Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au
9 June 2020
CEOs Webcast presentation
Domino’s Group CEO and regional CEOs will host a CEO webcast on Tuesday, 9 June, 2020 at 5:30pm (AEST).
The format will include a brief update on the most frequent topics requested by investors since the HY results (and relating to COVID-19), followed by a Q&A session. No trading update will be provided during this webcast.
The presentation is attached to this announcement. To register for the presentation, visit here: https://investors.dominos.com.au/presentations/2020/5/13/ceo-webcast-june-9
This will be the last management presentation prior to the release of Domino’s Full Year results scheduled for Wednesday, August 19.
This release has been authorised for release by Group CEO & Managing Director, Don Meij.
END
For further information, contact Nathan Scholz, Head of Investor Relations at [email protected] or on+614 1924 3517. Domino’s
CEOs webcast 9 June, 2020
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK1 Today’s speakers
Don Meij Group CEO & MD
Andre Ten Wolde Europe CEO
Nick Knight Australia/New Zealand CEO
Josh Kilimnik President & CEO Domino’s Pizza Japan
John Harney Group Chief Procurement and partnerships Officer Don Meij Group CEO & MD 4 Purpose and values tested
5 PURPOSE GUIDING & VALUES PRINCIPLES
FOSTER HUMAN CONNECTION GUIDED BY THE EXPERTS GOVERNMENT AND NATIONAL HEALTH AUTHORITIES BE GENEROUS & POSITIVE IT’S A PRIVILEGE NOT A RIGHT TO OPERATE DO THE RIGHT THING IT’S BETTER TO Be too Safe THAN FALL SHORT MOVE FAST, BE AGILE FOCUS on 5 TRUST PILLARS STAY PEOPLE-CENTRED 1. TEAM MEMBERS BE THE CUSTOMERS CHAMPION 2. FRANCHISEES 3. CUSTOMERs 4. COMMUNITY 5. GOVERNMENT 6 PURPOSE GUIDING & VALUES PRINCIPLES
FOSTER HUMAN CONNECTION GUIDED BY THE EXPERTS GOVERNMENT AND NATIONAL HEALTH AUTHORITIES BE GENEROUS & POSITIVE IT’S A PRIVILEGE NOT A RIGHT TO OPERATE DO THE RIGHT THING IT’S BETTER TO be too safe THAN FALL SHORT MOVE FAST, BE AGILE FOCUS on 5 TRUST PILLARS STAY PEOPLE-CENTRED 1. TEAM MEMBERS BE THE CUSTOMERS CHAMPION 2. FRANCHISEES 3. CUSTOMERs 4. COMMUNITY 5. GOVERNMENT 7 MISSION MINDSET
“A TIME TO DO GOOD, “ NOT WELL
Team FRANCHISEES CUSTOMERS COMMUNITY GOVERNMENT
8 We took the opportunity to learn from our Domino’s colleagues in other markets and apply those lessons 9 MOVE FAST. BE AGILE.
10 11 Customer behaviour has moved rapidly – and so have we
As the macro environment has updated, so has our response
Charitable giving to reinforce our ‘Mission A reinforcement of safety in everything we do Entering the ‘New Now’ – customers want to mentality’ move forward Scepticism Fear Fatigue
12 Customer responses reflect local conditions
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Customer responses reflect local conditions
Australia BELGIUM NETHERLANDS GERMANY DENMARK
NEW ZEALAND FRANCE JAPAN LUXEMBOURG
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Andre Ten Wolde Europe CEO Europe
Unlocking Europe
Different government reactions in the markets - even on regional levels in countries • Belgium: schools returning, offices very slowly reopening, restaurants open • Netherlands: Some schools reopening, restaurants are open under strict restrictions (max 30 people) • Germany: Different level of lock down in different "Bundesländer" • France: All Domino’s stores open , other QSRs have reopened, Paris still under heavy restrictions • Denmark: Least locked down market in Europe.
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Europe
The Summer ahead • European trade is typically more seasonal than Australia/New Zealand with lower sales during the Summer vacations as Europeans travel abroad • Management expects a vastly different summer to traditional: in all country's customers are unlikely to leave their home countries • With the ‘new now’ we will offer regional, seasonal offerings such as the BBQ range in France and Germany • Targeted offers will focus on rebuilding our carry-out customer base and adding even more new delivery customers • We intend to increase our advertising to grow share of voice in the summer.
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Europe
In the ‘new now’ our marketing gives customers alternatives to their favourite activities (Stadion wurrst in Germany) and returns to the familiar (Mardi and Jeudis Fou in France)
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Europe
Store roll-out/franchising
• We had an initial lull as franchisees paused their plans and local councils/businesses closing causing delay in permits and utilities. • Still managed to open several stores over the last months, including store number 300 in the Netherlands. • Expect to open stores at the end of the Financial Year: some planned openings now in July/August; usually a slow period because of summer. • Management expects real estate prices to come down
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Europe
New commissary - netherlands
• This weekend our new commissary became fully functional • All BENELUX (almost 400) stores are now supplied from this state-of-the-art facility • The commissary, is sized and located to fulfil future growth • Commissioning for dough production was completed despite challenges during Covid-19 • Office space will be co-located within the next week
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Nick Knight Australia/New Zealand CEO AUSTRALIA/NEW ZEALAND
Customer behaviour and our response • We operate a delivery, and a carry-out business • Carry-out now returning – our goal is to retain delivery growth
• Initial changes in ordering behaviour have not all continued (e.g. earlier ordering) • Some new practices (e.g. Zero Contact delivery) may be here for the long term
• The ‘New Now’ will include a return to sport and group occasions
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK 22 AUSTRALIA/NEW ZEALAND
New campaigns feature COVID-19 messaging as supplementary, rather than the primary message
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK AUSTRALIA/NEW ZEALAND
• We will continue to offer alternatives to dine-in restaurants/QSR • Our higher volume stores challenged what is possible to maximise deliveries – we are actively taking lessons for new operations
• Unit economics and franchisee engagement have improved and will be a key focus to fortress our market, and be prepared for economic shifts
• COVID-19 has demonstrated the importance of an experienced franchisee network to develop and adapt new operations • Some franchisees paused expansion plans temporarily • This pause affected the timing of store openings and refranchising, but not the strategy • An increase in deliveries reinforces the need for our fortressing strategy Congratulations to the Majmudar brothers who purchased their second store in May (South Australia)
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Josh Kilimnik President & CEO, Domino’s Pizza Japan JAPAN Japan Mobility Percent change from baseline (1)
60% Emergency declaration (7 prefs.) Local conditions 40% Emergency declaration (Nationwide) Lifted in 39 prefs. • Lower level of lockdown ‘semi-lockdown’ (despite State of 20% Emergency) 0% • Staying at home, social distancing, work from home or flex -20% commuting (Train passengers of peak time decreased by 60% -40% -60% in Tokyo.) Retail & Recreation Grocery & Pharmacy -80% Parks Transit Stations • Refrain from unnecessary outings, particularly to other Workplaces Residential -100% prefectures
What has this meant for other local businesses SSS Trend of Japan QSR Chains (2) 40% including restaurants? • Some chains have closed large number of stores 20% • Many open QSRs have changes operational hours 0% • Public data suggests many restaurant chains experienced -20%
negative SSS in April, except McDonald’s and KFC -40% McDonald's KFC Mos Burger Yoshinoya Sukiya Matsuya CoCo Ichibanya Royal Host -60% Skylark Group Denny's Saizeria Sushiro Kurazushi Doutor -80%
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK 26 Note: (1) Google LLC "Google COVID-19 Community Mobility Reports". https://www.google.com/covid19/mobility/ Accessed: 2nd June 2020. (2) IR information disclosed by each company JAPAN
Customer behaviour and our response • Customers have welcomed Zero Contact delivery for societal, as well as health reasons
• Local operations have allowed for growth in delivery and carry-out FY20 2H openings & Conversion Map (1) • Our initial data suggests this is driven by new customers, and additional New store New store frequency In inner cities In other cities • A heightened focus on operations, coupled with new team members, is focused on delivering high-levels of service – including reducing delivery times 27 6
Store roll-out/franchising • Our fortressing strategy, building out existing markets, remains unchanged • Franchisee appetite for purchasing, and opening, stores remains high • Development of franchisee base is being reinforced with expertise from ANZ
Corporate New Store Franchise New Store Conversion to franchise
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK 27 Note: (1) As of the end of June 2020 JAPAN
Customer behaviour and new marketing campaigns
• Single households are the largest and fastest growing segment of our community • These consumers are taking up delivery options now • Pizza has not traditionally been a choice for these single occasions • Price and volume have been barriers to reaching these customers
• Management intends to reach this key customer demographic with new campaigns: • 50% off: adding additional layer to ‘BOGO’ (buy one, get one free) • Rolling out no minimum delivery to reduce complexity and ordering barriers
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK 28 Note: (1) As of the end of June 2020 John Harney Group Chief Procurement & Partnerships Officer A Little About Me
• Joined DPE in 2004 • Previously with ICI Asia and Unilever for 13 years • Recently relocated to our European operation – first Group role outside ANZ • Responsible for global DPE food buy, Supply Chain and Quality Assurance
o Agility o Relentless o Partnerships
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK SUPPLY CHAIN
• Maximum agility
• Maximum value
• Maximum food safety
• Maximum security
• Maximum Customer Service
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK 31 COVID-19 RESPONSE
Secure the medium-to-long term
Secure our supply
Secure our staff and customers
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK Don Meij Group CEO & MD Living with COVID
• We expect the ‘new now’ could remain in place for the next 18 months
• Team member and customer safety must remain first
• Will this future see an Economic snapback or a sustained downturn?
• Marketing
• Unit economics
• Value will only become more important, not less important
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK MISSION MINDSET
“A TIME TO DO GOOD, “ AND WELL
Team FRANCHISEES CUSTOMERS COMMUNITY GOVERNMENT THE LONGER TERM
Fast forward the age of delivery
• Our view that the internet of food is our future remains unchanged
• COVID-19 has brought forward this reality for food and other retail
• Project 3TEN and fortressing strategy remain central to our business
• Franchising has again shown its importance to DMP
• Be bold – be creative – back yourself: Investing in media, store growth, people and culture
AUSTRALIA NEW ZEALAND BELGIUM FRANCE NETHERLANDS JAPAN GERMANY LUXEMBOURG DENMARK