Good afternoon, everyone. My name is John Ivankoe. I'm the restaurant and foodservice distribution analyst for JPMorgan. Very happy to make an introduction for Jeff Lawrence, the Chief Financial Officer for Domino's Pizza, Five years as CFO has been part of his twenty years with Domino's, always a great speaker, very entertaining. I think he's going go through a couple of slides, and we have some questions at the end.
Jeff, thank you so much.
Thank you, John, and good afternoon, everybody. My name is Jeff Lawrence. I'm the CFO of Domino's Pizza. Really appreciate your interest in our brand. And with that, we'll dive right into the deck.
We are number one in global QSR pizza with about a 15% global market share, split evenly between U. S. And international global retail sales, and we are 98% globally franchised, including 100% outside The United States. We're in more than 90 markets. We're a big company.
We're a big brand, more than 16,500 stores with about 6,000 of those in The U. S, which is our home country since we founded the brand in 1960. One of the unique things about Domino's is that we are a system built on homegrown talent. In The United States, more than 90% of our 800 franchisees started as a pizza maker or a delivery driver in a Domino's Pizza restaurant. That means that the entrepreneurs that we have looking after the brand in The U.
S. And in many of our international markets are real pizza people who have learned the business over time and are a key to our success in driving growth for the brand. Our franchisees in The United States on average own about seven stores and a cash flow almost $1,000,000 in EBITDA. On the international front, we are very fortunate to have five large public master franchisees. These are sophisticated partners with a growth mindset with market capitalizations well over USD 1,000,000,000 for four of these on this chart.
Really fortunate to have these folks as our partners in international and are a key part of our steady and stable growth profile outside The United States. With that, let's talk about how we win. One of the most important things about the Domino's Pizza brand is we started as a delivery pizza brand in 1960, as I mentioned, in Ypsilanti, Michigan. And we've always been able to have customers carry out pizza. But in the last five, six or seven years, we've been really intentional about the carryout business, really upping our game here.
And now almost half of our transactions in The U. S. Are coming from the carryout business, which represent about onethree of sales, while still having a very stable and steady and growing delivery business from for which we are much better known, of course. These are the largest two segments in The U. S.
Pizza industry, and this is where you'll want to be if you want to grow in U. S. Pizza. We're consumer focused. We're customer focused.
We're obsessed with making sure that our consumers have the best possible experience with our brand. And that starts really with what I call old school retail, which is product, service and image. We have a great menu of the highest quality food in the QSR pizza industry, fresh dough products. We offer salads, oven baked sandwiches, a great line of desserts, and we're constantly innovating in the food space to make sure that we're bringing great food to our consumers. We're known for service.
We're always trying to get better at service, but we know that we have to get both for our carryout consumers and delivery consumers, we have to get those deliveries to our consumers safely and in a good time to make sure that they really see the value from the experience with Domino's. And on image, we rolled out our Pizza Theater reimage program globally several years ago. We are now substantially reimaged pretty much everywhere around the world. And this is really bringing an open kitchen concept to the customer. They can see the fresh product being made right in front of their eyes.
And again, very transparent, very high quality food, gives us an elevated level of perception with our customers. We're very value oriented. We're known for the $5.99 mix and match deal in The U. S. You can deliver that or carry that out.
And again, really getting serious about carryout, being intentional about the carryout occasion. For the last four or five years, we've been running a carryout only special in The United States, which is a large three topping pizza for $7.99 This came out of some research we did, and we're really benefited because we're vertically integrated in technology, which I'll talk about in a moment. But we have a big database that we can mine for consumer insights and how do we really continue to improve the customer experience and deliver value and getting serious about carryout and going with the $7.99 price point was a great example of that. One of the ways that we win with our consumers is through technology, including our industry leading loyalty program. We are vertically integrated in technology, our point of sale system through our e commerce capability, through our data analytics capability on top of that in The U.
S. And in many of the international markets around the world that we serve. We have more than 23,000,000 active users in the loyalty program in The U. S, far outstripping other folks in even the broader QSR industry and a real key to continuing to grow the brand and to grow retail sales over time. Digital sales in The U.
S. Right now, about two thirds of total sales and continuing to increase on a year over year basis. We're not done innovating with our customers. We are going to continue to invest front footed but yet disciplined in areas such as consumer facing technology, ordering capabilities and even some newer stuff like autonomous vehicles. We've run some programs and tests around AV with Ford Motor Company.
We're now in test with neuro down in the state of Texas in The U. S, really trying to stay ahead of where the industry and the consumers are going and making sure that when those changes happen, not if, but when those changes happen, Domino's is ready to be the first and most effective consumer partner to really implement those for the consumer's benefit. One other point on this slide is we have 85,000,000 unique customers in our database. 23,000,000 of those are active loyalty customers, but 85,000,000 unique customers in our database in The U. S.
Alone shows the depth and breadth of data that we have to play with every day to continue to improve our brand. The consumer is not our only customer. We're 98% franchised, and that relationship enveloped in trust is super important to us, and we treat it very seriously. And we're constantly focused on keeping it simple for our franchisees, giving them the data and the tools they need to be great entrepreneurs for our brand. And above anything, we're always focused on driving traffic, driving orders into our brand.
That's the focus for us and how we try to build our brand over time in all of our markets around the world. Part of winning with franchisees is being laser focused on their economics, not just our economics, but the franchise economics, everywhere in the 90 plus markets that we operate in the world. How do we do that? We keep our store footprint really focused and efficient, anywhere between twelve hundred and eighteen hundred square foot on average generally around the world. So, very focused, operationally simple.
And the paybacks that our franchisees experience in The United States right now, better than three years in international markets on average, also better than three years. And that's why you're seeing the capital flow into Domino's from franchisees and they continue to grow units around the world. This is a chart that we're really proud of. We've been on a journey of success in improving franchise economics in The United States. This is a chart from about ten years ago, updated for 2019, where you see all the way through 2018 improved EBITDA at the store level on average as reported by franchisees every single year for a decade.
We're thrilled today to announce our early estimate for 2019 profitability as reported to us by U. S. Franchisees of approximately 136,000 to $139,000 in The U. S, which keeps them at industry leading best economics despite some of the challenges that we had and that we fought through and that our franchisees fought through during 2019. Really excited to be able to show that these economics remain best in class.
When we think about the results we've been able to put up over time, one of the things that we really try to focus on is try to get a balanced profile for growth. And we do that at Domino's, and I'll walk you through it in a minute, both U. S. And internationally balanced, but also comp and unit growth balance. And we hit all four of these, I think, squarely, routinely to grow the brand in the most profitable way possible.
Another chart we're really proud of. Not a lot of brands or maybe no other brand will show you comps over a twenty plus year period, but at Domino's, we're pretty transparent, so we're going to show it to you again. And as you can see, over this long period of time for The U. S. Business, you can see that we've averaged almost a 4% comp with consistency over a very long period of time through every kind of economic cycle you could dream up.
And over the last decade, we averaged almost 7%. Currently, we're on 34 consecutive quarters of positive same store sales in The U. S. Business. And of course, we'll be able to update you on that in February for quarter four.
On the bottom part of the slide is the international comp for the same time period. We are on 103 consecutive quarter streak of comp growth in our international business, something that we are extraordinarily proud of, and we thank our franchise partners all around the world for helping to drive that level of success. You can see both for the decade and the longer term view, we've averaged between 56% comp over a very, very long period of time. Moving from comps to unit growth, we've added almost 7,000 units since 2012. And you can see that over time, it continued to increase as you move from left to right on this chart.
The dark blue part of the stat bar is The U. S. Business. And I know it looks pretty small, but actually The U. S.
Business has been the number one market for unit growth out of the 90 plus markets we operate in, really a great story there with the franchisees. And again, showing that economics in this industry, this delivery of food industry matter. And when you get it right, you can attract capital to the brand to continue to grow and delight consumers both in The U. S. And abroad.
When you add comps and units together, you get the stacked bar on retail sales growth. Again, this is from 2012 to the trailing or the year to date for 2019. And again, you can see balance here, balance between The U. S. And international and also a high level of achievement with high single to double digit retail sales growth in the past over this time period, just outstanding amount of growth for the system and profitable growth for the franchisees.
You add all that up, you drop it to the bottom line, shareholders get to vote over time. We're showing you here a three, a five and a ten year total shareholder return chart. This is probably the biggest brag chart we have from an investor perspective. We deliver for our shareholders routinely over all different time periods. We're extraordinarily proud of our track record of success here.
And maybe more importantly, we're really proud of our track record of returning capital to shareholders with all of the organic and nonorganic cash flow that we're able to generate in the business. Opportunity to grow. We're not done. Despite that record of a track record of success, we're not done at Domino's. We have a lot of growth opportunity.
And part of the reason for the growth opportunity is we're in a large global and really healthy pizza industry around the world. It's about $84,000,000,000 If you look at QSR globally, that's about $47,000,000,000 in international markets and about $37,000,000,000 in The U. S. With The U. S.
Business or the industry growing low single digits, international growing a little bit more than that on average. And again, importantly, it's a fragmented marketplace. It's ripe for consolidation for a front footed, technology focused, franchise strong brand to continue to roll up share in the global pizza industry. This is a look at The U. S.
Market share. This is updated information for 2019, so you haven't seen this before. On the left hand side, we're delivering 3.5 out of 10 pies in America right now or about a 35% pizza delivery market share in The United States. And on the right hand side is our market share of the total pizza market. We're delivering and carrying out one in five pies basically in The United States as we sit here today.
Maybe more important than that is the opportunity of the 52% of The U. S. Pizza industry that is still fragmented with the independents and regionals. We don't have to just take share from the big guys. We can continue to take share from the smaller players as well.
And that industry setup is very, very good for someone like Domino's. So, how many stores can we build? We believe that we have at least 8,000 total units that we can have in The United States. We have about 6,000 units today. And why do we believe that?
We have the data, we have the analytics and mapping capabilities. And most importantly, we have the right franchise partners making the right profitability to build these stores. We're confident that we can get to 8,000 in The U. S, and we can do it over the medium term. How do we do that?
You've heard a lot about our fortressing strategy. This isn't complicated. This is taking a great investment opportunity with the best franchisees in our industry, giving them the investment opportunity to build a Domino's Pizza store to be closer to the delivery consumer and closer to the carryout consumer. More than 90% of a carryout business at a new store is incremental. More than 90%.
We're not taking care of those customers today. And when we fortress and we add a new store, we have the ability to get that market share, and we've done that. We also, of course, have better service, tighter delivery areas, and our drivers are busier. So we win with drivers, we win with consumers, and our franchisees continue to win to be able to grow their enterprise and continue to grow on almost that $1,000,000 of franchisee EBITDA in The U. S.
U. S. Is great, international growth opportunity even better. On the left hand side, you see some of our developed markets. On the right hand side, you see emerging markets.
We've got more than 5,600 more units to build in just these 15 markets alone, including China, one of our best growth markets at two fifty one stores on their last disclosed store count, we think that business and they think that business can get to at least 1,000 units, and we believe that. We're a work in progress brand. We take ESG very seriously at Domino's, and we're on a journey to continue to improve our ESG profile. We do things like partner with dairy farmers to improve their sustainability and their impact on the environment. We've launched e bikes and made them available to every U.
S. Franchisee to help reduce our carbon footprint at Domino's. And we have a fantastic partnership with St. Jude Research Hospital in Memphis, Tennessee, where the company and our customers continue to send millions of dollars every single year to help improve the lives of so many children struck with cancer. We're proud of our record.
We have a long way to go here. But we are focused on ESG with one other point that we have a very engaged, relevant and diverse Board of Directors who is active with management and franchisees as we grow to a dominant number one market share. So, 2020 outlook, let's get those computers ready. Fiscal twenty twenty guidance, I'll start with the fun stuff. We have a 53 year in 2020.
We kind of have a goofy retail calendar. 2020 happens to be a fifty three week, not a fifty two week calendar. So, that means all the numbers are going to be a little bit bigger than you're normally used to, and I'll share with you in a minute some of those. FX. We believe FX, as we sit here today, is going to continue to be a pressure for us as it's been largely for the last decade.
Currently, we're estimating it's going to be flat to negative $5,000,000 versus $20.19 FX levels. Food basket in The United States, we believe it will be up 1% to 3%, continuing to keep food costs down for our franchisees and really benefit from our scale to keep those costs down. We think we can grow profitability at those kinds of levels in The United States. G and A. This is based on a fifty three week year, so it's a little bit bigger than if it was a fifty two week year, obviously.
But as we sit here today, we think 2020 will be somewhere between 400,000,000 and $4.00 $5,000,000 of total G and A investment in 2020. On a fifty two week basis for 2020, we're sub-four 100,000,000 and actually would be basically in the range of the same range that I guided originally for 2019 year over year that I did last year here at ICR. Shows the discipline and the focus of continuing to tighten investment levels, while continuing to be front footed and investing in all of the innovation that is going to continue to drive the brand forward. Similarly, CapEx. We believe 90,000,000 to $100,000,000 of CapEx for 2020.
Our two to three year outlook, it's the same as we mentioned to you in October, culminating in 7% to 10% global retail sales over the next two to three years. We are reiterating that guidance today. Finally, before we get into Q and A, our goal continues to be 25,000 stores, dollars 25,000,000,000 in retail sales by the year 2025. If we can do that, we'll be a dominant number one player in the global pizza marketplace. And with that, I know I ran through that pretty quick, but we'll get to some Q and A.
You. Many may ask about the wobbling franchise store level EBITDA, and it truly was a wobble as basically 'nineteen was equal to 'seventeen on a per store basis. Could you talk about in hindsight the impact from splits as you have more data, you have more time to look at the split impact on comps is the first question. And secondly, what is the return for franchisees for opening that new store? Presumably, it's something longer than the three year average, it's where the capital has historically been invested.
Yes. So, the first thing on the range the early estimate for 2019 is that is a strong number. It's down a little bit, that's our early estimate from 2018 levels, but it is fantastic economics and one that is going to continue to be super attractive for our franchisees to open up new units. So, the calculus of the algorithm for us to build corporate stores and for our U. S.
Franchisees to build more stores doesn't change when you're making that much money. Now, in 2019, we didn't drive as much traffic as we probably wanted to. Inflation in some areas were a little bit higher than maybe we originally thought. And as you see, it came down maybe a couple thousand dollars. But again, it doesn't change the opportunity, doesn't change our belief in our 6% to 8% global unit growth, of which The U.
S. Is obviously a big piece of that. And again, our franchisees are extraordinarily happy with that level of return. So, our job as we go forward into 2020 is to continue to keep our eye on the consumer, to continue to drive real value and to drive and try to get elusive traffic. Traffic is very hard in our industry, as you very well know, John.
But we think we can do that. We are poised, we think, for a great year in 2020. We have the right franchise partners. We have the right capabilities. We're just really excited to get into 2020, execute and continue to roll up market share in this industry.
And the impact from splits that we talked about a year ago, which I think was 1% to 1.5%, correct me, is that still the number? Is that what franchisees are seeing? I mean, you've gone out of your way to say 90% of carryout sales is incremental, delivery sales presumably is nowhere near that incremental if the market already being delivered to, if you can make some comments specific to that.
Yes. On the split impact, no update to that range, one to 1.5 points for split impact. And again, we understand the optics that that's a bad guy for The U. S. Comp.
What I'd really remind people is we are making much more in total retail sales for that purposeful investment of fortressing. It's one that we would make every day, we do it again because that's really how you build your brand. And when you've been around for sixty years, you need to remove some of your territory, get a little smarter, let the data drive that. Franchisees are really happy, but more importantly, the customers. We're closer to the customer, fortressing gets better service delivery times, it's better for the carryout consumer, it's better for the drivers.
While other brands are out there expanding territories, we are shrinking territories. And we will take that one to 1.5 comp impact all day long to win the long game in pizza.
The two sales driving initiatives. Where are you in terms of AI providing truly customized personalized marketing to your 23,000,000 active loyalty members is the first point? And secondly, you've talked a lot about 2020 will be a return to a new product cycle, if you will. I mean, what are the unmet need states? I mean, maybe we could talk broadly or ideally specifically that you may be able to significantly increase sales at Domino's Pizza unit.
Yes. We think that we're going to launch something in 2020 from a food innovation perspective, nothing to announce here today. But we've got a great high quality menu, but it's been a while quite frankly since we've launched a new product. So, we think that's an opportunity and one that we'll take advantage of in 2020. And we think it will resonate with consumers and help to drive sales and continue to protect our best in class profitability.
As it relates on how do you activate and what do do with those 23,000,000 loyalty customers that we have and one to one marketing, if I heard your question right, that's about just continuing to mine the database, continuing on that journey. I think we're doing a pretty good job there. But I have to tell you, John, we have a long way still to go. I think we're ahead of most of the industry. We have a lot of opportunity and a long way to go to continue to really, again, mine the data for value with the consumer, 85,000,000 unique customers in the database.
When that first came across our desk, we had to have them go check that twice, got the big number. It's the right number, that's a real number. So, just being front footed, engaging and we think we're going to make a lot of progress there in 2020 and the out years as well.
Obviously, third party delivery had been, maybe has been aggressive in terms of customer acquisition, and not just customer acquisition but driver acquisition. And I think at some points in 2019 in certain markets, especially drivers maybe caused you some service issues that were below where you wanted to be, I mean, let's say. I mean, can you comment on the availability and quality of drivers and whether there's a potential for AB5 and other types of regulatory changes, specifically on the employment side that could potentially change the opportunity for Domino's.
Yes. So, you take if you ran into one of our 800 independent franchise owners in The U. S. And you ask them what's an opportunity, they will have told you for sixty years finding drivers and keeping drivers happy. So, it's always been a challenge.
It continues to be a challenge, but it's one that we embrace. You pay your drivers what you need to pay them, whether mandated by a government entity or just because the economy mandates that you pay them more. And the thing about Domino's that makes us the employer of choice for drivers is our drivers are busier than your drivers. It's an activity based business, particularly in The U. S, mileage opportunities, more tip opportunities and just more of a fun job because you're active.
And so, we continue to have opportunities in service. We're shrinking down those delivery areas, which again benefit the driver, benefit the consumer. So, challenging environment, it's always been challenging, but the things that we're doing strategically put us at an advantaged competitive position versus a lot of the other folks, both in the traditional pizza industry, but also the broader aggregator industry as well. Excellent.
Thank you. As China is going to be here tomorrow talking about their business, the goals of having, I think I saw on the slide, 1,000 units in China would be subscale for many retail businesses in China, smaller box retail businesses in China. So is that the opportunity? When should that opportunity be achieved? And does it make sense, I guess, just on paper that China should have fewer units than India does today, for example?
Yes. So, great question. Mean, listen, the first 1,000 stores are always the toughest, John. Got to build the first 1,000 and we can go from there. We've had fits and starts over China as a brand.
But we got that right coming up on a decade ago when we partnered with DASH Brands. And that team, they have an all Chinese management team on the ground, engaged, thoughtful, innovative, delivering results. And maybe the most important thing for Domino's Pizza in China isn't the number of Chinese consumers that we can ultimately serve, but is that the team on the ground has the box working, the economics of the box works. And that's what it's about at Domino's. For all the fancy slides and all the big stage presentations, you've got to get the four wall economics to work.
And when you work it and you get it working, that's the unlock. So, China, great opportunity. They'll get to 1,000 by 2025. And then from there, way more, and I don't know how much way more is. But we believe in the team, we believe in the opportunity and Domino's will be a force in China in the future.
Excellent. Thank you. Thank you very much. Appreciate everyone's interest. Thank you.