My name is Dennis and I will be your conference operator today. At this I would like to welcome everyone to the Domino's Pizza First Quarter 2016 Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Ms. Lynn Liddle. Please go ahead, ma'am.

Thanks, Dennis and good morning, everybody, and welcome to our first quarter 2016 earnings call. I've got the privilege today of doing this opening for the very last time, so I'm excited to tell you that we're going to follow our usual pattern of pointing towards our Safe Harbor Statement, make sure that you have all seen that, and I will ask also the media as per usual to be in listen-only mode. We're going to spend the next little while with prepared comments from both our Chief Executive Officer and our Chief Financial Officer and then we will open it up for questions for all of you. So let's kick it off this morning with Jeff Lawrence, our Chief Financial Officer.

Thank you, Lynn. And good morning, everyone. In the first quarter our positive brand momentum continued as we once again posted strong same-store stores in both our domestic and international businesses. UF -- by 4% and international comps grew by 7.9%. A fantastic outcome when considering the great results that we were rolling over from Q1 a year ago. We have now had 20 straight quarters of positive U.S. comps, and more than 22 consecutive years of positive international comps. We also continue to increase our store count at a healthy pace, which we believe is more evidence that our brand is strong and growing. Our diluted EPS grew 9.9% over the prior year quarter. With that let's take a closer look at the financial results for Q1. Global retail sales, which are the total retail sales at franchise and company owned stores worldwide, grew 7.3% in the quarter. When we exclude the adverse impact of foreign currency, global retail sales grew by 11.7%. The drivers of this retail sales growth included strong domestic same-store sales, which as I mentioned grew by 6.4% in the quarter, broken down are U.S. franchise business was up 6.6%, while our corporate stores were up 4%. Both of these comp increases were driven primarily by traffic or order count growth as consumers continue to respond positively to the overall brand experience that we offer them to a lesser extent, we also saw some ticket growth during the quarter. On the unit count front, we were also very pleased to report that we opened 16 net domestic stores in the first quarter, consisting of 18 store openings and two closures. Our international division had another strong quarter as same-store sales grew 7.9%, lapping a prior year quarter increase of 7.8%. Our international division added 146…

Thanks, Jeff, and good morning, everyone. As I look back on our first quarter results, I feel good about our continued momentum and the overall strength of our business model. Our strategy is steady. We're emphasizing continuous improvement and resisting the complacency that can come with success. And we're executing on big, bold, innovative ideas at an extraordinary pace. I'm very pleased with our solid sales performance domestically and yet another tremendous quarter for our international business, whose positive same-store sales streak continues to be unmatched at 89 consecutive quarters of positive same-store sales growth. Our franchisees just keep getting it done. The recent advertising highlighted our DXP pizza delivery vehicle, which we debuted for you at our Investor Day. As Russell told you then, the commercial scored very highly in tests as it reinforced with customers that Domino's is an innovative brand. It's consistent with our strategy of big bold ideas and contributed to that brand momentum we keep talking about. Our new loyalty pa program is getting a strong site. Sign-ups are healthy and we're getting more frequency from our regular customers, proving that loyalty drives loyalty. We expect this to be a contributor to sales comps going forward based on the early positive signs we're experiencing. On the technology front, the quarter was highlighted in the U.S. by two new exciting ordering platforms, Apple Watch and Amazon Echo. Partnering with two of the premiere technology companies in the world is more proof of the tremendous work being done by our digital team. Our investments in technology have helped build a truly unmatched in-house team, and I am proud of the contributions that the great technology talent we've assembled here in Ann Arbor, Michigan, is making toward our current performance. We told you last quarter about the progress…

[Operator Instructions] And your first question is from the line of Brian Bittner with Oppenheimer. Please go ahead.

I just have two questions for you, both on the U.S. business. I think that you said -- in the first quarter versus the fourth Street. Can you just talk about what the driver of that is. And then on the company -- margin, it was down a little bit year-over-year. Can you rehash exactly what drove that in the quarter?

First, on the U.S. comps, you know, significantly driven by traffic orders with just a small amount of ticket increase. So not a big amount of ticket increase. And as you know, we are really focused around getting comps, you know, more through orders and traffic than we are tickets so that's right in line with kind of what we planned for and expect. As far as the company-owned store margin, if I heard you right, really, the biggest thing going against us there is more labor rate than anything else. Food, not a big movement Q1 over Q1 last year. And you've got some other things moving around that you can see in our 10-Q. But more than anything, it's higher labor rates, and, again, as you guys know, our team USA footprint is a little bit more urban on balance than our franchisees footprint so a little bit more susceptible to rate changes, but, again, as we've said before, we view it as a short to medium term kind of challenge that we need to deal with, but we are focused on growing our way out of that over time, and that's what we will focus on doing, as well as our franchisees, who are also impacted with higher rates.

Okay. Is there any way you can tell us what the check growth was in the fourth quarter versus first quarter so we can get a better idea of what's going on with the check?

Yes, you know, the short answer is we don't give those exact things but I can tell you it was not a significant or material part of the 6.4 that you see.

Your next question is from the line of Karen Holthouse with Goldman Sachs. Please go ahead.

One quick housekeeping question. The new year shift that you mentioned, is that something that shows up in the same stores sales number or just in revenues?

So, Karen, it does not impact the comp number or the same-store sales number. It does actually flow through a little bit on the revenues. And again we've estimated that it's a $0.02 negative in Q1. When you look at the Q4 results that we had, you know, we identified and backed out the 53rd week, which was approximately $0.12, so the benefit of those really busy profitable days, New Year's Eve and New Year's day, was in that $0.12.

And then was there any sort of shift in weather this year versus last year, given sort of the amount of severe weather we had last year that wasn't really repeated this year?

Not material. I mean, you know, at the margin, maybe a little bit, but that's not a -- that's not a material driver.

All right. And then one actual question. With rewards in the wild now for four or five months, what are you seeing in terms of the redemption cycle at one point talked about it's really going to take a year to get real data on it, it seems like that timeline has been pulled forward. Have you all been sort of quickly --

We're feeling good about the loyalty program, and you say it's still only, I guess, seven or eight months in, but it clearly was a -- was a positive contributor to comps in the first quarter, and we're seeing enough on it that we're feeling good about how it's going to affect the growth on the business going forward.

Your next question is from the line of John Glass with Morgan Stanley. Please go ahead.

Jeff, just looking at the earnings and the earnings growth this quarter versus prior quarters, I guess I appreciate your calling out the calendar shift, maybe some of us didn't have that, but when you exclude that, even then your earnings growth was low double digits, low teen and it has been high teens or better in the prior, you know, many quarters. What do you think the key differences are here? Are there cost items, for example, in the first quarter that will continue, like labor, or are there some one time issues? Can you talk a little bit about what -- is this the right kind of thinking about earnings going forward and is this just maybe the reality of mid-single-digit comps versus double digits which we've enjoyed over the last several questions?

The first thing I would say is when you roll over a 14.5% come him and the throughput that that gets you a year ago, you know, putting up a 6-4 which we are very proud of and excited about, on balance wouldn't have got the you the flow through as if we had thrown up another double-digit. But when you look at the two-year camp, north of 20%, we feel great about the underlying momentum and the fundamental strength. When you look at 9.9% year-over-year, that's the biggest thing, but as I mentioned just a moment ago, also opportunities for us in some margin areas. Again, corporate stores being pinched a little bit by labor rates. Supply chain busier than they've ever been, doing a fantastic job of keeping up with the U.S. business. But they're being stretched a little bit. You know, we kind of mentioned that at the Investor Day in January. It's an area of our business that we are going to invest behind to continue to evolve and make sure we can keep up with the growth that we're seeing. But, you know, again -- and, again, you also have FX again this quarter, you know, another $3 million negative for Q1 versus last year. So you know what? When you add it all up, it does get you kind of in that 10% range, but, again, as you know, things can be, you know, a little bumpy along the way. What we're focused on is continuing to build the brand the right way with top line sales growth driven by traffic, driven by best in class digital and you know what, earnings will fall where they May but we feel good about the long-term opportunity of our financial engine.

The only thing I would add to what Jeff said is, you know, we've got two quarters in a row now where the two-year come is north of 20%. I don't believe we have ever done that. So the domestic momentum is as good as it has ever been. So we feel good about where we are.

And for sure the question wasn't about the comp momentum which even a two or three-year stack is unbelievable. It just had to do with what [indiscernible] growth expectations have been. Can you just -- one follow-up, Pizza Hut for the first time in a long time is comping positively felt historically you said it doesn't really seem to matter that there's a big unconsolidated -- is that still the case when you look down into your data, that when one major competitor starts to move materially higher than that they've been, there's still no real impact on your business? I know it doesn't seem like it from the outside but is the inside view the same?

Yes, I think it is. And, you know -- and I guess I'd go back to, you know, what I was just saying. I mean, you know, we saw, you know, very strong comps, you know, each of the last two quarters, particularly given what we were rolling over. And I guess I would repeat what, you know, I think you've heard me say many times around the category, which is, you know, the big story remains, the big players taking share from the smaller players, and so the fact that, you know, the Pizza Hut had a -- you know, had a better comp rolling over I think what was a small negative from the previous year, is -- is still a reflection of kind of that share moving from the smaller players to the bigger players. So, you know, I don't think we did feel it, really in our comp at all as they were up a bit in the first quarter.

Your next question is from the line of Alton Stump with Longbow Research.

I just have two questions. And if I heard this wrong, please correct me, but as you think back to the New Year's, New Year's Eve timing shift, how much of that impact did that have on your comps, ballpark, do you think, in the first quarter?

Yes, it's less about kind of the comp increase than it is just about the profits falling to the bottom line, both across the international domestic franchise as well as the stores and supply chain. So we estimated that it had a $0.02 kind of headwind for us in Q1 of '16. You know, if it hurt us in Q1, it means it helped us in Q4. So, again, that identified 53rd week item affecting profitability -- $0.12 in Q4 included kind of that positive effect. But, you know, you -- when you don't have New Year's Eve and New Year's day in your if I can, it's going to hurt you a little bit, and with the brand as strong as it is and with the volumes as strong as they are, it's going to hurt you little bit more than it has maybe in the past.

And then just secondly, you know, I was -- I was surprised at your currency update is unchanged given the fact, you know -- some major currency -- versus U.S. dollar. Any color on sort of what you're factoring in into your current or, you know, into your unchanged FX guidance for the year?

Yes, so, you know, as I said a moment ago, you know, FX is largely unpredictable, and if it were more predictable, we'd all be doing something else. A year ago we said that we thought 2015 was going to be $8 million to $12 million going into that year and we ended up at a negative 20. This year we kind of -- we looked at independent consensus estimates from economists, and when you add it up, it looks again like it's going to be at eight to $12 million headwind in 2016. In the last two or three weeks there's a little bit of softening in the U.S. dollar, but nothing that would cause us to think that that's going to be a permanent, you know, a permanent state for the FX. $3 million hit to earnings pretax for Q1, you know, kind of in line with that eight to 12 if you play that out, but, again, can it move around, either -- either better or worse than the eight to 12 that we've shown as an outlook for '16? The answer to that is yes, and sometimes materially. So we're going to let that play out a little bit more. We will continue to update all of the shareholders along the way with the impact that has and our outlook on it as the year progresses, and we will see where we land.

Your next question is from the line of Peter Saleh with BTIG. Please go ahead.

I just wanted to ask, you know, two consecutive quarters where your two-year stacks is north of 20%, and now you've got the loyalty program that should be kicking in. Is there any reason that you guys can think of why, you know, that momentum should slow going forward?

I'm not going to get into the kind of forecasting the specifics going forward, you know that’s not our practice, but what I would say is we obviously feel very good about the momentum of the business both domestically and internationally. And the news on the loyalty front is we have now seen enough from the results on that to have sense that is helping our comp and clearly that gives us some confidence but in terms of projections on near term we don’t get into, we just stick with our long term guidance.

And then just, you know, the GAAP between the company owned units and the franchise units looks like it was a little bit wider than it has been, you know, historically. Any call-outs there in terms of why the domestic -- the franchise units outperformed you guys by such a wide margin?

Yes, if you look at the two-year comp, they're actually identical, and I guess what I'd say, though, is, you are always going to see some noise one way or another, you know, between those because, you know, we are essentially in eight markets with -- with the corporate stores, and so, you know, it's always going to be a little bit more reliant on some specific local market conditions, but the two-year comp is fundamentally identical for corporate stores and franchise stores.

And then just my last question, you know, and when you guys have tested the loyalty and your initial results, are you seeing that the loyalty customers tend to spend more? I mean, I know your comp has been predominantly driven by traffic and I know the loyalty program is designed to drive traffic, but should we expect that the average check should start to increase as more and more of your customers sign up for the loyalty.

No, I mean, our loyalty program is -- and I think we even talked about this a bit at our Investor Day, you know, you've got a choice to make when you design these. We are -- we designed ours so that it is about odds, you know. And so you get 10 points for every order that is over $10. So it is rewarding frequency as opposed to rewarding spends. And it is playing out that way.

Your next question is from the line of John Ivankoe with JPMorgan. Please go ahead.

The question is on the supply chain, which has been more volatile in operating income as of late. You know, there were some comments about, you know, perhaps optimizing some labor while continuing to invest in what is obviously a very important strategic part of your business. So, you know, what type of, you know, operating income, you know -- or operating income gains should we expect out of that division over '16 and '17, obviously understanding there's going to be not only volatility around the dough balls, you know, but also perhaps some volatility, which is difficult for us to see in terms of the pizza theater upgrades.

Yes, so, John, you know, I think the answer is ultimately you're going to see it grow kind of like you have in the past. I mean, if you look at kind of its profits and dollar profit growth as opposed to margin shifts, it has fundamentally kind of grown in line with the pace of our business growth overall. And, you know, what we saw in the first quarter was, you know, our team is very focused on -- on supporting the stores, the most important thing they do is -- is to be effective and make sure that we're getting the service levels to the stores that we need. In the first quarter that means we may have been a little bit less efficient. And that meant a little bit of overtime. But you're not looking at an order of magnitude on that that is -- that is that big. What I would say in terms of the investments is, while there may be some investments in people, when we have talked about those, wear talking more about capital expenditures going forward because we're going to need to increase some of the capacity in our system. So that's really more what we've been talking about as we think about investments going forward. And, you know, I guess what I'd say is, when you look at kind of the profitability of the supply chain business, I would always say, focus more on the dollar profits than on the percentage margins because the percentage margins, as -- you know, as you know, are going to move with commodities, whereas kind of the dollar profits are going to tend to be more consistent.

And then secondly, you know, you've run much lower cash balances, you know, completely unrestricted cash balances than you currently have, so what do you think the right minimum cash balance is for Domino's as we kind of thing quarter to quarter, and secondly, could you take advantage of any early refinancing opportunities for your 2017 through securities?

That's a good question, John. I'll do your second one first is, you know, as you know, our 2012 debt that's outstanding expires in January of 2019. It has a par call -- or basically take it out without penalty next summer in the middle of '17. You know, we're never going to tip our hand as to what we're going to do but it's always a possibility that we could go any time between now and January of '19 into that -- that has served us so well. So we will keep our options open and we'll continue to consult with the management team and with our Kochville board and do what we think is right for the shareholders. As far as cash balances, we did roll into the end of Q1 with a higher unrestricted catch balance than we normally do. That was expected. Again, we knew as part of our recapitalization we were going to have around $700 million of excess proceeds. Basically the maximum amount that we could have flown through our accelerated share repurchase and make it efficient was $600 million, and during the accelerated share repurchase, you're really kind of not prohibited but it's hard to actually compete with your own ASR in the open market at the same time, so we knew we were going to run with kind of a temporarily high cash balance. And then again, as I said in the prepared remarks, we are very proud of our history of deploying cash in an efficient way to our shareholders and, again, I won't tip our hand as to how exactly or when we'll actually do that but that will remain our focus going forward and I think longer term, without giving you an exact number as to the dollars that we want to see in cash, it's lower than you see at the end of Q1.

Your next question is from the line of Joseph Buckley with Bank of America. Please go ahead.

Can I and you to elaborate on little bit on the wage rate inflation you're seeing in the company stores? And I know you mentioned labor was a supply chain but I wasn't sure if that was the overtime issue or how important that labor component is in the supply distribution business as well.

It was really, I think, kind of two different things in our corporate stores and in supply chain. Supply chain, honestly, was about keeping up with the business, and, you know, while they were very effective at doing that, you know, there were some opportunities on efficiency. But these were not big dollars in the grant scheme of things. From the perspective of team USA, we own all of the stores in the Bronx, Brooklyn and queens, and minimum wage, as you know, has gone up in New York, and so that's really the wage rate pressure that we're talking about. That's really primarily about New York. That's kind of a short-term thing, as, you know, our view on that has always been that, as wage rates move, you may see a little bit of dislocation in the near term on that over kind of the medium term and longer term. You see that both show up in better efficiency, because, frankly, as the wage rate goes up, stores tend to get better and more efficient about managing labor hours. And you also see, you know, over time kind of price settling in as well a little bit. And so, you know, we kind of absorb that a bit in the first quarter. And, you know, you may see that again as wage rates are going to continue to move in New York at the beginning of each year, but you adjust around that and I think over time you're going to see that kind of come back out again. That's at least the goal.

And Patrick, could I ask a big picture question on delivery? We're hearing more and more brands in various sectors of the industry exploring it, talking about it. How do you think about that market and you obviously, you know, kind of the -- position that each category has more importantly that Domino's has?

I mean, we absolutely watch everything that's going on out there. There are a lot of different people, often third parties that are trying to get into the kind of package or food delivery business. My understanding today is that some of the larger players are making pretty good money moving people around, but that from a variable profit standpoint, you are not seeing a lot of profit for them moving things around. And we'll watch as that develops. We clearly believe we are the most efficient around at delivering food. It's something that we've been perfecting over 55 years. It certainly is something that has given us, and we believe will continue to give us, real competitive advantage. We do it very efficiently. But it is certainly something that we're watching and keeping our eye on. There is demand for the convenience that we provide to people of delivering food to them. And so I think it's -- it's to be expected that others are going to look at that. I don't think yet today, within the restaurant industry, you're seeing any of them doing very significant scale of delivery through the third parties, and I think you've still got pressure within those third parties on -- on whether or not they're able to make money doing that. So it's going to be interesting. We're certainly watching it closely. But you know, as of this time, still remain pretty confident that we uniquely do this in an efficient way and at a scale that allows us to be efficient.

Your next question is from the life of Steve Anderson with Maxim Group. Please go ahead.

This is a follow-up to Joe's question just now. As you notice, some of the higher wages you're seeing in some of the urban stores, particularly New York and California. Has this influenced any of your decisions with regard to your company store opening schedule?

It has not. It has not. And just for point of clarification, we don't have any corporate stores in California. So this is really more about New York. But it is not. A and if you look at the overall profitability --

In what sort of states are you seeing the most wage pressures where your company-owned stores would see an impact?

New York is really the biggest of those. We too far corporate stores in California. We do not have corporate stores in Washington state .. and those three states are probably the ones that have put kind of the biggest increases on the board for wage rates.

Your next question is from the line of Jeffrey Bernstein with Barclays. Please go ahead.

Two questions, just one on promotions. I know Patrick in recent years it's been all about methods of ordering with technology, front and center, and I think you said there were two new platforms in the first quarter which seems to imply and I think you mentioned you have a huge backlog of presumably great products to launch whenever you feel they're quote/unquote needed. So I guess where do we stand in terms of your outlook for the rest of next year. Do you consider or are you contemplating new pizza menu product items, you know, in order to perhaps drive some new news or are you still happy in coming quarters really focusing more on just the ordering platforms?

Not going to get into any forward-looking go thoughts on that. What I will tell you is we do have lots of things in the pipeline, both from food and technology, and you know we feel quite good about where we are on that front.

And then just as the labor discussions continue to heat up across the industry, and obviously it's not much of a company-operated income just based on your franchise mix but it is evident in those company stores, but I'm just wondering what you hear from franchisees in terms of their response. Needless to say that record high profits. So there's somewhat some insulation for them. But whether they contemplate more menu pricing or if there's ever any internal definition about the 5.99 value promotion maybe needs to be tweaked or whether that's viewed as a pillar of the -- are addressing these cost pressures.

First you answered your own question. You know, we made over $125,000 of store at the franchise level last year, record level of profitability for our franchisees. You're seeing accelerating store growth. So, you know, overall they feel very good about where we are and the outlook for the business. Do we have discussions about all of the things that you just listed? Absolutely. And I guess what I would say is, we operate in -- in over 80 countries around the world. We operate in -- in labor markets that vary dramatically. There are places we're operating today where wage rates are over $20 an hour and markets where wage rates are significantly lower than they are in the U.S. And we’re pretty darn good at it, we’re efficiency, the efficiency of our model has been strength for a long time. The relatively limited menu makes us more efficient, the scale that we have around delivery makes us more efficient on that side and we have a technology platform that is also driven efficiencies and we think gives us opportunities to drive more efficiencies going forward. So certainly we have lots of conversations about how to address these things. The great news is our competition has to deal with all the same things and at the end of the day. The competitive landscape is one of who figures things out better, who is more efficient, who figures out how to balance driving value for -- for the customer effectively, who has the best people in the industry, and, you know, we feel good about where we are.

Your next question is from the line of [indiscernible]. Please go ahead.

Question on the U.S. business. I know you mentioned that Domino's is very insulated from competitive sort of pressures, maybe even from direct competitors, but certainly in the first quarter we heard a lot about market share shifting between segments, mainly the QSR taking share from casual dining. So I guess my question is, you know, are you seeing the overall pizza category, do you track that, is there some movement there and the momentum in general, and even if not, maybe just comment on general competitive pressures, maybe how you respond to them locally or geographically? I know this is I think some of the shifting was during lunch and maybe just comment on sort of how you respond to, you know, changing competitive landscape -- outside the category.

Sure. The pizza category is going a about it, you know, it's still not robust growth, but there were a number of years there where the pizza category really didn't grow. We're now seeing, you know, more in the range of low single-digit growth in the pizza category, so that's a little bit better. And, you know, I think from an overall restaurant industry perspective, you know, at the end of the day, it really comes down to, are you giving the great value to your customer, are you giving them a level of product quality and service, and, you know, the image of your stores that's -- you know, that's creating demand at the price point that you're offering. And I know that's kind of an obvious statement and an obvious equation, but it is something that we spend a lot of time looking at, at, you know, how can you say MERS are feeling about the quality of our food and, you know, the service that we're providing and are we doing that all at a value that's working for them. And, you know -- and I think if you look broadly at -- at the adoption of technology, you know, we're proud to be in the category that has probably done the best job with technology, and I think that's giving some advantage to the pizza category overall and not just Domino's. And so that may be helping at the margin as well.

Maybe just a follow-up. Did you see any change in the comp trajectory between daytime deliveries and evening?

Not materially, no.

And your final question comes from the line of [indiscernible] with KeyBank. Please go ahead.

I just have a couple follow-ups on the wage inflation commentary. Did you say what level of inflation franchisees are seeing right now?

Yes, I mean, it really depends on the market. I mean, on average, they're going to be seeing a little bit less than we do, just because of kind of the balance of where the stores are and how affected they're going to be. So, on average, affecting them less but, you know, averages are -- are dangerous, and I will tell you one of the interesting things that I think everyone in the restaurant industry is looking at right now, is, while we operate in lots of markets in the world that have very different wage rates, both higher and lower than the U.S., I can't think of any markets where you have wage rates that may vary dramatically within the market. And we are heading that direction in the U.S. And it's an interesting challenge for the business. It's something that I think every restaurant company is going to be thinking about. And, you know, certainly something that we're spending time on and we're bringing kind of our analytical prowess to kind of understand how we operate in an environment where, you know, you're a national brand, but you have cost structures that may vary fairly dramatically from state to state. So, you know, short answer is, on average, our corporate stores will have a little bit more wage pressure than our franchisees, but the interesting challenge is, as we move forward, is going to be an operating environment where those numbers may be pretty different.

Just explore that a little more. Is your technology capabilities give you an advantage in terms of being a national brand but able to establish trade area level pricing? Does that give you an advantage in terms of communicating promotions, I guess?

Well, you know, first, most pricing is set locally, so while we have a national promotion that our franchisees and our corporate stores are honoring, most of the rest of their pricing and their coupons are set locally by market so there are ways to adjust, and I guess in terms of technology, what I would say is, it gives us lots of advantages, and there may be ways in which it allows us to address this a little bit more effectively as well.

And I wasn't thinking of a trade area being a market, but a store level trade area. Do you find that you see that as well?

You know, individual franchisees within a market may vary their pricing, you know, so you might see different pricing between different stores within a market, but, on average, pricing within a market tends to be far more the same than you're going to see variability.

Okay. And then how has the change in the overtime rule affect a typical pizza operator?

We’re going to see how that kind of all shakes out here. I mean there is a lot going around that right now, certainly it could wind up impacting and that’s primarily what it's going to do is it's going to be far more efficient about not having overtime in your stores.

Well Will there be -- so if you had managers below that 50,000 threshold, would they be -- how would you think about that? Are they -- I mean, would a lot of people switch over to hourly employees?

Yes, I'm not going to get into all the -- all the details on that, but you know it certainly gives you a little bit -- it's something else to look at and figure out how you're going to do it most efficiently, but also put yourself in a position where you're going to be able to attract the best people in the industry.

And one last question. Jeff, it seems like the category discounted more in the quarter so I'm surprised with the ticket increase. Did you guys increase your discounting in your quarter and was able to drive your check through other means or--

Didn't materially change our pricing in the quarter.

And at this time there are no further questions. Please continue with any closing remarks.

Terrific. Well, listen, before we officially close, I'd like to acknowledge some recent news that many of you are aware of, which actually takes effect this coming Monday, May 2nd, which is the retirement of Lynn Liddle who is sitting across from me for her final earnings call at Domino's this morning, and the appointment of Tim McIntyre, whose sitting across from me for his first as the new Executive Vice President of Communications, Investor Relations, and Legislative Affairs. Tim is a 31-year veteran of Domino's Communications, and I look forward to many of you getting to meet and work closely with him along the way. Lynn, I join the investment community in saying we're going to miss you, very much and thank you for all you've done to move the Domino's business forward over the past 14 years. Domino's would not be what it is today without your leadership. With that, I thank everyone for joining today and look forward to discussing our second quarter earnings with you on July 21st.

Ladies and gentlemen, this does conclude the Domino's Pizza, Inc. first quarter 2016 earnings conference call. You may now disconnect.