are already powered by the Dom OS systems. And the reason for that is they provide our master franchisees with 2 key advantages. The first key advantage is cost savings that come from leveraging our global scale. And those cost savings aren't just a benefit to our master franchisees, they're also a benefit to DPZ. Why? Because when we can help our master franchisees make more efficient technology investments, they're not passing along those inefficiencies in the form of price increases to customers, which over time can reduce traffic and orders and therefore, our royalty income. The second key benefit is faster innovation cycles. When you are operating common fully integrated technology systems, it allows us to help our master franchisees bring innovations to their stores faster. Now as Joe talked about earlier, renowned value always has been and always will be a strategic imperative for any of the Domino's businesses, including the Domino's International business. And a result of that, our master franchisees already do a really good job of delivering differentiated value around the world. So what our international teams are focused on is helping them ensure that we continue to have -- differentiated value in all of our international markets. Specifically, our teams are focused on sharing best practices across value strategies like national deals, boost weeks, loyalty and other CRM tools. And a proof point of the positive impact that this best practice sharing can have in the business is what happened earlier this year in Mexico and Canada. Our international teams worked with both of these markets to help them run the same boost week playbooks we've been running for years in the U.S. And in both cases, these promotions delivered all-time record-breaking sales weeks. Also, as Joe mentioned, aggregators are a new way to bring renowned value to our U.S. business, but they are not new to our international business. Many of our master franchisees have been partnering with aggregators for 5 or more years, and successfully leveraging these marketplaces to acquire new customers. Today, 60 of our international markets are partner with aggregators and these partnerships generate over $1 billion in retail sales. So again, this is an area where we're actually importing not exporting learnings. And lastly, as I mentioned, the key to the success of our International business is that it's enhanced by an advantaged master franchisee model. Again, 80% of our international stores are managed by 7 public companies. Our most recent master franchisee to go public was DPC Dash, who listed on the Hong Kong Exchange this past March. And we're really proud of the fact that this has been one of the few successful IPOs in Hong Kong this year, which we believe is not only a testament to the strength of the Domino's brand, but also a testament to the strength of Dash's leadership team. The other thing that you'll see on this slide is that we've included the latest store growth guidance that have been provided by our public master franchisees. And you can see from these numbers, they are as bullish on the future growth of Domino's as we are and importantly, align to the ambitions that we're sharing with you today. Now along with our partners, Dash in China and Jubilant in India, we are poised for breakout store growth in both of these markets. I was actually just in Shanghai last week, and I can tell you, every time I visit this market, I come away even more energized and more confident about the future of Domino's in China. China and India combined over the next 5 years will deliver slightly less than half of our store growth. But beyond these 2 markets, we're also going to continue to deliver broad-based balanced growth across our other emerging markets and developed markets in all regions of the world. Additionally, because of all the store growth that we've achieved over the last several years and will continue to achieve over the next 5 years, more and more of our international markets are starting to reach the required density to begin to reap the benefits from fortressing. So we are as enthusiastic about the fortressing benefits that we're going to increasingly see across our international business, as we are about the net store growth that we'll deliver over the next 5 years. Now we're really excited, obviously, to expand our international store portfolio to over 18,500 stores in the next 5 years. But what we're even more excited about is the long-term growth potential of our international business. We routinely conduct a number of analyses to help us estimate the full store potential of our International business. These are analyses such as sales and stores per capita, share of wallet, share of the pizza and QSR categories, et cetera. And when you triangulate these different analyses, what they show is the estimated full store potential of our international business is over 40,000 stores. So that means even with all the store growth that we're going to deliver over the next 5 years, we will still have less than 50% of the estimated full store potential of our International business. So I hope you're now as excited as we are about the future growth prospects of our international business. And I'll now hand it over to Sandeep.

Good morning, everybody. Delighted to be over here today and see so many familiar faces. And I super excited also to be the newest member of the team that you're talking to, just had 20 months with the company. But as Russell talked to you about earlier, all of our franchisees have pizza sauce pumping through their veins. And that's what we talk about with people who actually work for Domino's too, and we call them Dominoids. I am a certified newly minted Dominoid with 20 months behind me, and I'm thrilled to say that. So I think some of you know my background, some of you don't. So I'm actually going to give you a little bit of color. And I grew up in India, but I have actually spent about 30 years living between the United States and different countries in Europe -- 4 different countries in Europe. And over that time, I've actually worked in multiple industries. I've worked in the toy industry for about 13 years. I worked in the fashion industry for about 9 years. I've worked for a couple of years in the theme park industry. And then I've been delighted to join the restaurant industry as well. So -- and it's been a great journey for me. But I think the very common thread that runs through it all is all of these have been with consumer-facing brands. And what happened was a couple of years ago -- just over a couple of years ago, I got a call from an executive search firm and somebody who knew me and they said, "We know you love brands. Would you really be interested in looking at a brand that I think may pique your interest?" I said, "Okay, sure." I signed the NDA. And then when I actually saw that it was Domino's, my heart just leapt. Because, honestly, this is a brand which is one of the most iconic brands that I known over the time that I've actually been working in my career, and -- and I had so many memories going back to when I was much younger to all the way through my entire career. I talked about the experience that I had in India. I've talked about the experience that I've had in different countries in Europe as well as in America. I've experienced the brand in so many different places. And that actually triggered something for me, which is when I look at the size of the international business, I realized that there was so much more potential on this international business at Domino's. And this is before I joined Domino's. And what I can tell you is 20 months later, all of those 3 hypotheses are true. They're very valid. But I've learned 2 incremental things: Number one, this business in the United States has enormous growth potential. And that's something I more fully realized only after coming into the company. And Joe talked about all of the exciting plans that we have. Huge, huge runway as far as we're concerned. So that's the first incremental learning I had. The second incremental learning I had was something that both Russell and Joe touched on, but until you inside understand it. Our franchisees are our superpower. And they've actually made such a huge impact on this business over the years, and they are going to be the fuel that actually makes this strategic plan come to life. And I've learned so much from these franchisees, really smart people, great business people, and it's been an enormously enriching experience to actually -- to get to know them. So Russell and Joe both shared some updates on the U.S. business with you, right? They gave you a fair couple of teasers. I'll give you another teaser. Look, when we talked back in October on the third quarter call, we were really excited about the launch of the loyalty program, and things were going very well. And we had seen some good transaction traction already from the launch of the program. What I'm happy to tell you is we're actually tracking slightly better than what we actually saw at that time back in October. And we're already very bullish. So we're pretty excited about positive comps coming in the United States. And so we're happy to actually say that the traction on the delivery business as well as our carryout business has been very good and driven by transaction growth. And it was really driven by the loyalty program that we talked about, and the launch of Emergency Pizza, which is a great customer acquisition tool into the loyalty program as well, which has worked for us. So super excited about the Q3 trends. I'm not going to spend too much time on Q3 after this because I want to really focus on the forward look. But I think what I will do before I actually might [indiscernible] to talking about the financials, is touch on Investor Relations for a minute. Now earlier in the year, we've actually got plenty of feedback from an Investor Relations standpoint. We weren't providing the adequate level of support and your feedback was very fair. We took on board the feedback. We went out. We actually engaged a search firm, and we recruited Greg Lemenchick to come in as our Head of IR, a couple of months ago. And we couldn't have been more thrilled about who we hired than Greg. But what really amazed me was the reaction that we saw when Greg actually came on board because it was pretty obvious that you guys have a great relationship with Greg already. His knowledge of the QSR space has been fantastic. And we feel in great hands. We already felt in great hands, but we feel even better hands with that. And -- but last but not least, I would be completely remiss if I didn't actually acknowledge the amazing contributions of Ryan Goers, who we heard from earlier. Ryan has been wearing 2 hats. He's been wearing the finance hat, and he's also been wearing the Investor Relations hat. And frankly, it was way too much, and we realize that. But I think if you actually look at what's been happening with Investor Relations response to you over the last, let's say, 6 months to a year. And if you've seen any improvements over the last 6 months or so, it's all due to Ryan. Ryan has done a great job of actually feeding back what investors are looking forward to Russell and I, and we've tried to activate as much as possible. There's more to improve. We know that. We'll keep on working on it, but I just wanted to make sure that I took the time to acknowledge that. So with that, I'm just going to go into the financials, which I'm sure you've been waiting to hear about. I'm not going to spend too much time on this particular slide because Russell has already actually gotten into it and given you some color on it. But I'm going to go into a lot more detail because I think the detail is probably very interesting for all of you. So with that, let's start with more sales. So what is more sales mean? I mean 7% or more or 7% plus global retail sales excluding FX. Well, it's going to have to come from a healthy mix of same-store sales and store growth, and that I think has been the model for a number of years and continues to be our model going forward. But specifically, we wanted to give you this number. What is U.S. same-store sales. We are saying we will do 3% or more on U.S. same-store sales as we go forward in the next 5 years. But I want to touch on 2024 in particular. Because in 2024, we have a couple of catalysts which are a bit outsized. Number one, I think from a loyalty program standpoint, we actually launched in the fourth quarter of '23. So we have 3 quarters worth of lapping the old program, which should be a catalyst of incremental sales. In addition to that, the Uber launch is actually going on right now with -- the pilots are going on right now. But we really don't go into full marketing until Q1 of next year. So we've got 4 quarters worth of that as well as the catalyst. So when you put those 2 things together, we expect that same-store sales in 2024 will be above the 3%. And that's kind of how we're thinking about it. Then international. International is like an unbelievable story, and I just -- I'm going back in my memory to that 2 years ago when I talked about joining the company, when I first started reading about it, I said, 28 consecutive years of same-store sales, I was convinced it was a typo. I said it must be 28 consecutive quarters. It can't be 28 consecutive years. But lo and behold, it was 28 years then, it's going to be 30 years now. I've never come across a brand in my career that has had this kind of track record with such a mature business. So it's incredible. And you've heard from Art on all the different things that we're doing internationally, super confident in the 3% plus international store same-store sales growth. And then I want to spend a bit more time in a while on the annual global store net store growth. But the important thing is when you actually add this all up, it's $7 billion or more incremental by 2028. You probably picked up on this from Joe's and Art's presentations, but there's $3 billion or more in the U.S. and $4 billion or more internationally. And I'm going to actually drill into that a little bit more now. So either on the store growth, and I know this has been very topical. And I think from a detail standpoint, we've typically just talked about the global number, right? We talked about global unit growth. But we haven't really broken out the U.S. piece from the international piece. And I think, obviously, from an economic standpoint, it's very important for you to understand how we're thinking about it. So we're actually breaking this down for you now. So when you look at the U.S., we're saying we expect to do 175 stores or more annually over the next 5 years. And I want to take a couple of seconds over here to actually go through the U.S. trajectory in the last couple of years because in 2022, we did 126 stores. Okay? That was that was due to a number of headwinds that we've talked about previously. But then when you go into '23, we talked on the Q4 earnings call, about the fact that we had about 72 stores under construction, and we've talked consistently through the -- since the beginning of the year that we're going to see an acceleration in the fourth quarter. What I'm happy to tell you is we're on track. Things aren't really changed. We expect to open the majority of our 72 stores in the fourth quarter, and we're on track with that. And we also had said that we expect to see sequential acceleration versus '23 in '24. We expect the see a sequential acceleration, and that's the 175 stores that you see there. But we're not satisfied with 175. We want to do more. But everything that we talked about, especially what Joe talked about in terms of where the store EBITDA is going is going to be very instrumental in driving that up and even higher than it is. I want to touch on something which is probably very important for you to actually think about in this context. I just talked about 3% plus on same-store sales. I'm just talking about 175-plus stores in terms of the U.S. business. You put that together, it's like a mid-single-digit retail sales growth, right? You compare that to the historical category growth over the last decade or so, it's been in the 1% to 2% range. So we're continuing down the path in this projection of gaining share because we don't expect the category growth to actually deviate from what's actually happened over the past decade or so. And that's super important for you to keep in mind in terms of context to how we're thinking about the business. And then International, we expect again to do 925-plus stores in International. I think this year has been characterized by a number of idiosyncratic closures. Hopefully, most of that is the rearview mirror. And as we move forward next year with all the initiatives that we're talking about, we should be back on track with the 925, at least in '24, and then accelerate from there to do more beyond that. So we put it all together, that's 5,500 stores or more by 2028. Now for the slide that I'm most excited about. So Russell talked about zeros and ones. So I hope we can pile a whole bunch of ones and a whole bunch of zeros behind them because we're all about the profits, and we're super excited about where this is going. And if you actually talk to the leadership team, they know I'm obsessed about profit growth. And that's what this is all about. So in terms of unpacking what's the components of it, the first principle that I would say is has been consistent the last couple of years that I've been with the company, I've actually talked about growing revenues faster than sales, whether it's retail sales versus expenses to make sure we're driving operating leverage. And that principle still applies. I've actually unpacked the top line growth. So I'm not going to spend too much time on it over here. I'm going to spend some time on investments because these investments are super critical to driving that top line and continued profit growth. And there's more I can actually tell you about that in a bit. And then moderate margin expansion. We expect moderate margin expansion, and I'm going to actually explain why a little bit more in detail now. So first of all, if you look at 2023 and what we've talked about, we're expecting to achieve our peak margins versus -- since 2019 this year. It's a significant margin recovery year for us and we've actually improved a lot versus where we were in '22. Now as we actually pivot towards 2024, we expect to actually see strong sales, like we just talked about in the U.S. But I think from an investment standpoint, we are very interested in making sure that we're investing in for future growth. And so expect margins in '24 to be relatively flat versus '23, but we are going to be very focused on driving profit dollar growth. So think about '24 as a profit dollar growth engine. And then after that, we actually move into a moderate margin expansion and continue on the path that we're talking about. And so I think overall, when we think about margins, what I will say is I want to touch on supply chain, in particular, because supply chain follows the same model that I talked about in the U.S. And there, I would say that there's been a lot of discussions about our supply chain margins and where that's going, expect really not to see significant changes in terms of margin going forward versus '23. If we assume a relatively stable food basket and inflation relatively stable as well but look for profit dollar growth in supply chain because it's going to follow the U.S. business. But when you put it all together, this is a $400 million incremental growth plan. And I think the $400 million has a great ring to it. $400 million in 2015, $400 million as our growth since 2015. And we want $400 million or more by '28. We're committed to actually driving as much as we can to drive more. So I did say I was going to talk about the investments a bit. So I'm going to spend some time on talking about G&A first. So on these numbers, I'm starting to go back to 2019 just to make sure that we are anchoring back to the pre-pandemic levels. You can -- as a company, we are looking at G&A as a percentage of global retail sales. And so what you can see on this is we've actually leveraged from 2.7% to 2.4% over the time frame. And I'll take a second over here to acknowledge one thing, which is with our international master franchise model, a significant portion of our G&A is going to be centered in the United States. We also look at the U.S. G&A as a ratio to U.S. retail sales, and we're seeing leverage there, too, and we managed to make sure that we're getting leverage on that side of it as well. So what you would expect to see is, as we move forward over this 5-year horizon, we stay at 2.4% or better if we -- as we go through the 5-year horizon. So a lot of questions have actually come on G&A specifically. And what's in G&A, can you guys give us a bit more detail on what's actually in those buckets. So on G&A, this pie chart is a little bit detailed, so I'll take a couple of seconds to go through it. There are 5 slices on it. The 5 slices include consumer tech, store tech, supply chain, corporate stores and corporate back-office support. So as you can see on this, the corporate back office support is about half, roughly, of our total G&A costs. But what I want to do is I'm going to drill down into 3 components. We have got 40% of our G&A spend going into consumer tech, store tech and supply chain. The first 2 of those, consumer tech and store tech are essentially revenue driving. And so from our standpoint, that's super critical to actually spend the money on those areas to drive that offline. And the last one, supply chain is to make sure that we have capacity available to fulfill the sales. And you look at all of this, about 40% of our G&A has actually gone into these 3 buckets, but that's up from 30% of our G&A in 2019. So not just are we leveraging our total G&A, we are being highly strategic about where we're investing that G&A. So that's important to actually tuck away. What's really important also to understand is does -- consumer tech and store tech costs to a great extent, are funded by our technology fee paid by our U.S. franchisees. So we are investing on their behalf to drive sales and profit growth for them and eventually for us through royalty income. So that's super critical. And the supply chain investments end up being effectively profit share with our franchisees as well. So it's a win-win situation where it's co-investing effectively for maximum value. So I'm going to go forward to CapEx because the construct is a little bit similar on CapEx in terms of the 5 slices that I just talked about, they're on this page as well. I'm not going to go into each one of them in detail. But what I will say is there's 3 components that I called out over there. 90% of the CapEx is on those 3 components. And here too, the consumer tech and store tech investments are driven by the technology fee to a great extent from U.S. franchisees. So when you think about how to actually -- how franchisees think through this whole construct, we really are looking to make sure that we're continuing to invest behind our shared objectives essentially for our U.S. franchisees driving their profits and driving ours. And that's how we're thinking about this model. So with that, I would actually talk about like what does this mean from a go-forward basis? We're investing for the long term on a go-forward basis. And I think from a CapEx standpoint, to make sure that we actually can fund and cover the investments we need to do to drive the top line that we believe we can realize in this plan, we are upping our CapEx estimates to $110 million. We believe this -- are going to deliver significant and improved returns as a result of these investments. So another area that has actually been quite topical has been store -- our franchisee store profits and paybacks and Joe touched on it a little bit. In 2019, what we know about the EBITDA number of $143,000, the build cost has been a subject of much discussion. We wanted to give you this because I think it's been a question that's come up a bit. The average build cost is $325,000. Back to Joe's point, relatively low build costs for our business. And in 2023, Joe already told you, it's $160,000 is our best estimate at this point. The build costs are estimated at about $400,000 on average. And this is relatively flat since 2022. So we're seeing stabilization in build costs based on what we've been seeing so far with significant improvement in profits based on the smart pricing that Russell talked about and the transaction growth that I actually talked about and Joe also talked about. So when you put all this together and then you think, "Okay, so what does this mean on a go-forward basis?" We've now talked about the catalyst of Uber. Incremental sales, incremental profits to the franchisee P&L. We've talked about the loyalty catalyst. What does that mean? Own channel for delivery as well as carryout is incremental sales and incremental profits. All of that leads us to actually when you align the long-term guidance that we've given you to expect that we see $170,000 or more in franchisee EBITDA in 2024. So super excited on where this is going to take us. And not surprisingly, with these kinds of numbers, we expect that the unit growth potential is very significant, and this flywheel just continues to build on itself. So now I want to touch a little bit on our capital deployment priorities. First of all, no change. Our principles haven't deviated from where they have been for the last few years. And I think the first priority is obviously to reinvest in the business, which I just took you through, so you know all about that. And then returning cash to shareholders has been a priority for us. Dividends and share repurchases, we've done them consistently. We expect to continue to do this consistently. And from a leverage standpoint, we've actually been at a 4x to 6x EBITDA, from a leverage standpoint. This is very topical. I know it's been very topical. I want to spend a bit more time on leverage in particular, but all of this is driven outside shareholder returns over the long term. So I'm going to now get into the leverage topic a little bit and get into a bit more detail. So look, first of all, all of our debt is fixed rate. And the average rate that we have on our debt is about 3.8%. Our current leverage ratio at the end of Q3 was 5.4x. With the profit guidance that we've given you, we delever naturally to profit growth by about 0.5x a year. So essentially, based on natural deleverage, we should be somewhere closer to the low end of this range by the time our next maturities that come up in October 2025 come up. So what you're probably wondering is what's your decision-making process on leverage? So let's start with if interest rates, which we acknowledge are elevated, remain at the current interest rates, we will not increase our debt load, and we will not lever up, okay? If interest rates actually go higher than they are currently, we will potentially partially pay down debt and delever. But in the happy circumstances where interest rates go back down to lower levels than they are right now, we look at our optimal leverage again. But within the 4x to 6x range and if there is an opportunity to lever up, over time, we will actually look at that. So hopefully, this gives you some clarity into the decision-making process that we're actually going through all the time. And this is a constant discussion as Russell and I and the Board will discuss it together, and that's how we think about it. So from a free cash flow standpoint, this is something which is super critical, the company has generated a little bit north of $400 million in 2019. Expecting to do a little bit less than $471 million in 2023. But overall, we expect to do over $500 million, but with the expectation that over 5 years, that's at least $2.5 billion or more which we are looking to return to shareholders. And if you think about the profit guidance, you can do the math, but there's a lot more than $2.5 billion, if you actually look at the growth that's in there. So we're super excited about what this is bringing us. So look, we've talked a lot about the Hungry for More strategy, but I want to take a minute right now to talk about our stewardship goals. We just published our third Stewardship Report last week. And I was really proud when Russell asked me to actually take responsibility for the ESG team earlier this year. And I think the team has done a fantastic job making a lot of progress, but we're still in the early innings. There's a lot more that we have to do to progress on this front, but we've made a lot of good strides already. And the great news for me is this long-term guidance that we've given you is completely aligned with our stewardship goals and incorporates our expectations from a stewardship standpoint as well. And so the chart speaks for itself. I'm not going to spend much time on actually going through the details on the chart. But what I will tell you is we're just getting started. We're Hungry for More. And if you want to find out more about what's coming next, here's a little video right now, 45 seconds. [Presentation]

That concludes the presentation portion. The Q&A session will begin at 11:00 a.m. [Break]

All right, everybody. Thanks, and welcome back. A couple of things. One, I want to let you know, we had cameras on, and we saw who was dancing to the Billy Idol music. So anyone with a tough question that, that video may appear on the Internet. Second, I'm going to throw it off to Greg before we go to Q&A.

Yes. Thanks, Russell. Just for just a couple of things as we get into Q&A. So we're only going to be taking questions from those in the room today. So if you can, for those in the room, please raise your hand. Ryan and I are going to be running mics around the room here. So again, please raise your hand. When you get there -- when we get to you, please stand up when you ask your question. If you can, please announce your name and your firm. And we would ask if you can please keep it to 1 question at a time. So with that, I'm going to hand over to Ryan to take our first question.

Dave Palmer, Evercore ISI. Lots in your presentation. And I was just trying to jot down some of the things you're talking about with Dom OS. And maybe we'll just limit it to some of the things you're doing in-store, everything from dough stretchers to the new ovens and you were talking about boxes being pre-folded and another quality assurance tool, new PULSE. Could you maybe bring it together for us and just talk about what that means, when these things are being rolled out? Some of them are probably partially out there already, so you probably have more of a sense than others. But what is it going to mean to sales maybe to profitability as well?

So Dave, thanks for the question. Actually, I'm going to direct it to this side because I think the two of you -- Joe and Kelly can talk about that.

Great. Yes. So there is a lot to unpack there. Dom OS is this envelope that encompasses both technologies, tools like DJ, we've got one in the back. You can go check out during lunch, as well as then the technology underneath it. And it's in different stages. Some of the pieces like the DSS that -- we call it the digital shoulder surfing that lets us know an order is coming in that's already rolled out to 100% of our stores. DJ is just becoming available to our franchisees right now. We expect that's going to roll out over the next 12 to 24 months. So there's going to be a staggered impact there. What we've already rolled out is what has underpinned the improvement that you've already seen in our service. And then Frank Garrido, our Chief Restaurant Officer and his team then leverage that, particularly what we call, load and go, which is the system within the stores where every job, every position in the store has very clear responsibilities at this point, introducing things like the runner. And that's just adding more clarity and satisfaction in the store. I didn't have the chance to tell this story in my presentation today, we actually had -- one of our top managers out in Seattle was ready to quit, was running a $60,000 a week store. It's about twice our average. Just -- this is too much. I can't keep up. the franchisee who's part of one of our advisory councils had seen Dom OS, so he -- give it a chance, go to the training. Went to the training, came back. He went from multiple lates a week to no lates, his service time went from 28 minutes down to 22 minutes, I believe it was. He now wants to be a franchisee. If that doesn't give me confidence in what we're doing, nothing is going to. I'm super excited about continuing to have that impact. I don't know...

No, I think I think that's great.

I just -- I would add, if you want to think about where the puck is going, to me, the idea is just in time pizza, just-in-time pizza making, right? So orchestration, but between the systems and the people to make sure, for example, why should you start making a pizza, if you know a driver is not going to be back, right? And so this idea of just-in-time pizza making talks to the efficiency, but it talks about the decreased variability in which we're going to get customers their pizza, which is we know is so important for repeat.

Andrew Charles from TD Cowen. I have a question for Joe and/or Sandeep. You guys talked about how operating profit growth is going to outpace sales for you, the franchise. Or if we think about U.S. franchisees and U.S. store-level cash flow, can that same philosophy applied if we assume a normalized commodity and labor inflation environment? I know for 2024, for instance, you're guiding 6% plus store-level cash flow versus 3% plus U.S. same-store sales. So kind of curious, if we think about 2025 and beyond a ramping impact from third-party delivery, more personalized market that you talked about. Is that still the right philosophy to think about, if we think about the store-level cash flow as well?

Yes. I think it's a great question, Andrew. I think the guiding principle for us has been make sure that we drive transaction volume. And I think that's the beauty of the model that has actually been generated for the franchisees over the years. Because the fortressing that Joe talked about, all leads to that. And so looking at margins don't make as much sense as making sure the store-level cash flows are growing. And that's the focus for the franchisees. Not just store-level cash flows at the individual unit level, but across the enterprise of all the stores that they have opened.

It's Eric Gonzalez from KeyBanc. Thank you so much for having us here today. I want to ask about your efforts to improve the messaging around deliciousness. Domino's messaging in recent years, it's been heavily focused on value and convenience. So I'm curious what we should expect to see on the marketing side to get that message out. And do you have any quantitative ways of measuring the impact of these changes, whether it be quality or taste scores? And is there a cost to this? In other words, do you have anything -- do you have to take away anything on the value and convenience side to support the deliciousness side?

Yes. So I think you're going to see that primarily in our marketing. We absolutely have ways to measure that with our consumer panels. That is going to be more of a shift in spend. But we've -- the balance we're going to need to strike is continuing to own that value, which we do own. And we have established really well. We have those national offers out there. If we can keep those consistent, we believe with the size of the marketing spend that we have, we can tell that product message, we can tell a value message, we can tell a service message. We need to do all 3 of those. We believe with -- again, within our NAV, we have the capabilities to do that. The biggest thing you're going to see that's going to be most tangible will be the increased product innovation. So again, 2 plus a year coming around to product. You saw that this year, you're going to see that next year. But you'll also see the more delicious product and more focus-on product in all of our communication, whether it's about service, and we're talking about consistency and speed perhaps that's going to be in service of deliciousness. It's going to be about that food experience that our customers get.

It's David Tarantino from Baird. Thank you for such a detailed presentation, at the risk of violating the rules. I do have one clarification question and one real question. So the clarification question is for Sandeep. You mentioned kind of flattish EBIT margin maybe next year. Does that -- should we interpret that to mean that the profit growth for next year is going to be underneath the algorithm? Or is that not the right interpretation? And then my real question is on the international growth opportunity. 40,000 units is a very big number relative to, I guess, what we've heard previously. So I guess how did you arrive at that number? Does it require a lot more new markets versus the ones you're already in, more new franchisees? Just some context on how you're thinking about that would be great.

Do the clarification, and Art, we'll throw it over to you.

Yes.

Sure. I mean I think -- so David, I think on the 2024 expectations, I talked about U.S. same-store sales being above the 3%, if anything that drives total sales up above 7%, right? Let's start there. But what we're saying is dollar growth is going to be basically the big focus because it is going to be a flat margin.

Percentage.

Flat margin percentage.

Yes, I'll talk about the international store growth. So first of all, the 40-store (sic) [ 40,000-store ] estimate is long term. But the way we think about that is the shape of our store growth should follow a very similar pattern to how I explained it over the next 5 years. So what do I mean by that? About half of our store growth long term is going to come from India and China. We only just opened up our 700th store in China, and we only have 1,800 stores in India. So in particular, in China, when you think about the headroom that we have in that market compared to other QSR concepts, it's enormous. And what's really exciting, this time last year we were in less than 16 cities in China. And historically, the business was really concentrated in Beijing and Shanghai. By the end of this year, we'll be in almost 30 cities. And what gives us a lot of confidence is the stores have opened really strong in the new cities that we've opened this year. In fact, actually have blown away most of our all-time record sales. We look at 30-day sales for the first month that stores are open, and I'm going to have to start to create some new award categories because the team has done such big sales there. So that gives us a lot of confidence, but also beyond those markets, again, remembering there's also big store growth in other emerging markets and our developed markets. So let me talk a little bit about that. Certainly, as you've seen, we have some short-term challenges in Brazil, but we still believe in the long-term potential of that market. So that will be a big growth driver for us down in South America. Shifting gears over into Europe, Poland is a market that we're really excited about, along with Turkey. We're approaching 700 stores in Turkey. We think we have a lot more headroom in that market. So we're excited. And then also in Southeast Asia, markets like Malaysia. And then finally, on the emerging market front, Africa. Africa is a huge potential for us long term. We have successful restaurants in Morocco and Nigeria today, but we think there's a lot of expansion opportunities on the rest of the continent. But I also don't want you to take away that we don't have headroom left in our developed markets. So I'll also unpack those a little bit. Canada and Mexico still have a lot of headroom. We still have tons of headroom in France and Germany. Those are big market potentials for us. And then Japan, who just opened up their 1,000th store, but we also think that we have big potential in that market. So you can see pretty balanced store growth that when you start to piece all of that together, gets us to that 40,000 number long term.

Just to get to that final point of your question as well. Back in 2018, 2019, there was a shift -- we're not planting flags. We're not in the business of planting flags anymore. If you look at just India and China, we have more potential in each of those markets than all of the remaining markets that we're not in around the world when we apply those same models that Art talks about. So it's primarily focused on the markets where we already exist.

Dennis Geiger, UBS. Thanks to the team for this great event. I wanted to touch a bit more on the same-store sales targets for '24 and over the next couple of years. Really attractive, considering almost every other restaurant is going to see slowing sales, you're going to see that acceleration. But as you think about the contribution from the $1 billion aggregator number, plus loyalty, plus some of the other initiatives you were talking about, Sandeep, I know you talked about an outsized '24. Can you just talk a little bit about the building blocks, maybe beyond what you said already, to thinking about same-store sales? And maybe what data points you've seen already from some of these new initiatives recognizing it's early that kind of give you some of this confidence into those targets and the outsized potential.

Do you want to start? And then Joe, anything you got to fill in.

Yes. So I think when I talk about the drivers of the -- the couple of catalysts that I talked about, I think the loyalty program, we already have visibility into it based on the amount of time that's passed. And we do believe it's going to be a pretty significant driver of the same-store sales growth that we're talking about. The part that I think is clear from an opportunity standpoint, but it's still not yet clear until we actually turn on full marketing is the Uber piece. So exactly how much? We'll actually know once we turn on marketing in the first quarter.

Peter Saleh, BTIG. Thanks for all the detail today. You mentioned faster speed of service and consistency helps drive sales. And then you also mentioned in one of the videos that you have faster cook times -- 2-minute faster cook times with some new, I guess, oven technology. Can you elaborate a little bit on that? Because 2 minutes is a pretty significant amount of savings. Are these new ovens going into new stores? Or is this something that's going into existing stores as well?

Yes. So the oven is obviously one of the bigger capital expenses for our franchisees, and they have a long shelf life. These are far and away. The ovens that are going into any new stores -- any new corporate stores that we're building, those are the ovens that are going in. But what's great about this process is our operations innovation team that work with the suppliers to develop that oven and qualify that oven for our stores, have also been having initiatives knowing the shelf life on our ovens is so long. Going back, working with those, working on our products, qualifying those for -- with tweaks for faster speeds as well and significantly improving speeds on greater than 50% of the ovens that we have deployed by the end of next year. We don't have to replace all the ovens.

I'd just add to that. On the new oven, it's not only faster, it's our least expensive oven, if you're opening up a new store.

It's Chris O'Cull with Stifel. So I wanted to start, Kelly, if you could just discuss a little bit about the new PULSE, what it's going to allow the company to accomplish? And then can you also talk about what degree the company wants to have a unified technology platform globally?

Yes. So I mean, first, where I'll start is with Dom OS. I mean the value generation that we're having is really all the things that we talked about in terms of make line, quality assurance, all the dispatch and the smarts that goes across that. So that piece is coming forward. The value of the base foundation, PULSE, is kind of the brains that runs that orchestration. And so it will continue to be the brains and the foundation. Now our new version is no longer a monolithic piece of technology. So the value in this replacement is really breaking it down into its component pieces, so that we can replace various portions. So the value of having a single asset, we actually don't look at it as a single asset anymore, a collection of tools more. And there are certain areas in there where we can bring in third parties if that's caught up and it's a competitive advantage to replace a component of PULSE. A good example of that is our labor management tool. So the new tool -- we have a labor management tool in PULSE today, the new tool is based on UKG Dimensions. And so that's something that they spend a lot of time making sure that all the rules for labor management and all the complexities are managed, we'll let them do that. But we'll provide the models and the smarts that integrate with it and the overall experience. So we don't see it as a collection of tools. Now internationally, Art and I both think that there's great value of everyone being on a common set of technology even if it's a collection of technologies. There's some reality there with certain master franchisees on whether they can or can't come. But we still believe that us operating on a single collection of technologies is the right answer for Domino's globally. Art, would you add anything to that?

No, I think you covered that. I mean, Kelly has been a great partner. We obviously are focused on becoming a more global company. So all of the technologies we're building are not just U.S.-centric. They're built to work in all 93 of our markets.

It's John Ivankoe from JPMorgan. I'd like to follow up on PULSE and maybe ask a couple of questions around tech. So we -- 20 years now, we've talked about PULSE 1.0. In one analyst meeting, it was, we're working on PULSE 2.0 as if there was going to be a light switch and there's going to be a significant change in the platform. It sounds like it's just a series of evolutions that are kind of happening through the system. So can you give us just a little bit kind of behind the scenes, the upgrades that you're talking about in PULSE. How much is evolution? How much might be just be a completely different architecture that's going to change the way that your stores are run and the way that you manage the business?

Yes. So internally, we don't necessarily look at this as one day we're going to flip a light switch and now all of a sudden, we're going to be on a whole new set of technology in our stores. And I talked about in my presentation how we've sort of separated the experience from the foundation. So we're excited about driving those experiences and acceleration. And you'll see, just like we do on e-commerce, and we never stop innovating. All these new experiences that are out there, make line, the new assurance tool that's going into the cut table as well as dispatch, those are going to continue to grow incrementally. So once they're out there, we'll continue to do that. Now, we do have the foundation of our current version of PULSE, which is on aging technology. And so from a longer-term sort of debt mitigation standpoint, we have to replace that out. The brilliant thing, I think -- a tech guy, right, is when I think about this, how do we make sure -- we can't just stop delivering innovations to our stores to wait for that. So as far back as 2017, we had this concept of deliver value while we're doing that. So what you're going to see in the replacement of PULSE, certainly, there's new order entry and there are some new tools in there, is a replacement of that, but we're going to continue to accelerate innovation into the stores incrementally on the backs of these new experiences.

And as you think about becoming more of a technology services provider for your franchisees, I mean do you expect the percentage of their system sales that you collect in the tech fee to grow? And of course, I'm going to ask this in the context, G&A relatively flat at 2.4% of system sales. So just help me juxtapose those 2 factors together potentially increased franchise fees and G&A not getting leverage over time. And Sandeep, a related question. CapEx at $110 per year on average. I'm actually surprised that, that doesn't have an upward slope to it, technology, people, everything is more expensive in the world. I don't know how much technology fees ever go down for anyone that I've ever covered. So can you kind of comment on the type of technology inflation that you might see in that CapEx model in '28? So really all technology-related questions.

Why don't I take the penetration question. We expect that these new tools will be adopted internationally and so Art showed a slide there in terms of GPS. Well, when they adopt our GPS, they also have the opportunity to adopt that new dispatch technology. And so over in the United Kingdom, they're already adopting that. We're working with DPE, and they were actually the first ones on the next version of our make line that's coming out. So we're working with our largest master franchisees around the world, even more closely to bring this to bear. So yes, we expect adoption of these new tools to go up. I'll let Sandeep handle the G&A question.

Yes. I think you're talking both about G&A, but specifically about CapEx, if I'm not mistaken.

Are you hungry for more CapEx? I don't think I've ever heard that as a question.

So we're hungry for more sales, which is what the CapEx will drive and hungry for more profits, which is what will come from the sales. So back to your question on leverage, the whole point of making these investments is to drive sales commensurate with the investments and more profits. That's the idea. So that's the flywheel of why we should be able to be at 2.4% or in sight.

And that slope of CapEx over time, that $110 million, you're thinking about the out year...

So I think I'll unpack a little bit of that for you because we talked about consumer tech, store tech and supply chain. I think there's a combination of investments over there. Initially, I think we're going to have some supply chain capacity investments that we actually have to make to make sure that we secure all this volume. That probably starts tailing off as we move towards the end of the time period. But on the other hand, technology continues to be an investment that we'll keep on making. But all -- when you put it all together, $110 million over this 5-year horizon, seems right.

I'm going to use that as a segue because in order to deliver the more sales as part of Hungry for More, you touched on supply chain. I think Cindy, maybe talk a little bit about what the team is doing there.

Yes, sure. We expect to be $3 billion or more in sales and supply chain over the next 5 years. And as part of that, there's going to be the need to invest in growth. Now in the forward portion of the 5 years, we would expect capacity expansion under roof, which has a different level of capital component than a new build. But a capacity expansion under roof in existing sites. And then in the out years, we would expect to have some incremental new builds. But CapEx across supply chain can vary in every annual year, it will depend on strategic project investment as well as capacity expansion. And most of the large capital projects span multiple fiscal years. So they're not an one and done.

Nick Setyan from Wedbush. Thanks for all the detail today. I just wanted to revisit the flat operating margin in 2024. Even if we assume sort of G&A stays relatively flat, company-owned margins are 500 basis points below 2019. Supply chain margins are over 100 bps below 2019. So why shouldn't there be at least a gradual recovery again in 2024? So even if you assume flat G&A, we should still see some operating margin expansion in '24.

No, I think the question is a fair one. And what I would say is we see outsized revenue opportunity beyond '24, which is why we're actually making sure that we're making some investments that could go into the COGS line as well as the G&A line that actually will impact margins. Yes, will company margins get a little bit better? We expect they will get better. But I think overall, when you look at the total P&L, we believe that next year is going to be a bit of an investment for future growth, and that's why we see relatively flat margins at this point.

Todd Brooks from the Benchmark Company. Thanks for all the information, exciting to hear about product innovation and product reinvention. I want to dig in on 2 fronts. On the reinvention side, it sounds like that's targeted towards the pizza platform, anything you could tease out there from a reinvention standpoint? And on the innovation side, that 2-plus new products per year. How do we balance that with operating efficiency in the restaurant itself? What are we doing as far as menu management versus menu expansion of product offerings?

Joe?

Yes. Great. So on the innovation versus the renovation, first, to be clear, the renovation is both pizza and platforms. Stuffed cheesy bread was a great example this year, where we drove some pretty significant sales, lifted that whole platform as we introduced that new item, and it was a pretty basic innovation, particularly from an operational standpoint. So we're going to be looking at that across both pizza and platforms. You're going to be seeing innovation on both sides there. And I would count a renovation and news around one of our existing product lines as part of that 2-plus. It's where we're coming out. And it's -- it may not be news to us who live it every day, it is news to our consumers. Talking about our products, talking about our pizza variety and/or our platform variety with some new news in there like we did with pep stuffed cheesy bread is part of that. Then you should expect to see things like tots for this year as well, where -- it's a completely new platform, maybe a completely new crust type on pizza. Those are things that our marketing team and our test kitchen team are working on. In terms of the operational simplification and just keeping that streamlined, we work really closely with our franchisees, with our operators to test items in their stores, make sure they're not creating a lot of complexity. And I think you saw that in the 2 innovations this year. Pepperoni stuffed cheesy bread, no incremental SKUs, drove incremental sales, no incremental process in store really. On tots, it essentially leveraged what we'd already been doing with specialty chicken with a different base. So we try to keep things as simple as possible. Of course, we look at SKU rationalization and understand where we might have opportunities. We do want to keep the stores simple while still offering a lot of variety for our consumers.

Yes, I would just add to that, too. If you think about the first 2 platforms in Hungry for More, they got to be balanced. So you got to have the most delicious food, all that innovation. But you still have to have operational excellence. We don't launch a new product without taking our -- we have franchisees on these committees. We meet right here on those new products. And so whenever we can, like stuffed cheesy bread, that was news without SKUs. No new SKUs, and it ended up being the highest mix for the stuffed cheesy bread line. So it's important that you understand that we understand that those 2 things absolutely need to be balanced. I think lastly, what you -- I never say never, and there'll be questions later on that you may ask that, I'll say, "Hey, we're always going to do what's best for the Domino's system and our franchisees." What I firmly believe until proven otherwise, is a series of LTOs, limited time offers, is not the best for operations because essentially what you're doing every month or every other month is you're retraining your staff on a new product, which means their amount of training on the existing product is not maybe where it should be. And over time, yes, I would be a little bit worried about. So I think it's the way we innovate. By the way, the long-term ROI on something that you launch and you pull back really isn't there. So I think the cadence in which and how we innovate is going to importantly balance the M and the O.

Greg Francfort from Guggenheim. I just had -- my question was maybe for Russell. I think if we go back 15 years ago and look at some of your Investor Day slides, the category, the top 4 players were 37%, 38% market share and increasing and now we're at 53%. I think the targets you hit at that time were Mexican and burgers and sandwiches and 60% to 80% were the top 4 players. Where do you think this category gets to from -- I don't know if is there a ceiling at some point? Is there a path that you think is embedded in your next 5 or 10 years in terms of how much of pizza can be consolidating to the top 4 players? And do you think your market share is going to come from the national competitors or from a lot of these independents as the category keeps consolidating?

Sure. I think you saw -- and obviously, feel free to add. It was that we were pretty equal opportunity kind of share takers from all 3 of the categories over time. The one thing I've learned about this business is scale drives more results, which drive more results. And so for example, you talked about past investor meetings, this is probably at least the third, maybe fourth update we've given on U.S. store potential. Because every time we open up more stores, what does it do? It begets more stores. And so really, the upside for me is -- it just continues to go higher. And actually, I can give you a great example. So we talk about how carryout, why can't we have our delivery fair share, right, for carryout? Well, even the delivery business, we're about a 31% delivery share. If you look at our delivery share outside of aggregators, we're what? About 39%, 40%, something like that. And so that tells you the second we get on the aggregator platform, there should be more share. And so that's just a real big takeaway from this category and from my last 15 years, is that scale and growth and fortressing begets more and more of that in the future. So I don't really see an upper limit.

Brian Bittner from Oppenheimer. Thanks again for the presentations today. Clearly, you have a lot of irons in the fire to drive sales, particularly I think the most incremental appears to be the third-party rollout Uber Eats and then what's to come. And you've suggested that's a $1 billion opportunity. And I think the equation behind that is getting your fair share of the $5 billion market and then maybe discounting it for some overlap. And my question is what about the opportunity to take share from non-pizza? Has your data and your insights informed you of any opportunity there? And why not maybe think about putting that into your overall goal as you potentially maybe accelerate the growth of the overall pizza market on the third-party platforms? Any color on that dynamic would be great.

Sure. Yes, there is absolutely opportunity outside of QSR pizza. That said, this team, our team's focus is on QSR pizza. As we work to continue to take share in both, carryout and delivery, there's halo. It's going to -- the bull's-eye is QSR pizza, there's impact out to other QSR. We've seen that as we've grown carryout. A lot of that volume that we source came from burgers and sandwiches. So we do watch that, but our bull's-eye remains because of the opportunity, again, 1 in 5, 1 in 3, 0 in 5 billion, the opportunity that we have to still consolidate and get a bit closer to some of the other QSR category leaders, we believe that's going to be easier for us to win first. And so that's our primary focus.

Growing share outside of -- suggests, outside of that $1 billion or does that $1 billion just includes pizza?

The $1 billion just looks at the pizza category. So we're looking at that $5 billion. Now that $5 billion will continue to grow over the next 5 years and at a slightly higher rate than the 1% to 2% that pizza will that Sandeep referenced. So there's upside, there's probably still upside above, again, the $1 billion, you could think of it as our floor. The plus is as the more there -- as that category continues to grow. We're targeting our share -- our 30% share that we have currently. And that's how we got to that $1 billion number. As Russell just mentioned, we actually have a 40% share where we do compete. So there's potential upside there beyond as well, and that's just within -- looking within Pizza.

Hi, Katherine Griffin from Bank of America. Can you talk a little bit more about the quarter-to-date trends that you're seeing? It sounds like you're benefiting from some company-specific initiatives, but maybe also that the QSR delivery segment maybe finally growing. So is that the case? And can you also give us color on carryout, just since -- I think it's our understanding that, that channel was meant to benefit or have the greatest impact from changes to the loyalty program?

Yes. I think the question is right on point in terms of what the drivers are. And I think I mentioned a little bit during like my presentation, but really, it's tied back to the initiatives that we've talked about before. The loyalty program launched that actually started in September. And then I think we did the emergency pizza customer acquisition vehicle, which launched in October. And both of those have been significant drivers of transaction growth, which is what basically has improved the trends relative to what we talked about back in October, and this applies for the carryout business for sure, but also for the delivery business, which Russell talked about.

I just call it emergency pizza. This is the marketing geek in me wanting to kind of congratulate our team on the way they've done that. We were relaunching our loyalty program. Again, we had 30 million active consumers, we had over 45 billion inactive consumers. If you just come out and say you have a new and improved loyalty program that no one's going to hear you. So what the marketing team did instead was launch of this the emergency pizza program. If you come out and you say, "Hey, you want a free pizza?" People pay attention. And that free pizza was 60 points in our loyalty program, which had just been relaunched with these different tiers and the new reward structure. So that was essentially -- it was a volume driving initiative within the quarter, but it was really a relaunch kind of a Trojan horse relaunch of our loyalty program.

And actually carryout Pizza, to your question on -- or emergency pizza is your question on carryout has been really, really strong there and out of the gate the engagement of the carryout customer has done actually slightly better than what you [ guys ] had hoped.

Joshua Long with Stephens. Curious about some of the initiatives you have for executing this at the store level. So you've shared in prior calls, just the work that's been done to kind of refill the top of the funnel from a human capital perspective. As you think about kind of really unleashing these initiatives going forward, are there other elements that are supporting this in terms of driving retention and kind of helping the store-level team members really kind of move up the productivity curve?

Yes. I think maybe I'll toss it to you in a second on store level. One of the things you should know, obviously, if someone talked about this already, a big volume that we think is going to be coming our way is obviously through Uber, especially as we open the year. So we have worked with them to give all of our franchisees store-level estimates on what they should expect. And then our Insights department has gone in and kind of reconfirmed those. And so while there will be volume and hopefully on the more side, coming our way, I think our stores are really prepared for it. And in fact, I know they are because we have examples of that every quarter, when we do a boost week. We do a boost week we're pretty scientific. We know what's going to happen. The franchisees know what's going to happen. Frankly, the team knows what's going to happen, and they're ready for it. And so I think some of these -- or I know some of these over-the-top initiatives, our stores are prepared for.

I'd just add it. Within the store, Dom OS, as the video showed, as Kelly talked about, I'd say 2 goals to think about there. One is to take some of the pain out of the in-the-store jobs -- take some of that friction out, that GM that I talked about, who is struggling to keep up and is now completely reengaged in the brand. And the other is improving the efficiency for our drivers. The busy our drivers are the more tips they get, the more engaged they are in the job. So big focus of Dom OS for in-store and then on the road.

It's Brian Mullan, Piper Sandler. Just a question on development specific to domestic. Just related to the new 8,500 longer-term target. Can you just talk about what led you to that number? Did you remap the country with new software? Did you engage with consultants? Really just any color on that? And then related, just for clarification, do you think 8,500 units will prove to be a ceiling for the Domino's brand domestically? Or do you think when you get there, there will be additional opportunity beyond that?

I'll pass you the second point. I want to do a shout out to our internal audit analytics team because the beauty is, no, we don't have an external supplier. This is an internal model that we've been doing, oh God, probably for the last 7, 8 years. that just gets stronger and stronger, more predictive. We see and franchisees see it works, which is why they continue to invest. And so that's what we've used to up the number. And as I said earlier, and especially as Joe said, because of the carryout business. When you open up these stores, there's all this volume that used to not be there because we concentrated on delivery. And so as we grow the future stores that volume opens up. The other piece to understand is we've opened the last -- since 2015, we've opened about 1,600 stores in the U.S., right? Our 2 largest public competitors have combined closed about 1,300. So that's a big change. When you open that many stores, and that's what fortress thinking is all about, you essentially also -- the strategy there is to keep out the competition. And to give yourself even more places to grow, and that's what I think you've seen and why the number has gone up.

Yes, I'll just add my kudos to our store siting team. I could show you a map of where those next 1,500 stores go. I won't, but I could. We do have it. In the spirit of globalization as well, we've taken that internally developed model. And these team are now using that with our master franchisees around the world to understand, where we're putting those stores and where we -- how we eventually get to the 40,000. So exporting some of that. And I'll just reiterate Russell's point on carryout being so integral to us being able to build those stores. That 80% incrementality. If we continue to, which I'm confident we will hit the [ $3 billion ] with the carryout growth inherent in that, that 8,500 store potential really starts to dig into that loss.

Jeff Bernstein from Barclays. Russell, I think you mentioned in your prepared remarks that you're expecting restaurants are going to be facing some headwinds going into 2024. Just wondering, just because some of your peers are talking about things that actually got a little bit better of late. So as you think about the industry, maybe are there any signs within your numbers or within the data that you get that we don't get a chance to see any sign of change in the consumer behavior? And maybe how you think about pizza within that because I know within pizza, it tends to be a more aggressive discounting promotional category. So 1 just your thoughts on the consumer to '24? And 2, your thoughts around the environment and what you're seeing in terms of accounting on promotional activity within the segment?

Sure. Some of the vendors that we work with that you're aware of as well, as they look into Q4 and into next year, especially from a transaction standpoint in restaurants, they expect that to be slowing down from a transaction standpoint. We do not expect that to happen for Domino's Pizza. We know also if you've looked at our past, order count once the margin is right for stores, the profitability is right for stores, our order count drives profitability. So that's where we're getting the restaurant number from. But the initiatives we have under Hungary for more is why we'll have positive order count.

You spoke to delivery transactions and comps being positive in 4Q to date, which I think is the first time in 9 quarters. Do you see this as an inflection for the underlying business. Can you just talk about how you're thinking about growth in the organic underlying delivery business in '24?

So the answer is yes, but he'll tell you why.

Yes. It's -- again, getting our service back to the right levels, having the stores staffed up for that and having the -- executing against more. So out there with new product innovation next year. We're out there with product innovation this year, getting our value right and loyalty has been a huge driver in us being able to drive that inflection in this quarter. We've got 3 more quarters of that next year.

I'll stand just out of the sun.

You're going to have like one of those Star Trek tan.

Brian Harbour, Morgan Stanley. I had a supply chain question actually. I mean, you've often talked about kind of like the fixed cost leverage in the supply chain. Is there a reason you don't think that would show up in the percent margin per your comments, Sandeep? Or is there maybe some effort to kind of share some of that with franchisees? Relatedly, maybe -- I don't know if you want to comment on kind of food cost next year, maybe it's stable or what? And -- sorry, this is multiple questions. On the innovation side, are you very much going to be focused on things that are more favorable for franchisees from a food cost perspective, products that are generally kind of margin accretive? I would think that pepperoni stuffed cheesy bread, is although you can -- correct me, if I'm wrong on that.

So why don't we do this? For market basket, why don't we start with market basket, you can do supply chain margins and then we'll talk about innovation.

Yes. So I think from the market basket standpoint and what we've been seeing in the second quarter and third quarter, it's been deflationary. And I think, if we continue to see the trends that we've been seeing in the market basket, you're going to see margin improvement. But I think, if you just take a step back and think about 2022 and what happened, we had 13% of market basket inflation. And when you look at what happened to the supply chain margins that was driven very significantly by the market basket inflation. And even if we have been deflationary in the current year, it is nowhere near as much of a magnitude of how much deflation has come. So the margin recovery is primarily going to be driven by where the market basket goes. And unless we see commensurate deflation to what we saw in '22, that's going to be a headwind in terms of supply chain margins, which is why when I talked about '24 and I talked about what the assumptions are, it was assuming normalized inflation levels, normalized food basket levels, we don't expect to see significant margin improvement at this point. And I think that's really the broad thinking. And I think otherwise, you want to talk about our philosophy?

Yes. I mean what I would also share is because of the inflation and our dependence or impact on the inflation, I would focus on margin dollars for supply chain versus the percentage, that should more closely follow U.S. volumes. In terms of our view for the franchisees, and I know Joe will talk about the product development, though, is we are in partnership with the franchisees. You all know that we share the profits of our North America supply chain centers with the franchisees. And there's a balance. It's been a win-win, and we wouldn't anticipate to make any appreciable changes to that strategy going forward. Joe, do you want to talk about the product?

Yes. So on product innovation, our first, second, third filter is going to be franchisee profitability, not -- and that's the blend of margin profit, but then orders like Russell just talked about. So one of the great things that we have is this mix and match menu that was at $5.99, that's now at $6.99. And we often -- you see most of the new innovations that we've come out with have been targeted at that $5.99 or $6.99 price point. That does 2 things. One, it lets us figure out how we build that product to be a good food margin at that cost. But secondly, it lets us continue to talk about the whole menu. We're not just talking about Tots. We're not just salads, which we launched a couple of years ago, we never could have gone on air with just salads, if we couldn't also have that be part of mix and match, which then lets us continue to drive orders with that food news. So those are the 2 levers we look at. It's not just about order level profitability. It's about the overall profitability on the new innovation.

Danilo Gargiulo from Bernstein. First of all, thank you for the insights today. It seems that at 1,100 annual unit growth, you might be falling a little bit below the previous or at least at the lower end of the previous guidance in terms of net unit growth. So I'm wondering how much of the prudence of the current credit market and the current tightening in credit is baked in into your expectations. So could you see some upside from here on if the market conditions are improving? And then a quick clarification. I think you were talking about the store paybacks in the United States, not in international markets. Can you provide some color with regards to the cash-on-cash returns for international markets on a blend basis, please?

Sure. Maybe what I'll do is talk about kind of the store guidance that -- then you can add to that, and we'll go over to international. What I think as the backdrop as we try to put a floor in to what the store opens would be. You got to understand what's happening in each of our businesses. So in the U.S., we'll be higher this year than we were last year and will be higher next year than we are this year. And -- so we're sequentially working ourselves up. And that's why the plus and that's why the more is there. On the international side, I said this in the Q3 call, a lot of that was driven by closures and kind of onetime special closures. If you take out some of the closures from Domino's Pizza Enterprises in Russia, I think we only closed like 15 stores in Q3. And so those onetime things will get behind us, and that's essentially, why we gave a floor with more because when we think about guidance, we want you to understand where we're getting back to and then we're going to continue to grow. Do you want to talk about profitability?

Yes, I'll talk about your question on international sort of paybacks. As you can imagine, they vary a lot across 93 markets. Not surprisingly, probably the store paybacks continue to be really attractive in China and India. So those are very strong and compelling. In some of our developed markets, store paybacks were under pressure earlier this year, particularly in Europe as we were facing commodity inflation and wage pressure, but we've started to see those slowly improve in the back half of the year.

Karen Nyawera from Trillium Asset Management. I have a question with respect to the international, particularly with like what are the challenges -- or challenges or opportunities that you learned from the international franchisees working with the third-party integrators? And underlying that is potentially a question with respect to why is it that the international franchisees were the first adopters with respect to working with the 3Ps?

Yes. So I can start and then you guys can fill in. So 1 of the big learnings is that the aggregators could be incremental to our business. And we've seen that in multiple markets, and we now have a couple of years of measurement to really understand the incrementality of those partnerships. And as I mentioned in my remarks, importantly, we're able to acquire customers from those marketplaces and then shift them over onto our own platforms. So as an example, one of the highest penetrated aggregator markets in the world is China because you have what we call the super apps there like Meituan. And a couple of years ago, we had over 50% of our transactions sourced from aggregators. That's down to less than 35% now because we've been able to successfully shift those customers over to our own platforms. How do we do that? What Joe spoke about in his remarks is making sure that the value proposition on our own platforms is stronger than the aggregator marketplaces. The best deals, loyalty, et cetera. So I think incrementality and making sure that we have the best value in our own platforms are 2 important lessons that we've learned from international.

Yes. And actually, as Joe came over from international and was the one kind of spearheading the deal with Uber, a lot of those best practices have been worked in.

And you specifically also asked why international first. We don't want to help grow the marketplaces, but we're happy to compete on the marketplaces that exist. So a market like China that Art mentioned, we had 200, 300 stores that between Meituan and LMA, they have 100% penetration more or less. We needed to be there to compete. And through the great work of the team, it's gone from 50% of the business down to closer to 30% of the business. It comes back to that $5 billion number. And our overlap right now in the U.S., 35% that's relatively leveled off. There's a certain number of consumers, who are going there, going there first to this. We kind of think of it as a virtual food court. All right. They're going to go there. They're going to make their decision from the options there, we're going to be there.

And this will be our last question.

Jon Tower from Citi. Russell, I think this is for you, and it's very high level in the U.S. I'm just trying to get your perspective on, I think, earlier, Sandeep, you had mentioned that the category in pizza in the U.S. is growing about a 1% to 2% clip over the past 10 years or so, clearly, Domino's has outpaced that. I think the limited service category has kind of been in that mid-single kind of high single-digit category over that time frame. So -- do you have anything from your own internal research that says why are the categories growing slower than the aggregate limited service space? Is there something a consumer preference isn't moving away from Pizza more broadly? Obviously, you guys are outpunching that. But Curious to know why, from your perspective, the category is not keeping up with the broader limited service category?

Yes. One -- the first thing, it's a big category, a big established category they've been around for a while. And there continues to be innovation in limited service restaurants. That happens -- I used to work at a soda company. And we always used to say, hey, if someone came down from bars years ago, they would say Earthlings drink water, they drink soda, juice and milk, maybe the alcohol every once in a while, just the IT guys. And you come down from Mars today, and you see there's a much bigger variety. And I think that's the same for us. It's a traditional category. It's been around for a while. And so there's innovation, and that's why you see the growth you have in the category. But our job and what we've done and what we will do with the Hungry for More strategy is to grow. And please don't confuse the growth of the category to our growth potential. The category is so fragmented. Over 40% to 50% of the category is still kind of smaller players. And that's all upside for us. We've shown how we've grown that way, since 2015. And no matter how the category growth, that's how we're going to grow outside moving forward. Well, that's good to end on a more growth question, I guess. What I'd like to do is first thank those of all of you, who are sitting in the first row, it's like the first sunny day in a long time in Michigan. So we didn't plan for that. So -- the after Sunburn, you can send to us the receipts and we'll pay for that. For those of you who are calling at home, you're probably still at your computer. So please log on and get your emergency pizza from Domino's. And also thank you so much for joining us today. This now ends the Q&A session.