Domino's Pizza Q2 2026 Earnings Call | International Store Expansion Drives System-Wide Growth

Thank you for standing by. My name is Jordan and I'll be your conference operator today. At this time, I'd like to welcome everyone to the rescheduled Domino's Pizza Inc. second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Greg Lmention. Please go ahead.

Good morning everyone. Thank you for joining us today for our second quarter conference call. Today's call will begin with our chief executive officer Russell Weiner and incoming CEO Joe Jordan followed by our chief financial officer Sandep Ready. The call will conclude with a Q&A session. The notices regarding forward-looking statements in this morning's earnings release and 10Q, both of which are available on our IR website, also apply to our comments on the call today. Actual results or trends can differ materially from our forecasts. For more information, please refer to the risk factors discussed in our filings with the SEC. In addition, please refer to the 8K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also being recorded for replay via our website. We want to do our best this morning to accommodate as many of your questions as time permits. As such, we encourage you to ask one question only. With that, I'd like to turn the call over to Russell.

Thanks, Russell. I'm honored to have the opportunity to lead Domino's and I'm excited about the opportunities ahead. I've had the privilege of working alongside Russell for many years and I want to thank him for his leadership and partnership. He has helped build one of the strongest businesses in our industry and I'm grateful that we'll continue to benefit from his experience as he transitions to executive chairman next year. Having spent the last several years as COO, I've had the opportunity to work closely with our franchisees and our teams across the globe. That experience has only strengthened my belief in what makes Domino's unique. We have an exceptional global franchise system, talented people, a culture of innovation and operational excellence, and a brand that continues to earn the trust of customers every day. Those strengths give me tremendous confidence in our future. Our priorities remain clear: serving customers with delicious food, outstanding value, and a great experience, supporting our franchisees, and executing with discipline to drive long-term growth. I couldn't be more excited to lead this next chapter alongside the incredible people who make this company what it is. I look forward to engaging with you all more closely in my new role once I become CEO in October. Until then, my focus is on partnering with Russell and our leadership team to ensure a seamless transition.

Thank you, Russell. And once again, a huge congratulations to both you and Joe. It has been fantastic working and learning from Russell over the past four years as he welcomed me into Domino's. Joe has been an incredible business partner for me. He has been just as welcoming and I've learned so much from him as well. I'm very much looking forward to continuing to work with Joe to drive our business. Now let's jump into the results. Income from operations increased 2.6% in Q2, excluding the impact of foreign currency and refranchising gains from the sale of certain US company-owned store markets in the second quarters of 2026 and 2025. This increase in operating income, which came in slightly below our expectations, was primarily driven by higher US and international franchise royalties and fees. It also benefited from gross margin dollar growth within supply chain that was fueled by our strong order count growth in the US. These increases were partially offset by higher general and administrative expenses. G&A increased due to expenses related to our worldwide rally in the second quarter of 2026. The rally takes place every two years. Excluding the impact of foreign currency, global retail sales grew 3% in the quarter due to global net store growth of almost 1,000 stores over the past 12 months.

In Q2, retail sales grew by 1.9% in the US, driven primarily by net store growth, inclusive of 26 net new stores in the quarter. Same store sales grew 0.1%. Our business continued to be impacted by a challenging macro environment which is pressuring consumers as well as heightened competition. Our comp was comprised of a strong increase in order counts that drove the strength of our core business as well as continued growth in our aggregator business. This was offset by a lower average ticket. As Russell noted, our ticket was impacted by rolling over our launch of Stuffed Crust in the prior year which carried a higher ticket and a mix of orders while we were on media with it. Our planned lap with the premium series and slice sauce resulted in a mix that was below our expectations. Pricing was up 0.2% in the quarter and our carry-out comp was up 1.1% and delivery was down 0.7%. I wanted to take a moment to share some color on the QSR pizza category through the first half of 2026. The category continues to grow in line with our historical growth rate and we continue to take share. Category growth this year is being driven by the dining-in channel as some pizza consumers are returning to pre-COVID habits of wanting a dining-in experience. Independent QSR pizza restaurants have been the biggest beneficiary of this shift.

Shifting to our international business where retail sales grew 4.1% excluding the impact of foreign currency in the quarter. This was primarily driven by net store growth over the last year inclusive of 183 stores in Q2. Comp sales declined by 0.1% in the quarter as they continue to be impacted by Domino's Pizza Enterprises. They remain focused on turning their business around and we continue to work closely with them on that. Home stores were also impacted by macro and geopolitical uncertainty across the world in the quarter. Moving to capital allocation. Through Q2 we repurchased approximately 632,000 shares for a total of $231 million year to date. As of the end of the quarter, with approximately $1.23 billion remaining on our share repurchase authorization, we continue to expect to deliver meaningful cash to shareholders in 2026 and beyond in line with our capital allocation priorities and we look to drive the best possible returns for our shareholders. Now turning to our updated outlook for 2026 which excludes the impact of the 53rd week. First, US same store sales: we continue to expect our US comp to be up low single digits. This contemplates the continuation of a challenging macro and competitive environment like we have seen in the first half of the year. We continue to expect our international same store sales growth to be up low single digits inclusive of the benefit of the World Cup soccer tournament that just concluded. We now expect approximately 175 net stores in the US, which is a slight shift from the 175+ we had previously. We are making this adjustment as we are seeing some pressure on our pipeline due to the macro coupled with the challenging start to the year that has impacted franchisee profitability. We continue to expect approximately 800 net stores in our international business. We continue to expect our global retail sales growth to be up single digits for the year. Lastly, we continue to expect operating income growth of mid to high single digits, excluding the impact of foreign currency, refranchising gains, and the gain on the sale of our corporate aircraft. Before I wrap up, I wanted to call your attention to an investor presentation that we've added to our IR website. This deck gives a summary of our business and historical growth over time across our key hungry for more metrics. It also includes updated market share information through December 2025 that is broken down by nationals, regionals, and independents. Thank you. We will now open the line for questions.

As a reminder, if you'd like to ask a question, simply press star followed by one on your telephone keypad. You are limited to one question. Your first question comes from the line of David Palmer from Evercore ISI. Your line is now live.

Great. Thank you. Thanks for those comments. Russell, if you could maybe take a step back and maybe sort of label the biggest challenges and opportunities maybe by the parts of the business as you see fit. I can think about the innovation front, the value lift front, the channel expansion, you know, you're doing very well with carry out. There's been more like low single digits there. There's the third party marketing lift. You had the DOM OS and new versions of the app. If you had to kind of go through these areas, your own execution versus the environment, where do you think has been the biggest sort of disappointment versus plan and how much of it is underexecution and how does that inform the biggest near and medium-term opportunities? Thanks very much.

Your next question comes from the line of Brian Bner from Oppenheimer. Your line is now live.

Hey, thank you. And Russell, as you move into this executive chair role, just a huge congratulations on such an amazing career at Domino's. And Joe, of course, congratulations on the big CEO promotion. And the question is just in light of the meaningful order count growth that you're alluding to, it begs the question, are you still seeing the short-term competitive pressures on the business that you called out specifically on the last quarter's earnings call? On this earnings call, you said that your competition has never been weaker. And I'm assuming that's more of a consistent structural view that you have. So I'm curious if you're starting to see some of those competitive pressures that you called on the last call start to dissipate or if you could just unpack that dynamic for us. Thank you.

Our next question comes from the line of Gregory Frankfurt from Berenberg. Your line is live.

Hey, thanks for the question. I just wanted to ask you about third party. Russell, I think you made a comment that you're the largest pizza player on third party now. And I guess as you think about trying to drive the business higher or continue to grow going forward, how do you balance maybe profitability with market share in that channel? And are you trying to hold kind of gross profit dollars similar to your in-restaurant business and are you willing to maybe discount a little more aggressively? Just any thoughts on continuing to drive that business going forward? Thanks.

And Greg, I'm just going to add something on the profitability that we're actually seeing on the aggregated orders. We've been very thoughtful about the way we're actually going after the growth opportunity. As Russell mentioned, we have our fair share from a growth perspective. There's plenty of runway still for us even though we're the number one player. But the reason we're actually being so careful is because we want to protect profitability as we go after this growth and that's going to be a guiding philosophy that we're going to employ as a management team as we move forward. But the runway is there, the profitable growth is there, and this is one more lever to actually drive franchisee profitability.

The next question comes from the line of David Tarantino from Baird. Your line is now live.

Hi. Good morning. Russell and Joe, congratulations from me as well. My questions maybe on the US comps performance in the second quarter and you'd mentioned I think meaningful order count growth offset by ticket declines. I was hoping maybe you could give us a sense of the magnitude of the up and down around the order counts and the ticket growth. I appreciate that you don't want to give the exact number, but perhaps something directionally like was it better than in Q2 than Q1 on order count growth or something like that. And then I guess on the order counts specifically, just wondering your thoughts on what drove that specifically in the second quarter and how sustainable that might be for the second half of the year.

David, thanks for the question. And let me actually give you just a high level overview of how the quarter worked out from an order count perspective. Not only was it meaningful growth, but it actually met our expectations. It did exactly what we were planning to do. The challenge we really had was on ticket as Russell mentioned in the prepared remarks and I did too where I think the premium series that was intended to lap the parmesan stuffed crust from last year didn't give us the results that we needed and I think that's why we had a bit of a shortfall on ticket and same store sales fell below our expectations. But from what our plans are, I think this is a very sustainable opportunity from an order count growth perspective because it ties into what we're doing with renowned value whether it's some of the promotions that we actually have had in the first half of the year or what we're running right now with best deal ever.

addition to that aggregators will continue to be a growth driver and that should be driving more and more occasions. So we're really confident in our ability to drive account growth as we move into the rest of the year as well.

Your next question comes from the line of Dillo Garilo from Baronstein. Your line is live.

Thank you. And again Russell, huge congratulations on the incredible success you had at Domino's, the big impact you had over your career, and you know, congratulations and good luck to you Joe on your new role. My question is, obviously you tested the new series before opening up to the market and it's also your expectations. So I'm wondering if you can elaborate on what drove the disconnect between your testing and the actual results and what learnings are you embedding to make sure that the new pizza that you're going to be launching there this quarter is not going to fall short of your expectations.

Your next question comes from the line of Dennis Giger from UPS. Your line is now live.

Great. Thanks, guys. And congrats Russell and Joe. I wanted to ask another one on the order count and mix dynamic. Specifically to the order count. Russell, you commented on adding millions of new customers. I'm curious if there's any way to put that into context relative to prior quarters and presumably some of that's a good chunk is coming from the third party channel. Anywhere else you think those new customers are coming from? And then just as it relates to the mix side of that, just curious as you think about best with stuff there. Is that something that has a notable drag on mix or have you kind of engineered it or figured it out that it's not a notable ticket tag? I guess.

So Dennis, I'll start and maybe Russell will tag you on this one as well. I think on the auto account front it's really a consequence of all the great stuff we talked about during the investor day. When you think about the loyalty program that we launched just before investor day, we have continued to build significant numbers into the loyalty program. As at the end of 25, we were up 20% from what we were before launching it. And I think we're really excited about the frequency that comes behind customers acquired through the loyalty program, and that is a big driver of our old account. And that's on the one hand. On the other hand, the other part that we talked about on the investor day was entering into the aggregator channel. And the beautiful thing with 50% incrementality is we are acquiring more customers that we wouldn't have been able to acquire otherwise by being on the aggregator channel. This continues to build and this also continues to compound over time as we spend more time on platform. We're seeing this in the case of Uber and we expect to see this in the case of DoorDash over time as well. And that's why we're so bullish on the future with the aggregator platform as we move forward. And then on the mix dynamics, we touched on this a little bit in the prepared remarks. Yes, we did have an impact on ticket during the second quarter because the premium series didn't give us the mix that we were looking for. But as we also noted, as we moved into the third quarter of last year, a few weeks into it, the messaging changed from Amazon stuffed crust to our next promotion, which happened to be bestie level. And now we're actually lapping bestie level with bestie level. And we're super excited about the reinvention that we've done with the inclusion of Parmesan stuffed crust in the best deal ever offer. And really excited and confident that this is going to be an important order count driver. In addition to the fact that the mix impact on the ticket is much more modest than Q3 because we pretty much have already lapped that. And I also think about this as almost we use this term paid trial. By putting Parmesan stuffed crust in best deal ever, it's a discount for customers but they're still paying a good fee for it. And that trial will lead to long-term repeat. So putting Parmesan stuffed crust in best deal ever was really important because we know when people try it they'll come back again and again. And that's happening right now with best deal ever.

The next question comes from the line of Lawrence Silverman from Deutschbang. Your line is live.

Thank you very much and congrats Russell and Joe. I guess first I just want to clarify my question. The clarifications on same store sales. Is it fair to assume 2Q comps are the lowest for the year just given the comments that average checks just get better? And sounds like momentum on the order count continues. And then my actual question is just on US unit growth. So trimmed it slightly called that franchisee profitability. I know a lot of development would have been in place in 26. So I guess what does that mean for 27 and just given peak industry pressures? Is this a little bit of rebalancing across same store sales and unit growth? Anything you'd consider differently to sort of incentivize unit growth? Thank you.

So, so Lauren, let me start with the same store sales projections. And look, I mean, we didn't change the guidance for the full year from low single digits. And I think we're sticking to that. And I think based on how we updated last quarter, we weren't really going to talk to a cadence. During the course of the year, we're happy with the order count growth in the second quarter, but not happy with the ticket outcome that we got. And I think as we move into the back half of the year, we're looking to fix both sides of it. And so we're very confident in our guide of low single digits. When it comes to the unit growth, I think we touched on that specifically and you did catch that we made a modification to it. When we actually have looked at the last few months and some of the headwinds that we've been seeing broadly in the environment, the pipeline has started to see some pressure. And I think this happens sometimes when there's a bit of pressure on franchisee profitability. So while all accounts have been great, unfortunately in the short term when we don't execute both sides of our barbell strategy with the premium series not achieving the objectives that it was intended to achieve, that had a short-term impact on franchisee profitability. We know exactly what the problem is. We're fixing it in the back half of the year. So we're pretty confident that we'll actually get back on track over time, but I think in the short term, because of the window that we're in when halfway through the year, we are seeing a little bit of that pressure which we are sure will take care of itself over time. Too early to talk about 2027. We'll come back once we do our budgets for the year by the end of the year and we'll talk about it more when we report Q4.

Your next question comes from the line of John Ivanco from JP Morgan. Your line is now live.

Hi, thank you. First a comment and I don't obviously I don't know if it's the product, but the Italanos that you have in the UK is my single favorite large brand pizza I've ever had. So we have an opportunity to bring that to the US. I'd be very happy about it. So just a comment on that. Hopefully I landed okay. And then secondly, when I think about unit development, obviously to follow up to Lauren's question asking in a different way, a little tweak down in 26. It does seem like at least from what I'm interpreting, 27 has an opportunity to perhaps be a little bit less. My experience is that one of the easiest ways really to drive same unit economics is to focus on what's already open as opposed to what would open in the future. And Domino's as a brand in the US has closed nearly nothing in the past, in my experience covering the company since 2004. So, do we have an opportunity to maybe remap some of the US and just kind of think, okay, what's the best way to optimize same unit profitability and not just maybe rethink of what was previously planned to be open, but maybe in some cases actually consolidate some stores that perhaps we could have oversplit certain markets in order to enhance same unit profitability. So how are we thinking about kind of remapping the US business? I think we have an opportunity. Thanks.

And I'm just going to add on this, John. I think Russell's said this many times before in previous calls, and so have I. When we open up a store, the carry out business is about 80% incremental. And with the scale that we've actually already achieved, we have tremendous opportunity to drive incremental growth with our share just about 20% on carry out. So it continues to be a very compelling vehicle for growth for us and does offer great returns for the franchises when they open those stores.

Your next question comes from the line of Zach Fedum from Wells Fargo. Your line is now live.

Hi, good morning and congrats Russell Joe. Following up on the innovation. Domino's has a history of implementing or testing new products overseas and then bringing them to the US. So my first question is if you can update us on what products you have tested internationally of late and any thoughts on results, chicken dippers, etc. And then with respect to your pizza innovation, is this something that's been tested overseas? And is there anything that you can share about performance? Thanks.

The next question comes from the line of Sarah Senator from Bank of America. Your line is now up.

Oh, thank you. I wanted to follow up on this comment about your share of the market being half what it is in other segments, but I guess the independents seem to be maybe more formidable challengers in this segment than elsewhere. And you mentioned DIN channel in particular this announcement to be driving growth. I guess one, I would have thought that this normalization from COVID might have happened already. So if you can give some insight into maybe where DIN is as a share of channel and whether that's different from historical. And then two, as you think about competing with independents, is that something that you're concerned about going forward if in fact they seem to be on the upswing? Thanks.

And Sarah, I'm going to add something on that. I think as I mentioned before, we've posted an investor deck on the IR website. And if you go back there, we've got two pieces over there. We've got one piece which actually gives a retrospective to what we shared back in December 23 at our analyst day where we gained nine points of share over eight years. Three of those nine points came from independents. So we can actually take share from independents. And essentially, when you look at things just like Russell said, you don't look at a quarter or maybe 6 months, you don't look at things even in a very short time frame of years, you look at it over a longer period of time. We have done it before, we can do it again. And I think that's the way we focus on all our competition and what are the best ways to compete occasions away from them.

Your next question comes from the line of Andrew Charles from TV Calvin. Your line is now live.

Great. Thank you. And Russell and Joe, just want to extend my congratulations as well. You know, I want to reconcile your thoughts on the US business. You talked about strength in the aggregator business in 2Q and I know you said earlier in this call, the getting into it is around the premium pricing if you don't offer the $6.99 mix and match. But I'm curious if part of 2Q's ticket mix can be explained by the value offers being offered in recent months on both Uber and DoorDash such as $3 medium pizza among other value offers here to help attract more guests.

Your next question comes from the line of Chris Carol from Key Bank Capital Markets. Your line is now live.

Hi, good morning and yeah, Russell and Joe, congratulations on your new roles here going forward. So I did want to ask about the international business. I was hoping you could expand a little bit more on that beyond what you've already said today. You know, maybe areas or geographies that were perhaps a drag in the 2Q where there might be opportunities for improvement or also where you saw strength. And Sandep, I know you mentioned World Cup benefit or at least World Cup as part of your guide for the year. Curious if that was a 3Q specific comment. So any clarification there would be great. Thank you.

Yeah, I'll start World Cup and I'll probably give a little bit color on the comp as well. So, look, in terms of the World Cup, it's really started after June for the most part after June 14th, which was the end of our quarter. So, there was really a full year comment on the guidance and what it included. We always included it, but we wanted to make sure that we clarified it on this particular guidance messaging. But in terms of the performance that we had in the quarter, there was obviously lots of puts and takes when we get to the final comp that we had. And we're really not going to get into too much specifics on geographical variation. What I will say is two things actually impacted us. The macroeconomic and geopolitical environment was definitely an overhang that we anticipated and we experienced. And as I called out in the prepared remarks, Domino's Pizza Enterprises was definitely a drag on our same store sales because their performance continues to be impacted by the approach that their management have already talked about, which is they've actively decided to reduce the lower margin transactions. And as a result of that, they've actually had a reduction in order counts where the ticket increase has not been able to compensate. And that same store sales drag that they've experienced impacts us pretty materially and that's another driver that I would say is embedded in the numbers.

Your next question comes from the line of John Ta from city. Your line is now live.

Great. Thanks for taking the questions. Maybe just going back to the new product that might be on its way in the third quarter here or is on its way. I'm just curious if you could kind of try to read through the tea leaves here. Russell, you had mentioned that this is effectively a new occasion for Domino's. And while also protecting the core pizza occasions, I think about your business and you guys hit really well at nighttime, maybe not daytime, particularly around lunch. So seems to lean in the direction of something around that lunch occasion, maybe even more single serve. So if that's the case, how should we think about protecting the aggregate ticket if you're moving in the direction of say single serve occasions here or something more geared towards smaller portions?

Your final question comes from the line of Jacob Akin Phillips from Melius Research. Your line is live.

Hi, good morning and congrats to both Russell and Joe. So you described order growth as profitable and I understand the ticket mix but you also cited franchisee profitability as one of the constraints to the development pipeline. Can you give us any color or direction on where franchisee profitability is trending this year versus the 166k you have in squads of 20.5 and then maybe break apart what are the things that are pressuring it the most and what needs to improve for those openings to accelerate.

So, so Jacob, I think on this one as we look in the first half of the year, we definitely saw the order account growth that we were looking to have, but I think especially on the second quarter, we talked about the premium series not mixing to the extent that we were planning on and that has a negative impact on franchisee profitability. So part of what happened was a discrete event in the second quarter that actually impacted franchisee profitability due to the ticket drag that we talked about. Now, we're fully cognizant of it. We know what we need to do. We need to go and fix it and we are fixing it and that's all embedded in our plans. But I think on a short-term basis there was that impact in the second quarter. But in no way should this be an impact to long-term franchisee profitability. The whole point that Russell was making on the prepared remarks is if you look at the long-term relationships between franchisee profitability and what drives it, it is driving order count, customer acquisition, building frequency behind it, but doing it with healthy ticket with disciplined pricing. So if you are in balance over time across all these elements, you're going to drive franchisee profitability. We had a one quarter blip on ticket. We're not going to have another blip.