SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 15, 2014
Domino’s Pizza, Inc.
(Exact name of registrant as specified in its charter)
Commission file number:
001-32242
| Delaware | 38-2511577 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
30 Frank Lloyd Wright Drive
Ann Arbor, Michigan 48106
(Address of principal executive offices)
(734) 930-3030
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
As previously announced, Domino’s Pizza, Inc. (the “Company”) plans to hold the Domino’s Pizza 2014 Investor Day (the “Event”) on January 15, 2014. Audio of the Event will be broadcast live over the internet and archived in the Investors section at www.dominosbiz.com. A copy of the Company’s presentation materials to be used for the conference are attached hereto and furnished as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits |
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | Domino’s Pizza, Inc. Investor Day 2014 Presentation Materials. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DOMINO’S PIZZA, INC. | ||
| (Registrant) | ||
| Date: January 15, 2014 | /s/ Kenneth B. Rollin | |
| Kenneth B. Rollin | ||
| Executive Vice President | ||
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Exhibit 99.1
Exhibit 99.1
Building Brand Domino’s
January 15, 2014
Patrick Doyle
President, Chief Executive Officer
Forward Looking Statements
This presentation and our accompanying comments include “forward-looking statements.”
These statements relate to future events or our future financial performance and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. This presentation and our accompanying comments do not purport to identify the risks inherent in an investment in Domino’s Pizza and factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.
These risks include but are not limited to those risk factors identified in Domino’s Pizza, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 30, 2012, as well as other SEC reports filed by Domino’s Pizza, Inc. from time to time. Although we believe that the expectations reflected in the forward-looking statements are based upon reasonable estimates and assumptions, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on forward-looking statements, which reflect our estimates and assumptions and speak only as of the date of this presentation, and you should not rely on such statements as representing the views of the Company as of any subsequent date. We undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. In light of the above, you are urged to review the disclosures contained in the Domino’s Pizza, Inc. SEC reports, including the risk factors contained therein.
This presentation contains trade names, trademarks and service marks of other companies. We do not intend our use or display of other parties’ trade names, trademarks and service marks to imply a relationship with, or endorsement or sponsorship of, these other parties.
Building Brand Domino’s
Patrick Doyle – Domino’s Dominance
Russell Weiner – Brand Leadership Ritch Allison – Global Brand Momentum Kevin Vasconi – Technology Innovations Mike Lawton – Financial Updates
| 4 |
|
A Dominant Force in the Pizza Industry
2008 Today
Message Uninspired Unique
Product OK Quality
New to Online
Technology Digital Leader
Ordering
International Strong Accelerating
| 5 |
|
A Category That Has Market Share Growth Potential
Major Chains Share of Dollars
96%
82%
71%
40%
QSR QSR Mexican QSR Sandwich QSR Pizza
Hamburger
Year ending September 2013. Source: The NPD Group/CREST®.
| 6 |
|
Domino’s is Growing Delivery Share
2008
18.8% 31.3%
31.1% 18.8%
Domino’s
Major Competitive Pizza Chains Small Pizza Chains Pizza Independents
2013
23.1%
29.7%
17.5% 29.7%
Years ending September 2008 and 2013, share of delivery consumer spending. Source: The NPD Group/CREST®.
| 7 |
|
Leading in Digital
Share of U.S. Digital Dollars – QSR Pizza
Estimated Domino’s
Global Digital Sales of Almost $3 Billion a Year*
7.8%
7.8%
31.3%
53.1%
Domino’s
Major Competitive Pizza Chains Small Pizza Chains
Pizza Independents
January-September 2013. Share of consumer online and mobile app order spending. Source: The NPD Group/CREST®.
| * |
|
International digital sales and information based on reported sales information and other data from franchisees. |
| 8 |
|
Relative Strength of Major Players is Impacting Regionals and Locals
QSR Pizza Store Count Change
2.3% 2.3%
1.1% 2.2% 1.7%
1.4% 1.0%
1.3% 1.6% 1.4%
0.8% 0.5% -0.2%
0.1%
-0.7% -0.3%
-2.6%
Major QSR Pizza
Regionals
Locals -6.9%
2008 2009 2010 2011 2012 2013
Source: The NPD Group/CREST®; March unit change vs previous year
Major QSR Pizza = Domino’s, Pizza Hut, Papa John’s, Little Caesars
Locals = Pizza Independents, 1-2 units
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Dom world has Changed... For the Better
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Domino’s Largest Opportunity is to Improve Stores
Primary Opportunities
1) The restaurant has pleasant ambience
2) The restaurant is family-oriented
3) I feel comfortable in the store
Brand Equity Study – August 2013
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Image 2000 is 17 Years Old
Lacks purpose/alignment with revitalized brand Not customer friendly Outdated and worn
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New Store Rollout Mandated Worldwide
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U.S. Reimage Costs
Estimated cost of $40-55K per store
Some stores will be relocated
New stores estimated cost roughly $250,000 to $350,000
U.S. and international franchisees will generally have up to four years to reimage based on the number of stores
U.S. incentives for new stores and certain relocations
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Russell Weiner Chief Marketing Officer
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September 22, 2008
U.S. Same Store Sales
8.0%
6.7% 6.8% U.S. Same Store Sales
6.0% 1995—2008
4.9%
4.5%
4.0%
4.0%
2.8% 2.6%
2.2% 1.8%
2.0% 1.3%
0.0%
0.0%
-2.0% -1.7%
-4.0%
-4.1%
-4.9%
-6.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Russell Weiner, CMO
November 2008
Investor Meeting
Ann Arbor, Michigan
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The Next 90 Days…
Forge a Lighthouse Identity for the Domino’s brand
– Informed by our past and inspired by the future
– Grounded in consumer insights
Lighthouse drives brand decisions
– Advertising & Communications
– Innovation
– Store design
21
Innovation Philosophy…
Long-Term Approach
30 days and 30 years
Quality, Quality, Quality!
We’re delivery. We’re service. We’re 30 minutes…
AND the FOOD is great (Deliciously Fast)
Born out of a rational business need…Developed with an emotional POV that makes it uniquely Domino’s
Drive incremental growth and profitability
22
Did We Do What We Said We Would Do?
Re-introduced an unexpected new Domino’s to the world
– Brand
– Product
23
Figured Out Who We Were:
An honest, transparent pizza company that is always trying to get better
24
Focused on Having the Best Food:
Re-created our 50-year-old recipe from the crust up
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New Approach Significantly Improved Taste Credentials
10 8
6.55
| 6 |
|
| 4 |
|
2 0 |
| 7.94 |
|
8.92 |
Q3 2009 Q3 2011 Q3 2013
Source: Study Logic; Question asked of consumers who ate Domino’s in the past 7 days: “Please rate the overall brand “Taste” you received during this visit for your order (1-10 Poor/Excellent)”
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Great Beverage Partner
New contract with Coca-Cola®
#1 beverage company
We are the only national pizza chain partnered with them
Favorite Brand vs. Nearest Competitor
2.1x 2.9x 6.3x 5.6x 2.1x
SOURCE: USE B-Cubed.
12 month Ending
May 2013.
Total Population 13-64.
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Did We Do What We Said We Would Do?
Re-introduced an unexpected new Domino’s to the world
– Brand
– Product
Re-defined innovation
– No in and out/limited time products
– 85%+ of menu is new
– Expanding and adding new channels
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E-commerce
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Carryout
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Did We Do What We Said We Would Do?
Re-introduced an unexpected new Domino’s to the world
– Brand
– Product
Re-defined innovation
– No in and out/limited time products
– 85%+ of menu is new
– Expanding and adding new channels
Re-claimed sales momentum
– Pizza
– QSR
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We Have Significantly Outgrown the Pizza Competition
+17.0%
+2.0% +7.0% +9.9%
+8.0%
+3.6%
+3.0% +3.4% +3.5% +3.1%
0.0% +0.5%
-9.0 % 0.0% 0.0%
2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012
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And Are Leaders in the Broader QSR Category as Well
U.S. Same Store Sales 2009 + 2010 + 2011 + 2012
17.0% 17.0%
14.5%
10.3%
7.0%
2.0% 2.2%
Pizza Hut Wendy’s Papa John’s Dunkin’ McDonald’s Starbucks Domino’s
Donuts Pizza
Calculated by adding same store sales from years ending 2009, 2010, 2011, and 2012
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Momentum Continued in 2013
U.S. Same Store Sales
9.0%
Q1 2013 Q1-Q3 2013 8.0%
Q2 2013 6.7%
6.0% 6.2%
Q3 2013 5.4%
4.0% 4.2%
3.1% 3.4%
1.6% 1.8% 1.7%
0.7% 1.0% 0.7%
0.4%
-1.0% -1.0% -1.2%
-2.0%
Pizza Hut Wendy’s Papa John’s Dunkin’ McDonald’s Starbucks Domino’s
Donuts Pizza
Source: Reported U.S. same store sales for Q1, Q2 and Q3 2013. Papa John’s and Wendy’s data represents same store sales for North America; Wendy’s Q3 data is for franchise stores. Company stores were up 3.2%.
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We Have Become a Completely New Brand
35
We are now translating our new brand into retail…
Domino’s Pizza Theater
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New stores
Re-images
Re-locations
Pizza Theater Was Researched Extensively
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Pizza Theater is a Winning Image for Domino’s
Salt Lake City Gulfport Virginia Beach
Net Promoter Score Rating of Interior Rating of Comfort Cleanliness Saw Food Being Cooked/Prepared Employee/Customer Engagement
Houston
Las Vegas
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New, More Modern Uniforms Better
Represent the Brand
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And Our Re-imagined Car Topper Will Drive Awareness of Our New Logo
53
What Should You Expect From Domino’s in The Future?
The same winning formula!
Brand
First
Broad, Best-in-class
Long-term consumer
innovation research and
approach analytics
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Richard Allison
Executive Vice President, International
International is a Growth Engine
Proven international franchise business model
30 years of experience with seasoned team
Great local partners
Healthy and balanced growth
Delivering growth in developed and emerging markets
Consistent growth at 3x market growth rate
SSS growth driven primarily by order count
Attractive economics for our franchise partners
Strong unit-level cash-on-cash returns
Economies of scale
Best-in-class technology fueling share gains
Q3 TTM digital sales estimated to exceed $1.3B*
Accelerating import/export of technology ideas
*International digital sales and information based on reported sales information and other data from franchisees.
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Robust Topline Growth
Sales have grown at 12.9% CAGR over last eight years
Q3 2013 TTM
Retail Sales (millions) Retail Sales
$4,000 $ 4.1B
$3,500 $ 3,861
$ 3,519
$3,000
$ 2,952
$2,500
$ 2,452 $ 2,531
$2,000 $ 2,222
$ 1,870
$1,500 $ 1,679
$ 1,459
$1,000
2004 2005 2006 2007 2008 2009 2010 2011 2012
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Strong Store Growth
Store count more than doubled since 2004—pace of growth accelerated
Store Count CAGR 2004 – 2013 Q3
6,000 5,627 8.3%
5,327
5,000 4,835
4,422
4,072
4,000 3,726
3,469
3,223
2,987
3,000 2,749
2,000
1,000
-
2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3 2013
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Leading the Competition
Net Store Growth: Domino’s International consistently outgrowing top two competitors
600
492 Papa John’s
500 454 Pizza Hut
413 Domino’s
400
350
300
300 257
209
200 175
137
113
100 74 86
0
2010 2011 2012 YTD Q3 2013
Note: PJ’s figures do not include AK, HI and Canada; PH figures include licensees.
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Healthy Growth
Order growth: the engine of long-term sales growth
Indexed Store Level Growth
1.3
Sales
1.2
Orders
1.1
Ticket
1.0
0.9
2010 2011 2012 2013
Weighted all store indexed growth TTM through Q3 2013
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Driving Profits
International EBITDA tripled from 2004 to 2012; 14% CAGR
EBITDA (in Millions)
150
125 114.1
104.9
100 92.8
79.6
75 64.4 67.2
57.8
50.4
50 44.1
37.8
25
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3
TTM
62
Leveraging Technology
Rolling out existing • Domino’s Pulse in more than 3,300 international
tools to international stores*
markets • Over 2,000 stores have Pulse Web Reporting*
Accelerating • Established Global CEO Council
import/export of ideas • Held first Global CIO Conference
Expanding in-house • We are the online ordering provider for Canada
capabilities to support • 2014: Expanding online ordering hosting for other
international markets markets
*As of year end 2013
63
Global Digital Strength
TTM Q3 digital sales have hit an estimated $1.3B
Markets with online ordering average approximately 36% digital sales as of Q3
Nine markets are over 40% digital sales as of Q3
Almost 60% of total sales in Australia are online
The goal is to extend this to 80% in the next three years
Digital sales now account for 66% of UK delivered sales
Mobile sales were up 91% as of their last reported quarter
UK results as of December 29, 2013. Australia results as of October 29, 2013 release.
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Kevin Vasconi
Chief Information Officer
Who Do We Benchmark?
In digital we pay less attention to:
And more attention to:
68
A Holistic View of E-commerce
(DIGITAL SALES)
( x x )
Visits Conversion Ticket Engagement
&
Platforms Technology
69
U.S. Digital Sales Continue to Rise
Q3 YTD Up 26%
Digital Sales
$1.4B Q3 TTM
$1.1B
$922M
$770M
$539M
2009 2010 2011 2012 2013
70
Digital Growth Fueled by Mobile Sales Growth
Q3 YTD Up 89%
Mobile Sales
$459M Q3 TTM
$296M
$107M
$11M $33M
2009 2010 2011 2012 2013
71
Digital Sales Already More Than 60%
In these DMAs:
Sacramento
San Francisco
New York
Washington, D.C.
Baltimore
Boston
Dallas—Ft. Worth
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Domino’s Covers 95% of the Smartphone Market
iPhone® Android™ Kindle ™ Windows 8
- More than 6 million downloads —More than 4 million downloads —90k downloads —70k downloads
- Ranked #2 in the free Food and —Ranked #3 in the free Lifestyle —Ranked #36 in the free —Ranked #1 in the Food + Dining
Drink Category Category Lifestyle Category Top Free Category
- 4.8 out of 5 star customer rating —4.8 out of 5 star customer —4.7 out of 5 star customer —4.5 out of 5 star customer rating
rating rating —Voice ordering
As of January 2014
73
Profiles Simplify Reordering for Returning Customers
Profiles Phase 1—Launched August 2013
Link to Saved
Easy Order
Year End 2013
+7M total distinct profiles
Links to Past +3M tokenized credit cards
Five Orders
Local Store
Offer
74
DPZ Platforms that Allow Consumers to Easily Order
Anytime, Anyplace
At home… On the move…
In the living room… At work…
Digital Provides a Ubiquitous Customer Relationship
75
Latest Innovation
76
Video
77
Michael Lawton Chief Financial Officer
79
Franchisee Profitability
$49,000 to $75,000 / year
100
75
50
25
2008 2009 2010 2011 2012
Estimating $81K—$85K per store in 2013
Average store economics are internal Company estimates based on results reported by franchise owners. Estimates are projections as of January 2014.
80
Franchisee Lending Sources for Reimaging
Five national lenders with specific programs for DPZ franchisees
– Balboa Capital
– Direct Capital
– IRH
– Macquarie
– Navitas Lease Corp
No obligation to use these lenders
– Credit analysis and pricing are up to each lender (no corporate subsidies or guarantees)
81
Looking Ahead: 2014
82
Looking Ahead at 2014
Commodities
Food basket outlook is favorable
Projected flat to -2%
83
Looking Ahead at 2014
G&A
Range of $240—$244 million
Technology innovation
Technology upgrades
International growth
Lower non-cash
compensation
84
Looking Ahead at 2014
Impact of Currency
Market currently projecting negative impact
Diversified portfolio of more than 70 markets
10% dollar move vs. DPZ currency basket
= approximately 12 cents EPS
85
Long Range Outlook Change
Cap Ex
Long range outlook of $35—$45 million
Limited capital required due to franchise model
Company store reimaging – lead the way Technology Supply chain centers
86
Long Range Outlook Change
Domestic Same Store Sales
Range of 2%—4%
Raising based on brand positioning and momentum
Technology advantages
Market share gain
87
Long Range Outlook
Global Domestic International Global
Net Units Same Store Same Store Retail Sales
Sales Sales
+4% to +6% +2% to +4% +3% to +6% +6% to +10%
Cap Ex: $35—$45 million
Tax Rate 37%—38%
37% to 38%
Outlook does not constitute specific earnings guidance. Domino’s does not provide quarterly or annual earnings estimates.
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Q&A