25 June 2019 Americas/United States Equity Research Restaurants

Domino’s Pizza Inc. (DPZ) Rating OUTPERFORM Price (21-Jun-19, US$) 280.33 INITIATION Target price (US$) 320.00 52-week price range (US$) 300.67 - 234.35

Market cap(US$ m) 11,523 Time to Get A Piece of This Pie; Initiate Enterprise value (US$ m) 14,963 Target price is for 12 months. Outperform

Research Analysts ■ We initiate coverage of Domino’s (DPZ) with an Outperform rating and Lauren Silberman 212 325 2720 $320 target price. DPZ is one of the best growth stories in restaurants, with [email protected] ~10% revenue growth, margin expansion and benefits from repurchases driving an EPS CAGR of ~15% over the next four years. We believe concerns regarding the impact of third-party delivery could be overdone as the honeymoon phase wears off and carryout could offset pressure, with outperformance against SSS estimates as upside. Confidence in ~7% global unit growth is driven by global brand strength, domestic whitespace opportunities in a fragmented category and international master franchise agreements. ■ US SSS Outperformance: DPZ should maintain SSS momentum and share gains as one of the few companies with contribution from positive traffic, the only company with a frequency-based loyalty program, consistent value messaging, favorable franchisee relations (avg franchisee ~$975K EBITDA) and an industry-leading digital ecosystem supporting best-in-class execution. We estimate US SSS of 5.5% in 2019, with expectations for sequential improvement throughout the year against easing compares and reduced competitive headwinds from 1Q (Points for Pies, QSR chains delivery campaigns). Longer term, we model US SSS of ~5%. ■ Third-Party Delivery as NT Pressure, But Not LT Issue: An increasing number of cross-branded campaigns with national QSR chains, competition for delivery drivers and aggressive promos represent incremental competitive pressure NT. LT, pizza’s stable 10-yr ~$10BN delivery market share should largely hold, with pizza a cuisine that travels well and offers great value. Positioning as a delivery company could be a net positive for DPZ as delivery demand increases, while increased focus on carryout can drive incremental sales and help offset competitive pressures (~2/3 delivery, 1/3 carryout split). ■ Valuation: Our $320 target price is based on ~20.5x our NTM EBITDA in 12 months, implying ~28x our NTM EPS in 12 months (30x avg), in-line with current multiples. Key risks: competition, consumer spending, interest rates.

Share price performance Financial and valuation metrics

Year 12/18A 12/19E 12/20E 12/21E EPS (CS adj.) (US$) 8.42 9.44 11.10 12.66 Prev. EPS (US$) - - - - P/E rel. (%) 186.3 172.0 162.6 156.3 Revenue (US$ m) 3,432.9 3,686.0 4,042.2 4,386.1 EBITDA (US$ m) 625.9 694.5 783.2 847.1 OCFPS (US$) 9.10 10.54 12.69 14.52 P/OCF (x) 27.5 26.6 22.1 19.3 EV/EBITDA (current) 24.0 21.6 19.2 17.7 On 21-Jun-2019 the S&P 500 INDEX closed at 2950.46 Net debt (US$ m) 3,506 3,440 3,540 3,588 Daily Jun22, 2018 - Jun21, 2019, 06/22/18 = US$292.39 ROIC (%) 103.56 113.41 115.03 117.77

Quarterly EPS Q1 Q2 Q3 Q4 Number of shares (m) 41.10 IC (current, US$ m) 466.22 2018A 2.00 1.84 1.95 2.62 BV/share (Next Qtr., US$) -72.8 Dividend (current, US$) 2.60 2019E 2.20 2.08 2.11 3.07 Net debt (Next Qtr., US$ m) 3,400.6 2020E 2.44 2.43 2.46 3.79 Net debt/tot eq (Next Qtr.,%) -114.3

Source: Company data, Refinitiv, Credit Suisse estimates

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

25 June 2019

Domino’s Pizza Inc. (DPZ) Price (21 Jun 2019): US$280.33; Rating: OUTPERFORM; Target Price: 320.00; Analyst: Lauren Silberman Income Statement 12/18A 12/19E 12/20E 12/21E Company Background Revenue (US$ m) 3,432.9 3,686.0 4,042.2 4,386.1 Domino's Pizza is the one of the world's largest pizza companies, EBITDA (US$ m) 626 695 783 847 with nearly 15,000 locations in more than 85 markets. Depr. & amort. (54) (59) (65) (70) EBIT (US$) 572 635 718 777 Blue/Grey Sky Scenario Net interest exp (140) (149) (156) (157) PBT (US$) 433 487 562 619 Income taxes (68) (92) (112) (124) Profit after tax 365 395 450 496 Net profit (US$) 365 395 450 496 Other NPAT adjustments 0 0 0 0 Cash Flow 12/18A 12/19E 12/20E 12/21E Cash flow from operations 394 440 514 568 CAPEX (120) (112) (100) (90) Free cashflow to the firm 274 328 414 478 Cash flow from investments (88) (71) (100) (90) Net share issue(/repurchase) (581) (223) (392) (391) Dividends paid (92) (105) (122) (136) Changes in Net Cash/Debt (388) 66 (100) (49) Balance Sheet (US$) 12/18A 12/19E 12/20E 12/21E Cash & cash equivalents 25 17 82 98 Account receivables 190 193 212 230 Other current assets 305 268 268 268 Total fixed assets 233 241 276 296 Investment securities - - - - Total assets 1,124 1,095 1,214 1,268 Total current liabilities 412 396 404 414 Shareholder equity (3,040) (2,986) (3,040) (3,061)

Total liabilities and equity 1,124 1,095 1,214 1,268 Net debt 3,506 3,440 3,540 3,588 Our Blue Sky Scenario (US$) 385.00 Our $385 one-year valuation in a blue sky scenario is based on an Per share 12/18A 12/19E 12/20E 12/21E EV/EBITDA of ~22.5x our blue sky FY20 EBITDA. Our blue sky No. of shares (wtd avg) 43 42 41 39 FY20 EBITDA is based on: 1) domestic SSS of 8%; 2) domestic unit CS adj. EPS 8.42 9.44 11.10 12.66 growth of ~6%; and 3) operating margins of ~19%. Prev. EPS (US$) Dividend (US$) 2.20 2.60 3.12 3.59 Free cash flow per share 6.33 7.85 10.22 12.22 Our Grey Sky Scenario (US$) 235.00 Earnings 12/18A 12/19E 12/20E 12/21E Our $235 one-year valuation in a grey sky scenario is based on an Sales growth (%) 23.1 7.4 9.7 8.5 EV/EBITDA of ~18x our grey sky FY20 EBITDA. Our grey sky FY20 EBIT growth (%) 9.7 11.0 13.1 8.1 EBITDA is based on: 1) domestic SSS of 3.5%; 2) domestic unit Net profit growth (%) 29.5 8.1 14.0 10.2 growth of ~4.5%; and 3) operating margins of ~16.5%. EPS growth (%) 42.4 12.1 17.6 14.1 EBITDA margin (%) 18.2 18.8 19.4 19.3 Share price performance EBIT margin (%) 16.7 17.2 17.8 17.7 Pretax margin (%) 12.6 13.2 13.9 14.1 Net margin (%) 10.6 10.7 11.1 11.3 Valuation 12/18A 12/19E 12/20E 12/21E EV/EBITDA (x) 24.0 21.6 19.2 17.7 P/E (x) 33.3 29.7 25.3 22.1 Returns 12/18A 12/19E 12/20E 12/21E ROIC (%) 103.6 113.4 115.0 117.8 Gearing 12/18A 12/19E 12/20E 12/21E Net debt/equity (%) (115.3) (115.2) (116.4) (117.2) Quarterly EPS Q1 Q2 Q3 Q4 2018A 2.00 1.84 1.95 2.62 2019E 2.20 2.08 2.11 3.07 2020E 2.44 2.43 2.46 3.79 On 21-Jun-2019 the S&P 500 INDEX closed at 2950.46 Daily Jun22, 2018 - Jun21, 2019, 06/22/18 = US$292.39

Source: Company data, Refinitiv, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 2 25 June 2019

Executive Summary We initiate coverage of Domino’s Pizza (DPZ) with an Outperform rating and $320 target price. DPZ is one of the best growth stories in restaurants, with ~10% revenue growth, margin expansion and benefits from repurchases supporting EPS growth of ~15% over the next four years. Please refer to our views summarizing the Restaurants industry: US Restaurants Phone To Table: Digitizing Restaurants.

■ DPZ Well Positioned for Global SSS Outperformance: DPZ has exhibited industry- leading and consistent global SSS, with domestic SSS averaging ~9% and international SSS averaging ~5.5% over the last five years. DPZ has consistently met or exceeded its long-term SSS targets, currently 3-6% globally. While increasing competitive pressure from third-party delivery companies has pressured SSS more recently, we believe DPZ’s long-term strategy around value, digital and delivery well positions the company for market share gains. For 2019, we estimate domestic SSS of 5.5%, with expectations for sequential improvement throughout the year as compares ease. We model domestic SSS of 5% post 2019, toward the higher end of DPZ’s long-term SSS target of 3-6%. Our confidence in ongoing SSS outperformance and market share gains comes from: 1) historical precedent, with 32 consecutive quarters of positive US SSS averaging ~7.5% since 2010 comprised of healthy traffic gains and average check increases; 2) fragmented pizza market, with opportunities to gain share from independents, regional chains and large chains; and 3) execution against sales initiatives, including ongoing evolution of its digital platform, compelling and consistent value offers and benefits from a greater focus on carryout. We model international SSS of 3.1% in 2019, including sequential improvement throughout the year as compares ease. Long term, we model international SSS of ~3.5%, toward the lower end of DPZ’s long-term SSS target of 3-6%, in-line with slower growth over the last two years. ■ Delivery Concerns Could Be Overdone: Third-party delivery is likely to represent incremental pressure near term, driven by: 1) increasing demand and supply from third-party delivery providers fueling higher awareness; 2) aggressive promotions/discounts; 3) QSR chains offering delivery; 4) cross-branded campaigns between aggregators and large QSR chains; and 5) competition for delivery drivers. Long term, we believe the pizza delivery market will largely maintain its delivery market share, which has been ~$10BN for a decade. We view Domino’s as best positioned to continue to gain share within the segment given the strength of its digital ecosystem and long-term strategic approach. We expect Domino’s loyalty program and superior execution in delivery will allow the company to maintain a competitive advantage even against increasing competition. ■ Global Growth Opportunity Strong: We believe DPZ can reach 25,000 units by 2025, with contribution from accelerating domestic growth and continued robust international development. The 25,000 unit growth target implies global growth of ~7% over the next several years, including ~4.5% domestic unit growth and ~8% international unit growth. We model global unit growth of ~7% through 2022, including domestic unit growth of ~5% and international unit growth of ~8%. This compares to a 5-yr global growth CAGR of 7.9%, including 3.3% domestically and 11.2% internationally. Our confidence in development expectations comes from: 1) global brand strength, fundamentals and operating momentum; 2) domestic whitespace opportunities with fortressing strategy in existing markets; and 3) international development opportunities, with increased visibility from master franchise agreements.

Domino’s Pizza Inc. (DPZ) 3 25 June 2019

■ Earnings Estimates: We expect top-line growth of ~9% over the next few years to enable margin leverage for operating profit growth of ~10.5%. Together with accretion from share repurchases, we model EPS growth of ~15% long term. For 2019, we model EPS growth of ~12%, including dilution from the refranchising of company- operated stores in New York. We also note 2020 includes a 53rd week. ■ Valuation: Our $320 target price is based on ~20.5x our NTM EBITDA in 12 months, implying a P/E multiple of ~28x our NTM EPS in 12 months. Our ~20.5x EV/EBITDA multiple is in-line with DPZ’s current multiple and a premium to its 3-year average multiple of ~19x. Our implied P/E multiple of ~28x is in-line with DPZ’s current trading multiple and below its three-year average P/E multiple of ~30x. ■ Key risks include: 1) competition from pizza peers, other QSR chains and delivery aggregators; 2) consumer spending; and 3) interest rates, as DPZ is highly levered at ~6x debt/EBITDA.

Domino’s Pizza Inc. (DPZ) 4 25 June 2019

Key Charts

Figure 1: DPZ has demonstrated system sales Figure 2: Execution against digital initiatives, growth of ~11% over the last five years, consistently delivery and consistent value should support beating at least the lower end of long-term ongoing SSS outperformance, even against guidance, with expectations to maintain 8-12% increased competitive pressures from delivery and growth over the next 3-5 years. fortressing growth strategy.

14% 14.0%

12% 12.0%

10% 10.0% 8% 8.0% 6% 6.0%

4% Domestic Domestic SSS

System System Sales Growth 4.0% 2% 2.0% 0%

0.0%

2011

2012

2013

2014

2015

2016

2017

2018

2019E

2020E

2021E

2022E

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019E

2020E 2021E Domestic International DPZ LT Target 2022E Domestic SSS DPZ Target Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Figure 3: Following several years of international SSS at the high-end of DPZ’s LT range, we model Figure 4: We model global unit growth of 6.9% over international SSS toward the low-end of guidance the next four years, relative to 7.9% growth over the and in-line with slower growth over the last two last five years and DPZ’s target of 6-8% growth over years. the next three to five years.

9.0% 12.0% 8.0% 7.0% 10.0% 6.0% 8.0% 5.0% 4.0% 6.0%

3.0% 4.0% International International SSS

2.0% Global Unit Growth 2.0% 1.0%

0.0% 0.0%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2017 2013 2014 2015 2016 2018

2019E

2020E

2021E

2022E

2022E 2019E 2020E 2021E International SSS DPZ Target Domestic International DPZ LT Target (6-8%) Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 5 25 June 2019

Figure 5: Delivery aggregators are growing at a Figure 6: Domino’s is currently trading at ~20.5x faster rate than pizza companies, highlighting EBITDA and we expect the company will maintain increasing competition. its valuation premium to peers.

90% 24.0x 80% 22.0x 70% 60% 20.0x 50% 40% 18.0x 30% EV/EBITDA 16.0x 20%

Digital Digital App Download Share 10% 14.0x 0%

12.0x

Jul-14

Apr-13

Apr-18

Oct-15

Jan-12

Jan-17

Jun-12

Jun-17

Feb-14

Mar-16

Feb-19

Nov-12

Sep-13

Nov-17

Sep-18

Aug-16

Dec-14

May-15

Apr-17

Apr-18

Apr-19

Oct-16

Oct-17

Oct-18

Jun-16

Jun-17

Jun-18

Jun-19

Feb-17

Feb-18

Feb-19

Aug-16

Aug-17

Aug-18

Dec-16 Dec-17 Pizza Apps Delivery Apps Dec-18 NTM EV/EBITDA 3-yr Avg +1 Std Dev -1 Std Dev Source: Sensor Tower, Credit Suisse estimates Source: FactSet, Credit Suisse estimates Note: Pizza Apps include Pizza Hut, Papa John’s, Hungry Howie’s, Domino’s, MyCicis, Little Caesars, Blaze, Papa Murphy’s, PizzaRev, Pieology and Marco’s. Delivery Apps include Grubhub, Seamless, Delviery.com, Postmates, DoorDash, Caviar and Uber Eats.

Domino’s Pizza Inc. (DPZ) 6 25 June 2019

What is DPZ’s SSS outlook? Credit Suisse View DPZ has exhibited industry-leading and consistent global SSS over the last ten years. Domestic SSS have averaged ~9% over the last 20 quarters and international SSS have averaged ~5.5%. While increasing competitive pressure from third-party delivery companies has pressured SSS more recently, we believe Domino’s remains well positioned for outperformance globally. For 2019, we estimate domestic SSS of 5.5%, with expectations for sequential improvement throughout the year as compares ease. Long term, we model domestic SSS of 5%, toward the higher end of DPZ’s long-term SSS target of 3-6%. Our confidence in ongoing SSS outperformance and market share gains comes from: 1) historical precedent, with 32 consecutive quarters of positive US SSS averaging ~7.5% since 2010 and ~9% over the last five years comprised of healthy traffic gains and average check increases; 2) fragmented pizza market, with opportunities to gain share from independents, regional chains and large chains; and 3) execution against sales initiatives, including ongoing evolution of its digital platform, compelling and consistent value offers and benefits from a greater focus on carryout. We model international SSS of 3.1% in 2019, including sequential improvement throughout the year as compares ease. Long term, we model international SSS of ~3.5%, toward the lower end of DPZ’s long-term SSS target of 3-6%, in-line with slower growth over the last two years. Consensus Expectations Consensus Metrix estimates domestic SSS of 4.7% in 2019 and ~4.2% longer term. For international SSS, consensus models 2.8% in 2019 and ~3.4% longer term.

Brand strength supports continued share gains in the US Domino’s has demonstrated 32 consecutive quarters of positive US SSS averaging ~7.5% since 2010 and ~9% over the last five years comprised of healthy traffic gains and average check increases. Ongoing execution against key sales drivers should continue to support outperformance relative to peers and capture market share in the fragmented pizza category. We model domestic We model sequential improvement in SSS throughout 2019 as compares ease. We SSS of ~5-5.5% over believe accelerating digital download growth in 1Q19 (~40% vs ~17% in 4Q18) could be a the next few years, leading indicator for accelerating SSS growth in 2Q19 (driven by DPZ’s expanded Piece of relative to DPZ’s long- the Pie Rewards program). We also expect the impact of Chipotle’s free delivery bowl term target of 3-6% promotion in early January and Taco Bell’s co-branded marketing campaign with Grubhub offering free delivery in February/March were both incremental pressures in 1Q19. Chipotle and Taco Bell are two of the strongest competitors in the QSR/fast casual space currently, and we believe advertising around delivery could have had an incremental impact. We do note a large marketing campaign by McDonald’s would also represent a more significant competitive pressure point and is likely to come at some point in 2019. We model domestic SSS of ~5.5% in 2019, which assumes consistent 2-yr SSS trends through the year, relative to consensus expectations of ~4.7%. Long term, we model 5% SSS, at the high end of DPZ’s long-term target of 3-6% and relative to consensus’ ~4%.

Domino’s Pizza Inc. (DPZ) 7 25 June 2019

Figure 7: Domino’s is facing easing compares throughout 2019, noting 2018 represents the easiest Figure 8: We expect SSS to accelerate throughout compares over the last three years. 2019 against easier compares.

14.0% 7.0% CSe 6.5% 12.0% Consensus 6.0% 5.5% 10.0% 5.0% 8.0% 4.5%

4.0% Domestic Domestic SSS Domestic Domestic SSS 6.0% 3.5% 3.0% 4.0% 2.5%

2.0% 2.0%

1Q19

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

2Q19E

3Q19E 4Q19E 1Q20E

Source: Company data, Credit Suisse Source: Company data, Consensus Metrix, Credit Suisse estimates

Figure 10: We model domestic SSS of 5.5% in 2019 Figure 9: Domino’s has demonstrated SSS strength & 5% long-term, relative to consensus expectations in the US since 2010, with average SSS of 7.4%. of ~4.7% in 2019 & ~4-4.5% long term.

14% 25% 7.0% Domestic SSS Target +3-6% 12% 6.0% 20% 10% 5.0% 15% 8% 4.0%

6% 10% 3.0%

yr Domestic yr Domestic SSS

yr Domestic Domestic yr SSS

Domestic Domestic SSS -

4% - 1 2 2.0% 5% 2% 1.0%

0% 0% 0.0%

2019E 2020E 2021E 2022E

2010

2011

2012

2013

2014

2015

2016

2017 2018

1-yr Domestic SSS 2-yr Domestic SSS CSe Consensus DPZ Target

Source: Company data, Credit Suisse Source: Company data, Consensus Metrix, Credit Suisse estimates

Consistent and impressive SSS offer confidence in long-term share gains US SSS have averaged ~7.5% since 2010, supporting ~500bps of pizza segment market US SSS have averaged share gains. Despite a challenging restaurant industry backdrop and heightened ~7.5% since 2010, competitive environment, Domino’s has maintained its long-term strategy to grow market generating ~500bps of share profitability with compelling value and innovation through the evolution of its digital US pizza segment platform and delivery infrastructure. market share gains Over the last several years, DPZ has raised its long-term SSS outlook, currently guided for 3-6%. While the market has gotten accustomed to DPZ outperforming targets, SSS within the targeted 3-6% range is still well above peers and demonstrates enviable market share gains. DPZ has consistently met or exceeded targets, adding to our confidence in the outlook.

Domino’s Pizza Inc. (DPZ) 8 25 June 2019

Figure 11: Domestic SSS have averaged ~7.5% Figure 12: Domino’s has largely outperformed long- since 2010, reflecting consistently impressive term outlooks set by management, which have performance on a 1-yr and 2-yr basis. increased over time. 14% 25% 14.0% 12% 20% 12.0% 10% 8% 15% 10.0% 6% 10% 4% 8.0% 2% 5%

6.0%

yr Domestic yr Domestic SSS

yr Domestic yr Domestic SSS - 0% -

0% Domestic SSS

1 2 -2% 4.0% -5% -4% 2.0% -6% -10%

0.0%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 1-yr SSS 2-yr SSS Domestic SSS DPZ Target Source: Company data, Credit Suisse Source: Company data, Credit Suisse

Fragmented industry sets an attractive backdrop The pizza segment is The pizza segment is the most fragmented in restaurants, with the five largest chains making the most fragmented in up 45% of segment sales. For comparison, the five largest burger chains comprise nearly restaurants, with the 80% of burger sales and the five largest Mexican restaurant chains make up ~70% of sales. five largest pizza In every other category outside of pizza, the segment leaders maintain at least 30% of the chains making up just market share, and on average, comprise ~45% of their respective segment sales. 45% of sales Figure 13: Pizza is the most fragmented segment in Figure 14: Across all segments except pizza, the restaurants, with the top five largest chains making market leader makes up 30%+ of the category’s up less than 50% of category sales. sales.

Burgers Burgers Chicken Chicken Coffee Coffee Bakery Café Bakery Café Mexican Mexican Sandwich Sandwich Frozen Desserts Frozen Desserts Asian/Noodle Asian/Noodle Pizza 45% 14% 40% Pizza 15%

0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% Sales Composition by Segment Market Leader by Sales Sales Other Large Chains Small Chains & Independents Source: Technomic, Credit Suisse estimates Source: Technomic, Credit Suisse estimates

Domino’s is the market share leader, with 15%+ of segment sales, representing an increase of ~560bps over the last ten years. Small chains and independents have lost ~140bps of market share over the same period, while Pizza Hut and other large pizza chains have together lost ~10% of the segment’s sales. We believe large chains are better positioned to gain market share over time as the segment consolidates. Structurally higher cost structures, a shift toward margin-dilutive delivery channels and technological investment requirements are likely headwinds for the smaller companies. Domino’s has exhibited average domestic system sales growth of ~12% per year over the last five years, nearly triple the rate of the US pizza segment’s ~4% average growth. Many of the larger and regional chains have donated share, highlighting opportunities to capture share from both larger players as well as regionals/local pizza shops. Domino’s has indicated a US market share target of at least 25%, consistent with other market share leaders, driven by a combination of SSS and unit growth.

Domino’s Pizza Inc. (DPZ) 9 25 June 2019

Figure 16: Large chains have represented the Figure 15: Small chain, independents and more majority of segment sales contribution, though regionalized brands have lost ~700bps of market more recently, share losses from larger pizza share since 2009. players have weighed on segment growth.

100% 7.0% Papa Murphy's 90% 6.0% 80% Papa John's 5.0% 70% Little Caesars 60% 4.0%

50% Pizza Hut 3.0% 40%

Market Share Domino's 2.0%

30% Sales Growth YOY % 20% Other Large Pizza 1.0% Chains 10% 0.0% Small Chains & 2012 2013 2014 2015 2016 2017 2018 0% Independents

Large Pizza Chains Small Pizza Chains & Independents

2009

2010

2011

2012

2013

2014

2015

2016 2017 2018 Source: Technomic, Credit Suisse estimates Source: Technomic, Credit Suisse estimates

Best-in-class digital ecosystem as a meaningful growth driver Domino’s maintains an industry-leading digital platform, which has supported outperformance relative to pizza peers and the overall industry. The company uses digital development to lead its innovation strategy and maintain a competitive advantage. For the first time, Domino’s added “online ordering” as a reason customers purchase from Domino’s in its 2018 Franchise Disclosure Document (FDD). Digital makes up ~65% Digital represents ~65% of Domino’s sales, with the pizza segment overall generating the of sales, with an highest levels of digital utilization across the industry. Domino’s digital ecosystem and opportunity to reach an compelling loyalty program have supported robust sales growth and a meaningful unprecedented nearly outperformance gap relative to peers. While there are increasing concerns that digital ~100% of sales over ecosystems will become table stakes as more restaurants invest in technology and service time providers make it more affordable for smaller companies, we still believe DPZ’s proprietary infrastructure and integrated operations will help the company sustain a competitive advantage. Domino’s has the potential to transition to an unprecedented nearly 100% digital ordering business, and we expect the company to continue to evolve to be at the forefront of innovation. We expect Domino’s to continue to evolve its digital ecosystem through both consumer facing and back of house technology. Domino’s already offers a voice ordering channel, and though not widely used, can potentially be leveraged for phone orders, unlocking capacity. Phone orders represent ~25% of the business, so greater digital conversion should meaningfully drive benefits for restaurant operations and profitability. With every order guaranteed to be answered in any language and automatically offer add- ons/suggested sell, the digital technology could actually improve the customer experience. In addition, we expect utilization of in-store technology such as kiosks makes it possible to generate labor savings and help in the transition to an increasingly digital company.

Domino’s Pizza Inc. (DPZ) 10 25 June 2019

Figure 17: The pizza segment leads the industry in digital sales mix, with the top three largest pizza Figure 18: More than 65% of sales come from digital players generating at least 50% of their sales channels, with expectations to approach nearly through digital channels. 100% long term.

Digital Sales Mix 100% 90%

~65% ~60%+ 80% 70% ~50%+ 60% 50%

Mobile: 40%

Mobile: Mobile: Digital Sales Mix ~75% 30% 50%+ ~75% 20% 10% Domino's Pizza Hut Papa John's 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Future

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

High digital utilization and a large scale loyalty program offer Domino’s a significant advantage to analyze, segment and target customers through personalized marketing efforts and suggestive sell. Domino’s is one of the most aggressive in the industry with suggestive selling, offering add-ons and upselling at nearly every step of the ordering process. We expect this has been supportive of average check increases and should continue to offer a benefit.

Domino’s app suggests add-ons at each stage Figure 19: Domino’s uses suggestive sell at multiple times during the online of the ordering ordering process, likely a factor driving its healthy average mix. process, likely a meaningful factor driving its average check growth

Source: Domino’s Digital App

Domino’s Pizza Inc. (DPZ) 11 25 June 2019

Figure 20: For comparison, Pizza Hut offers an “Extras” page for add-ons and Papa John’s features popular add-ons at the top of its checkout screen. Pizza Hut and Papa John’s both use suggestive sell though separate from the overall ordering process

Source: Pizza Hut Digital App, Papa John’s Digital App

Domino’s is arguably a pizza company, technology company and marketing company. The Domino’s AnyWare platform provides a suite of ordering options, from Facebook messenger to Amazon Alexa. We largely view the AnyWare platform as a marketing tool to maintain relevancy and generate new news, with limited sales mix likely generated from a tweet or Facebook message. The Hotspots program allows customers to order delivery from nontraditional sites, though we expect minimal sales mix from the channel.

Figure 22: Domino’s offers 200K Delivery HotSpots Figure 21: Domino’s offers a suite of fun and in the US, expanding delivery available to innovative ordering platforms. nontraditional sites, though utilization is limited. AnyWare Platform 2017 Slack 2016 Google Home 2016 Facebook Messenger 2016 Zero Clicks 2016 Apple Watch 2016 Amazon Alexa 2015 Text 2015 Tweet

2015 Pebble & Android Wear smartwatches 2015 Samsung Smart TV 2014 Voice 2014 Ford Sync AppLink Source: Company data, Credit Suisse Source: Company data, Credit Suisse

Domino’s Pizza Inc. (DPZ) 12 25 June 2019

Both Pizza Hut and Papa John’s have increased investments to accelerate digital development. Pizza Hut is playing a catch-up game to Domino’s, launching its Delivery Tracker in early 2017, nearly a decade after Domino’s, and digital enhancements were largely rolled out at once. Papa John’s similarly introduced its Papa Track in March 2017, and has expanded into additional order channels, including Amazon Alexa, Apple and Google Pay, evolved its loyalty program and expanded into a delivery partnership with DoorDash. While pizza peers are beginning to offer similar headline features, we believe Domino’s will maintain a competitive advantage given its holistic integration. “Piece of the Pie” Loyalty Program Domino’s frequency- Domino’s “Piece of the Pie” loyalty program launched in late 2015 and is already one of based loyalty program the largest in the industry, with ~20MM active users (ordered within last 6 months). The has meaningfully ease of sign up and integration of the Pizza Profile make it a compelling and frictionless contributed to SSS process. since it launched in late 2015 The loyalty program has consistently contributed meaningfully to SSS growth, with its simplicity, ease of use and ease for customers to understand the value as sources of strength. The frequency-based loyalty program rewards consumers 10 points for every order, and consumers can redeem a free pizza once they reach 60 points. Benefits from data analytics will likely accelerate over time given the large scale of its program. Domino’s has created an integrated digital ecosystem built off of simplicity, consistency and value that should continue to be a meaningful contributor to SSS going forward.

Figure 24: We believe Domino’s loyalty program has supported high levels of digital download share, Figure 23: Domino’s frequency-based loyalty with Domino’s ~35% download share outpacing its program requires minimum spend of $60, which is pizza market share (~15% overall and 26% among compelling relative to pizza peers. large pizza chains).

100% Domino's $60 90% Hungry Howie's Pizza $60 80% 70% Other Large Chains Pizza Hut $75 60% Papa Murphy's Papa John's $75 50% Little Caesars Marco's $100 40% Papa John's

%Download %Download Share 30% PizzaRev $100 Pizza Hut 20% Domino's Pieology $100 10%

Blaze Pizza $120 0%

Spend Required For Reward

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18 4Q18 1Q19 Source: Company data, Credit Suisse estimates Source: Sensor Tower, Credit Suisse estimates

Domino’s recently launched a 12-week (February to April 2019) campaign through its loyalty program by rewarding customers for eating any pizza, a creative attempt to acquire new customers onto to the platform and capture more customer data. To earn points, customers use the app to upload a picture of their pizzas, and can earn up to 60 total points, the redemption value of a free pizza, over the promotional period. Importantly, Domino’s used the program as an opportunity to inquire about competitors and customers’ experiences. The company also inquired about other loyalty program memberships to assess competitive overlap. Questions ranged from where customers ordered the pizza from, how the pizzas were ordered, the quality of the pizza, the type of pizza ordered (i.e., crust, sauce, cheese, meat) and reward program membership.

Domino’s Pizza Inc. (DPZ) 13 25 June 2019

Figure 25: Domino’s Points for Pies Promotion (February to April 2019)

Source: Domino’s App

Consistent value messaging Execution against value has supported strength, through consistent permanent value platforms, including a $5.99 Mix & Match deal, $7.99 carryout deal and $19.99 combo Execution against meal deal. Domino’s has maintained its $5.99 deal for nearly a decade, with options consistent value spanning the entire menu, encouraging trial, flexibility and limiting menu fatigue. The $5.99 messaging has Mix & Match deal requires the purchase of at least two items, setting a floor for minimum supported share gains tickets and supporting margins. Beyond the $5.99 deal, Domino’s has maintained a permanent $7.99 large three topping carryout deal, which has helped drive growth in that part of the business, as well as other periodic promos and deals. Domino’s value strategy is based on consistency. Domino’s sends customers emails daily, featuring its $5.99 Mix & Match deal in every single communication, and often includes its $7.99 carryout and $19.99 combo in the majority of its communications. Additionally, its homepage also features the three national value offers, communicating a consistent message across channels and across time. For comparison, Pizza Hut also features its $5 Lineup and $7.99 online national price points on its website, though email marketing is lacking (though has picked up in recent weeks). Papa John’s has relatively inconsistent value messaging across different platforms.

Domino’s Pizza Inc. (DPZ) 14 25 June 2019

Figure 27: Domino’s maintains a consistent Figure 26: Domino’s prominently features its three message by offering the same deal through its value deals on its website. email marketing (and selectively through text).

Source: Domino’s website Source: Domino’s Email – 5/9/19

Menu innovation is limited New menu innovation Domino’s does not use menu innovation as a driver of growth. The company rarely does not appear to be a introduces new items to the menu. It appears the company’s strategy is to use value deals meaningful part of the as a consistent message, digital innovation as an opportunity to generate new news and strategy limits operational complexity to optimize operations.. In August 2016, Domino’s rolled out salads nationwide, which are available on the $5.99 meal deal and can help eliminate the veto vote, though unlikely a high volume category. Bread twists were introduced in mid-2017, a complementary add-on with potential for suggested sell and supportive of higher average tickets. Increased focus on driving carryout business Carryout sales can help As the rest of the restaurant industry shifts into the food delivery channel, Domino’s has offset increasing increased its focus on the carryout side of its business, which represents approximately competitive pressure in 1/3 of sales. Domino’s has indicated carryout sales are largely incremental and supportive the delivery segment of its fortressing strategy as consumers are less willing to travel long distances to pick up a and unlock capacity pizza. We believe this strategy allows the company to remain defensive as delivery expands into different segments, and also offers added flexibility on value, as carryout orders eliminate the cost of delivery. Further, in a tight labor market, particularly with delivery drivers, carryout can help unlock some capacity and drive additional sales. Carryout represents ~1/3 of Domino’s US sales mix, highlighting opportunity for further growth. As other restaurants push the delivery message, we believe Domino’s could gain further share in the carryout segment.

Domino’s Pizza Inc. (DPZ) 15 25 June 2019

Figure 28: Pizza delivery sales have remained Figure 29: Carryout represents ~1/3 of sales for largely stable, while carryout has increased over the Domino’s, with opportunities for further share gains last several years. closer to competitors.

$30MM 100% 90% $25MM 80% $20MM 70% $15MM 60% Dine-in 50% $10MM Carryout 40% Sales Sales Mix % Delivery

$5MM 30% US QSR Pizza Segment US Pizza QSR Segment Sales $0MM 20%

10%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018 0% Delivery Carryout Domino's Pizza Hut Papa John's Little Caesars

Source: Company data, Credit Suisse estimates Source: Company data, Restaurant Research Journal, Credit Suisse estimates

International market strong, but some slowdown raises concerns Domino’s has demonstrated 101 consecutive quarters of positive international SSS averaging ~6% over the last ten years, largely driven by traffic growth. Growth has slowed more recently, with 1Q19’s 1.8% SSS the lowest comp over the last decade. 2-yr SSS trends have also decelerated, with 2018 2-yr trends down ~300bps to ~6.9%, relative to ~9.7% in 2017 and ~14.1% in 2016. 2017 and 2018 were the lowest international SSS over the last 20 years. We model international We model international SSS of 3.1% in 2019 and ~3.5% longer term, near the low end of SSS of 3.1% in 2019 DPZ’s long-term guidance of 3-6%. Our go-forward estimates are below historical and ~3.5% LT, near the averages given ongoing expectations for an elevated drag from new store cannibalization low end of DPZ’s 3-6% given DPZ’s fortressing strategy, more recently lower SSS and the potential impact of target increasing global delivery competition. Consensus models international SSS of 2.8% in 2019 and ~3.5% over the next few years, relatively in-line with the last two years.

Figure 31: We expect international SSS of ~3.1% in Figure 30: International SSS have averaged ~6%, 2019 and ~3.5% over the next several years, in-line though have decelerated more recently. with consensus expectations and DPZ guidance.

9% 16% 7.0%

8% 14% 6.0% International SSS Target 7% 5.0% 12% +3-6% 6% 4.0% 10% 5% 3.0% 8%

4% International SSS 2.0%

yr International yr International SSS

yr International International yr SSS

-

- 1 6% 2 3% 1.0%

2% 4% 0.0%

2019E 2020E 2021E 2022E

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018 CSe Consensus DPZ Target 1-yr International SSS 2-yr International SSS

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 16 25 June 2019

New store cannibalization pressuring international SSS The proliferation of new store growth in existing markets is one factor weighing on international SSS trends, with territory splits now making up the majority of unit growth in certain markets. In the United Kingdom, splits have had a ~200-300bps drag on SSS on the region’s SSS. Going forward, the majority of new store openings are expected to be splits, which will continue to pressure SSS. While sales appear to recover over time and the company benefits from overall market share gains, near-term organic SSS growth will remain pressured. With the UK one of DPZ’s largest international markets representing ~11% of international stores, we expect international SSS to see a drag from this strategy.

Figure 32: The majority of new unit growth is Figure 33: Increased unit growth and greater splits expected to come in the form of splits. have weighed on SSS. 100 12.0% 16.0% 3.5pp 90 14.0% 10.0% 2.5pp 80 12.0% 70 1.5pp 8.0% 10.0% 60 0.5pp 50 6.0% 8.0% -0.5pp 40 UK SSS 6.0% 4.0%

30 -1.5pp UK New UK New Unit Opens

4.0% SSS from Drag Splits 20 2.0% UK New UK New Unit Growth YOY % -2.5pp 10 2.0% 0 0.0% 0.0% -3.5pp 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Splits Non-Split Unit Growth YOY % UK SSS excl splits UK SSS incl splits SSS drag from splits Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: 2018 unit growth estimates reflect Domino’s Pizza Group (DOM) guidance for 2/3 split unit composition.

India represents ~12% of international units. SSS performance improved in 2018, though unit growth has notably decelerated over the last two years. Recently, India’s master franchisee, Jubliant Foodworks (JUBI), has indicated intent to incorporate the fortressing strategy in certain areas through some store splits (which the market has done before). Given the market’s relatively large store base and lower unit growth, the splits should not have a material impact on the region’s SSS, though could add some pressure relative to more recent quarters with modest unit growth. JUBI indicated new opens should not affect SSS by more than 200-300bps, noting existing stores affected by splits return to the same level within one year.

Figure 35: Unit growth in the region has Figure 34: SSS have been somewhat volatile, with decelerated, likely alleviating SSS pressure on the 2018 performance the strongest in several years. base. 25.0% 1,300 25.0% 1,200 20.0% 1,100 20.0% 1,000 15.0% 15.0% 900

10.0% 800

India India Units 10.0%

India India SSS 700

5.0% Unit Growth YOY% 600 5.0% 500 0.0% 400 0.0% 2013 2014 2015 2016 2017 2018 -5.0% 2013 2014 2015 2016 2017 2018 Units Unit Growth YOY% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: SSS above reflect calendar quarters. Jubilant Foodworks (JUBI) FY end March 31. Note: Unit growth reflects calendar years.

Domino’s Pizza Inc. (DPZ) 17 25 June 2019

Increasing penetration of global delivery aggregators The proliferation of delivery aggregators has been a common theme across geographies given the potential impact on the pizza segment and DPZ’s digital and delivery strength. In the US, Domino’s has largely strayed away from delivery aggregators and does not appear to have plans to add presence on a national scale (though franchisees may choose to be on a third-party platform). Internationally, master franchisees appear to be more open to at least testing partnerships with third-party providers as they grow in scale and customer demand continues to shift toward delivery. India tested delivery through third-party partners, though has since pulled back and decided to control the end-to-end experience. The master franchisee, JUBI, has noted the growth in third-party delivery driven by fundamental consumer changes (greater demand for convenience, increasing number of women in workforce, more traffic/congestion) and discounting. The company is working with aggregators from a platform presence perspective, though not to complete the actual delivery. The master franchisee, DOM, views delivery aggregators as a potential gateway to acquire new customers. The company has been on an aggregator platform in Switzerland for several years and in Norway and Iceland there is minimal if any aggregator presence. In the UK, DOM recently ran a 20-store trial through Just Eat, indicating overall profit per order was actually higher than a direct order, with nearly 40% of customers new to Domino’s. The UK is extending the trial to more than 100 stores in 2019, highlighting aggregators tend to appeal more to younger cohorts and can be a potential customer acquisition channel. DMP in Australia has also indicated it is partnering with aggregators across different markets, viewing the platforms as a customer acquisition tool and a search engine. Given lower discounts offered on these platforms, the orders are still profitable transactions. DMP has also highlighted customers tend to be incremental and are different customers not specifically entrenched to a brand or cuisine. ALSEA has also called out the rise of third-party delivery apps pressuring Domino’s delivery sales in Spain in particular.

Domino’s Pizza Inc. (DPZ) 18 25 June 2019

Will third-party delivery eat into Domino’s US market share? Credit Suisse View No, we don’t expect the expansion of third-party delivery to meaningfully eat into Domino’s US market share, though it is likely to represent incremental pressure for the foreseeable future, driven by: 1) increasing demand and supply from third-party delivery providers fueling higher awareness; 2) aggressive promotions/discounts; 3) QSR chains offering delivery; 4) cross-branded campaigns between aggregators and large QSR chains; and 5) competition for delivery drivers. Long term, we believe the pizza delivery market will largely maintain its delivery market share, and view Domino’s as best positioned to continue to gain share within the segment given the strength of its digital ecosystem and long-term strategic approach. We expect Domino’s loyalty program and superior execution in delivery will allow the company to maintain a competitive advantage even against increasing competitive pressure in the delivery channel. In 1Q19, Domino’s reported its lowest domestic comp in 21 quarters (3.9% in 1Q19 vs 8.7% avg over 21 qtrs), identifying aggressive promotional activity by delivery aggregators as a pressure point. While Domino’s has historically indicated limited impact from aggregators, we believe the 2019 inflection reflects: 1) partnerships and cross-marketing campaigns between delivery aggregators and QSR chains, and 2) increased advertising by aggregators with greater access to capital as they grow, particularly at times when the convenience of delivery is more in demand. We believe the greatest delivery share risk is at the late night daypart, during at-home events (i.e., major sporting events, elections, etc.) and with inclement weather. Despite increasing competition, we believe the pizza segment will largely maintain its delivery market share despite increasing competitive threats given: 1) customers largely choose the pizza cuisine, limiting the potential share shift; 2) customers prefer individual brand platforms over third-party aggregators; 3) pizza is a cuisine that maintains its integrity and travels well; 4) pizza delivers attractive value to the customer based on the amount of food; and 5) restaurant operators and delivery aggregators still have significant challenges ahead to improve economics for all parties involved, ensure operational execution, develop a better system to share data and to limit the customer shift to third- party platforms. We do believe regional and local chains are facing greater risk given the aforementioned challenges, as delivery becomes an expectation. Consensus Expectations We believe consensus is pricing in pressure from the increasing growth of delivery aggregators, with domestic SSS estimates of ~4-4.5% over the next several years below DPZ’s average ~9% over the last five years and lower than prior estimates (albeit in part related to decelerating comps in recent quarters, also a function of increased competitive pressure). A significant number of questions in recent quarters have been focused on the impending impact of third-party delivery, and expectations for delivery market share growth among other QSR chains to be sourced from the pizza segment. Domino’s delivery infrastructure is a competitive advantage… Domino’s is the number one delivery player in the number one delivery category, uniquely positioned relative to every other restaurant concept. While many large QSR competitors have recently partnered with third-party providers, challenges remain, and likely exacerbate over time as incrementality and the benefit of “newness” declines. Delivery is a core competency for Domino’s, which we believe has been a meaningful driver of its success. In contrast, even other pizza chains have failed to execute delivery at the same level as Domino’s, and we’re unconvinced third-party aggregators will be able to approach

Domino’s Pizza Inc. (DPZ) 19 25 June 2019

Domino’s execution levels any time soon. That said, a flexible work schedule and potentially higher pay could be a meaningful headwind in attracting delivery drivers for Domino’s regardless of its proprietary delivery infrastructure.

■ Overall experience – Domino’s has full control of the customer experience, from initial order to customer delivery. In contrast, restaurants on third-party platforms hand off control to the third-party provider completing the last mile, though ultimately are responsible for the end experiences. While customers currently appear more accepting of lower quality delivery orders in exchange for convenience, we’re not sure they will be as forgiving longer term. ■ Quality control – Restaurants have limited control over the quality of the food once it is handed off to a third party. As third-party delivery drivers seek to maximize their order count, the quality of the food could be secondary (i.e., could wait around for multiple orders from restaurants before delivering). In contrast, Domino’s has strict standards regarding food quality and maintains control over the “chain of custody.” Based on discussions with franchisees from pizza competitors, the quality of the food delivered by third-party aggregators has been an issue. ■ Economics – Delivery is expensive for all stakeholders, including delivery drivers, restaurants and customers. Aggressive promotions and discounting have helped drive customer demand for delivery, though third-party aggregators and restaurants have borne much of that customer acquisition cost. Over time, we expect costs to largely shift to customers in the form of inflated delivery menu prices, delivery fees and service fees. While delivery demand seems relatively inelastic right now, we don’t view that as sustainable on a larger scale. Additionally, pizza arguably offers one of the best value propositions for customers, and as newness and aggressive discounting dissipates, we think the value of pizza will help sustain the segment’s delivery market share. ■ Data – Third-party aggregators own the data transacted through their platforms, giving minimal information to restaurants about their own customers, while also having powerful and diversified data. In contrast, customer transactions through restaurants’ own branded platforms captures proprietary data that can be used to better market and segment customers. Access to data from digital platforms has been a key driver of success from industry-leading share gainers over the last several years, including Domino’s, Starbucks and Panera. New up-and-coming restaurant chains are also leaning into their digital strategies. ■ Customer Shift – Delivery through aggregator platforms alone creates risk that customers will shift onto the platforms, get introduced to competitors and choose to start at the platform in the future rather than consider the restaurant from the start. We do believe presence on a platform could be beneficial should it be incremental to the business and attract new customers, particularly as third-party aggregators expand and acquire new customers. Domino’s digital ecosystem is a core tenet of its success, and risk of customer shift could be high relative to restaurants with nascent and small digital platforms. …but not ruling out presence on delivery platforms Domino’s has been very clear about its unwillingness to allow a third-party to complete the last-mile of delivery given concerns around the quality of the food and experience. Franchisees in select markets have signed up with aggregators, which could help offset some risk of delivery share shift to platforms, while offering an opportunity to enter the consideration sets of customers. We do not expect Domino’s to partner with a third-party aggregator of any kind at a national level, though we do believe franchisees have the decision to partner with platforms for order aggregation.

Domino’s Pizza Inc. (DPZ) 20 25 June 2019

Domino’s has indicated company-operated delivery is the lower cost option relative to outsourcing to third-party providers given scale. However, we expect if Domino’s followed the strategy implemented by many QSR chains and inflated delivery menu prices on aggregator platforms to cover commission costs and/or do not offer traditional promotions, the economics could be compelling. However, we also recognize the added potential cost of poor execution from third parties. There is some level of overlap between digital Domino’s users and third-party platforms, suggesting there could be some cannibalization from presence on platforms, but such is limited. ~10-15% of Domino’s digital users also use the four largest third-party platforms (Grubhub, DoorDash, Uber Eats, Postmates). Customers using these platforms could choose to transact through third parties rather than Domino’s directly, which would be a negative, though it seems to be relatively limited in scope, for now. On the other side, ~15- 20% of customers using third-party platforms also transact through Domino’s digitally. This suggests Domino’s could access the ~80-85% of customers on these platforms not currently transacting through Domino’s. This could represent an opportunity to attract new customers, as well as reduce the impact of the growing popularity of third-party aggregators.

Figure 37: ~15-20% of third-party delivery customers also transact with Domino’s digitally, highlighting an opportunity for Domino’s to reach Figure 36: ~10-15% of Domino’s digital users also seemingly incremental 80-85% of third-party use the four largest third-party platforms. delivery customers. 25% 30%

25% 20%

20% 15% 15% 10%

Cross Visiting Cross Visiting 10% % Domino's % Domino's Users 5%

5% % Pizza Peers/Delivery % Pizza Peers/Delivery Users

0% 0% Pizza Hut Papa GrubHub DoorDash Uber Eats Postmates Pizza Hut Papa GrubHub DoorDash Uber Eats Postmates John's John's

Pizza Peers Delivery Pizza Peers Delivery Source: comScore, Credit Suisse estimates Source: comScore, Credit Suisse estimates

Competition for delivery stomach share is growing Demand and supply from third-party delivery providers is growing The exponential growth of third-party delivery providers undoubtedly represents a competitive threat to the pizza segment, which has largely faced minimal competition in the delivery channel to-date. Third-party delivery providers have meaningfully expanded geographic coverage and the number of restaurants on their platforms. Many QSRs have stepped up their investments and are increasingly engaging with third-party partners, fueling growth in the delivery channel. Further, these third-party platforms help level the playing field for smaller companies to engage with consumers on a large scale. Industry conferences, articles, research and discussions have focused on the delivery channel as the industry navigates through dynamic changes. This is transforming delivery into a “need-to-have” channel, and third-party delivery is the fastest way to “turn on” delivery, driving the growth of the aggregators. Based on our analysis of digital app downloads over time, third-party delivery platforms are meaningfully growing download share relative to pizza companies. Over the past several years, growth in third-party platform downloads have outpaced that of traditional pizza companies. While this is in part due to the relative newness of these platforms, such highlights increasing demand for delivery. For reference, Domino’s has ~20MM+

Domino’s Pizza Inc. (DPZ) 21 25 June 2019

active users on its digital platform. Grubhub has already amassed 19MM+ active users as of the end of 1Q19 alone, and together with other aggregators, would meaningfully top Domino’s users.

Figure 39: There is notable overlap among top Figure 38: Delivery app providers are now growing digital aggregators, highlighting competition in the digital downloads at a faster rate than the pizza restaurant space overall as well as among delivery players. providers. 90% Cross App Usage 80% Uber Eats Grubhub DoorDash Postmates 70% 60% Uber Eats 34% 35% 19% 50% Grubhub 19% 27% 12% 40% 30% DoorDash 22% 30% 15% 20% Postmates 23% 27% 30% Digital Digital App Download Share 10%

0% Note: Read starting from left. Example: 34% of Uber Eats users also

visit Grubhub. 19% of Grubhub digital users also use Uber Eats.

Jul-14

Apr-13

Apr-18

Oct-15

Jan-12

Jan-17

Jun-12

Jun-17

Feb-14

Mar-16

Feb-19

Nov-12

Sep-13

Nov-17

Sep-18

Aug-16

Dec-14 May-15

Pizza Apps Delivery Apps

Source: SensorTower, Credit Suisse estimates Source: comScore, Credit Suisse estimates Note: Pizza Apps include Pizza Hut, Papa John’s, Hungry Howie’s, Domino’s, MyCicis, Little Caesars, Blaze, Papa Murphy’s, PizzaRev, Pieology and Marco’s. Delivery Apps include Grubhub, Seamless, Delviery.com, Postmates, DoorDash, Caviar and Uber Eats.

Figure 40: Based on Google search volumes by metro areas, Domino’s has lost relative volume share compared to the largest delivery aggregators, highlighting the increasing competitive threat from these players (we use Grubhub and DoorDash as proxies).

2013 2014 2015

2016 2017 2018 Source: Google Trends, Credit Suisse estimates

Aggressive promos and discounts have recently driven more compelling value proposition Increasing advertising by the largest third-party delivery aggregator, Grubhub, the launch of DoorDash’s first TV campaign in January and co-marketing campaigns between QSR chains and third-party providers suggest increasing competition for share of voice in delivery. Grubhub spent $170MM in advertising in 2018, a ~60% increase from 2017, which does not even include free promotions it might offer with select partners (i.e., Taco Bell). Many other platforms also fund free delivery periodically for select chains to drive trial as part of the partnership.

Domino’s Pizza Inc. (DPZ) 22 25 June 2019

Expansion of QSR chain delivery pressures delivery segment, particularly with cross-branded campaigns With delivery now available across nearly all large public restaurant chains, the pizza segment no longer has a competitive advantage in the channel. To some extent, we believe the cuisine and price of QSR chain delivery has been secondary to the excitement of customer trial. The chains’ national access and delivery marketing campaigns represent incremental pressure in the segment that has not existed before, even amidst the growth of third-party delivery over the last several years. QSR chains are significantly driving delivery channel awareness and trial. We looked at relative search queries based on data from Google Trends for Domino’s and select competitors within the context of search volume for delivery. For the first time in 1Q19, Taco Bell and Chipotle gained relative search share in select markets. We also note both of these brands launched marketing campaigns to highlight the offering. Taco Bell and Grubhub launched a co-marketing campaign, with Taco Bell featuring delivery in its advertising and Grubhub featuring Taco Bell on its platform and funding free delivery. Chipotle also ran a few marketing campaigns related to digital and delivery, including a Free Delivery Bowl offering (December 18 to January 7), free delivery during Super Bowl weekend and TV advertising during March Madness.

Figure 41: Based on Google search volumes by Figure 42: Chipotle and Taco Bell continued to metro areas, Chipotle and Taco Bell have gained generate high delivery search volumes in April relative search volume share for delivery for the 2019, highlighting delivery promotions from 1Q19 is first time in 1Q19. driving more sustainable delivery interest.

1Q19 April 2019

Source: Google Trends, Credit Suisse estimates Source: Google Trends, Credit Suisse estimates Note: Google Trends through April 2019.

Fighting for delivery drivers, not just sales Labor is the number one concern among restaurant operators. While restaurants are still navigating through higher cost structures and fears of additional wage hikes, labor supply remains a challenge. Unemployment is near historical lows, and it appears the supply of delivery drivers is even lower. Given the rapid growth of on-demand apps requiring delivery drivers, even outside of the food space, operators seem to be having a hard time finding and retaining good talent. We believe this limited supply pool could affect opportunities for new unit growth, lead to a reduced service experience and potentially result in lost sales. Based on our channel checks, Domino’s as well as other concepts have had to turn down or cancel delivery orders because of insufficient delivery driver staffing. Given expanded job opportunities for delivery drivers (even outside of restaurant delivery), we believe attracting and retaining good drivers could be difficult. Third-party aggregators offer attractive pay opportunities and a flexible work schedule, which are advantageous relative to Domino’s, which has more stringent requirements/standards. Other benefits such as mileage reimbursement and distances to travel could affect the relative pay scales.

Domino’s Pizza Inc. (DPZ) 23 25 June 2019

The shift toward aggregators over time Increasing awareness, geographic coverage and restaurant partnerships are indicative of the growing demand and supply of delivery aggregators, with share expected to increase over time. Based on our survey of consumers in March 2019, delivery aggregators are gaining favor among consumers as a preferred choice for delivery. On average, ~14% of consumers indicated third-party platforms were their preferred ordering methods, up from 10% in July 2018. Across all age groups and neighborhoods, less consumers indicated their preferred ordering method was calling the restaurant directly, suggesting digital could improve the overall customer experience. ~50% of consumers indicated ordering directly through the restaurant website/app was their favorite ordering method, an increase of ~7% from July 2018 and now the most preferred ordering method. More than 60% of consumers age 18-29 selected ordering through restaurant website/app as their preferred method (+13% March 2019 from July 2018), which we believe is in part due to the offering of loyalty/rewards programs, which seems to be the most important and intent-driving factor relative to other cohorts. While we do believe third-party aggregators will grab a greater market share over time, the overall customer experience from branded websites/apps is superior to the platforms and is a competitive advantage, for now. Domino’s remains well positioned given its digital ecosystem and compelling loyalty program, and expect the company to defend its share even in an environment of growing penetration from delivery aggregators.

Figure 44: Consumers across age groups are shifting to digital channels, with the greatest Figure 43: On average ~14% consumers indicated change in delivery aggregator preference among third-party platforms as the preferred delivery those ages 30-44, and the greatest move toward method, with some range across cohorts. branded websites/apps among those ages 18-29.

What is/would be your preferred method to order delivery? 15% 100% 12% 12% 8% 10% 90% 22% 80% 5% 70% 60% 0% 50% 40% -5%

% Respondents 30% 20% -10% 10% 0% Change March 2019 vs June 2018 -15% 18-29 30-44 45-60 60+ 18-29 30-44 45-60 60+ Age Call the restaurant Restaurant website/mobile app Third-party aggregator Call the restaurant Restaurant website/mobile app Third-party aggregator

Source: Survey data, Credit Suisse estimates Source: Survey data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 24 25 June 2019

Figure 45: Consumers in urban markets tend to prefer third-party aggregators, though this is in part Figure 46: Consumers are increasingly shifting due to the availability and magnitude of restaurants toward digital channels to order delivery across relative to suburban/rural neighborhoods. neighborhoods.

What is/would be your preferred method to order delivery? 10% 100% 5% 90% 19% 14% 5% 80% 70% 0% 60% 50% -5% 40%

% Respondents 30% 20% -10% 10% 0% Change March 2019 vs June 2018 -15% Urban Suburban Rural Urban Suburban Rural Neighborhood Call the restaurant Restaurant website/mobile app Third-party aggregator Call the restaurant Restaurant website/mobile app Third-party aggregator

Source: Survey data, Credit Suisse estimates Source: Survey data, Credit Suisse estimates

Pizza segment should be able to hold onto its delivery market share long term Despite increasing competition, we believe the pizza segment will largely maintain its delivery market share long term despite increasing competitive threats given: 1) customers largely choose the pizza cuisine, limiting the potential share shift; 2) customers prefer individual brand platforms over third-party aggregators; 3) pizza is a cuisine that maintains its integrity and travels well; 4) pizza delivers attractive value to the customer based on the amount of food; and 5) restaurant operators and delivery aggregators still have significant challenges ahead to improve economics for all parties involved, ensure operational execution, develop a better system to share data and to limit the customer shift to third- party platforms. We do believe regional and local chains are facing greater risk given the aforementioned challenges, as delivery becomes an expectation. Consumers largely choose to order pizza Pizza is a top of mind choice for consumers that choose to order delivery given the segment’s delivery association. Pizza tends to travel well relative to other cuisines, and we believe many households specifically select pizza as a cuisine, and do not simply choose to order delivery. Based on our survey of 1,000+ consumers in March 2019, pizza remains the top cuisine for ordering delivery, with ~65% of consumers indicating they would most likely order pizza for delivery. Additionally, nearly 65% of consumers first choose the type of food they want and then choose where delivery is available. This compares to ~35% of consumers that first decide they want delivery and then select the type of food. We believe this highlights that pizza is often selected as the cuisine of choice and can be a different occasion, not necessarily directly competing for delivery share among different cuisines.

Domino’s Pizza Inc. (DPZ) 25 25 June 2019

Figure 48: Consumers tend to first select the Figure 47: Based on our consumer survey, pizza is cuisine they want to order, and then choose where the top cuisine chosen to order for delivery. delivery is available.

What cuisines would you most likely order for delivery? When ordering delivery, do you: 70% 60% First decide that you want food 50% delivered to you, and then select the 34% 40% type of food 30%

% Rrespondents 20% 10% First choose what type of food you want (i.e. pizza) and then choose 66%

0% where delivery is available

Pizza

Italian

Soup

Salad/

Chinese

Mexican Burgers/

Sandwich % Respondents Other Asian (Thai,Sushi) Source: Survey data, Credit Suisse estimates Source: Survey data, Credit Suisse estimates

However, we expect at a certain frequency level, the availability of other cuisines for delivery could eat into pizza delivery market share. Notably, the availability of other delivery options appears to have a more meaningful impact on 1) more frequent delivery consumers, and 2) younger cohorts. We expect a greater impact at certain times where the pizza cuisine has otherwise enjoyed a competitive advantage and restaurants have experienced lost sales, such as inclement weather and large at-home events. On average, ~25% of consumers indicated the number of times they order pizza has changed given the availability of other restaurant delivery options. Among consumers that order pizza delivery at least 3-4 times per month, ~30% indicated the availability of other cuisines has affected their pizza delivery. Nearly 50% of consumers that order delivery at least 5 times per month indicated optionality has affected their pizza delivery consumption. While we believe pizza delivery could be a separate occasion and consumers explicitly choose pizza, pizza delivery market share could be at risk in part among frequent delivery consumers that are likely using the delivery channel more for convenience. Age tends to influence the impact of other delivery options as well, with ~35% of consumers ages 18-29 indicating the availability of other delivery options are affecting their pizza delivery orders. This is likely due in part to higher delivery order frequencies among younger consumers.

Figure 49: Availability of alternative delivery options has a more significant impact on higher frequency delivery consumers. Nearly 50% of consumers that Figure 50: ~35% of consumers have changed their order pizza delivery at least 5 times per month have pizza delivery order consumption as a result of changed their frequency as a result of other options. other delivery options, relative to ~25% on average. Has the # of times you order pizza each week/month Has the # of times you order pizza each week/month changed with the availability of other delivery options? changed with the availability of other delivery options? 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40%

30% 30% % Respondents % % Respondents % 20% 20% 10% 10% 0% 0% Average Never 1-2 times per 3-4 times per 5 or more Average 18-29 30-44 45-60 60+ month month times per month Pizza Delivery Frequency Age Yes No Yes No

Source: Survey data, Credit Suisse estimates Source: Survey data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 26 25 June 2019

Brand platforms still preferred over aggregators Despite the strong growth among third-party delivery providers, consumers still show a preference to order delivery directly from the restaurant. ~85% of consumers in our survey indicated they prefer to order delivery directly from a restaurant website/app or by calling the restaurant, with just 15% that prefer online aggregators. There appears to be a relationship between the frequency of delivery orders and consumers’ preferences toward third-party aggregators. Among consumers who never use delivery, only ~6% would choose to order from third-party platforms. As the frequency of delivery increases, consumers’ affinity toward delivery aggregators tends to increase, likely suggesting consumers become less sensitive to the cuisine or restaurant, and more inclined to order delivery for the convenience. Among consumers who order delivery 5+ times per month, a notable 36% of respondents prefer to order from third-party platforms. Looking at consumers who order pizza delivery specifically, a similar ~85% of consumers prefer to order from the restaurant directly, which is largely consistent irrespective of pizza delivery order frequency. Among consumers who order pizza delivery at least 5 times per month, 22% indicated their preferred channel is third-party aggregators, compared to 36% among users who order other cuisines for delivery at least 5 times per month. The pizza chains’ early lead in the digital evolution, secured mindshare in consumers’ consideration sets, and established real estate on consumers’ phones could support greater defense against the rise of third-party aggregators.

Figure 52: Pizza delivery consumers tend to prefer Figure 51: More frequent delivery consumers tend to order from the restaurants directly, with a to have a greater affinity toward third-party consistent 14% indicating a preference for aggregators. aggregators.

What is/would be your preferred method to order ANY delivery? What is/would be your preferred method to order PIZZA delivery? 100% 6% 100% 90% 14% 13% 22% 90% 14% 12% 14% 15% 22% 80% 36% 80% 70% 70% 60% 60% 50% 50% 40% 40%

30% 30% % Respondents 20% % Respondents 20% 10% 10% 0% 0% Average Never 1-2 times per 3-4 times per 5 or more times Average Never 1-2 times per 3-4 times per 5 or more times month month per month month month per month Frequency among ALL Delivery Users Frequency among PIZZA Delivery Users

Call the restaurant Restaurant website/mobile app Third-party aggregator Call the restaurant Restaurant website/mobile app Third-party aggregator

Source: Survey data, Credit Suisse estimates Source: Survey data, Credit Suisse estimates

Pizza travels well, though not all cuisines may maintain the same quality While customers appear relatively forgiving of the quality of food in favor of convenience currently, we don’t believe customers are willing to lower the bar across the board for delivery long term. One of the reasons pizza has been a top cuisine choice for delivery is the ability to maintain the integrity of the product from restaurant to the customer. The pizza box packaging is a good conduit for movement (including the little table in the middle of the pizza), pizza can stay hot for a relatively long period of time and pizza can be reheated well. In contrast, other cuisines do not travel as well, are not prepared in the proper packaging and cannot be reheated successfully.

Domino’s Pizza Inc. (DPZ) 27 25 June 2019

Figure 54: Traditional packaging may not be Figure 53: Fries do not hold up as well as other sufficient for delivery, requiring companies to take a delivery products, often coming soggy at high wait long-term view and investment in the channel times. (though some are less willing).

Source: Credit Suisse (Delivery May 2019 in NYC) Source: Credit Suisse (Delivery May 2019 in NYC)

Delivered pizza has an attractive value proposition Despite what appears to be seemingly inelastic demand for delivery currently, it is unclear how sustainable the current delivery model will be long term. To improve delivery economics, many QSR chains are inflating delivery menu prices or adding service fees to offset margin dilution. Additionally, many of the chains do not offer their national value promotions through delivery channels. As a result of higher delivery prices, lower promotional take rates through delivery and benefits of suggestive sell (and to some extent group orders), delivery transactions tend to be 1.5-2x the size of an in-store order. Pizza arguably offers the most attractive delivered value, in part due to pizza chain restaurants’ value promotions, which are largely non-existent for other cuisines through delivery. Delivery challenges must be addressed as volumes increase Challenges with delivery include: 1) incremental delivery costs weigh on already thin margins; 2) operational execution for restaurants and third-party delivery is still a work-in- progress (i.e., integration efforts, layout, etc.); 3) data is not being shared as freely as restaurants would like; and 4) there is risk customers will shift to aggregator platforms as restaurants market the ease and availability of these offerings through partnerships. While restaurants are inflating delivery prices and adding service fees, aggregator platforms are adding delivery fees and customers are still responsible for tips. The combination of these fees could make the order total ~50%+ higher. Shifting costs to customers seems to be working right now, but we’re not convinced this is a sustainable model. Restaurants are still working to optimize operations through integration efforts, delivery sales forecasting and staffing needs and layout improvements as their digital channels grow. Third-party delivery providers are also still working through challenges of increasing demand and fulfilling orders as efficiently as possible. As we’ve previously highlighted, limited data sharing from delivery providers to restaurants is a major negative in the partnerships. Long-term benefits from third-party partnerships are still unknown. Grubhub recently indicated its co-marketing campaign with Taco Bell in 1Q19 attracted many new diners. Importantly, Grubhub indicated some new diners are reordering from Taco Bell, with the majority trying other restaurants on the platform. This highlights our key concern that these

Domino’s Pizza Inc. (DPZ) 28 25 June 2019

partnerships are shifting customers to become platform customers and introducing them to new competitors. Should Taco Bell decide to integrate delivery in its app, we think it will have a difficult time reattracting the customers to use its own branded platform given the ease of use of Grubhub’s ecosystem. In our view, best practice for restaurants starting to offer delivery is to integrate the channel directly with their digital apps/websites and have third-party partners fulfill the order. This should allow restaurant chains to improve economics through a lower commission structure, capture customer data and limit customer shifting. Presence on aggregator platforms could also unlock opportunities for incremental orders.

Domino’s Pizza Inc. (DPZ) 29 25 June 2019

Can DPZ reach 25,000 units by 2025? Credit Suisse View Yes, we believe DPZ can reach 25,000 units by 2025, with contribution from accelerating domestic growth and ongoing strength internationally. The 25,000 unit growth target implies global growth of ~7% over the next four years (7.9% 5-yr CAGR), including ~4.5% domestic unit growth (3.3% 5-yr CAGR) and ~8% international unit growth (11.2% 5-yr CAGR). We model global unit growth of ~7% through 2022, including domestic unit growth of ~5% and international unit growth of ~8%. Assuming DPZ maintains our average unit growth estimates through 2025, the company would achieve ~25,000 global units. Our confidence in accelerating DPZ global unit growth to ~25,000 units comes from: 1) global brand strength, fundamentals and operating momentum; 2) domestic whitespace opportunities with fortressing strategy in existing markets; and 3) international development opportunities, with increased visibility from master franchise agreements. Consensus Expectations Consensus models global unit growth of ~7% through 2022, including ~4.5-5% domestic unit growth and ~8% in international markets. Applying consensus’ four-year forward CAGR through 2025 implies DPZ global units of 25,000+, suggesting consensus also buys into DPZ’s unit growth targets. DPZ maintains robust global unit growth opportunity DPZ has grown at a DPZ has exhibited global net unit growth of 7.3% over the last five years, including 3.3% in 7.9% unit CAGR over the US and 11.2% internationally. Increasing contribution from domestic development the last 5 years, similar to recent levels and continued robust international expansion should support including 3.3% in the growth of ~7% over the next few years. Our estimates are relatively in-line with consensus US and 11.2% and at the midpoint of DPZ’s long-term net unit growth target of 6-8%. internationally DPZ has consistently met or exceeded its long-term unit growth targets over the last several years, giving us added confidence in the targeted 25,000 units by 2025. Further, the implied 6.7% unit growth CAGR over the next seven years to reach 25,000 units is a step down from the 7.3% unit growth CAGR over the last seven years, with DPZ maintaining 7%+ unit growth over the last four years.

Figure 55: DPZ has maintained global unit growth of Figure 56: International growth is expected to 7.3% over the last seven years and 7.9% over the contribute to the majority of our estimated ~7% last five years. global growth.

12.0% 8.0% 10.2% 7.0% 10.0% 6.0% 7.7% 8.0% 7.6% 6.8% 7.1% 5.0% 6.2% 4.0% 6.0% 5.3% 3.0%

4.0% Global Unit Growth 2.0% Global Global Unit Growth 1.0% 2.0% 0.0% 0.0% 2019E 2020E 2021E 2022E 2012 2013 2014 2015 2016 2017 2018 CSe Domestic Consensus Domestic DPZ Domestic Domestic International CSe Int'l Consensus Int'l DPZ Int'l

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 30 25 June 2019

Figure 57: DPZ has consistently met or exceeded its long-term unit growth targets, giving us added Figure 58: We model global net unit growth of ~7% confidence in the company’s ability to meet its long- over the next few years, at the midpoint of DPZ’s term targets. guidance of 6-8%, and in-line with consensus.

12.0% 9.0% 8.0% 10.0% 7.0% 8.0% 6.0% 5.0% 6.0% 4.0%

4.0% 3.0%

Global Global Unit Growth Global Global Unit Growth 2.0% 2.0% 1.0% 0.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E

Actual DPZ Target CSe Consensus DPZ Target (6-8%)

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Domestic Unit Growth We model domestic DPZ has demonstrated domestic net unit growth of 3.3% over the last five years, with unit growth of 4.7% acceleration each year since 2012. We estimate domestic net unit growth of 4.7% through through 2022, above 2022, above consensus’ 4.4% and somewhat above DPZ’s implied unit growth of ~4.5% 3.3% over the last five to reach a targeted ~8,000 units by 2025. years Our confidence in above average domestic unit growth of 4.7% over the next several years comes from: 1) strong fundamentals and operating momentum; 2) favorable franchisee relationships and more optimal franchisee base; 3) robust whitespace opportunities in a fragmented category; and 4) fortressing strategy providing increased visibility into development pipeline.

Figure 59: DPZ has demonstrated domestic net unit growth of 3.3% over the last five years, with Figure 60: We model domestic net unit growth of acceleration each year behind strong fundamentals, 4.7% over the next few years, slightly above favorable franchise relationships and whitespace consensus expectations of 4.4% and DPZ’s implied opportunities. domestic target of 4.5%.

6.0% 5.5%

5.0% 5.0%

4.5% 4.0% 4.0% 3.0% 3.5% 2.0%

3.0%

Domestic Domestic Unit Growth Domestic Domestic Unit Growth 1.0% 2.5%

0.0% 2.0% 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E CSe Consensus DPZ Implied Target

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 31 25 June 2019

Figure 61: DPZ has indicated a domestic unit growth potential of ~8,000 units by 2025. Based on Figure 62: We expect domestic unit development to our estimates through 2022, such would imply a represent ~25% of global growth over the next step down to ~4.2% through 2025. several years, relative to ~15-20% over the prior few.

8,500 Implies ~4% unit 12.0% 8,000 growth CAGR from 7,500 2022-2025 10.0% 7,000 8.0% 6,500 6,000 6.0%

Domestic Domestic Units 5,500 4.0%

5,000 Global Unit Growth 2.0% 4,500

4,000 0.0%

2013

2014

2015

2016

2017

2018

2013

2014

2015

2016

2017

2018

2019E

2020E

2021E

2022E

2025E

2019E

2020E

2021E 2022E Domestic International DPZ LT Target (6-8%) Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Strong fundamentals and operating momentum Since 2010, DPZ has delivered average domestic SSS of ~7.5%, primarily through increased traffic, well outpacing industry peers and driving strong franchisee economics. Domino’s should continue to maintain industry-leading SSS through traffic gains and healthy ticket. Average franchisee EBITDA in 2018 was ~$141K per store, representing growth of ~230% since 2009 and a ~2-3 year payback period. At an enterprise level, the average franchisee owns ~7 stores, generating ~$975K of EBITDA in 2018. Further, DPZ franchisees appear to have the highest cash-on-cash returns among QSR peers, supporting confidence in franchisee appetite for growth. Digital innovation also benefits franchisees and operations. DPZ is currently testing its voice technology, DOM, for phone calls, digital kiosks for in-store orders, as well as an in- store voice recognition inventory app, allowing crew members to automatically update inventory. These investments could help offset rising labor pressures, driving attractive returns and potentially additional franchisee appetite for growth.

Figure 64: At an aggregate level, the average franchisee operates 7 stores and is generating Figure 63: Franchisee EBITDA has grown to $141K enterprise-wide EBITDA of ~$975K in 2018, up from per store in 2018, up ~230% since 2009’s ~$60K. an average of 4 stores and ~$235K in 2009.

$160 $1,000 $900 $140 $800 $120 $700 $100 $600

$80 $500 $400 $60 $300 $40

EBITDA per Franchisee EBITDA per Franchisee ($000s) $200 Franchisee Franchisee EBITDA per Store ($000s)

$20 $100

2014 2009 2010 2011 2012 2013 2015 2016 2017 2018 2016 2008 2009 2010 2011 2012 2013 2014 2015 2017 2018

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 32 25 June 2019

Figure 65: Domino’s has the best cash-on-cash Figure 66: US system orders have doubled over the returns (excludes rent and G&A) among QSR peers, past decade. US Franchisee EBITDA has tripled supportive of franchisee appetite for growth. over the same period.

70% $707MM 60% 50%

40% Cash Cash Return

- 30% on

- 310MM 20%

(Excl. (Excl. Rent G&A) & $223MM Cash 10% 140MM

0%

KFC

Sonic

Arby's

Zaxby's

Culver's

Popeyes

Wendy's

Church's

Carl's Carl's Jr.

Hardee's

Taco Bell Pizza Hut

Domino's US System Orders US Franchise EBITDA

Bojangles'

McDonald's

Burger King

Dairy Queen Papa John's

Little Caesars 2008 2017 Dunkin Donuts Jack in the Box Source: Restaurant Research Journal, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Favorable franchisee relationships The average franchisee DPZ has a unique franchisee base, with ~90% of franchise owners that have started within operates ~7 stores and the restaurant and a vast majority solely dedicated to operating Domino’s restaurants. We earned ~$975K in believe this strategy creates a franchisee base with an operator mindset, though could EBITDA in 2018 constrain growth. The base has become more consolidated over the last several years, with the average franchisee operating ~7 stores, compared to an average of ~4 stores ten years ago. We believe some consolidation is a prudent strategy, with multi-unit operators likely better capitalized, can leverage best practices across its base and benefit from economies of scale. Franchisee EBITDA of ~$141K per store in 2018 and ~$975K on an aggregate basis per franchisee suggests healthy financials, which should generate an appetite for unit growth. DPZ has now largely completed its five-year rollout of the updated reimage program, with more than 90% of the US system on the Pizza Theater image. This should also unlock incremental capital for franchisees to invest in new units.

Figure 68: Multi-unit operators can benefit from the Figure 67: DPZ has consolidated over the last sharing of best practices and economies of scale decade, with the average franchisee operating ~7 across its system. 262 franchisees operate one stores, up from ~4 stores in 2009. restaurant, down from 372 in 2013.

7.5 400 7.0 380 6.5 360 6.0 340 5.5 320 5.0 300 4.5 280 260 4.0 240

3.5 Franchisees # Operating Store 1 Average Average # Stores of per Franchisee 220 3.0

200

2013 2010 2011 2012 2014 2015 2016 2017 2018 2009 2013 2014 2015 2016 2017 2018

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 33 25 June 2019

DPZ’s integrated DPZ’s integrated supply chain and profit sharing arrangement helps to strengthen supply chain and profit franchisee relationships by providing aligned strategies, enhancing transparency and sharing arrangement further incentivizing franchisees to operate efficiently and effectively. Based on the profit help strengthen sharing arrangement, franchisees earn 50% of their regional supply chain’s profits. franchisee relations Domino’s operates 19 regional supply chain centers across the US, which provide food, and align incentives supplies and equipment to nearly the entire US system. Based on DPZ’s outlook for the US business, the company is expanding supply chain capacity by building new supply chain centers in the US, including the recently opened and largest supply chain center in Edison, NJ. DPZ is also accelerating investments to support two additional centers which are projected to open in early 2020 in South Carolina and Texas. These investments signal management confidence in the growth of the US business and the capacity requirements needed to support growth across the existing base and new units. Whitespace opportunity in a fragmented category The pizza segment has exhibited unit growth of ~1% over the last five years, with large chains outpacing growth among small chains & independents. With the exception of the Asian/Noodle segment, pizza is the only other segment with small chains & independents making up more than 50% of the category’s ~62K units. Pizza is also the only segment with the market share leader representing less than 10% of the segment’s units (Note: Pizza Hut represents 12% of the segment’s units, but is no longer the segment leader on overall sales market share). DPZ represents ~10% of the segment’s units, compared to ~30% for burgers, ~38% for coffee and ~15% for Asian/Noodle. We do believe there is a fundamental difference between pizza and other cuisine categories given relatively lower barriers to entry with pizza, but still see opportunities for segment share gains, especially given heightened structural costs. Segment consolidation appears to be in some part driven by the level of competitive pricing in the industry, as highlighted by the significant concentration in the burger segment. We believe DPZ is particularly well positioned on value, with its $5.99 per item national deal that has run for nearly a decade, as well as the pulsing of additional promos. Given an environment that is more price sensitive, an increased focus on price point deals from competitors and consumer access to unlimited information, we view DPZ as a net beneficiary of increased price competition in the pizza segment.

Figure 70: The pizza segment is the most Figure 69: The top five pizza chains make up just consolidated among restaurant categories (with the ~35% of the segment’s units, with small chains & exception of Asian/Noodle), while also one of the independents comprising ~50% of units. largest by units.

100% Small Chains & Burgers 90% Independents Chicken 80% Other Large Chains Bakery Café 70% Papa Murphy's Coffee 60% Sandwich Papa John's 50% Frozen Desserts 40% Little Caesars Mexican

Unit Unit Composition Pizza 36% 13% 51% 30% Pizza Hut Asian/Noodle 20% Domino's 0% 20% 40% 60% 80% 100% 10% Unit Composition by Segment 0% 2013 2014 2015 2016 2017 2018 Top 5 Chains Other Large Chains Small Chains & Independents

Source: Technomic, Credit Suisse estimates Source: Technomic, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 34 25 June 2019

Opportunity to gain share from small chains & independents Top 3 pizza Pizza’s large and fragmented market well positions DPZ to continue to take share from competitors have >55% smaller chains & independents. Structurally higher costs and challenges in navigating high of the QSR pizza investment, emerging disruptors such as digital and delivery create an uncertain future for segment delivery sales, regional players. Additionally, we expect some incremental segment consolidation as up ~10% since 2010 independent pizza operators age, and younger generations may not want to take over the business given an increasingly difficult restaurant industry backdrop. Over the last several years, top competitors have gained share in both delivery and carryout. The top three largest competitors now represent more than 56% of the QSR pizza segment delivery sales, up ~10% in share since 2010 and ~300bps since 2013. The top four largest competitors comprise 48% of the QSR pizza segment carryout sales, up ~700bps in share over the last five years.

Figure 71: Large chains have consistently outpaced Figure 72: …supporting market share gains among unit growth among small chains & independents… the top competitors in both delivery and carryout.

2.0% 50% 2010 46% 49% 2011 51% 1.5% 2012 53% 48% 2013 53% 1.0% 47% 2014 55%

Delivery 2015 58% 0.5% 46% 2016 56% 0.0% 45% 2017 56% 44% Top3 % as of Pizza QSR 2018 56%

-0.5% Unit Unit Growth YOY % 43% 2013 41% -1.0% 42% Large Chains as % Segment of 2014 41% 2015 42% -1.5% 41% 2016 47% 2013 2014 2015 2016 2017 2018

PizzaCarryout 2017 48%

Top 500 Chains Small Chains & Independents Large Chains as % of Segment Top4 % as of QSR 2018 48%

Source: Technomic, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Opportunity for share gains among larger competitors While DPZ has historically targeted share gains among regional chains & independents, the company has also identified opportunities to take share from larger chains. In the aggregate, larger chains represent the greatest competitive threat to DPZ given their system sizes. Within a one-mile radius, ~34% of DPZ’s store base competes with Pizza Hut, ~26% of its base competes with Little Caesars and ~25% with Papa John’s. ~34% of Domino’s As Domino’s develops units through its fortressing strategy, we expect geographic overlap store bases competes could increase as Domino’s seeks to capture greater market share in its existing markets. with Pizza Hut within 1 ~34% of Domino’s store base competes with a Pizza Hut within a one-mile radius, while mile and ~72% of the ~72% compete with Domino’s within a three-mile radius. Assuming Domino’s puts units base within 3 miles within that three-mile territory, the number of Domino’s facing competition with Pizza Hut within a shorter distance will increase.

Domino’s Pizza Inc. (DPZ) 35 25 June 2019

Figure 73: Domino’s store base faces the most competition from mature pizza peers given their Figure 74: Domino’s places relatively significant relative system sizes. ~34% of DPZ’s base faces competitive pressure on select pizza peers, with competition from Pizza Hut and ~25% from Papa ~30-40% of the largest pizza competitors facing John’s within a 1 mile radius. pressure from Domino’s within a 1 mile radius.

Pizza Hut 10% 19% 34% 72% 82% Pizza Hut 9% 17% 31% 64% 69%

Little Caesars 7% 14% 26% 61% 73% Little Caesars 11% 20% 38% 83% 90%

Papa John's 7% 13% 25% 61% 73% Papa John's 12% 25% 46% 90% 95%

Papa Murphy's 24% 30% Papa Murphy's 12% 22% 39% 86% 91%

MOD 9% 18% MOD 7% 16% 34% 94% 99%

Blaze 24% 17% Blaze 8% 16% 40% 95% 99%

% DPZ Base Facing Competition From Select Peers % Select Peers' Bases Facing Competition From DPZ

0.25 Miles 0.5 Miles 1 Mile 3 Miles 5 Miles 0.25 Miles 0.5 Miles 1 Mile 3 Miles 5 Miles

Source: Thinknum, Credit Suisse estimates Source: Thinknum, Credit Suisse estimates

Fortressing strategy provides increased visibility into domestic growth DPZ has indicated opportunities to grow in underpenetrated markets, as well as fill-in existing markets. As part of its fortressing strategy, DPZ is splitting its delivery areas into smaller addressable markets. This is an offensive move to gain market share as well as a defensive move to capture market share before a competitor moves in. Benefits of fortressing include: 1) incremental carryout sales (primarily all carryout sales are incremental in new split stores); 2) improved service through faster delivery times (per Domino’s: the closer a delivery customer is to a store, the higher the frequency and increased spend over time); 3) increased enterprise sales and profits for franchisees, with most splits within one franchisee’s territory (in general, franchisee cannibalizing own sales); 4) increased profitability with reduced delivery trade area (shorter distance) and increased carryout sales (better margins); and 5) defends against competition and aggregators, especially as Domino’s competes for delivery drivers (assumption is that delivery drivers can earn more tips per hour with shorter delivery drives). Domino’s fortressing Fortressing should better position Domino’s long term, though is likely to pressure SSS strategy is likely to be a near term. In 2018, fortressing represented a ~1-1.5% SSS drag, which we expect to 1-1.5% drag on SSS continue over the next several years. This includes some benefit from split stores comping going forward over time, but we assume the initial negative impact well offsets the gains. Based on our geospatial analysis, ~2% of Domino’s store base faces competition from another Domino’s restaurant within a one-mile radius. We expect there is notable opportunity for Domino’s to expand through splits in these trade areas, with store overlap likely to increase over time as a result.

Domino’s Pizza Inc. (DPZ) 36 25 June 2019

Figure 75: ~2% of Domino’s store base faces competition from another Domino’s within a 1 mile Figure 76: Domino’s same-store overlap is relatively radius. in-line with peers.

0.1 Miles 0% Domino's 35% 65% ~2% of Domino's Blaze Pizza 41% 53% 63% 0.25 Miles 0% store base faces competition from Little Caesars 37% 63% another Domino's 0.5 Miles 0% Papa John's within a 1 mile radius 11% 28% 63% Pizza Hut 14% 42% 62% 1 Mile 2% Papa Murphy's 22% 52% 3 Miles 35% MOD Pizza 9% 34%

5 Miles 65% % Base Facing Competition From Same Brand

% Domino's Base Facing Competition From Another Domino's 0.25 Miles 0.5 Miles 1 Mile 3 Miles 5 Miles

Source: Thinknum, Credit Suisse estimates Source: Thinknum, Credit Suisse estimates

Fortressing – Not a New Concept for Domino’s Domino’s has implemented its fortressing strategy internationally and in select US markets for several years. Given expectations for increased domestic expansion over the next several years, there has been increased interest on the impact of fortressing, which will likely lead to greater SSS pressure near term. 2018 generated the highest absolute unit growth in at least a decade, and with the majority in split territories, weighed on SSS by ~1-1.5%. Going forward, unit growth will primarily be split units, and we expect a similar impact on SSS near term. Long-term, examples from other markets highlight meaningful share gains within markets as a result of the fortressing strategy. ■ Exeter, UK – Domino’s split the territory in Exeter, UK in both 2014 and 2015, which now has a total of three stores. Over the last five years, Domino’s increased total retail sales in the market by more than 100%, and the average sales per store has continued to increase post splits. Average weekly sales have increased by ~14.5% from 2015 to 2018.

■ Nottingham, UK – Domino’s split the territory in Nottingham, UK, starting with six stores, and adding four additional stores in 2013 and 2014. Total market sales in the region have increased ~80% since 2013. Average sales per unit have increased each year in the mid to high-single digits, with average weekly sales increasing by ~22.5% from 2015 to 2018.

Domino’s Pizza Inc. (DPZ) 37 25 June 2019

Figure 77: In Exeter, UK, Domino’s more than doubled the market’s total retail sales through Figure 78: In Nottingham, UK, Domino’s increased splits, and the average sales per store has its store count to 10 units (opened 4 in 2013 and continued to increase. 2014), up ~80% in total market sales since 2013.

£6.0MM £12.0MM

£5.0MM £5.0MM Split in 2014 £11.0MM & 2015 £10.0MM Total of 10 units £4.0MM

- opened 4 in Exeter, Exeter, UK

- £9.0MM 2013 & 2014 Nottingham, Nottingham, UK

£3.0MM - £2.4MM £8.0MM £2.0MM £7.0MM

Total Total Retail Sales £1.0MM £6.0MM Total Total Retail Sales £0.0MM £5.0MM 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: Represents average sales per store post splits (calculated as total sales in period/number of stores in period).

■ Las Vegas, NV – Domino’s split a company-operated Las Vegas territory by adding a fourth store, which reduced the trade area in each of its other three stores. One year later, average annual sales per store increased ~$42K, average carryout sales per store increased ~$82K and average EBITDA per store increased nearly ~$17K.

■ Roanoke, VA – One year after the opening of a second store, total sales increased $500K per year and EBITDA increased $130K per year.

Figure 80: The split store in Roanoke, VA generated increased average market sales of $500K and EBITDA of $130K. On a per store level, on average, Figure 79: Incremental carryout sales in Las Vegas sales decreased, but EBITDA increased, appear to offset the drag from loss of delivery sales highlighting the benefits of smaller delivery trade due to smaller trade areas. areas and a greater carryout mix.

$1,400K $1.6MM $1,200K +$500K $240K $1,000K Avg Sales/Store:

+$42,120 Roanoke, VA

- $1.1MM

Las Vegas, NV $800K +$130K - Avg Carryout $600K Sales/Store: +$81,640 $110K $400K Avg EBITDA/Store:

$200K +$16,654 Avg Sales/Store $0K Pre-Split Post-Split Average Sales EBITDA & Sales Store 1 Sales Post Split EBITDA Store EBITDA Post Delivery Sales Carryout Sales Pre-Split 1 Pre-Split Split

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 38 25 June 2019

International unit growth opportunity is strong We model international DPZ’s international segment has grown at an 11.2% growth CAGR over the last five years, growth of 8.1% over the representing ~85% of DPZ system unit growth. We expect international to continue to drive the next 4 years following majority of system unit growth going forward, and model an ~8.1% international unit CAGR an 11.2% unit CAGR over the next several years, comprising ~75% of DPZ system growth. This is relatively in-line over the last 5 years with consensus expectations and DPZ’s implied ~8% per year to reach ~17,000 international units by 2025. Our confidence in robust unit growth in international markets comes from: 1) strong fundamentals and operating momentum; 2) global whitespace opportunities; and 3) master franchise partnerships with mandated development schedules.

Figure 82: We model international unit growth of Figure 81: DPZ has exhibited international net unit 8.1% over the next few years, relatively in-line with growth of 11.2% over the last five years. consensus and DPZ’s implied target. 16.0% 9.5% 15.0% 9.0% 14.0% 13.0% 8.5% 12.0% 8.0% 11.0% 10.0% 7.5% 9.0% 7.0%

8.0%

International International Unit Growth International International Unit Growth 7.0% 6.5% 6.0% 5.0% 6.0% 2019E 2020E 2021E 2022E 2014 2015 2016 2017 2018 CSe Consensus DPZ Implied Target Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates Note: DPZ’s implied target is based on 7-yr unit growth CAGR to reach 17K international units by 2025.

Figure 83: Domino’s has identified the potential for 6,500+ units in its largest and fastest growing international markets, including 3,000+ in its top 15 international markets (excl. India & Brazil) and 3,500+ units in Brazil, Russia, India and China. Developed Emerging BRIC UK/Ireland 1,675 Mexico 1,025 Brazil* 1,000+ Australia/New Zealand 1,200 Turkey 900 Russia 1,000+ France 1,000 Saudi Arabia 450 India* 1,800 Germany 1,000 Malaysia 450 China 1,000+ Kapan 1,000 India* 1,800 Canada 700 Brazil* 1,000+ South Korea 500 Netherlands 400 Spain 350 Total Developed 7,825 Total Emerging 5,625 Total BRIC 4,800 Current Developed ~4,700 Current Emerging ~1,800 Current BRIC ~1,800 Top International Markets (excl. BRIC) Growth Opportunity: 3,000+ BRIC Opportunity 3,500+

Source: Company data, Credit Suisse estimates *Note: (1) India & Brazil are two of DPZ’s top 15 international markets, but growth opportunities are included in BRIC target growth of 3,500+ units. (2) DPZ has previously indicated a 500 unit market potential in Brazil. At the 2019 DPZ Investor Day, DPZ highlighted the opportunity for at least 1,000 units in Brazil (as well as Russia and China).

Strong fundamentals and operating momentum 101 consecutive quarters of positive international SSS averaging ~6% since 2010 highlight strong fundamentals in international markets and a solid business case for future growth. On average, international stores are generating payback periods of about three years, with the majority of large markets experiencing improving or consistent paybacks.

Domino’s Pizza Inc. (DPZ) 39 25 June 2019

Global whitespace opportunities for pizza Pizza represents a ~$150BN global market, with international comprising ~$100BN and expected to grow ~4% annually. Carryout and delivery are growing at a faster rate than dine-in, well positioning Domino’s as a carryout/delivery focused brand. Domino’s maintains the #1 or #2 pizza delivery market positions in all of its top 15 markets, which comprise ~75% of international units. Going forward, Domino’s expects to reach ~17,000 international units by 2025, with the majority of growth coming from DPZ’s top 15 international markets and markets of Brazil, Russia, India and China (BRIC). DPZ has indicated an opportunity for 3,000+ more units in its top 15 international markets excluding the BRIC countries, representing growth of ~50% over the next several years. DPZ has targeted 3,500+ more units across the BRIC regions, tripling the number of units in these countries.

Figure 85: Chains are expected to drive the majority Figure 84: The global pizza market is expected to of sales growth in domestic markets and about half grow at ~4% per year over the next several years. of the growth in international markets.

7.0% 7.0%

6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0%

3.0% 2.0%

2.0% 1.0% 0.0%

Global Global Pizza Sales Growth YOY % 1.0% Chain/Independent Chain/Independent Growth Contribution

0.0% 2016 2017 2018 2019 2020 2021 2022 US Chains US Independents International Chains International Independents

Source: Euromonitor, Credit Suisse estimates Source: Euromonitor, Credit Suisse estimates

Figure 86: DPZ has highlighted an opportunity for Figure 87: Based on our estimates, Domino’s 6,500+ units in its largest and fastest growing expects to gain a greater share of the market’s units markets, including 3,000+ in the top 15 international in nearly every country with targeted unit growth, markets excl. BRIC and BRIC store growth implying the company expects to grow at a faster opportunity of 3,500+ units by 2025. rate than the industry.

2,000 Current Potential 50% Current Potential 1,800 1,600 40% 1,400 1,200 30% 1,000 800 20%

Unit Unit Count 600 400 10%

200 DPZ % as of Units

0 0%

India

India

Brazil

Spain

China

Brazil

Japan

Spain

China

Russia

Japan

Turkey

France

Mexico

Russia

Turkey

France

Mexico

Canada

Canada

Malaysia

Germany

Malaysia

Germany

UK/Ireland

UK/Ireland

Netherlands

SouthKorea

SaudiArabia

Netherlands

South Korea

Saudi Arabia

Australia/NewZeal. Australia/New Zeal. Developed Markets Emerging BRIC Markets Developed Markets Emerging BRIC Markets Markets Markets Source: Company data, Credit Suisse estimates Source: Company data, Euromonitor, Credit Suisse estimates Note: Brazil and India are among DPZ’s top 15 markets, though growth targets are included in Note: (1) Potential share of international markets is based on DPZ’s stated potential in the the BRIC store growth opportunity of 3,500+ units by 2025. region over the estimated unit count in each market by 2025. (2) Potential unit count in each market in 2025 is based on Euromonitor’s 2022 unit count estimate in each market multiplied by Euromonitor’s average unit growth estimate from 2020 to 2022.

Domino’s Pizza Inc. (DPZ) 40 25 June 2019

Master franchise partnerships Five public master DPZ is one of the more unique franchised business concepts, with ~65% of its franchisees comprise international units held by five public master franchisees including: Domino’s Pizza ~65% of DPZ’s Enterprises Ltd. (DMP), Domino’s Pizza Group PLC (DOM), Jubilant FoodWorks Ltd. international units (JUBI), Alsea SAB de CV (ALSEA) and DP Eurasia (DPEU). In addition, Dash Brands, the master franchisee in China, has indicated interest in going public over the next couple of years. DPZ’s public international franchises are well capitalized operators and have been strong partners for the brand. Select international markets have deployed strategies to purchase existing restaurant concepts and convert them to Domino’s restaurants, providing for expedited increases in unit counts. Over the last several years, international master franchisees have converted restaurants in select markets, including Germany, France and South Africa. We expect markets will continue to strategically purchase existing concepts going forward, though such will likely get more challenging as competitors are smaller and the geographical overlap with existing Domino’s stores may make the deal less complementary. As part of the agreements, master franchisees have set development schedules, giving increased confidence in the visibility of the international growth pipeline. Master franchisees pay lower royalty rates, making returns more attractive, with an added incentive through a royalty fee rate reduction if the master franchisee meets development targets. Domino’s Pizza Group (DOM.GB) Domino’s Pizza Group is master franchisee in the markets of the UK, Ireland, Switzerland and Liechtenstein, holds a controlling stake in the holders of the master franchise agreements in Iceland, Norway and Sweden, and associate investments in Germany and Luxembourg. DOM’s current development agreement is for 350 new stores over a 10-year period, with a minimum of 1,346 stores by 2026 (from 1,261 at the end of 2018). Domino’s Pizza Enterprises (DMP.AX/DMP AU) DMP includes the regions of Australia/New Zealand, Europe and Japan. DMP has a target to reach 4,900 total stores by FY25-FY28 (raised from 4,650 by FY25) from 2,454 at the end of FY1H19 (CY18). Australia/New Zealand Australia/New Zealand comprise 830 units, with expectations for strong organic new store openings in FY19, following two calendar years of ~50 net new opens. System sales have grown nearly 15% per year, including average SSS of ~10%. Domino’s has indicated market potential for 1,200 total stores, highlighting a still strong runway for growth. Germany Germany has 320 stores currently, with an expected market potential of 1,000 stores. In early 2018, DMP completed the acquisition of the largest independent pizza chain in Germany, Hallo Pizza, in a JV transaction. A total of 126 stores were converted to Domino’s restaurants, with conversions completed at a faster rate than expected and at higher volumes. France France is one of the largest European markets with ~400 stores currently and a targeted potential for 1,000. The region has underperformed expectations, but is working to address challenges with new management in place.

Domino’s Pizza Inc. (DPZ) 41 25 June 2019

Netherlands Netherlands has ~270 units, with expectations to reach 400 long-term. The region appears to be performing well, including double-digit SSS in 2018. Going forward, expectations include expansion through splitting territories. With 90% of FY18’s 45 new stores opened with existing franchisees/managers, confidence in unit growth is high, though likely to weigh on strong SSS. Luxembourg DMP recently acquired the Master Franchise Agreement for Luxembourg, completing the Benelux region (Netherlands, Belgium, Luxembourg), with the first store in Luxembourg expected to open in 2019. Japan Japan has 550 stores as of FY1H19 (CY18), including organic growth of nearly 100 stores over the last 2.5 years and a long-term target of 1,000 stores. Dash Brands Dash Brands is the master franchisee in China, with ~200 units across mainland China, Hong Kong and Macau. The company has targeted growth to ~1,000 stores by 2025, representing a ~25% growth CAGR over the next seven years, relative to ~30% over the last few years, albeit a smaller base. Sub-franchising opportunities represent upside to current growth targets.

Domino’s Pizza Inc. (DPZ) 42 25 June 2019

What is DPZ’s earnings growth outlook? Credit Suisse View We model DPZ EPS growth of ~15% over the next four years, with ~9% revenue growth (SSS 4.2%, global unit growth ~7%) enabling slight margin expansion for operating profit growth of ~10.5%, and accretion from share repurchases (~3-4% of EPS growth). In 2019, we model EPS growth of ~12%, Upside to expectations exists should Domino’s be able to generate company restaurant margin expansion following ~300bps of degradation since 2015. We model ~30bps of contraction in 2019 and relatively stable company margins going forward. We estimate every ~100bps of company margin expansion is ~1% to EPS. Margin improvement from the supply chain could also generate upside – we model ~50bps of improvement in 2019 and relatively flat supply chain margins going forward. Consensus Expectations Consensus models DPZ EPS growth of ~14% over the next four years, including revenue growth of 8.8%, ~90bps of operating margin expansion from 2018 for operating profit growth of ~10% and share repurchases representing ~3% of market cap per year. For 2019, consensus estimates EPS growth of ~12%.

Figure 88: EPS has grown at a ~28% EPS CAGR Figure 89: We model EPS growth of 15% over the over the last five years. next four years, slightly above consensus’ 14%.

$9.00 45% 20% $8.00 40% 18% $7.00 35% 16% 14% $6.00 30% 12% $5.00 25% 10% EPS $4.00 20%

8% EPS EPS Growth $3.00 15% EPS Growth 6% $2.00 10% 4% $1.00 5% 2% $0.00 0% 0% 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E

EPS EPS Growth CSe Consensus

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 43 25 June 2019

Valuation $320 Target Price Our $320 target price is based on ~20.5x our NTM EBITDA in 12 months, implying a P/E multiple of ~28x our NTM EPS in 12 months. Our ~20.5x EBITDA multiple is in-line with DPZ’s current trading multiple (3-yr avg ~19x). Our implied P/E multiple of ~28x is in-line with DPZ’s current trading multiple and slightly below its three-year average P/E multiple of ~30x. Peer Group EV/EBITDA Analysis DPZ currently trades at ~20.5x consensus NTM EBITDA estimates, above its three-year average EV/EBITDA multiple of ~19x. DPZ is currently trading at a ~12% premium to heavily franchised restaurant peers, relative to ~18.5% over the last three years, with its historical premium implying DPZ could trade at ~21.5x EBITDA.

Figure 90: DPZ NTM EV/EBITDA Figure 91: DPZ NTM EV/EBITDA vs Peers 24.0x 24.0x

22.0x 22.0x

20.0x 20.0x

18.0x 18.0x EV/EBITDA 16.0x EV/EBITDA 16.0x

14.0x 14.0x

12.0x 12.0x

Apr-17

Apr-18

Apr-19

Apr-17

Apr-18

Apr-19

Oct-16

Oct-17

Oct-18

Oct-16

Oct-17

Oct-18

Jun-16

Jun-17

Jun-18

Jun-19

Jun-16

Jun-17

Jun-18

Jun-19

Feb-17

Feb-18

Feb-19

Feb-17

Feb-18

Feb-19

Aug-16

Aug-17

Aug-18

Aug-16

Aug-17

Aug-18

Dec-16

Dec-17

Dec-18

Dec-16

Dec-17 Dec-18 NTM EV/EBITDA 3-yr Avg +1 Std Dev -1 Std Dev DPZ Peers Implied Multiple on Avg. Premium

Source: FactSet, Credit Suisse estimates Source: FactSet, Credit Suisse estimates Note: Peers include heavily franchised restaurant companies.

Peer Group P/E Analysis DPZ currently trades at ~28x consensus NTM EPS estimates, slightly below its three-year average P/E multiple of ~30x. DPZ has historically traded at a ~20% premium to heavily franchised restaurant peers. At current levels, DPZ is trading at a ~5% premium to restaurant peers, with its historical premium implying a P/E multiple of ~32x EPS.

Figure 92: DPZ NTM P/E Figure 93: DPZ NTM P/E vs Peers

40.0x 40.0x

35.0x 35.0x

30.0x 30.0x

P/E P/E 25.0x 25.0x

20.0x 20.0x

15.0x 15.0x

Apr-18 Apr-17 Apr-19

Oct-16 Oct-17 Oct-18

Jun-16 Jun-17 Jun-18 Jun-19

Apr-18 Apr-17 Apr-19

Oct-16 Oct-17 Oct-18

Feb-17 Feb-18 Feb-19

Jun-16 Jun-17 Jun-18 Jun-19

Aug-18 Aug-16 Aug-17

Feb-17 Feb-18 Feb-19

Dec-17 Dec-16 Dec-18

Aug-18 Aug-16 Aug-17

Dec-17 Dec-16 Dec-18 NTM P/E 3-yr Avg +1 Std Dev -1 Std Dev DPZ Peers Implied Multiple on Avg. Premium Source: FactSet, Credit Suisse estimates Source: FactSet, Credit Suisse estimates Note: Peers include heavily franchised restaurant companies.

Domino’s Pizza Inc. (DPZ) 44 25 June 2019

Figure 94: DPZ’s above-average system sales and EBITDA growth outlook support its premium valuation.

NTM System Sales % Franchised/ NTM P/E % Unit Growth EBITDA Growth EV/EBITDA Growth Licensed

SHAK 28.2x 113.8x 22.2% 22.8% 17.5% 40% CMG 25.6x 53.0x 11.0% 5.9% 22.6% 0% DPZ 20.4x 29.0x 9.7% 6.8% 10.5% 98% YUM 20.1x 28.3x 6.8% 4.1% 7.3% 98% DNKN 18.3x 26.4x 3.5% 1.5% 5.0% 100% MCD 18.0x 24.8x 5.0% 2.1% 4.4% 93% QSR 17.5x 25.5x 6.5% 5.4% 5.8% 100% SBUX 17.4x 29.0x 7.1% 6.9% 7.5% 48% PZZA 15.7x 36.8x 1.3% 2.8% 3.1% 88% WEN 15.0x 30.3x 3.3% 1.9% 5.3% 95% JACK 12.1x 19.1x 2.3% 0.9% 2.6% 94% Average 18.0x 30.2x 5.7% 3.8% 7.4% 81.3%

Source: Company data, FactSet, Consensus Metrix Note: (1) FCF, system sales and EBITDA growth calculated based on 3-yr forward CAGR using consensus estimates. (2) % Franchised/ Licensed reflects 2018 franchise mix. (3) Averages exclude SHAK.

Scenario Analysis Blue Sky: $385 One-Year Valuation Our $385 one-year valuation in a blue sky scenario is based on an EV/EBITDA of ~22.5x our blue sky FY20 EBITDA. Our blue sky FY20 EBITDA is based on: 1) domestic SSS of 8%; 2) domestic unit growth of ~6%; and 3) operating margins of ~19%. Grey Sky: $235 One-Year Valuation Our $235 one-year valuation in a grey sky scenario is based on an EV/EBITDA of ~18x our grey sky FY20 EBITDA. Our grey sky FY20 EBITDA is based on: 1) domestic SSS of 3.5%; 2) domestic unit growth of ~4.5%; and 3) operating margins of ~16.5%.

Domino’s Pizza Inc. (DPZ) 45 25 June 2019

Investment Risks

■ Competition: Domino’s faces competition from large pizza chains, regional pizza chains, QSR competitors and third-party delivery aggregators. Increasing competitive pressure could weigh on market gains globally.

■ Inflation: Inflation in store-level input costs (labor, cheese, etc.) could weigh on store level profitability and margin compression.

■ Store Growth: Domino’s growth strategy relies in part on opening new US and international stores. DPZ could face difficulty executing its strategy if it is unable to find quality site locations, secure leases with acceptable terms, obtain government permits or approvals and find qualified employees. DPZ’s ability to increase revenues and operating income could be adversely affected if they are unable to add a significant number of new stores.

■ Supply Chain Center Disruption: Domino’s operates 19 regional dough manufacturing and supply chain centers, one crust manufacturing center and one vegetable processing center in the US and five dough manufacturing and food supply chain centers in Canada. Domino’s services all company-owned and US franchise stores. Any prolonged disruption in the operations of these facilities could adversely affect its business and operating results.

■ International Exposure: ~6.5% of DPZ’s total revenue in 2018 was derived from its international franchise segment. A hypothetical 10% adverse change in the FX rates in DPZ’s international markets would likely have a ~$20MM negative impact on international royalties. Each 10% change in FX in DPZ’s international markets affects EPS by ~5%.

■ Economic Exposure: DPZ’s financial condition and operations are affected by economic conditions outside of its control. DPZ could experience reduced product demand, longer payment cycles, slow adoption of new technologies and increased price competition if there is an economic downturn or deterioration in economic conditions.

■ Cybersecurity: DPZ collects and stores personal information about its customers, employees and franchisees as a result of accepting electronic forms of payment and the nature of its business operations. DPZ’s business, reputation and results of operations could be adversely affected if confidential customer, employee or franchisee information is compromised.

■ Food-borne Illness: In the past, reports of food-borne illness or tampering have injured the reputations of the companies involved. DPZ’s sales, profits, and reputation could be adversely affected if it is linked to reported cases of food-borne illness or other food safety incidents.

■ Interest Rates: DPZ is highly levered, with ~6x debt/EBITDA. ~90% of debt is fixed, though an increase in rates could raise concerns around future refinancing.

Domino’s Pizza Inc. (DPZ) 46 25 June 2019

Financials

Figure 95: DPZ Income Statement

Domino's (DPZ) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Jan-21 2020E 2021E 2022E Income Statement

Revenues Domestic Company-owned stores $439.0 $490.8 $121.2 $118.8 $118.5 $156.3 $514.8 $123.5 $115.0 $109.3 $147.2 $495.0 $118.0 $114.8 $116.5 $166.4 $515.6 $540.0 $577.4 YOY % 10.6% 11.8% 6.7% 5.7% 5.0% 2.8% 4.9% 1.9% -3.2% -7.8% -5.8% -3.8% -4.4% -0.2% 6.5% 13.0% 4.2% 4.7% 6.9% Domestic franchise royalties and fees $312.3 $351.4 $89.5 $87.4 $89.4 $125.2 $391.5 $96.7 $97.1 $98.8 $136.3 $428.9 $107.5 $106.5 $107.9 $157.8 $479.7 $513.4 $560.1 YOY % 14.5% 12.5% 12.0% 6.1% 11.4% 15.0% 11.4% 8.1% 11.1% 10.5% 8.9% 9.6% 11.1% 9.7% 9.2% 15.8% 11.8% 7.0% 9.1% Supply chain $1,544.3 $1,739.0 $440.1 $440.9 $445.1 $617.2 $1,943.3 $472.1 $485.0 $489.6 $678.9 $2,125.7 $519.3 $533.5 $538.6 $746.8 $2,338.2 $2,572.1 $2,829.3 YOY % 11.7% 12.6% 13.3% 13.0% 10.7% 10.6% 11.7% 7.3% 10.0% 10.0% 10.0% 9.4% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% International franchise royalties and fees $177.0 $206.7 $52.4 $51.3 $50.4 $70.6 $224.7 $54.6 $55.7 $56.5 $80.1 $246.9 $59.5 $60.9 $62.1 $93.6 $276.1 $298.5 $327.9 YOY % 8.2% 16.8% 24.2% 17.5% 4.3% -2.6% 8.7% 4.1% 8.5% 12.1% 13.5% 9.9% 9.1% 9.4% 9.8% 16.9% 11.8% 8.1% 9.9% Domestic franchise advertising $0.0 $0.0 $82.2 $80.9 $82.5 $112.9 $358.5 $89.1 $88.1 $89.3 $122.9 $389.5 $97.1 $96.0 $97.3 $142.2 $432.6 $462.3 $503.8 YOY % 8.4% 8.9% 8.2% 8.9% 8.6% 8.9% 9.0% 9.0% 15.6% 11.1% 6.9% 9.0% Total Revenues $2,472.6 $2,788.0 $785.4 $779.4 $786.0 $1,082.1 $3,432.9 $836.0 $841.0 $843.5 $1,165.5 $3,686.0 $901.4 $911.7 $922.3 $1,306.8 $4,042.2 $4,386.1 $4,798.5 YOY % 11.6% 12.8% 25.8% 24.0% 22.1% 21.4% 23.1% 6.4% 7.9% 7.3% 7.7% 7.4% 7.8% 8.4% 9.3% 12.1% 9.7% 8.5% 9.4%

Costs of sales: Domestic Company-owned stores $331.9 $377.7 $93.0 $92.0 $93.0 $120.1 $398.2 $95.5 $89.4 $86.1 $113.3 $384.4 $91.1 $89.2 $92.0 $128.4 $400.7 $420.2 $449.4 YOY % 12.5% 13.8% 6.7% 3.3% 7.1% 4.8% 5.4% 2.7% -2.8% -7.4% -5.7% -3.5% -4.6% -0.2% 6.8% 13.3% 4.2% 4.9% 6.9% % of Domestic Company-owned stores revenues 75.6% 76.9% 76.8% 77.4% 78.5% 76.9% 77.3% 77.4% 77.7% 78.8% 77.0% 77.6% 77.2% 77.7% 79.0% 77.2% 77.7% 77.8% 77.8% Restaurant Margin 24.4% 23.1% 23.2% 22.6% 21.5% 23.1% 22.7% 22.6% 22.3% 21.2% 23.0% 22.4% 22.8% 22.3% 21.0% 22.8% 22.3% 22.2% 22.2% Margin Chg. YOY -127bps -135bps 1bps 177bps -156bps -144bps -40bps -62bps -30bps -30bps -10bps -30bps 15bps 0bps -20bps -20bps -7bps -11bps 0bps

Supply Chain $1,373.1 $1,544.3 $392.5 $393.8 $397.7 $548.0 $1,732.0 $418.1 $430.8 $435.0 $600.8 $1,884.7 $459.4 $473.3 $478.0 $660.1 $2,070.9 $2,278.0 $2,505.8 YOY % 11.4% 12.5% 14.3% 13.6% 11.0% 10.5% 12.2% 6.5% 9.4% 9.4% 9.6% 8.8% 9.9% 9.9% 9.9% 9.9% 9.9% 10.0% 10.0% % of Supply chain revenues 88.9% 88.8% 89.2% 89.3% 89.3% 88.8% 89.1% 88.6% 88.8% 88.8% 88.5% 88.7% 88.5% 88.7% 88.7% 88.4% 88.6% 88.6% 88.6% Supply Chain Margin 11.1% 11.2% 10.8% 10.7% 10.7% 11.2% 10.9% 11.4% 11.2% 11.2% 11.5% 11.3% 11.5% 11.3% 11.3% 11.6% 11.4% 11.4% 11.4% Margin Chg. YOY 21bps 11bps -85bps -44bps -24bps 6bps -33bps 62bps 50bps 50bps 30bps 46bps 10bps 10bps 10bps 10bps 10bps 0bps 0bps

Total costs of sales $1,704.9 $1,922.0 $485.5 $485.8 $490.7 $668.2 $2,130.2 $513.7 $520.2 $521.1 $714.1 $2,269.1 $550.6 $562.6 $569.9 $788.5 $2,471.6 $2,698.2 $2,955.2 YOY % 11.6% 12.7% 12.8% 11.5% 10.2% 9.4% 10.8% 5.8% 7.1% 6.2% 6.9% 6.5% 7.2% 8.1% 9.4% 10.4% 8.9% 9.2% 9.5%

General & administrative expenses $313.6 $344.1 $84.2 $86.0 $80.4 $121.4 $371.9 $89.7 $89.4 $89.2 $123.8 $392.0 $94.4 $94.6 $95.2 $135.5 $419.8 $449.0 $484.0 YOY % 13.3% 9.7% 8.2% 7.5% -0.5% 15.0% 8.1% 6.5% 4.0% 11.0% 1.9% 5.4% 5.3% 5.9% 6.8% 9.5% 7.1% 6.9% 7.8% % of Total Revenue 12.7% 12.3% 10.7% 11.0% 10.2% 11.2% 10.8% 10.7% 10.6% 10.6% 10.6% 10.6% 10.5% 10.4% 10.3% 10.4% 10.4% 10.2% 10.1% Margin Chg. YOY 20bps -34bps -174bps -169bps -232bps -63bps -151bps 1bps -40bps 35bps -60bps -20bps -25bps -25bps -25bps -25bps -25bps -15bps -15bps

Domestic franchise advertising $82.2 $80.9 $82.5 $112.9 $358.5 $89.1 $88.1 $89.3 $122.9 $389.5 $97.1 $96.0 $97.3 $142.2 $432.6 $462.3 $503.8 % of Domestic System Sales 5.4% 5.4% 5.5% 5.5% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4% 5.4%

Total operating costs $2,018.6 $2,266.1 $651.9 $652.7 $653.53 $902.5 $2,860.6 $692.5 $697.7 $699.6 $960.8 $3,050.6 $742.0 $753.2 $762.5 $1,066.2 $3,324.0 $3,609.5 $3,942.9

Operating Income $454.0 $521.9 $133.48 $126.68 $132.44 $179.64 $572.23 $143.5 $143.2 $143.9 $204.7 $635.3 $159.3 $158.5 $159.8 $240.6 $718.3 $776.7 $855.6 YOY % 10.2% 14.9% 15.0% 12.2% 12.5% 2.5% 9.7% 7.5% 13.1% 8.7% 13.9% 11.0% 11.0% 10.6% 11.1% 17.6% 13.1% 8.1% 10.2% Operating Margin 18.4% 18.7% 17.0% 16.3% 16.9% 16.6% 16.7% 17.2% 17.0% 17.1% 17.6% 17.2% 17.7% 17.4% 17.3% 18.4% 17.8% 17.7% 17.8% Margin Chg. YOY -22bps 36bps -159bps -170bps -144bps -306bps -205bps 17bps 78bps 21bps 96bps 57bps 51bps 35bps 27bps 85bps 53bps -6bps 12bps

Interest income $0.7 $1.5 $0.5 $1.2 $0.8 $0.9 $3.3 $0.7 $0.4 $0.4 $0.4 $1.9 $0.4 $0.4 $0.4 $0.4 $1.6 $1.6 $1.6 Interest expense ($110.1) ($116.8) ($30.3) ($32.8) ($34.0) ($46.0) ($143.0) ($35.1) ($34.8) ($34.7) ($46.1) ($150.6) ($34.5) ($35.4) ($36.3) ($51.3) ($157.6) ($158.9) ($161.5) Interest expense, net ($109.4) ($115.3) ($29.8) ($31.6) ($33.2) ($45.1) ($139.7) ($34.4) ($34.4) ($34.3) ($45.7) ($148.7) ($34.1) ($35.0) ($35.9) ($50.9) ($156.0) ($157.3) ($159.9)

Pretax Income $344.7 $406.6 $103.7 $95.0 $99.3 $134.6 $432.5 $109.1 $108.9 $109.6 $158.9 $486.6 $125.2 $123.5 $123.9 $189.7 $562.3 $619.4 $695.7 Pre-Tax Margin 13.9% 14.6% 13.2% 12.2% 12.6% 12.4% 12.6% 13.1% 12.9% 13.0% 13.6% 13.2% 13.9% 13.5% 13.4% 14.5% 13.9% 14.1% 14.5%

Income tax expense $130.0 $124.7 $14.8 $14.7 $15.2 $22.9 $67.58 $16.5 $21.8 $21.9 $31.8 $92.0 $25.0 $24.7 $24.8 $37.9 $112.5 $123.9 $139.1 Tax Rate 37.7% 30.7% 14.3% 15.4% 15.3% 17.0% 15.6% 15.1% 20.0% 20.0% 20.0% 18.9% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% Net Income $214.7 $281.9 $88.83 $80.38 $84.1 $111.64 $364.9 $92.7 $87.1 $87.7 $127.1 $394.6 $100.2 $98.8 $99.1 $151.7 $449.8 $495.5 $556.5 Net Income Margin 8.7% 10.1% 11.3% 10.3% 10.7% 10.3% 10.6% 11.1% 10.4% 10.4% 10.9% 10.7% 11.1% 10.8% 10.7% 11.6% 11.1% 11.3% 11.6%

Adj EPS $4.30 $5.91 $2.00 $1.84 $1.95 $2.62 $8.42 $2.20 $2.08 $2.11 $3.07 $9.44 $2.44 $2.43 $2.46 $3.79 $11.10 $12.66 $14.73 YOY % 18.6% 37.5% 59.3% 39.6% 54.3% 25.2% 42.4% 9.7% 12.6% 7.8% 17.2% 12.1% 11.2% 16.9% 16.7% 23.5% 17.6% 14.1% 16.3%

Weighted Average Basic Shares 48.6 46.0 42.8 42.0 41.6 41.0 41.9 40.9 40.6 40.3 40.1 40.5 39.7 39.4 39.0 38.7 39.2 37.8 36.4 YOY % -9.6% -5.5% -10.5% -12.4% -9.7% -2.4% -8.9% -4.6% -3.4% -3.0% -2.2% -3.3% -2.8% -3.0% -3.3% -3.5% -3.2% -3.5% -3.6% Weighted Average Diluted Shares 49.9 47.7 44.4 43.6 43.1 42.6 43.3 42.2 41.9 41.7 41.4 41.8 41.0 40.7 40.3 40.0 40.5 39.1 37.8 YOY % -10.1% -4.5% -10.7% -12.4% -9.7% -4.5% -9.1% -4.9% -3.8% -3.3% -2.8% -3.5% -2.7% -2.9% -3.2% -3.4% -3.1% -3.4% -3.5%

Cash Dividends per Share $1.52 $1.84 $0.55 $0.55 $0.55 $0.55 $2.20 $0.65 $0.65 $0.65 $0.65 $2.60 $0.78 $0.78 $0.78 $0.78 $3.12 $3.59 $4.13 YOY % 22.6% 21.1% 19.6% 19.6% 19.6% 19.6% 19.6% 18.2% 18.2% 18.2% 18.2% 18.2% 20.0% 20.0% 20.0% 20.0% 20.0% 15.0% 15.0% Payout Ratio 35.3% 31.1% 27.5% 29.8% 28.2% 21.0% 26.1% 29.6% 31.3% 30.9% 21.2% 27.5% 32.0% 32.1% 31.7% 20.6% 28.1% 28.3% 28.0%

Operating Income $454.0 $521.9 $133.5 $126.7 $132.4 $179.6 $572.2 $143.5 $143.2 $143.9 $204.7 $635.3 $159.3 $158.5 $159.8 $240.6 $718.3 $776.7 $855.6 Depreciation & Amortization $38.1 $44.4 $11.1 $12.2 $12.5 $17.9 $53.7 $13.8 $13.2 $13.5 $18.7 $59.2 $14.9 $14.3 $14.7 $21.0 $64.9 $70.4 $77.0 EBITDA $492.2 $566.2 $144.5 $138.9 $144.9 $197.5 $625.9 $157.3 $156.4 $157.4 $223.4 $694.5 $174.2 $172.8 $174.6 $261.6 $783.2 $847.1 $932.6 YOY % 10.7% 15.0% 15.1% 12.8% 13.2% 4.2% 10.5% 8.8% 12.6% 8.6% 13.1% 11.0% 10.7% 10.5% 10.9% 17.1% 12.8% 8.2% 10.1% EBITDA Margin 19.9% 20.3% 18.4% 17.8% 18.4% 18.3% 18.2% 18.8% 18.6% 18.7% 19.2% 18.8% 19.3% 19.0% 18.9% 20.0% 19.4% 19.3% 19.4% Margin Chg. YOY -15bps 40bps -171bps -177bps -145bps -301bps -208bps 41bps 78bps 22bps 91bps 61bps 51bps 35bps 27bps 85bps 53bps -6bps 12bps Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 47 25 June 2019

Figure 96: DPZ Balance Sheet

Domino's (DPZ) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Jan-21 2020E 2021E 2022E Balance Sheet Cash and cash equivalents $42.8 $35.8 $44.6 $157.8 $84.6 $25.4 $25.4 $83.1 $85.2 $52.0 $17.2 $17.2 $14.1 $157.6 $118.2 $82.2 $82.2 $98.4 $214.1 Restricted cash and cash equivalents $126.5 $191.8 $145.2 $145.0 $168.2 $167.0 $167.0 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 Accounts receivable, net $150.4 $173.7 $174.4 $182.8 $170.2 $190.1 $190.1 $194.1 $204.3 $196.1 $193.4 $193.4 $206.8 $220.2 $212.4 $212.1 $212.1 $230.2 $251.8 Inventories $40.2 $40.0 $41.2 $40.2 $41.4 $46.0 $46.0 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 $45.7 Deferred income taxes $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Prepaid expenses and other $17.6 $18.4 $18.7 $33.4 $22.4 $25.7 $25.7 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 $19.5 Advertising fund assets, restricted $118.4 $120.2 $112.3 $123.8 $118.8 $112.7 $112.7 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 $98.1 Total Current Assets $495.9 $579.8 $536.4 $682.9 $605.6 $566.9 $566.9 $590.5 $602.8 $561.5 $524.0 $524.0 $534.3 $691.2 $644.0 $607.7 $607.7 $642.0 $779.3

Gross PP&E $359.5 $406.9 $412.8 $425.6 $454.2 $485.2 $485.2 $488.1 $476.8 $511.8 $546.8 $546.8 $571.8 $596.8 $621.8 $646.8 $646.8 $736.8 $826.8 Accumulated depreciation and amortization ($221.0) ($237.3) ($243.2) ($248.4) ($247.2) ($252.2) ($252.2) ($260.3) ($273.5) ($286.9) ($305.6) ($305.6) ($320.5) ($334.8) ($349.6) ($370.6) ($370.6) ($441.0) ($518.0) Net PP&E $138.5 $169.6 $169.5 $177.2 $207.0 $233.0 $233.0 $227.9 $203.4 $224.9 $241.2 $241.2 $251.3 $262.0 $272.3 $276.3 $276.3 $295.8 $308.8

Investments in marketable securities, restricted $7.3 $8.1 $0.0 $0.0 $0.0 $8.7 $8.7 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Notes receivable $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred financing costs $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Goodwill $16.1 $15.4 $15.4 $15.4 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 Capitalized software, net $40.3 $52.8 $56.0 $58.9 $59.8 $63.8 $63.8 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 $66.2 Other assets $9.4 $8.3 $16.9 $17.1 $21.8 $12.5 $12.5 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 $22.7 Operating lease right-of-use assets $218.9 $218.9 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 $222.0 Deferred income taxes $8.9 $2.8 $4.1 $3.2 $2.9 $5.5 $5.5 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 $4.1 Total Assets $716.3 $836.8 $798.3 $954.6 $912.1 $1,124.3 $1,124.3 $1,148.3 $1,136.1 $1,116.3 $1,095.0 $1,095.0 $1,115.5 $1,283.0 $1,246.1 $1,213.9 $1,213.9 $1,267.7 $1,417.9

Current portion of long-term debt $38.9 $32.3 $32.3 $35.6 $35.8 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 Accounts payable $111.5 $106.9 $89.0 $79.4 $87.5 $92.5 $92.5 $84.9 $91.1 $89.5 $95.9 $95.9 $94.8 $97.5 $96.5 $104.5 $104.5 $114.0 $124.9 Accrued compensation $42.1 $37.4 $0.0 $0.0 $0.0 $41.0 $41.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Accrued interest $18.8 $22.1 $0.0 $0.0 $0.0 $26.0 $26.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Insurance reserves $16.7 $20.8 $21.5 $21.3 $21.9 $22.2 $22.2 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 $22.0 Dividends Payable $0.0 $0.0 $24.0 $23.6 $23.3 $0.0 $0.0 $27.2 $26.4 $26.2 $0.0 $0.0 $31.0 $30.7 $30.4 $0.0 $0.0 $0.0 $0.0 Advertising fund liabilities $118.4 $120.2 $105.8 $117.4 $112.2 $107.2 $107.2 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 $93.0 Legal reserves $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other accrued liabilities $57.3 $58.6 $112.1 $100.2 $95.7 $54.9 $54.9 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 $117.2 Operating lease liabilities $32.0 $32.0 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 $31.8 Total Current Liabilities $403.7 $398.3 $384.8 $377.4 $376.4 $411.6 $411.6 $412.0 $417.4 $415.7 $395.9 $395.9 $425.7 $428.2 $426.9 $404.4 $404.4 $414.0 $424.9

Long-term debt, less current portion $2,149.0 $3,121.5 $3,117.2 $3,437.0 $3,437.6 $3,495.7 $3,495.7 $3,447.8 $3,439.0 $3,430.2 $3,421.4 $3,421.4 $3,412.6 $3,603.8 $3,594.9 $3,586.1 $3,586.1 $3,650.9 $3,762.9 Insurance reserves $27.1 $30.6 $31.4 $33.2 $34.0 $31.1 $31.1 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 $32.6 Deferred income taxes, net. $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other accrued liabilities $19.6 $21.8 $35.8 $36.2 $37.8 $31.1 $31.1 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 $32.5 Operating lease liabilities $194.7 $194.7 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 $198.5 Total Liabilities $2,599.4 $3,572.1 $3,569.2 $3,883.8 $3,885.9 $4,164.2 $4,164.2 $4,123.4 $4,120.0 $4,109.5 $4,080.9 $4,080.9 $4,101.9 $4,295.6 $4,285.5 $4,254.2 $4,254.2 $4,328.5 $4,451.4

Common stock $0.5 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 Additional paid in capital $1.0 $5.7 $0.1 $0.7 $1.9 $0.6 $0.6 $5.5 $7.5 $9.5 $11.5 $11.5 $13.5 $15.6 $17.7 $19.8 $19.8 $28.5 $37.6 Retained deficit ($1,881.5) ($2,739.4) ($2,768.6) ($2,926.9) ($2,972.6) ($3,036.5) ($3,036.5) ($2,976.8) ($2,987.7) ($2,998.9) ($2,993.5) ($2,993.5) ($2,996.1) ($3,024.4) ($3,053.3) ($3,056.3) ($3,056.3) ($3,085.5) ($3,067.3) Accumulated other comprehensive loss ($3.1) ($2.0) ($2.8) ($3.4) ($3.5) ($4.4) ($4.4) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) ($4.2) Shareholders' Equity ($1,883.1) ($2,735.4) ($2,770.9) ($2,929.2) ($2,973.8) ($3,039.9) ($3,039.9) ($2,975.2) ($2,984.0) ($2,993.2) ($2,985.9) ($2,985.9) ($2,986.4) ($3,012.6) ($3,039.4) ($3,040.3) ($3,040.3) ($3,060.8) ($3,033.4)

Total Liabilities & Shareholders' Equity $716.3 $836.8 $798.3 $954.6 $912.1 $1,124.3 $1,124.3 $1,148.3 $1,136.1 $1,116.3 $1,095.0 $1,095.0 $1,115.5 $1,283.0 $1,246.1 $1,213.9 $1,213.9 $1,267.7 $1,417.9 check ------

Balance Sheet Analysis 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E Debt Analysis Long-term debt, less current portion $2,149.0 $3,121.5 $3,117.2 $3,437.0 $3,437.6 $3,495.7 $3,495.7 $3,447.8 $3,439.0 $3,430.2 $3,421.4 $3,421.4 $3,412.6 $3,603.8 $3,594.9 $3,586.1 $3,586.1 $3,650.9 $3,762.9 Current portion of long-term debt $38.9 $32.3 $32.3 $35.6 $35.8 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 Total Debt $2,187.9 $3,153.8 $3,149.5 $3,472.6 $3,473.5 $3,531.6 $3,531.6 $3,483.7 $3,474.9 $3,466.1 $3,457.3 $3,457.3 $3,448.5 $3,639.7 $3,630.9 $3,622.0 $3,622.0 $3,686.8 $3,798.8

Cash and cash equivalents $42.8 $35.8 $44.6 $157.8 $84.6 $25.4 $25.4 $83.1 $85.2 $52.0 $17.2 $17.2 $14.1 $157.6 $118.2 $82.2 $82.2 $98.4 $214.1 Net Debt $2,145.1 $3,118.0 $3,104.9 $3,314.8 $3,388.9 $3,506.1 $3,506.1 $3,400.6 $3,389.7 $3,414.1 $3,440.1 $3,440.1 $3,434.4 $3,482.1 $3,512.6 $3,539.8 $3,539.8 $3,588.4 $3,584.7

Average Debt $2,214.3 $2,670.8 $3,151.7 $3,311.0 $3,473.0 $3,502.5 $3,342.7 $3,507.7 $3,479.3 $3,470.5 $3,461.7 $3,494.4 $3,452.9 $3,544.1 $3,635.3 $3,626.4 $3,539.7 $3,654.4 $3,742.8 TTM EBITDA $492.2 $566.2 $585.2 $601.0 $617.9 $625.9 $625.9 $638.6 $656.2 $668.7 $694.5 $694.5 $711.4 $727.8 $744.9 $783.2 $783.2 $847.1 $932.6 NTM EBITDA $566.2 $625.9 $638.6 $656.2 $668.7 $694.5 $694.5 $711.4 $727.8 $744.9 $783.2 $783.2 $800.5 $818.4 $836.4 $847.1 $847.1 Total Debt/TTM EBITDA 4.4x 5.6x 5.4x 5.8x 5.6x 5.6x 5.6x 5.5x 5.3x 5.2x 5.0x 5.0x 4.8x 5.0x 4.9x 4.6x 4.6x 4.4x 4.1x Net Debt/TTM EBITDA 4.4x 5.5x 5.3x 5.5x 5.5x 5.6x 5.6x 5.3x 5.2x 5.1x 5.0x 5.0x 4.8x 4.8x 4.7x 4.5x 4.5x 4.2x 3.8x Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 48 25 June 2019

Figure 97: DPZ Statement of Cash Flows

Domino's (DPZ) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Jan-21 2020E 2021E 2022E Cash Flow Statement Operating Cash Flows Net income $214.7 $277.9 $88.8 $77.4 $84.1 $111.6 $362.0 $92.7 $87.1 $87.7 $127.1 $394.6 $100.2 $98.8 $99.1 $151.7 $449.8 $495.5 $556.5 Depreciation and amortization $38.1 $44.4 $11.1 $12.2 $12.5 $17.9 $53.7 $13.8 $13.2 $13.5 $18.7 $59.2 $14.9 $14.3 $14.7 $21.0 $64.9 $70.4 $77.0 D&A as a % of Revenue 1.5% 1.6% 1.4% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% Gain/losses on sale/disposal of assets $0.9 ($3.1) $0.4 $0.2 ($5.7) $0.5 ($4.7) $0.1 $0.0 $0.0 $0.0 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Benefit for losses on accounts and notes receivable ($0.2) ($0.3) $0.0 $0.0 $0.0 $0.9 $0.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Provision (benefit) for deferred income taxes ($3.1) $6.2 $0.6 $0.9 $0.3 ($2.6) ($0.9) $1.5 $0.0 $0.0 $0.0 $1.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Amortization of debt issuance costs $6.4 $11.0 $1.2 $4.3 $1.1 $1.5 $8.0 $1.1 $1.0 $1.0 $1.0 $4.1 $1.1 $1.0 $1.0 $1.0 $4.1 $4.1 $4.1 Non-cash compensation expense $18.6 $20.7 $6.1 $5.4 $4.2 $7.1 $22.8 $4.6 $5.6 $4.4 $7.5 $22.2 $4.8 $5.9 $4.6 $7.9 $23.3 $24.4 $25.7 Excess tax benefits from equity-based compensation ($48.1) ($27.2) ($8.4) ($6.9) ($7.4) ($1.1) ($23.8) ($8.7) ($3.0) ($3.0) ($3.0) ($17.7) ($8.7) ($3.0) ($3.0) ($3.0) ($17.7) ($17.7) ($17.7) Other $0.0 $0.0 ($0.1) $0.2 $0.2 ($0.4) $0.0 $0.1 $0.0 $0.0 $0.0 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Changes in operating assets and liabilities $60.0 $9.6 ($15.4) ($34.8) $24.6 $7.1 ($18.4) $2.0 ($4.8) $6.4 ($17.1) ($13.6) $16.5 ($10.9) $6.6 ($22.3) ($10.1) ($8.5) ($10.8) Accounts receivable ($18.7) ($22.6) ($18.2) ($10.2) $8.1 $2.7 ($13.4) ($13.4) $7.8 $0.2 Inventories, prepaid expenses, and other ($2.9) $1.5 ($12.5) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Accounts payable and accrued liabilities $78.9 $22.3 $10.0 $5.4 ($1.7) ($19.8) $29.9 $2.5 ($1.3) ($22.5) Insurance reserves $2.8 $8.4 $2.2 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Changes in advertising fund assets and liabilties, restricted $0.0 ($0.5) $12.1 ($6.1) ($10.9) ($5.4) ($10.2) $0.0 $0.0 $0.0 ($10.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Operating Cash Flows $287.3 $339.0 $83.7 $71.0 $107.8 $131.7 $394.2 $97.0 $99.2 $110.0 $134.2 $440.4 $128.8 $106.1 $123.1 $156.3 $514.3 $568.4 $634.9 Year-to-date $83.7 $154.7 $262.5 $394.2 $97.0 $196.2 $306.2 $440.4 $128.8 $234.9 $358.0 $514.3

Investing Cash Flows Capital expenditures ($58.6) ($90.0) ($13.6) ($23.6) ($27.8) ($54.8) ($119.9) ($12.2) ($30.0) ($35.0) ($35.0) ($112.2) ($25.0) ($25.0) ($25.0) ($25.0) ($100.0) ($90.0) ($90.0) Proceeds from sale of assets $4.9 $6.8 $0.0 $0.3 $7.9 $0.2 $8.4 $0.0 $41.3 $0.0 $0.0 $41.3 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Changes in restricted cash $54.4 ($65.3) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Maturities of advertising fund investments, restricted $0.0 $4.0 $25.0 $15.0 $50.0 $94.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Purchases of advertising fund investments, restricted $0.0 $0.0 ($35.2) ($15.0) ($20.0) ($70.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other ($1.7) ($0.6) ($0.5) ($0.2) ($1.7) $1.8 ($0.6) $0.3 $0.0 $0.0 $0.0 $0.3 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Investing Cash Flows ($0.8) ($149.0) ($10.1) ($33.6) ($21.6) ($22.9) ($88.3) ($12.0) $11.3 ($35.0) ($35.0) ($70.7) ($25.0) ($25.0) ($25.0) ($25.0) ($100.0) ($90.0) ($90.0) Year-to-date ($10.1) ($43.8) ($65.4) ($88.3) ($12.0) ($0.7) ($35.7) ($70.7) ($25.0) ($50.0) ($75.0) ($100.0)

Financing Cash Flows Proceeds from issuance of long-term debt $63.0 $1,900.0 $0.0 $905.0 $0.0 $65.0 $970.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $200.0 $0.0 $0.0 $200.0 $100.0 $1,000.0 Repayments of long-term debt and capital lease obligations ($122.3) ($928.2) ($8.1) ($578.1) ($8.9) ($9.0) ($604.1) ($49.0) ($8.8) ($8.8) ($8.8) ($75.4) ($8.8) ($8.8) ($8.8) ($8.8) ($35.3) ($35.3) ($888.0) Proceeds from issuance of common stock $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Proceeds from exercises of stock options $15.2 $6.1 $3.7 $1.5 $3.8 $0.9 $9.8 $4.5 $2.0 $2.0 $2.0 $10.5 $2.0 $2.1 $2.1 $2.1 $8.3 $8.7 $9.2 Excess tax benefit from equity-based compensation $48.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Purchases of common stock ($300.3) ($1,064.3) ($101.1) ($219.0) ($109.1) ($162.0) ($591.2) ($8.1) ($75.0) ($75.0) ($75.0) ($233.1) ($100.0) ($100.0) ($100.0) ($100.0) ($400.0) ($400.0) ($400.0) Tax payments for restricted stock upon vesting ($5.6) ($9.4) ($2.3) ($0.0) ($4.5) ($0.1) ($7.0) ($2.5) $0.0 $0.0 $0.0 ($2.5) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Payments of common stock dividends and equivalents ($73.9) ($84.3) ($0.1) ($23.5) ($23.2) ($45.4) ($92.2) ($0.1) ($26.6) ($26.4) ($52.3) ($105.3) $0.0 ($31.0) ($30.7) ($60.6) ($122.3) ($135.6) ($150.4) Cash paid for financing costs $0.0 ($16.8) $0.0 ($8.2) $0.0 $0.0 ($8.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other $0.0 ($0.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Financing Cash Flows ($375.8) ($197.1) ($107.8) $77.8 ($142.0) ($150.7) ($322.8) ($55.1) ($108.4) ($108.2) ($134.1) ($405.8) ($106.8) $62.3 ($137.4) ($167.3) ($349.2) ($462.2) ($429.2) Effect of exchange rates ($1.3) $0.1 $0.0 ($0.2) ($0.1) ($0.3) ($0.5) $0.1 $0.0 $0.0 $0.0 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Year-to-date ($107.8) ($30.1) ($172.1) ($322.8) ($55.1) ($163.5) ($271.7) ($405.8) ($106.8) ($44.5) ($181.9) ($349.2)

Change in cash and equivalents incl restricted cash ($90.6) ($7.0) ($34.2) $115.0 ($55.9) ($42.3) ($17.4) $30.0 $2.1 ($33.2) ($34.9) ($35.9) ($3.0) $143.4 ($39.3) ($36.0) $65.1 $16.2 $115.7 Cash at beginning of period $133.4 $42.8 $35.8 $44.6 $157.8 $84.6 $35.8 $25.4 $83.1 $85.2 $52.0 $25.4 $17.2 $14.1 $157.6 $118.2 $17.2 $82.2 $98.4 Less: change in restricted cash ($43.1) $1.8 $17.3 $16.9 ($7.1) ($27.6) $0.0 $0.0 $0.0 ($27.6) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Cash at end of period $42.8 $35.8 $44.6 $157.8 $84.6 $25.4 $25.4 $83.1 $85.2 $52.0 $17.2 $17.2 $14.1 $157.6 $118.2 $82.2 $82.2 $98.4 $214.1

Restricted cash $126.5 $191.8 $145.2 $145.0 $168.2 $167.0 $167.0 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 $150.1 Cash & cash equivalents included in advertising fund assets, restricted $25.1 $27.3 $30.8 $32.8 $26.9 $45.0 $45.0 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 $34.3 Change in restricted cash ($49.2) $67.5 ($43.1) $1.8 $17.3 $16.9 ($7.1) ($27.6) $0.0 $0.0 $0.0 ($27.6) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Change in cash and cash equivalents excl restricted cash ($41.4) ($74.5) $8.8 $113.2 ($73.2) ($59.2) ($10.3) $57.7 $2.1 ($33.2) ($34.9) ($8.3) ($3.0) $143.4 ($39.3) ($36.0) $65.1 $16.2 $115.7

Cash on Balance Sheet $42.8 $35.8 $44.6 $157.8 $84.6 $25.4 $25.4 $83.1 $85.2 $52.0 $17.2 $17.2 $14.1 $157.6 $118.2 $82.2 $82.2 $98.4 $214.1 Difference (0) - - - - 0 0 - - - - (0) - - - - - 0.0 -

Free Cash Flow 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E Operating Cash Flow $287 $339 $84 $71 $108 $132 $394 $97 $99 $110 $134 $440 $129 $106 $123 $156 $514 $568 $635 Less: Capex ($59) ($90) ($14) ($24) ($28) ($55) ($120) ($12) ($30) ($35) ($35) ($112) ($25) ($25) ($25) ($25) ($100) ($90) ($90) Free Cash Flow $229 $249 $70 $47 $80 $77 $274 $85 $69 $75 $99 $328 $104 $81 $98 $131 $414 $478 $545 FCF/Share $4.58 $5.22 $1.58 $1.09 $1.86 $1.80 $6.33 $2.01 $1.65 $1.80 $2.40 $7.85 $2.53 $1.99 $2.43 $3.28 $10.22 $12.22 $14.42 Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 49 25 June 2019

Credit Suisse HOLT® Analysis DPZ’s current price implies expectations of 4.2% sales growth. DPZ’s valuation is more sensitive to top-line growth, with every 100bps adding ~$47 per share, and every 100bps of EBITDA margin adding ~$19 per share.

Figure 98: HOLT Market Implied Scenario

DOMINO'S PIZZA INC (DPZ) Illustrative "What's Priced In" Assumptions Valuation Sensitivity Analysis at Current Share Price of $281

EBITDA Margin (%) Long-Term Sales growth 2019-2029 based on CS Research, then assumed constant CS Research -200 bps -100 bps 0 bps +100 bps +200 bps 30 25 21.1 21.8 21.8 2.2% 3.2% 4.2% 5.2% 6.2% 20 -200 bps 19.8% $172 $205 $244 $289 $342 15 10 -100 bps 20.8% $187 $222 $262 $310 $366 5 0 0 bps 21.8% $202 $238 $281 $331 $390 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Historical margins Forecast Historical median +100 bps 22.8% $216 $255 $299 $352 $413

Long-Term EBITDA Margin Sales Growth (%) +200 bps 23.8% $231 $271 $318 $373 $437 2019-2025 based on CS Research, then solved long term sales growth required to get to current price CS Research 20 > 10% Within > 10% 15 downside 10% upside 10 7.2 7.4 4.2 5 DPZ's valuation is more sensitive to top line growth with every 0 100bps increment adding ~47 per share vs. ~$19 per share (5) added for 100bps incremental margins growth (10) 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Historical sales growth Market implied Historical median Assumptions and Methodology - EBITDA margins: 2019-2029 based on CS Research, then assumed constant Asset Turns (x): Sales/ Invested Capital - Sales growth: 2019-2025 based on CS Research; then solved for the 2.5 sales CAGR required to get to the current price 2.0 2.0 2.0 - After the 10-year explicit forecast, the HOLT methodology calculates 2.0 the terminal value by fading returns on capital and growth towards cost 1.5 of capital and GDP growth respectively HOLT market implied scenario For this analysis, we have made two adjustments consistently across 1.0 our coverage: first, we are using the US Country discount rate (3.83%) for all companies and second, we have adjusted the final fade 0.5 rate from 10% to 5% to account for the sector's longer sustainability 0.0 of returns on capital 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Historical asset turns Forecast Historical median

CFROI (%) Asset Growth (%) 41.7 45 40.1 40.0 20 40 35 15 30 10 25 5 2.4 20 1.8 1.8 15 0 10 (5) 5 0 (10) 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Historical CFROI Forecast CFROI Discount rate Historical median Historical asset growth rate Forecast asset growth

Source: Credit Suisse HOLT®. CFROI and HOLT are trademarks or registered trademarks of Credit Suisse Group AG or its affiliates in the United States and other countries. Source: Credit Suisse HOLT®

Domino’s Pizza Inc. (DPZ) 50 25 June 2019

Company Overview Domino’s Pizza (DPZ) is the largest pizza company in the world based on global retail sales, serving pizza, sandwiches, pasta, chicken, desserts and beverages. Domino’s was founded in 1960, with roots in pizza delivery, with a significant amount of sales also coming from carryout (2/3 delivery and 1/3 carryout). Domino’s is currently headquartered in Ann Arbor, Michigan. Domino’s operates ~16,000 restaurants in over 85 markets around the world as of the end of 2018, including 390 company-operated stores in the US, 5,486 domestic franchise stores and 10,038 international stores. There are 793 US franchisees as of the end of 2018, with the average franchisee operating ~7 Domino’s stores and generating EBITDA of ~$141K per store. DPZ is ~98% franchised and operates in three reportable segments including: 1) US Stores; 2) Supply Chain; and 3) International Franchise. In 2018, DPZ generated ~$3.4BN in total revenue (~$3.1BN excluding franchise advertising contributions). System sales were ~$13.5BN in 2018, including ~$6.6BN in the US and ~$7BN internationally.

Figure 99: DPZ Unit Composition Figure 100: DPZ Revenue Composition

18,000 $3,500

16,000 $3,000 14,000 $2,500 12,000 10,000 $2,000 8,000 $1,500 6,000

Unit Unit Composition $1,000 4,000 $500 2,000 Revenue Composition ($MM)

0 $0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018

US Company US Franchise International Franchise US Company US Franchise International Franchise Supply Chain

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: 2018 revenue excludes US franchise advertising contributions.

Figure 101: DPZ System Sales Figure 102: Average # Stores Per Franchisee

$16,000 7.5 $14,000 7.0 $12,000 6.5 $10,000 6.0 $8,000 5.5 $6,000 5.0 $4,000 System System Sales ($MM) 4.5 $2,000 4.0

$0 3.5

Average Average # Stores of per Franchisee

2009

2010

2011

2012

2013

2014

2015

2016 2017 2018 3.0

Domestic International

2009

2010

2011

2012

2013

2014

2015

2016 2017 2018 Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Domino’s Pizza Inc. (DPZ) 51 25 June 2019

Supply Chain Domino’s operates 19 regional dough manufacturing and food supply chain centers, one thin crust manufacturing center, one vegetable processing center and one center providing equipment and supplies in the US. The company also operates five dough manufacturing and food supply chain centers in Canada. In 2018, Domino’s made ~2.5 deliveries per store per week. Domino’s is in a profit-sharing arrangement with US and Canadian stores that purchase all their food from supply chain centers, which generally offer franchisees 50% of their supply chain centers' profits. Cheese is the largest food cost (~20-25%) and Domino’s purchases the US pizza cheese from a single supplier (Leprino Foods). Prices charged to US franchisees for cheese is based on the Chicago Mercantile Exchange cheddar block price, plus a supply chain markup. As cheese prices fluctuate, actual supply chain dollar margins remain unchanged, though revenues and margin percentages similarly fluctuate. Domino’s has a multi-year agreement with Coca-Cola in the US as the company’s exclusive beverage supplier. The majority of meat toppings in the US also come from a single supplier (Tyson). Properties DPZ owns five supply chain center buildings and two store buildings the company leases to US franchisees, with all other company-owned stores, US supply chain centers and international supply chain centers under leases. Fiscal Year End/Reporting Period DPZ’s fiscal year ends on the Sunday closest to December 31. Each of DPZ’s first three fiscal quarters consists of 12 weeks with the fourth fiscal quarter consisting of 16 or 17 weeks. FY20 is the next fiscal year with 53 weeks in the reporting period.

Domino’s Pizza Inc. (DPZ) 52 25 June 2019

Management & Board of Directors

Figure 103: Management & Board Directors Management Profile Executive Position Years at DPZ

Richard E. Allison, Jr. Chief Executive Officer 8 Jeffrey D. Lawrence EVP, Chief Financial Officer 19 Stuart A. Levy EVP, Supply Chain Services Joined Jan 2019 Kevin S. Morris EVP, General Counsel & Corporate Secretary 2 Joseph H. Jordan EVP, International 7 J. Kevin Vasconi EVP, Chief Information Officer 7 Russell J. Weiner Chief Operating Officer & President of the Americas 10 Scott R. Hinshaw EVP, Franchise Operations & Development 33 Thomas B. Curtis EVP, Team USA 34 Timothy P. McIntyre EVP, Communications, Legislative Affairs & Investor Relations 34

Mangement Compensation Stock & Option Non-Equity Executive Position Salary Total Awards Incentive & Other Richard E. Allison, Jr. CEO $744,711 $6,726,382 $1,631,323 $9,102,416 J. Patrick Doyle Former President & CEO $551,923 $2,606,295 $1,486,203 $4,644,421 Jeffrey D. Lawrence EVP, CFO $500,000 $587,179 $596,689 $1,683,868 Russell J. Weiner COO & President of the Americas $679,557 $4,613,899 $1,064,661 $6,358,117 Joseph H. Jordan EVP, International $425,000 $520,195 $867,171 $1,812,366 J. Kevin Vasconi EVP, CIO $510,000 $613,424 $618,272 $1,741,696

Management Compensation Metrics

CEO Richard E. Allison Tenure as CEO Since Jul 2018 Total Compensation ~$9.1MM Annual Incentive Plan Metric Adjusted Total Segment Income Long-term Incentive Metrics Vesting Period Performance Shares 4-yrs Adjusted Total Segment Income Stock options 4-yrs Retention Equity Shares 4-yrs

Board of Directors Director Experience Joined Board

David A. Brandon Chairman of the Board; former CEO of Domino's Pizza & Toys “R” Us 1999 Andrew B. Balson Managing Partner of Cove Hill Partners; former CEO of Match Beyond 1999 Diana F. Cantor Partner at Alternative Investment Management & Vice Chairman at Virginia Retirement System 2005 James A. Goldman Senior Advisor at Eurazeo; former President, CEO & Director at Godiva Chocolatier 2010 Richard L. Federico Former Non-Executive Chairman, CEO & Co-CEO of P.F. Chang’s 2011 C. Andrew Ballard CEO & Co-founder of Wiser Solutions; Chairman of Datacor; Vice Chairman of Zignal Labs 2015 Richard E. Allison Chief Executive Officer of Domino's Pizza 2018 Corie S. Barry Senior EVP & Chief Financial and Strategic Transformation Officer of Best Buy 2018 Patricia E. Lopez CEO & Director of High Ridge Brands; former SVP at Estée Lauder 2018 Source: Company data

Domino’s Pizza Inc. (DPZ) 53 25 June 2019

Companies Mentioned (Price as of 21-Jun-2019) Chipotle Mexican Grill, Inc. (CMG.N, $726.85) Domino’s Pizza Inc. (DPZ.N, $280.33, OUTPERFORM, TP $320.0) Grubhub Inc. (GRUB.N, $71.17) Jubilant Foodworks (JUBI.BO, Rs1255.7) McDonald’s Corporation (MCD.N, $204.26) Papa John’s International, Inc. (PZZA.OQ, $44.37) Pizza Hut (Unlisted)

Disclosure Appendix Analyst Certification I, Lauren Silberman, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Domino’s Pizza Inc. (DPZ.N)

DPZ.N Closing Price Target Price Date (US$) (US$) Rating 04-Oct-17 201.64 200.00 N * 13-Oct-17 192.98 205.00 04-Jan-18 197.29 220.00 O 23-Jan-18 219.57 235.00 21-Feb-18 230.53 245.00 14-Mar-18 226.66 NC * Asterisk signifies initiation or assumption of coverage. Effective July 3, 2016, NC denotes termination of coverage.

NEUTRAL OUTPERFORM NOT COVERED

As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a sto ck’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the re levant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and Asia stocks (excluding Japan and Australia), ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to it s current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stoc ks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Domino’s Pizza Inc. (DPZ) 54 25 June 2019

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 46% (32% banking clients) Neutral/Hold* 39% (27% banking clients) Underperform/Sell* 13% (22% banking clients) Restricted 2% *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. Important Global Disclosures Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the frequency and manner of receiving communications, the client’s risk profile and investment, the size and scope of the overall client relationship with the Firm, as well as legal and regulatory constraints. To access all of Credit Suisse’s research that you are entitled to receive in the most timely manner, please contact your sales representative or go to https://plus.credit-suisse.com . Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: https://www.credit- suisse.com/sites/disclaimers-ib/en/managing-conflicts.html . Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. Credit Suisse has decided not to enter into business relationships with companies that Credit Suisse has determined to be involved in the development, manufacture, or acquisition of anti-personnel mines and cluster munitions. For Credit Suisse's position on the issue, please see https://www.credit-suisse.com/media/assets/corporate/docs/about-us/responsibility/banking/policy-summaries-en.pdf . The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

Target Price and Rating Valuation Methodology and Risks: (12 months) for Domino’s Pizza Inc. (DPZ.N) Method: Our $320 target price and Outperform rating is based on ~20.5x our NTM EBITDA in 12 months, implying a P/E multiple of ~28x our NTM EPS in 12 months. Our ~20.5x EBITDA multiple is in-line with DPZ’s current trading multiple (3-year avg ~19x). Our implied P/E multiple of ~28x is in-line with DPZ’s current trading multiple and slightly below its three-year average P/E multiple of ~30x. Risk: Key risks to our $320 target price and Outperform rating include: competition and economic factors. Increasing competitive pressure could weigh on market gains globally. DPZ could experience reduced product demand, longer payment cycles, slow adoption of new technologies and increased price competition if there is an economic downturn or deterioration in economic conditions.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (DPZ.N) within the next 3 months. Credit Suisse or a member of the Credit Suisse Group is a market maker or liquidity provider in the securities of the following subject issuer(s): DPZ.N For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=437127&v=2woh88f4ce9b1f3k3plxy3072 . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit- suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. This research report is authored by: Credit Suisse Securities (USA) LLC ...... Lauren Silberman

Domino’s Pizza Inc. (DPZ) 55 25 June 2019

Important Credit Suisse HOLT Disclosures The HOLT methodology does not assign ratings or a target price to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms available in the HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variables may also be adjusted to produce alternative warranted prices, any of which could occur. The warranted price is an algorithmic output applied systematically across all companies based on historical levels and volatility of returns. Additional information about the HOLT methodology is available on request. CFROI, CFROE, HOLT, HOLT Lens, HOLTfolio, "Clarity is Confidence" and "Powered by HOLT" are trademarks or registered trademarks of Credit Suisse Group AG or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse. © 2019 Credit Suisse Group AG and its subsidiaries and affiliates. All rights reserved. Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important disclosures, with the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at https://rave.credit-suisse.com/disclosures . For valuation methodology and risks associated with any recommendation, price target, or rating referenced in this report, please refer to the disclosures section of the most recent report regarding the subject company.

Domino’s Pizza Inc. (DPZ) 56 25 June 2019

This report is produced by subsidiaries and affiliates of Credit Suisse operating under its Global Markets Division. For more information on our structure, please use the following link: https://www.credit-suisse.com/who-we-are This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse or its affiliates ("CS") to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of CS or its affiliates.The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable for any particular investor. CS will not treat recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Please note in particular that the bases and levels of taxation may change. Information and opinions presented in this report have been obtained or derived from sources believed by CS to be reliable, but CS makes no representation as to their accuracy or completeness. CS accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to CS. This report is not to be relied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in this report. Those communications reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no obligation to ensure that such other communications are brought to the attention of any recipient of this report. Some investments referred to in this report will be offered solely by a single entity and in the case of some investments solely by CS, or an associate of CS or CS may be the only market maker in such investments. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by CS and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments. Investors in securities such as ADR's, the values of which are influenced by currency volatility, effectively assume this risk. Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investments discussed in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own risk. This report is issued and distributed in European Union (except Switzerland): by Credit Suisse Securities (Europe) Limited, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Germany: Credit Suisse (Deutschland) Aktiengesellschaft regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). United States and Canada: Credit Suisse Securities (USA) LLC; Switzerland: Credit Suisse AG; Brazil: Banco de Investimentos Credit Suisse (Brasil) S.A or its affiliates; Mexico: Banco Credit Suisse (México), S.A., Institución de Banca Múltiple, Grupo Financiero Credit Suisse (México) and Casa de Bolsa Credit Suisse (México), S.A. de C.V., Grupo Financiero Credit Suisse (México) ("Credit Suisse Mexico"). This document has been prepared for information purposes only and is exclusively distributed in Mexico to Institutional Investors. Credit Suisse Mexico is not responsible for any onward distribution of this report to non-institutional investors by any third party. The authors of this report have not received payment or compensation from any entity or company other than from the relevant Credit Suisse Group company employing them; Japan: by Credit Suisse Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau ( Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers Association, Type II Financial Instruments Firms Association; Hong Kong: Credit Suisse (Hong Kong) Limited; Australia: Credit Suisse Equities (Australia) Limited; Thailand: Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701, Rama IV Road, Silom, Bangrak, Bangkok10500, Thailand, Tel. +66 2614 6000; Malaysia: Credit Suisse Securities (Malaysia) Sdn Bhd; Singapore: Credit Suisse AG, Singapore Branch; India: Credit Suisse Securities (India) Private Limited (CIN no.U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INZ000248233), having registered address at 9th Floor, Ceejay House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777; South Korea: Credit Suisse Securities (Europe) Limited, Seoul Branch; Taiwan: Credit Suisse AG Taipei Securities Branch; Indonesia: PT Credit Suisse Sekuritas Indonesia; Philippines:Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above. Additional Regional Disclaimers Australia: Credit Suisse Securities (Europe) Limited ("CSSEL") and Credit Suisse International ("CSI") are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority ("FCA") and the Prudential Regulation Authority under UK laws, which differ from Australian Laws. CSSEL and CSI do not hold an Australian Financial Services Licence ("AFSL") and are exempt from the requirement to hold an AFSL under the Corporations Act (Cth) 2001 ("Corporations Act") in respect of the financial services provided to Australian wholesale clients (within the meaning of section 761G of the Corporations Act) (hereinafter referred to as “Financial Services”). This material is not for distribution to retail clients and is directed exclusively at Credit Suisse's professional clients and eligible counterparties as defined by the FCA, and wholesale clients as defined under section 761G of the Corporations Act. Credit Suisse (Hong Kong) Limited ("CSHK") is licensed and regulated by the Securities and Futures Commission of Hong Kong under the laws of Hong Kong, which differ from Australian laws. CSHKL does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing Financial Services. Investment banking services in the United States are provided by Credit Suisse Securities (USA) LLC, an affiliate of Credit Suisse Group. CSSU is regulated by the United States Securities and Exchange Commission under United States laws, which differ from Australian laws. CSSU does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing Financial Services. Credit Suisse Asset Management LLC (CSAM) is authorised by the Securities and Exchange Commission under US laws, which differ from Australian laws. CSAM does not hold an AFSL and is exempt from the requirement to hold an AFSL under the Corporations Act in respect of providing Financial Services. This material is provided solely to Institutional Accounts (as defined in the FINRA rules) who are Eligible Contract Participants (as defined in the US Commodity Exchange Act). Credit Suisse Equities (Australia) Limited (ABN 35 068 232 708) ("CSEAL") is an AFSL holder in Australia (AFSL 237237). Malaysia: Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020. Singapore: This report has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (each as defined under the Financial Advisers Regulations) only, and is also distributed by Credit Suisse AG, Singapore Branch to overseas investors (as defined under the Financial Advisers Regulations). Credit Suisse AG, Singapore Branch may distribute reports produced by its foreign entities or affiliates pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact Credit Suisse AG, Singapore Branch at +65-6212-2000 for matters arising from, or in connection with, this report. By virtue of your status as an institutional investor, accredited investor, expert investor or overseas investor, Credit Suisse AG, Singapore Branch is exempted from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the “FAA”), the Financial Advisers Regulations and the relevant Notices and Guidelines issued thereunder, in respect of any financial advisory service which Credit Suisse AG, Singapore Branch may provide to you. EU: This report has been produced by subsidiaries and affiliates of Credit Suisse operating under its Global Markets Division In jurisdictions where CS is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable exemptions from registration or licensing requirements. This material is issued and distributed in the U.S. by CSSU, a member of NYSE, FINRA, SIPC and the NFA, and CSSU accepts responsibility for its contents. Clients should contact analysts and execute transactions through a Credit Suisse subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. Please note that this research was originally prepared and issued by CS for distribution to their market professional and institutional investor customers. Recipients who are not market professional or institutional investor customers of CS should seek the advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. CS may provide various services to US municipal entities or obligated persons ("municipalities"), including suggesting individual transactions or trades and entering into such transactions. Any services CS provides to municipalities are not viewed as "advice" within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. CS is providing any such services and related information solely on an arm's length basis and not as an advisor or fiduciary to the municipality. In connection with the provision of the any such services, there is no agreement, direct or indirect, between any municipality (including the officials,management, employees or agents thereof) and CS for CS to provide advice to the municipality. Municipalities should consult with their financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated broker, dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products, the issuance of municipal securities, or of an investment adviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than Credit Suisse AG, or its affiliates, that financial institution is solely responsible for distribution. Clients of that institution should contact that institution to effect a transaction in the securities mentioned in this report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing financial institution, and neither Credit Suisse AG, its affiliates, and their respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. No information or communication provided herein or otherwise is intended to be, or should be construed as, a recommendation within the meaning of the US Department of Labor’s final regulation defining "investment advice" for purposes of the Employee Retirement Income Security Act of 1974, as amended and Section 4975 of the Internal Revenue Code of 1986, as amended, and the information provided herein is intended to be general information, and should not be construed as, providing investment advice (impartial or otherwise). Copyright © 2019 CREDIT SUISSE AG and/or its affiliates. All rights reserved. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.

Domino’s Pizza Inc. (DPZ) 57