Okay, I think we're right to go. We might turn that volume down a little bit because that's deafening me. Is that okay? Not too loud for everyone? Is it good? Excellent. All right. First of all, thanks for coming today, everybody, we really appreciate it. I think the first question is why? Why do we need a, an update now? And we thought it was important when we looked at the gap between interims and, full year results in March, given that I'd only been in, in the business sort of, you know, 80-odd days by the time interims had come around, in fact, maybe a little bit less. So we thought it was important. A lot of people were curious about what my general thoughts of the business were after sort of 100 days.
So we thought it was really worthwhile to sort of just give a broad strokes update. We're not going to give the micro today that a lot of people would love. We want to save that for the full year, and to be honest, after, you know, 100-odd days in the business, it's really still 5 minutes. So I feel as though that I'll have a lot more accurate data to give you come March, but we wanted to give you the broad strokes of how we think about the business in general. Let's start off on slide. The first slide there today, purpose of the day, as I spoke about.
I think if I could categorize one way of looking at this is myself and the team are determined to deliver value, and that means value to our customers, that means value to our franchisee partners, which ultimately means value to our shareholders. And as you'll see through this presentation, value, customers and growth, they'll be common words because that's probably all I've known for the last almost 30 years. In fact, I'm 30 years in April that I've been in the pizza business. I've been very thankful to be aligned with this brand, which happened to turn 63 itself on Saturday. So Domino's was 63 years old on Saturday. So it shows you the longevity of this brand. If we go on to the next slide, who am I and what do I stand for?
I think the first thing is that I really take a customer-first approach, and it probably goes back to my very first store. Only had 3,000 addresses, roughly 6,000-7,000 consumers, which back in those days, we're going back to almost the dinosaurs, the average store had about 40,000 addresses. Call that 80,000 customers, and I had 6,000. So I couldn't afford to lose one single customer. I just couldn't afford to. So I've always had that mentality of never lose a customer, and coincidentally, that's Tom Monaghan's mantra is: If you never lose a customer, your sales can only go up. A nd I think it's, it's pretty true of any business. So very passionate. I'm going to outline how I think we can improve growth here today, and my first impressions.
So if we go on to the next slide. Here's a bit about my experience. I don't want to talk to it too much. All I can say is this, is that, you know, I was a franchisee for the first 10 years of my 30 years. You know, I really do think I speak a language that franchisees understand. I'm a Dominoid, and for those who don't know, that means that, you know, we've got pizza sauce in our blood. This brand has given so much to me and my family, and it has to all the people that you'll see in a second on the screen and in this business. It's, it's hard to explain to people that aren't Dominoids.
You know, there's over 20,000 stores in the world now, and I see that DPZ's guiding to, you know, upwards of 40,000- 50,000 over time is quite incredible. But when you understand the culture inside Domino's, and Tom Monaghan, who started this brand, still has that culture and has that connection to the brand today, a real, a real family value sort of attitude, and it still stems and flows through the business today. I think the other point I would make about my, my past is I actually gave a keynote speech to 9,000 Dominoids in Vegas back in 2018, and the title of my speech was Grow or Die. The lawyers didn't like it very much. The U.S. lawyers didn't want me to have that, but I told them to get stuffed.
And I still think today that is as relevant today as what it was five years ago, of any business, is that if you're not growing, you are dying. So we have to have this growth mentality every day that we're trying to grow. And that could mean growth in terms of service, growth in terms of training and skill set, but a growth mindset. If we go on to the next slide, this is a few snapshots of my first sort of 100 days. I've seen all but two franchisees so far. I will track them down. But what stands out to me is that, you know, they're incredible people who love the brand. Many of them have been in the business.
I think the youngest one there of the whole system has been like 10 or 12 years. That's the youngest. Most of them have been there 30, 25, 20 years. Their children have grown up inside the business, and I'll talk more about the second generation in a second. But they're inspiring people, hardworking people that started with nothing. You know, their stories of what they had to do, you know, standing in stores, you know, pulling the conveyor belt to make the oven work because the oven broke down, so for two or three hours, their fingers bleeding in the early days to make a dollar. You know, these sort of stories are quite inspiring. And you know, we've got over 35,000 team members. You know, we have this massive army of people who are devoted to the brand across U.K. and Ireland.
We want to leverage those people who are well-trained and believe in the brand. Coming forward to the next slide. So we really do. I mean, I, I know it's bandied around a lot, but we really do have incredible high-quality franchisees. The, the Grewals, the Candolas, the, the Sheddens, you know, the, the list goes on of how many people we have in this business that, that really are best in class in the world, not just in the U.K., in the world. And we have a, a leadership team that I'm very thankful for the from Elias and Dominic before me. They really did hire high-quality people. I haven't had to walk in and, and change a single person. I really haven't. I want to help bolster that team to, to handle more growth, but the team is incredibly high quality, so I feel very fortunate.
Also the supply chain and digital systems that I've inherited as well, which talk more about in a second, I feel very fortunate too. I haven't had to come in and start rebuilding those like people in the past have had to do. Next slide, just a few myths out there, a few questions like: Is pizza competitive? Is it saturated? Well, as I said before, the U.S., the brand has been around 63 years. In two years' time, this business in the U.K. will be 25 years old... So when you think about it, we've still got 25 years before we catch up to where the U.S. is, and the U.S. is still growing and still forecasting growth. So I think we've still got a long way to go.
And if you look at the international market for Domino's, it's had 30 consecutive years of positive like-for-like growth. So Domino's International, 30 years of consecutive like-for-like growth. Apparently, no QSR has ever done that. Will the franchisees start again? I, I don't believe so. I feel very aligned with the franchisees, as does our board, as do our leadership team. I think it's a very different board, very different leadership team, very different mentality. All they wanna do is grow and win, and we want to win with them. And at the end of the day, franchising is about franchisees winning, franchisors winning, and shareholders winning. It's, it's actually not rocket science. And I suppose I see that quite simply because I've been on both sides of the fence.
Some people might say that, you know, our pricing may be too high, but I would question that and say that value is not represented just by price, it's represented by service. It's represented by the image, the quality of the product. The good thing for us is that with over 1,300 stores, 1,316 now, we have better distribution than anybody in the game, in the pizza business. So we're getting closer and closer to our customers, and every day, we're building. We build four stores a day, we're closer again. When we get closer to our customers, we give better service because we can get to the customer faster with a hotter product. So I don't believe that is the case.
When you look at the fact we've almost got 14 million active customers, and we're about six to seven times bigger than our nearest competitor, clearly, you know, we must be doing a few things pretty good. What else in there? Growth. Limited growth availability. Well, one of my things I'll talk about in a second is that the growth in this business is far greater than I expected when I came into it. Far greater, and that's been a huge positive for me, it really has. We move on to the next slide. I really like this capital allocation framework that the board and previous management have put together. I think it's really clear, it's simple, and I'm gonna stick with it because I think it works really well.
If I look through the framework, I would say this is that the business has been investing into the business. It's time for us to lever up on terms of leveraging what's been invested already and really focus on driving that core part, which is our number one priority. So that organic part is set for growth. The dividends, that policy won't change, and when you think about it, when you've got a business that's growing faster, there's actually more opportunities for dividends. The additional investment opportunities, we'll talk about those in a second. And then surplus cash, returning them to shareholders, most definitely. If we've got surplus cash and we can't put it to better use, we will give it to shareholders.
So I really like how these frameworks come together, and it's incredible that over the turbulent years that have happened, that this business has still sort of put out GBP 400 million in the last three years. It's quite incredible what a cash generative business it really is. If we go to the next slide, you see the buybacks and the dividends, et cetera, adding up to circa GBP 400 million. It's quite incredible. My point is, if we grow and put some serious top-line growth on top of this, how big could those numbers be? At GBP 400 million in three years with the current growth that we've had, how much bigger could that be with proper top-line growth? So that's what I'm really focused on. Next slide. Really focused on EPS. We know that's really important to shareholders.
But it all starts with long-term sustainable growth. I think about growth across a three-year period, a 10-year period, and a 30-year period. Why do I think that far out? I was inspired when I met the second generation of the franchisees when I went around store by store. How they. They're Domino's. They've grown up inside the business, 20, 25, 30 years of age, 35 years of age, and they, they wanna grow. They wanna do, have the same opportunities, the same growth that their parents had over this last 30 years. So I'm building together a plan that, that will allow them to have 30 years of growth themselves. So they, they quite inspired me. They truly did. So next slide, growing our U.K. and Ireland business. All right? This is our number one priority, leveraging our existing platform, right?
Our distribution network, our logistics system really is high quality. A 99.9% quality rating all the time. We wanna make sure that we're using those. We're really highly focused on leveraging the digital system that we've invested heavily into. We've got 14 million customers. We've got 35,000 staff. We really wanna leverage all those platforms that we have. And I can honestly say that 80% of my time, I focus just on the core, how we grow the core every single day. As an example about increased focus on operations on the right-hand side there, is that I put a competition together for November, just to get franchisees to focus on something that we did 20 years ago, Perfect Delivery days.
And the store that had the most Perfect Delivery days got a prize. And you can give the things away like Domino's shoes, a pair of Nikes with Domino's embossed on them, and they go crazy for them, right? And what happened was, the store that won was quite fanatic, and that the customer rating for that month, which is done by a third party, jumped by almost 20% because we focused on delivering faster to the customer. Now, it's not about the speed of service, it's about the quality of the product that gets to the customer, how much better quality it tastes, and they really do have a direct correlation. So one of the things that we're gonna do is focus on more and more about back to basics and getting those operational nuances, and we're talking seconds here.
Saving seconds adds up to a lot to a consumer. So next slide, please. So driving long-term growth, how do we do that with the core business? So what we do is we've got a really solid base here of franchisees, supply chain, customer, digital, right? Our digital system is now constructed. All that investment has been, it's done. So from January, we start labeling, adding on to these features that we could never add on to before. And, and because of all those things, we can put more stores on the ground. So by leveraging that platform that's been built over these... invested in heavily over these last three years, we can really start to grow up from there. The base has been built really well. Just moving on to the next slide. So franchisees, you know, as I said, they are, they are high quality.
They have a hunger, they have this insatiable appetite to grow. They have really strong balance sheets. And when you start talking things about crushing make times, hustle times, rack times, leg times, things that probably don't mean much to other people, they're things that, that Domino's understand, and we get back to basics, and we start saving these seconds, which starts giving the customer a way better experience. And consistency here is the key. You know, it's not unusual on a Friday or Saturday night, some of our stores are making 200, 300, 400 pizzas every 30 minutes. With a 66,000 different combinations of pizza, to do that and do that consistently well is very, very hard to do, which is why we are seven to eight times bigger than our nearest competition, and my goal is to make that 10-12 times bigger.
We want to keep increasing this moat through distribution. The other thing is that, you know, we've got some stores out there that have broken, in the last few weeks, over GBP 100,000 in a week. In one store, one week. You know, that's sort of almost five times what an average store can do. So it shows that we are scalable, right? We can grow these stores to amazing volumes, and it shows how much this brand is loved. So we move on to the next page. The supply chain now, that really has been invested in very well. The distribution we have is, is, sensational. We're about to roll out the new ERP system in the first half. That'll bring us more efficiencies. But I would say it's safe and it's dependable, all right, and scalable.
So we really have built a system there that will allow us to grow, 'cause quite often you go to a lot of systems, and they have a bottleneck, they're constrained by that growth, they can't grow, they need to put a lot of CapEx in. That's not the case here, so I feel very fortunate. Onto the next slide. So we want to give our customers compelling value, and, and as I said before, value isn't just price, right? You can sell someone a pizza for GBP 5, but if it's cold, it's late, it tastes terrible, that's not good value, right? You can sell them a product for GBP 7. It's ready in 10 minutes, it's tasty, it's hot, that's better value, right? So you have to have a look at the whole value equation.
So things like collection, you know, when we build more stores, we get closer to our customers, our collection goes up. So I expect our collection to go from circa 37% today at mix, probably closer to 50% where the U.S. is, just because we are closer to our customers. As I said, we've got 13.7 million, close to 40 million active customers. I've just signed off today on a three-stage strategy for rollout of loyalty for next year, so we'll have something in test in Q1. We'll have stage two probably in Q3, and then we'll probably do stage 3 in Q1 the following year. So that starts, it started already. Literally had a call 2 hours ago. Innovation at lunchtime and other day parts, that's already in play.
In fact, we're about to launch some of those things now that have been in test for some time now. And the other thing, too, is our customer consideration and awareness this last quarter is up quite significantly. So our customers are considering us more, and they're more aware of us than they've ever been. It's the highest that we've had in history. So, quite fortunate around that. Next slide. So I really do believe when you look at our business today, with 90% of our sales are online and 80% of those sales are via digital, almost 80% are via the app, there must. The system's not broken, all right? And we're just enhancing that now by adding all these extra features on next year, which we haven't been able to do before.
When I walked in the door and said, "Can we do this, this, and this?" They said, "Sorry, Andrew, we can't do those things with our system yet. We will be able to in January." So all these ideas I have that I want to add on, we will be able to start launching in Q1 and Q2, so they're already in construction phase now. But they couldn't add them on until the system, the new, updated IT system and platform had been finished, which was very thankful that it was so far along for me. But we'll be able to do, you know, things like, customer segmentation, offer better experience for our consumers.
A few other bells and whistles that I won't talk about today because I don't want to give a heads up to our competitors, but they really are beneficial to our franchisees and our stores. Next slide. Store openings continue to accelerate, and my goal is to keep that number going up. I feel quite confident about next year. Come March, we'll obviously be able to give some more color around that, but I feel very positive about that. When you see the franchisees, the number one thing they ask for is more stores. "Andrew, I want more stores. I've got no debt, I've got lots of cash, I want more stores." It's their number one request of me, so my job is to help try and find some growth for them.
And penetration, we've still got a long way to catch up to other QSRs and other Domino's markets around the world where we can penetrate even more yet. Some of the virgin territories we've opened up recently in small towns, you know, populations of only 10,000- 12,000. So they've got a third of the national average of address count, of houses, and they're doing equal to or more than the national sales. So the penetration is higher, the pounds per household is higher, the frequency is up. That's because you're so much closer to the customer. You can give better service. They come back more often. So, these are things that I've seen before in other markets, of course. And at the end of the day, you know, operational excellence really does lead to customer loyalty.
So splitting stores, getting closer to them, shorter lead times, and in times where national living wage is going up and labor is getting higher, as you get closer to your customers, your drivers can do more deliveries per hour, that cost per delivery comes down, right? So that's one of the ways that we can get around it compared to others, because our distribution is, as I said, four, five, six times higher than our competition. And I honestly believe that competition is actually ourselves. Our biggest competitor is ourselves. We could do so much better just by doing a better job of what we do, and I'm less focused on our competition, to be fair. Next slide. So summary of the core growth, right?
So probably this is the first half of the, of the presentation is the number one priority is to grow customer growth and store growth in, in Ireland and, and the U.K., right? And we've got plenty of it ahead of us. I really feel comfortable with that, and we've now got the platform to grow off... and we're gonna focus on long-term sustainable earnings growth, right? Not short-term hits, long-term sustainable growth. Good for franchisees, good for customers, good for us, and good for shareholders. If we move forward to the next slide, I want to break this up into sort of three boxes. The first one is really, it's still core. It's corporate stores and our joint ventures. I just wanted to highlight, you know, where we're going with the thinking with that, and then there's potential second engine and potential other markets.
But I want to reiterate, though, that our core focus is the organic business, but I'm an entrepreneur and growth is in my mentality, so I'm always looking for more growth. To me, they're not binary, particularly the business that spins off the sort of cash that this does. Next slide. So this one here is, we already have a small corporate network. We've got about 135 joint venture stores. My point here is that we want to make sure that we can consolidate where we can to have more strategic influence on the business, to test ideas, to have our own hands in the dough, if you like, to drive strategy forward. To do that, we have better rigorous returns on capital employed.
To help do this, I've brought a really experienced Dominoid in, been in the system 26 years. He started as a pizza delivery driver, then a franchisee in the Netherlands. He went on to run corporate stores for me in Germany, and today he's just stepped down from being the CEO of Domino's in Germany. His name is Stoffel Thijs. And he's gonna come along and help us drive this operational focus for a better drive on our own estates. So that's one big focus. On the next slide. Okay, so this one here is more about second brand, and I don't want people to jump to conclusion, we're gonna rush out and buy a second brand. Why would you do so? A couple of things to consider here.
Have very strict and very disciplined guardrails around this, and our board is very considered on these points. But what we, what we will say, it has to have significant growth, scalability, brand and product fit, synergies, profitable, not a startup. Why would I consider this? The reason I would consider this is, as I said before, we've got all these amazing franchisees, 35,000 staff. We've got all this knowledge on consumers in the U.K., a lot of them already out with other brands. They've already invested in other brands because they couldn't get the sort of growth they wanted in DPG. If I could somehow bring them back into the fold, into the one group, and get more synergies from being together as one, I should consider it. But only if the right thing comes along. I'm patient. I'm not in a hurry.
I don't need to do it. I've got plenty of growth. But if the right thing comes along and I think it fits all those categories, we will seriously consider it. As I said before, our franchisees are already doing it today. Why can't we bring them in-house and monetize that instead of letting someone else have that benefit? And when you consider, yeah, the IP and the training that we've given our guys are now giving it to someone else, we want to bring that back in-house if the opportunity comes along. Next point. So this one here is about other Domino's markets, and I'm, you know, I'm not. It's not lost to me the experience that's happened here in the past. I suppose all I can say is that we are very disciplined with how we would go about it.
The other thing I would say is that I've got a lot of experience in Domino's markets internationally, as does Stoffel, the guy I'm bringing on board. I think there's definitely a few things I would do differently. One is, we go to markets where we've already got scale, we've already got profitability, we've already got a management team in place. And I would make sure that it, it doesn't disrupt the core team here because it's, it's a separate business completely. Again, I've got a lot of experience there. Again, we're patient, we don't need to rush, but if the right opportunity comes along, I don't think it's binary. I think we have a business here that produces so much cash, has so much growth, that we should consider it.
So I just want to put it on the table that if those opportunities do come along, we will be disciplined, but if it happens to fit all the criteria that we set for ourselves, we will look at it. Summary, next page. My last page before Q&A. So the number one priority is core. All right? We do have a lot of growth there, and we will demonstrate that, and come March, you will see good demonstration of that, and we will update the market on our store outlook. I'm not doing it today for a couple of reasons. One is, I feel like I've only been here five minutes, but more importantly, as we know, the demographics have changed quite dramatically since COVID times.
So therefore, I've requested the team upgrade all the software we use, a third-party company, all the software, all the learnings of stores that we've opened to make sure that we have a really clear line of sight to that next store number that we put out there, 'cause it'll be a number that we put out there that we will hit. I want clear line of sight to it. I want it to be very accurate. So therefore, I will be talking about that in March in sort of the bigger picture, if you like. I want to build on the well-invested. All the, all the capital that's been invested in the digital and the commissaries, so we have a platform to grow from now, so I really want to drive that. I really do have a long-term focus, sustainable growth.
I said after 30 years, I believe that second generation that we have in this business is quite incredible, highly educated, grown up inside the business, and hungry as well. Be very disciplined. You know, operations is my process, starting from the bottom, starting from the consumer first, making sure that we're catering to their needs, then the franchisee benefits, then shareholders benefit. At the end of the day, we're determined to deliver value, deliver value to everybody. I really want to thank you for your time today, and I look forward to Q&A. Thank you very much. Yes. Sharon? Oh, give it to Will here. Good idea.
Okay. All right, thanks. Okay, Douglas Jack. So I've got a few questions. First of all, what percentage of your sales are currently through value offers now, bundle deals?
98% .
Right. That's a good number. Thanks. And in terms of the franchisees, has there been much change in the number of franchisees? Many coming in, many leaving. Where does that leave the system now?
Yeah, sure. I would say the franchisee numbers since I've been on board, and I think in the last couple of years, is pretty stable. We've actually had some homegrown heroes. We've added about four of those. So guys that have been in the system a long time but wanted to be franchisees. Well, if you go back up those photos there where you'll see, I'll point out Peter Siddall. He's started 30 years ago, when he had his first store. He opened it a year ago, doing exceptionally well. So, a very stable group, I would say now. I, I don't see too many wanting to leave. Yeah, maybe one or two maybe will want to retire, but very stable.
In terms of the penetration you showed, can you mention order frequency? How is that changing in the system?
Yeah, sure. Order frequency has kicked up a little bit in the last few months, and I think mainly because of our digital and app. Today, our order frequency is circa 4.3%, 4.37%. The most exciting thing for me is, and it's something we talk about every week now, is that we have some franchisees in the system with some sizable units that are actually north of five. So it really does show us the way of what's possible. And when you think about it, that is effectively a 25% uplift by just getting that extra frequency. So that's really makes me quite motivated to get there.
And, yeah, the last question from me. In terms of the number of stores you're looking at in your mind, what would be the average number of addresses per store that would take you to, and would that require another supply chain center to get there?
Yeah, really good question, Douglas. I'd like to answer that in March, and the reason being is I want to do that accurately, and I think once I've got the data from the software, I'll be able to give a more accurate update with that. But it's something that we will answer in March, and as well as the commissary question. I think it's a good question. Thank you. Who's next? Okay, Richard.
Thanks. Richard Stuber from Numis. A few from me. First of all, you say you've got a 47% market share of the pizza market. Obviously, you haven't got. You've got a much smaller share of the aggregator pizza market. I know Domino's had a, DPZ had a Capital Markets Day last week, and they're saying that they want to get their fair share. So how much do you think, of the aggregator market, do you think you could get to?
It's a really interesting question, Richard, and I'll be honest, I don't know the answer to that. The aggregator market definitely, you know, has grown a lot. I still see that if we do an incredible job with how we look after our current customers, that we can grow the market quite significantly. I think with the offerings and value that we're going to bring to the market, particularly next year, is that we will attract others to our business. And if you think about it as share of stomach, they'll come from potential pizza eaters today, but it could come from others who eat other products as well. So I couldn't put a number on it today. I haven't thought of it that way, to be honest.
I think about the total pizza growth. As we add Uber Eats, we're going to test in Q1 next year, we'll start to get some more data. I think I'll probably be able to give a bit more informed decision on that. What we do know is that the aggregator customer is an incremental customer, pretty much 88% of the time, roughly. So, you know, at the end of the day, it's a consumer we don't have today. They're a different consumer than what we have in our business. But I do feel very confident that our business will grow exceptionally well with or without aggregators, to be fair. So yeah, I think they're a net add for us. I think they're a positive.
And another one actually related to the capital markets day last week. I think Domino's said that 60% of their sales come from pizzas and the rest also ancillary sales. What is it... What is it like in the U.K., and how's that changed over time, and where do you think that can get to?
Yeah, ours is higher. We're probably closer to 70%-75% pizza, to be fair. I think it all comes down to how many extra sides you want to offer and what day parts you want to go after, et cetera. We will start offering different opportunities next year for different day parts, so that may decrease. For me, what's important is pizza continues to grow, so if it becomes a lower percentage, but yet it's still growing, I think that's okay if you. The rising tide lifts all ships type mentality. So it's not something that we think about too heavily because at the end of the day, we want to cater to our customers' needs, right? And if our customer wants to buy X tonight and Y tomorrow night, that's fine with us.
We just want to be their first point of choice for that general meal occasion. So yeah, we don't put too much thought. We like to cater for all. Lots more choice if we can.
Thank you.
Thank you. Sharon, over here.
Yeah. Hi, it's Richard Taylor from Barclays. You mentioned collection perhaps moving to 50% of the share. And I guess post-COVID, we've seen delivery itself struggling, especially on a like-for-like basis. Would you still aspire to get delivery back into like-for-like growth as well as growing the collection business? And can you talk to how you think you can do that?
The answer is a categorical yes. The interesting thing is when you analyze collection and delivery, globally, they are 90%, depending on which stats, somewhere between 90% and 85% different consumers, right? So a delivery customer predominantly is a delivery customer, and a collection customer predominantly is a collection customer. Now, believe it or not, the collection opportunity is actually far greater than the delivery opportunity. And I would say that this business, typically prior to sort of COVID, probably under-indexed in the collection portion, whereas in my old business, we over-indexed in collection. We really went after that. So I think you can. I don't think, I know we can grow both, all right? And delivery really is a lot more attuned to service. It's much harder to deliver consistently on time, hot.
Collection is probably easier to drive. You just have to drive it through more value. And the other point is that as we open more stores, as I said before, by getting closer to the consumer, one of the, one of the number one reasons a collection customer comes to you is because proximity, you're closer to them. So that distribution we have, which is already amazing at 1,300 stores, as we get to 1,400- 1,500, et cetera, we get closer to our, our customers, we get more, more, collection. And I think you saw that in the capital markets stage, that they're seeing this big uplift now as they really penetrate. So we'll grow both. My intention is to grow both. Wayne?
Just as a follow-up from that collection point, how do you balance the desire to improve franchisee profitability if you're going to drive collection that hard? I mean, will the franchisees not be taking in less pound notes per order? And how do you balance that with the value proposition that you're trying to drive through?
Yeah, it's a good question. In fact, I presented this to all the franchisees about six weeks ago and showed them that actually, when you break out the P&L of a collection customer versus a delivery customer, collection's actually more profitable. And now it's not more GBP today because of the volume, but as the GBP go up, it does, it can be more GBP. But what, what we'd like to see is both, because what happens is, is that with collection, your food cost goes up because it's more value driven, but your labor goes considerably lower. Considerably, we're talking sort of 10 points lower. And with delivery, your food cost comes down, but your labor costs go up 'cause your drivers are out on the road, right? Now they're 15, 20, 30 minutes before they're back.
Now, as you get closer to the customer, 'cause you're splitting your territories, that delivery time and that therefore, that labor gets shorter, but it's not there today. And it'll never be as, as, profitable as collection in terms of labor, because, you know, when you're serving someone, you can serve, you know, 60, 70 customers in an hour, unlike a driver, right, they can do three, four, or five. So the beautiful thing about collection and delivery is they complement each other. One drags labor down and food up, and the other one drags food down and labor up. So, you know, they really do complement each other. So from my point of view, it's about sweating the assets, and collection has always been able to help drive sweat those assets.
At the risk of cannibalizing collection versus delivery, 'cause that's one thing you probably don't want to do-
Yep.
And the new day parts that you're trying to attract, do I get the sense that you're gonna maybe develop two menu pricings and menu offers so that you can avoid that particular issue?
Yeah, it's a good question, and the answer is basically yes. Yeah. Put it this way, there'll be a different strategy for lunch than for dinner. It's a different occasion, it needs a different product, and we've already been testing the product, to be fair. So yeah, we're already attuned to that. And the good thing is the franchisees are already, they're supportive of this, right? They've presented all the numbers, and the good thing is we've got franchisees out there who already do a lot more than 50% in collection, and their profitability is huge, right? So franchisees see other franchisees go, "This is real," right? "I can make more money doing this." So but we want a balanced approach, right?
The good thing is, as I said, there's only about a 10%-15% overlap between a delivery and collection customer, sometimes even less, so you don't actually cannibalize. Sometimes if you do convert them across, they buy more often. And sometimes they're a delivery customer, and sometimes they're collection based on the weather and the kids from after sport and all those sorts of things, but 90% of the time they are a different customer.
Okay. Thank you.
No worries. In the front, Richard.
Yeah, I guess it's really a follow-up from that as well. So if you're doing more and more stores and you're cannibalizing potentially existing stores, do you need to give more capital contributions to incentivize franchisees, or do you think the franchisees are on board and they understand that growing their profits overall is the best thing to do? How do you think about that?
Yeah, it's very simple. I've been doing it a long time. I did it myself as a franchisee. So what happens is, when you split your territory, a couple of things happen. One is, yes, you'll lose the delivery sales to that new territory 'cause we, we draw a delivery territory where they can only, only those orders go to that new store. But what happens, as I said before, is they get all these new collection customers they didn't have before because that was too far away from that collection customer to come to. And the donor store, because you'd reduce your territory, you therefore, increase the amount of deliveries your drivers can do, so your labor goes down.
Now, typically, it takes about 12-18 months for the sales to grow back up again to where they were before for the franchisee, but on better metrics, right? So on lower labor. There are also lower marketing costs because you get less addresses to market to. So as long as you drive the strategy correctly by really going after that collection customer in the new store, you will give better service times to your first business because you're doing smaller territories. So it's quite incredible when the graph, you know, we've seen this for 20-30 years, is that when you can compress delivery times, it's not actually the feature of the time that makes the consumer come back. It's not because I got my pizza five minutes faster, I come back.
I come back because the pizza was so much hotter and tastier, because every minute it's in a pizza box, it degrades. That's the reality, right? So I can assure you, if I gave you a pizza that's been 30, 40 minutes in a pizza box versus one that's been 15 minutes, the product's incredibly different. It's like eating it at a restaurant, right? Versus eating it an hour later. So that distribution is extremely important for growing the business, delivery and collection. Another question?
Yeah, I mean, I thought someone's gonna ask it, but, any thought on, you know, diet drugs, processed foods, your whole market? What do you think about that sort of-
Yeah
... longer term?
Yeah, it's a good question.
You know, longer term, what, how do you think about that topic?
Really good question. So first thing I would say is that we're constantly thinking about health. So we launched sometime back before my time, Cheeky Little Pizzas, which is a less than 650-calorie pizza. And we want to keep doing those types of things to give consumers choice. You can actually model your pizza as low calorie as you want, you know, no cheese, just vegetables, et cetera. You really can, right? That's the beautiful thing about it. The other thing I would say is that, you know, pizza is a treat. You know, on average, people are buying it 4.3 times a year. So you actually, you know, you aren't really impacting their health when you think about that sort of frequency.
However, even considering that, we will do our best to always continue to work on health, because we think that's the right thing to do. As far as the drugs, et cetera, you spoke about, I think, you know, I think they have a place in the world. Certainly, we haven't seen any yet in the U.S. or anywhere else to suggest that it's hurting the business. But again, I think if you're doing the right thing by leading with health and giving consumers choice is that treat that they go after, whether it be four, five, or six times a year, isn't going to impact their diet. The things that they're eating every day will impact their diet more so. So, I'm not concerned about it.
However, you know, I always like to plan for the worse and hope for the best. So, that's how we'll treat it. Thank you.
Thank you. Darragh O'Sullivan, Jefferies. Do you have any idea how many of the new stores and the targets you're going to discuss in March would be, new territories versus split? It sounds like you, you might be indifferent to this.
Yeah, it's a good question. It depends over what period you're looking at. At the moment, you would say the ratio is 1/3 new territories, 2/3 splits. That may fluctuate a little bit based on some of the new territories we're unlocking, but I would think that if you look out over a five-year window, it's probably 1/3, 2/3, Darragh.
Thanks. And are you able to go into a bit of detail about how you're thinking about reaching that number? Are you using a lot of kind of local expertise in that, or a lot of data, that you currently have? Can you talk us through that a little bit, please?
Yeah, a lot of data, right? With 1,300 stores, we have a lot of data, which is great, which is all being fed into the software at the moment. So we have some, you know, very accurate data. And we're very fortunate because the amount of stores that we have, it is so accurate. Obviously, local knowledge is always useful as well, but there's so much information out there now that can really pinpoint where consumers are sitting, you know, mobile data, credit card data, but more importantly, our, our own pizza data. And what we're finding is that even we're surprising ourselves. Some of the franchisees that have been in the business 30 years have opened stores up in the last two or three weeks and done sales twice as high as they suspected they would.
So it's sort of inspiring them to sort of go into territories they would have never thought they would have gone into in the past. Now, as I said at the start, that's not unfamiliar to me. My first store was 3,000 addresses. It's sort of half the size of our smallest address at the moment, and I started there. And that little store I took from the bottom of the pack to number one in the country, so it is possible. So you know what? I think I, I have a little bit of no glass ceiling 'cause I, I've sort of been through that. So when someone tells me they can't do something, I just call a bit of bullshit on it and, and, turn it around on them. So yeah, I'm pretty confident.
Thanks.
No worries at all. Oh, yes, one more, Richard. Yep. Don't forget there's pizzas after this, everyone. So I'm sure that's what you're here for today, not me, the pizzas. So they're outside.
Thank you. Yeah, just a question on the loyalty program. You mentioned that you'll be trialing it in the first quarter of next year. Could you talk a little bit more about what it's gonna look like? Any more sort of... Is it based on a point system like, like, like the U.S.? Is it to try and increase the frequency? Any, anything... How large will that trial be before you roll it all out? Anything around that would be great.
Yeah. Look, I have to be careful 'cause I don't want to flag anything to competition, et cetera. But what I can tell you is that we've studied the U.S. system very closely. We've studied what they're going to do very closely. We've studied their mistakes. We've done consumer research and what they prefer here in the U.K., because we can't always, always assume what works in one country works in another. And we're gonna do a stage approach where we're sort of. We've got a system that's actually very little to actually roll out in terms of time and cost. That'll give us some knowledge to go to stage two, which will cost us a little bit and take us to another stage, and then stage three is the bigger cost. But by then, we would have answered a lot of the questions rather than guessing.
So that's why we've staged it across three stages. I don't want to give too much more than that, Richard. I might be able to give a bit more in March, but I wanna wait until we've got a few, few, runs on the board. But yeah, I feel very positive. Over this side over here.
Thank you. So I'll keep it short 'cause I'm sure people want to get to the pizza. Bradley from Shore Capital. Where do you think sort of collection penetration could get to X, a very successful sort of lunch trade? What do you think you can do just in the existing sort of day parts?
Is your question about what percentage lunch could get to as a percentage of our total sale?
Sorry, collection.
Collection total?
So, collection as a total.
Yes.
Um-
Where could it get to? 'Cause today it's at 37% of our total business.
Yeah.
Where could it get to as a percentage?
As a percentage, yeah.
Yeah, so-
Sort of standing the lunch.
Yeah. So, it's a good question. So it, it's interesting, right? Because percentages can lie. If my delivery business starts growing rapidly, which I want it to do, lunch might take longer to catch up, but it actually is growing as a bigger number. But I think based on what I've seen, where it's coming from, and seen in other markets, whether it be in France or Australia or New Zealand or whatever else, some of those markets are 60%, 70% at different times through their maturation curve. I would say if you look at the U.S., they're at 50%. I think that's a fairly natural progression for where we're going to today.
And I think that's back to Wayne's point. It's a very nice balance, too, is that you've got this lovely balance of driving your labor down with collection and driving your food down with delivery. So you know, somewhere around there, I think is a sweet spot. Now, some stores, based on location, could be 70% collection, some could be 20% in collection, right? So we're looking at averages here. But as we get closer to the customer, we naturally lift our collection because, as I said, that proximity is the number one reason I'll come and buy a collection from you. So if it's easier to walk down the street, particularly in rural areas, it's sort of a bit of a. It's a reason to get out of the house.
You walk down the street, and you pick up a pizza, so it will naturally lift anyway. But as I said before, it's a very profitable part of the business when you have a large collection part of the business.
Okay. Thank you.
No worries at all. Wayne? Yeah. You're up.
Are the stores that you're opening up, whether they're splits or new store, are they, are they located somewhat differently to the historic estate? 'Cause I was always under the belief that collection never really did that well in the U.K., 'cause the stores are in back alleys and tiny little stores, no seating, so they don't gravitate the customer to necessarily go there. Are you looking at that somewhat differently?
Yes, that's a fair comment, and I would say the answer is yes. I think franchisees naturally have seen that benefit of taking a more high street approach. And when you go to smaller towns, typically there might only be a couple of high streets anyway, right? The choice is actually quite limited compared to, say, somewhere like London, which can be much more challenging. So naturally, when we go into these smaller territories, the location is a very good location anyway. But I would say franchisees believe now that collection is an important part of their business, and they can see the benefits of that. So I think if there's an opportunity to relocate a store that might be in a back alley, which was the old Domino's thinking.
When I joined the business, collection was 5%, it was 95% delivery. My store ended up getting up to, like, 35% because I was in a location people wanted good, easy access and good, good parking, et cetera. So the answer is yes, we are, we are looking at that as an important part of the strategy. Any more questions? No? Well, I think we might wrap up, if that's okay. Any, any, any points you'd like to add, Edward, that I've missed or anything? No, no questions for our CFO diligently sitting there? No capital allocation questions or anything, no? Geez, I must have done a good job. Excellent. All right, guys, let's go and have some pizza. Thanks very much for coming.
Thank you.