Hello. Thank you for standing by, and welcome to the Q2 2021 Domino's Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jenny Fouracre, Investor Relations. Please go ahead.

Thank you so much. And thanks to everyone for joining us for our conversation today regarding the results of our second quarter 2021. Today's call will feature commentary from Chief Executive Officer, Ritch Allison; and from the Office of the CFO, Jessica Parrish. As this call is primarily for our investor audience, I ask that all members of the media and others to be in a listen-only mode. I want to remind everyone that the forward-looking statements in this morning's earnings release and 10-Q also apply to our comments on the call today. Both of those documents are available on our website. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our filings with the SEC. In addition, please refer to the 8-K earnings release to find disclosures and reconciliations of non-GAAP financial measures that maybe referenced on today's call. Our request to our coverage analysts. We want to do our best this morning to accommodate as many of you as time permits. We encourage you to ask only one-part question on this call if you would. Today's conference call is being webcast and is also being recorded for replay via the website. With that, I'd like to turn the call over to our CEO, Ritch Allison.

Thanks, Jenny, and thanks to all of you for joining us this morning. Overall, I am very pleased with our results this quarter, which once again demonstrated the strength of the Domino's brand around the world. We are still navigating to the COVID pandemic across the globe. Throughout the last 18 months, our franchisees have continued to step up to the challenge in service to their customers, their community and their team members. I continue to be extremely proud of our global franchisees and their extraordinary efforts to provide outstanding food through safe and reliable delivery and carryout experiences. You've heard me often about the importance of global retail sales growth and how that drives our business model. During the second quarter, we delivered 17.1% global retail sales growth excluding foreign currency impact, driven by a powerful combination of growth in U.S. same-store sales, international same-store sales and global store accounts. The second quarter marked our 41st consecutive quarter of U.S. same-store sales growth and our 110th consecutive quarter of international same-store sales growth. We also reinforced our leadership position in the pizza category with a very strong quarter of global store growth highlighted by the opening of our 18,000th store. We celebrated this terrific milestone with the opening of a beautiful store in La Junta, Colorado. The pace of net store growth has accelerated significantly during the first half of this year. When you look at it on a trailing four-quarter basis our pace of net store growth has increased from 624 in Q4, 2020 to 884 in Q2, 2021. During the quarter we also completed our $1.85 billion refinancing transaction, lowering the cost of our debt and giving us the capacity to return $1 billion to our shareholders through our recently completed accelerated share repurchase transaction. Overall, the Domino's brand continues to deliver as our strong same-store sales, store growth and resulting retail sales growth deliver great returns to our franchisees and our shareholders. I'll turn the call over now to Jessica Parrish, our Controller and Treasurer. She will take you through the details of the quarter. And then after that, I'll come back and share some additional observations about the quarter and some thoughts around how we are approaching the business going forward. Jessica, over to you.

Thank you Ritch, and good morning everyone. We are excited to share our strong second quarter results with you today. Overall, Domino's team members and franchisees around the world generated impressive operating results, leading to a diluted EPS of $3.06 for Q2. Our diluted EPS, as adjusted for certain items related to our recapitalization transaction completed during the quarter was $3.12. In Q2, we continue to see positive momentum in both the U.S. and International businesses in both same-store sales performance and net unit growth leading to strong global retail sales growth. Global retail sales grew 21.6% in Q2 as compared to Q2, 2020. When excluding the positive impact of foreign currency, global retail sales grew 17.1%. Breaking down total global retail sales growth, U.S. retail sales grew 7.4% and international retail sales grew 39.7%. When excluding the positive impact of foreign currency, international retail sales through 29.5% rolling over a prior year decrease of 3.4%. The prior year decrease in international retail sales excluding foreign currency resulted primarily from temporary store closures, changes in store hours and service method disruptions in certain international markets as a result of the COVID-19 pandemic. Turning to comps. During Q2, we continued to lead the broader restaurant industry with 41 straight quarters of positive U.S. comparable sales and 110 consecutive quarters of positive international comps. Same-store sales in the U.S. grew 3.5% in the quarter, lapping a prior year increase of 16.1%. Same-store sales for international business grew 13.9% rolling over a prior year increase of 1.3%. Breaking down the U.S. comp, our franchise business was up 3.9% in the quarter, while our company-owned stores were down 2.6%. As we noted on our Q1 call, we continue to observe a larger spread between the top-line performance of our franchise stores and our company-owned…

Thanks Jessica. And I'll begin my comments with a look at our U.S. business. For months now many of you have been asking, how we would lap the tough comparisons from Q2 of last year? My answer has always been that we're not focused on managing to a 12-week quarter. We are focused on building the business for the long term. And that long-term focus on great product, service, image and technology is precisely why we were able to deliver a terrific quarter, highlighted by 7.4% U.S. retail sales growth, lapping 19.9% from Q2, 2020. Turning to same-store sales. Perhaps the thing I'm most pleased about when I look at the 3.5% U.S. comp, is the fact that we were able to hold orders flat while overlapping the big gains from Q2, 2020. I'm also pleased that our ticket growth was driven by a very healthy balance of more items per order and modest menu price and delivery fee increases. We achieved positive comps in both our delivery and carryout businesses with delivery driven by ticket and carryout driven by a balance of order count and ticket growth. We continue to see strong growth across our business in the quarter. You've often asked, if our sales growth might be weaker in markets that had more fully reopened. But to the contrary, the opposite trend emerged through the second quarter where we saw higher levels of sales growth in the second quarter in the markets with fewer COVID-related restrictions. Similar to Q1, we saw that comp growth in rural areas outperformed urban areas and less affluent areas outperformed more affluent areas. These differences combined with the impact of more aggressive fortressing accounted for much of the same store sales gap between our corporate store and franchise store businesses. We saw sales…

Thank you. [Operator Instructions] Our first question comes from Brian Bittner with Oppenheimer & Company. You may proceed with your question.

Thanks. Good morning, congratulations. Ritch, you highlighted the importance of paying attention to the two-year same store sales trend both in the press release and on this earnings call. And that trend obviously accelerated meaningfully in the second quarter? Is pegging this two-year trend relevant in your mind for the rest of the year including the fourth quarter, because sustaining it would imply a pretty big jump in the one year same store sales in the fourth quarter. And I just think in general, folks remain a bit confused, how this accelerated business performance that Domino's is generating is able to occur in this reopening environment? You actually suggested that more reopen footprints are outperforming. So can you just put some insights into the core drivers of this dynamic that you're seeing within your business?

Sure, Brian. Thanks for the question. We do feel that it's instructive to take a look at the business, comparing back to that pre-COVID anchor if you will of 2019. Because there's so many dynamics that have occurred over the last 18 months that for us as we look at the business internally and we think constructive for our investors as well, really understanding what is that longer term trend and the growth in the business is important. We're not making any statements or projections today about the third or fourth quarters of this year. Just merely sharing with you how those trends are unfolding on a quarter-to-quarter basis. Because there's still so many factors there that are driving the business. Obviously, those things that we have under our control, but there are also many factors externally outside of our control that are difficult to predict. What happens with -- as COVID continues to unfold with the delta variant for example, what happens with respect to ongoing government stimulus and intervention in the economy, all of those things will continue to play a factor as we look at what happens with comps and what that resulting one and two year comp, a profile looks like over time. You asked about the dynamics going on in markets that are reopening. Like many of you, we've obviously been watching very studiously. What happens as some of these markets around the country reopen. And I think it's important to remember that our business is a -- it's a delivery business, but it's also a very robust carryout business. And so, when markets close down, and I've talked about this several times over the last year. It had a negative impact on our carryout business. So as we see markets reopen, we get some positive tailwind on the carryout business. And then also for our delivery business, the fact that we've been able to stay very focused on value for our customers, we saw a positive comp in the in the second quarter on the delivery business as well, even though markets had reopened. So we'll keep tracking the one and two year basis looking across both of those businesses and as the year unfolds on a quarterly basis we'll continue to share those insights back with you.

Thank you.

Thank you. Our next question comes from Peter Saleh with BTIG. You may proceed with your question.

Great. Thanks. Ritch, I wanted to ask about the competitive environment. Now that it seems like the economy is somewhat reopened or mostly reopened. How do you feel the competitive environment is looking right now? Especially with respect to independents. Do you feel like independents are stronger today or weaker post-COVID? Just trying to get a sense on if you feel like you guys are taking share from independents or where those market share gains are coming from? Thanks.

Sure. Thanks Peter. It's still -- as the market continues to unfold here, there's still a lot of moving parts. And so, we're always a little careful to make definitive statements about market share movements until we see a few quarters behind us. But at least some of the indications that we have now are that the larger chains are driving most of the growth in the pizza category right now, with independent kind of more flat to down. So, best we can tell, growing market with share being gained by the larger chains and certainly as the largest chain we are taking some of that share.

Thank you very much.

Thank you. Our next question comes from John Glass with Morgan Stanley. You may proceed with your question.

Thanks very much. Ritch, I wanted to go back to your comments about the labor and the wage environment. One, you talked about how much you're taking some pricing yourself at company stores, maybe what that is to contextualize that? And how are franchisees managing that? You said that they're taking moderate amounts of pricing or there's moderate amount of pricing in your -- and maybe it's your company comps maybe assumed that's the franchise as well. Does that open the conversation about what the price point should be at Domino's given this unique market environment should -- is you're sort of locked into these 599, 799 price points. Is there more friction around that conversation given the cost of labor? And if there is how do you answer that question or the franchisees might ask about pricing?

Sure. Thanks John. And this is certainly something that we think about all of the time. To the first part of your question, most certainly when we look at the labor and the wage environment, wages are only going in one direction over time and that is up. Some of that obviously is dictated by some of the minimum wage changes that are happening, another round of which occurred in here in July. But also just the general supply and demand equation in the labor market is causing wages to go up. And we're certainly continue to invest more in our hourly team members in our corporate store business to make sure that we can remain staffed and serve our customers. When we think about how do we offset those wage increases and still deliver a terrific four-wall economic model? Pricing is certainly one of the levers that is out there. And at the local level we do this in our corporate stores. And our franchisees have -- they have the latitude to do this for their businesses. We have taken some increases in our single transparent delivery fee. We charge -- wherever we are we charge a single fee. It varies significantly market-to-market based on the local dynamics. But that's certainly a lever that we and our franchisees have pulled. And then menu pricing, our franchisees have control of that. And in the higher wage markets you will find higher menu prices -- generally higher menu prices at Domino's. As it relates to the national offers, our 599 and 799 hero offers, we continue to test those on a very frequent basis. Not just looking at which offers would drive the most top line, but more importantly, what's going to drive the strongest four-wall EBITDA for our stores. And 599 and 799 have continued to emerge from the many, many offers that we test on a frequent basis. But what I'll tell you is, if we find an offer or if the dynamics change stuff that such that a different offer drives higher levels of profit for our franchisees then we would move to that offer. 599 and 799 are not sacred. The only thing that is sacred is that we're going to bring value to the consumer. Because that's what drives order counts and ultimately order counts over time are correlated with sales and with profitability at the store level. So something we are always looking at John and always talking to our franchisees about.

Thanks very much.

Thank you. Our next question comes from Jared Garber with Goldman Sachs. You may proceed with your question.

Hi. Thanks for thanks for the question. It's a little bit of a follow-up on some of the previous questions as it relates maybe to the competitive landscape. We've seen a little bit more menu innovation maybe from some of the larger direct pizza LSR competitors recently, maybe over the last six months or so. And I think the consumer is seemingly willing to pay more for some offers now and for some more maybe surprise and delight. So I wanted to get a sense of how you're thinking about menu innovation going forward? Obviously, like the operations and the simplicity of everything makes sense from a franchisee economics perspective. But wanted to get a sense of how you're thinking about innovation from here?

Sure Jared. Appreciate the question. Our overall philosophy and approach really hasn't changed around menu innovation. We are constantly testing a robust pipeline of new products and platforms for the menu. But we hold it to a pretty high standard in terms of what ultimately gets on our menu. Because we're not just looking to put things on the menu to drive sales for a limited amount of time. So that's you don't see us use LTOs and you shouldn't expect to see us using those into the future. What we are looking for products that can drive incrementality in revenue and in profit. So we test products not only for where they would mix on the menu, but more importantly once you take into effect the potential cannibalization from other menu items, are we delivering incremental revenue and profit at the store level? You asked a little bit about premium and customers willing to pay more. When we introduced our two new specialty pizzas, the chicken taco and the cheeseburger. Those were all about bringing some more premium products to that specialty line, which gives the franchisee an opportunity for some incremental revenue over and above our more traditional products that are offered on the 599 menu. So, we'll continue to look for opportunities there. And when we introduce something like those two specialty pizzas, it's not just to drive sales of those two pizzas, but we also see that that elevates sales of the specialty line in general, which is a more premium line. So as we look forward you should expect to see us continue to roll out new products. As has been the past, you probably won't see us rolling them out or as fast or as in as significant quantity as some of the other players in the industry, simply because we've just got a different strategy in terms of how we look at it. And I suspect it goes without saying. But a big part of that strategy is also just managing the level of change and complexity on our operators in our 6,000 plus stores across the country.

Thanks Ritch. Appreciate the color.

Thank you. Our next question comes from Andrew Strelzik with BMO. You may proceed with your question.

Hi. Thanks for taking the question. I'm curious how your conversations more broadly are going with franchisees at the moment. I guess, it wouldn't surprise me if kind of going into this period against the tough compares. There was maybe a little bit of uncertainty among the U.S. franchisees. But now obviously that you're demonstrating the performance against those comparisons, I'm just curious how those conversations are unfolding? Has it kind of unlocked anything with respect to the development pipeline or anything else with those conversations?

Sure. Sure. Thanks for the question. It's something that we're always actively engaged in discussions with our franchisees and those relationships. And frankly, one of the best things about the second quarter for myself personally is that I've been out on the road a lot. Out in stores and visiting with our franchisees as we've gotten ourselves vaccinated and are able to get out there and interact a lot more. And franchisees, I think certainly pleased with the top line growth that we've seen in the business. And the fact that we've seen the sustained levels of sales that we've had here in the first and second quarters of the year. You won't be surprised because to hear that franchisees are just as we are, concerned about staffing, about labor rates and where those are going over time, thinking about commodity costs and where those are going. All the things that you would expect, restaurant operators to be concerned about. But when we take a look at the business in total, the four-wall economics the business are still incredibly strong, the cost of entry or what it takes to get a Domino's Pizza opened relative to other QSR's still very modest. So the cash-on-cash returns in the business are still very strong. And that's really what drives the appetite for development. So I still see a strong appetite for development. And that's not just true in the U.S. business, but it's around the globe. And really kind of tying back some of the comments I made earlier on this call. The real gating factor right now in terms of getting stores open is not the desire to do so. It is some of those other factors around staffing and just having teams ready to be in those stores day one when they open, given some of the labor constraints. But also, we have seen some continued delays in construction and permitting. And then also just in some specific equipment categories, they go into our stores, you probably won't be surprised to hear that there are still you know some significant supply chain disruptions out there and some of those have hit some of the equipment that we use to build out a Domino's Pizza store.

Great. Thank you very much.

Thank you. Our next question comes from Chris O'Cull with Stifel. You may proceed with your question.

Thanks. Ritch, just to follow-up on the labor side, is the company able to monitor franchisees staffing levels? And what's the company doing to kind of help franchisees with staffing, so that it doesn't become a service issue?

Sure. Chris, we don't monitor our franchisees staffing levels or really have any say or direction in what they do with their own people outside of the of the brand standards. So what we try to do is lead by example with what we do inside our corporate store businesses. And so, one of the most important things about running corporate stores is that we're out there across the country feeling exactly what our franchisees are feeling. And so, when they're feeling pinched on staffing and wages and other things, we feel it in our own business as well. And it allows us to maintain a level of alignment that it's just impossible to have if you've sold all your corporate stores over time. And so, we communicate what we're doing in the corporate store business and do our best to lead by example with respect to the things that we're trying to do around hiring and wages and other things that we've got going on out there in the marketplace. But ultimately, they're going to make their decisions about how they choose to pay and staff their stores.

Thank you.

Thank you. Our next question comes from John Ivankoe with JPMorgan. You may proceed with your question.

Hi. Your first - it's just -- I guess a topic I'd like to address not really a question and secondly a question. First, Ritch, I mean, could you address some of the senior level turnover that you've seen and it has been fairly chunky. And it kind of came in a wave more or less and maybe that some of the challenges, but also opportunities that may bring as you kind of think about the Domino's over the next five to ten years. So that's I guess is the first topic. It would be great to address. And then secondly, your app gives you a lot of data that others would love to have. And some of that data may show customers that abandon their orders once they see a delivery time that has got to be quite long. Talk about how much of an issue that's become? And if there is a way for you to think, just like how much sales you could actually recapture or I guess in this case actually grow if you were to get service levels materially down, which I assume would come through increased delivery driver staffing? Thanks.

Sure, John. And that's good creativity around a topic and a question since we said one question. So to address the first topic, we've had some turnover among the management team. But what I can tell you is, that also creates opportunity for great leaders that we've had on the bench and who are ready to step up and take -- and really take things to the next level. So, as I look across our team and that's not just the direct reports to myself, but also as I look broadly across our senior management team within the company, we've never been stronger than we are today. We like -- I'm sure some others out there we've still got a few positions that we still need to fill. But when I look across, I feel very good about the leadership team at Domino's Pizza. And I don't think we could deliver the kind of results that we've been delivering if we didn't have a great leadership team. The second question around taking a look at service and what we're seeing there in the business. With the challenges that we've had in staffing, we haven't made the service gains and improvements that I would like to see here in 2021. And we've slipped a minute or two in some places with respect to the average times in terms of getting food to our customers. And that is a big area of focus for us as we look going forward. We know because we got all the data. As you as you referenced, we know that when our mean delivery times get better and when our standard deviations around delivery times get tighter, we get more delivery sales per household for those customers that are in our delivery area. So there's clearly…

Thank you so much.

Thank you. Our next question comes from David Tarantino with Baird. You may proceed with your question.

Hi. Good morning. I was wondering, Ritch, if you could comment on where the U.S. business is in terms of carryout sales relative to where you were pre pandemic? And then in particular, I guess the related question would be -- what do you think this Carside Delivery option is doing for you in terms of growing that business and the opportunity going forward?

Great, David. Thanks. And if you take a look at where carryout is. And the most important metric that we look at around it is, where are we in terms of carryout orders per store? And basically when we take a look at the Q2, we were pretty well back to where we were in 2019 on carryout orders, slightly positive. A lot of a benefit in ticket growth that we've seen in carryout really driven by customers ordering more product per order. But we did see in the second quarter that we got back to the pre-COVID levels in terms of orders. In terms of the mix of our business, when you look at carryout orders versus delivery orders. We're still a little bit below where we were pre-COVID. And that's really driven by the fact that our delivery order counts on a two-year basis are significantly higher than they than they were back in 2019. So, what I would say is that we are in kind of the first phase of that carryout order count growth resurgence that we've been thinking about and forecasting for a while internally. Carside Delivery. For us is something that was on -- it was on our work plan even before COVID hit. Because we were looking at Carside Delivery really as the way at Domino's to compete for that drive-through customer. Now when COVID hit, we kind of reshuffled our work plan and pulled all of that forward to get it rolled out more quickly, because it also provides a safe and contactless experience for the customer, which became so important during COVID. But we look at Carside as a as a fantastic way to compete against the drive-through. Because while we've got pickup windows in a number of our stores out…

Great. Thank you very much.

Thank you. Our next question comes from Dennis Geiger with UBS. You may proceed with your question.

Great. Thanks. Ritch, wanted to ask you a little bit more about customer loyalty and new customer acquisition that you're seeing. And how you're thinking about the go forward from here. Maybe if you could talk a little more about the opportunities that you have to continue to attract new customers and also keep those that you have gained over the last let's say 15 months or so? I'm sure it's a bunch of things. But any thoughts around kind of what factors are most important for this, if it's that service level opportunity that you mentioned? If it's new menu items, value, boost weeks. Just curious how you -- what you're seeing and how you think about the opportunity? Thank you.

Sure. That's happy to touch on that. As you take a look really over the course of the last year or so, the bulk of the growth in our business really has come from existing customers. And that customer retention and purchase frequency and even more concentrated within our loyalty customer base, that 27 plus million active loyalty members that we have at Domino's. So, I'm really pleased with what we've been able to do as the pandemic has unfolded in terms of driving customer retention, staying relevant and keeping those orders, that order frequency up over time. When I look forward, I think we do have more opportunities to continue to prime the pump further around customer acquisition. Some of the most important tools that we've used historically to do that have been some of these periodic boost weeks that we've used. And we haven't run any of those for quite some time. So that's certainly an arrow in the quiver that we have going forward. Product introductions, certainly another opportunity to invite new customers in. And we do have some robust products in the pipeline. So you should expect to see some news from us on that in the quarters to come as another potential opportunity. And then what I would tell you also, just kind of underlying all this it's not a specific action or a catalyst for driving customer acquisition, but I fundamentally believe that staying focused on value is perhaps our greatest customer acquisition vehicle over time. Because as you see you know prices being raised significantly at a number of other restaurant chains around the country and as we start to see some of this government stimulus come away as we go into the back half of this year, I think it's going to be really important for the families that we serve to stay focused on value. And I think that's always a consistent message from us and an opportunity to continue to bring new customers into the fold.

Great. Thanks Ritch.

Thank you. Our next question comes from Lauren Silberman with Credit Suisse. You may proceed with your question.

Thanks for the question. So within the context of the current labor environment, can you talk about some of the in-store technology or back of house technology that you're testing or recently launched to enhance the in-store operating model? And then related digital represents 75% of sales now, increased about 5% each year over the last several years. So, how are you thinking about how high that penetration can go? Could it be 90%, 95% just given some of the labor benefits?

Thanks Lauren. You're first on the labor environment, we're absolutely working on technologies and operating procedures to help us run our stores more efficiently and with less labor. One of those I spoke about earlier as it relates to our delivery drivers, which is that, we're trying to take a lot of things off of their plates that cause them to do anything other then being in a car delivering a pizza or on a bike delivering a pizza to a customer. So, an example of that is -- that drove me crazy for years was pre-folding boxes, which was often a task that delivery drivers did. We've made enormous strides within our system and now have more than 2,000 of our stores in the U.S. that no longer pre-fold boxes. So that's taken work out of the store. And by the way, it also makes for a much cleaner and better work in store as well. Other things that we've been working on, we've rolled out our GPS software out to our stores and its in the hands of our drivers on their smartphones. That allows drivers to get proficient much more quickly. In the old way at Domino's the driver might take two, three months to learn the delivery area. But with the GPS capability that we have, we can do a better job of routing and getting drivers to the location that they're headed to. We're working on other things as well, around how we schedule and staff the store using machine learning to really help us to do a better job of predicting what our sales are going to be. And therefore, more appropriately matching the number of team members at the store at the times when we need them. So lot going on there. Your second around digital. Yes, around 75% of sales, how high its high? I don't know. But I know its higher than 75%. The benchmark that we use is a Domino's world to kind of inspire everybody else is China, where more than -- more than 19 out of every 20 orders come in through digital channel. So, that's really the inspiration for us. So, I guess, until we get close to a 100, I'm not going to stop pushing.

Great. Thanks so much.

Thank you. Our next question comes from Chris Carril with RBC Capital. You may proceed with your question.

Great. Thanks. So returning to the [Indiscernible] and perhaps in the light of the reopening and the gradual return of in-restaurant dining [Indiscernible].

Hey, Chris, there's kind of static on your line.

Is that better?

Yes. That's better. We couldn't hear anything you were saying.

Sorry about that. So, just returning to the theme of competition, Ritch, just curious to get your latest thoughts on third-party delivery competition. And your latest thoughts and how they're shifting dynamics around the reopening, will drive the next phase of delivery competition just broadly, that would be great? Thanks.

First on third-party, I mean, I don't think there's any question at this point that third-party delivery is here to stay. You can pretty well get any type of food delivered anywhere in the county. And frankly now, broadly just about across anywhere in the world today. So we don't think that competition is going away. And in fact in many ways, we look at that as our primary competitive set. As the leader in the pizza category, obviously we still continue to look at the pizza competition. But frankly, the biggest competition over the long term for us in delivery is that third-party aggregator channel. So, when I think about what we got to do. So let's assume, regardless of where their economic sit today, we believe, they're going to be here for the long haul. So we have to continue to make sure that we are the best value both for the consumer and for the restaurant operator. So, we continue to believe that our owned fleet for us and our corporate stores and for our franchisees and their stores having our own delivery drivers running point-to-point back and forth to the store, we continue to believe that's the most efficient operating model and gets even more efficient as we continue to fortress our markets. And so having very efficient model is important in order to put us in a position to continue to offer a very competitive delivery fee and overall value proposition to the customers. We also believe that the fact that we use a single transparent delivery fee, we think overtime is an important competitive advantage. When I was a third-party delivery, I have to really get my calculator out to figure out what I've actually paid to have that food deliver, because maybe I…

Great. Thank you. Appreciate all the detail.

Thank you. And our last question comes from David Palmer with Evercore ISI. You may proceed with your question.

Thanks. I think this one touches on some of the things you've been talking about with regard to a third-party delivery. But you mentioned sales trends were best in less affluent and less dense population areas. And I wonder if you could give us your best thinking about why that might be. And in your answer if you could really catch on the influence of third-party deliveries competition. And I don't want to leave the witness too much. But I'm thinking that the restaurants and the third-party players themselves may be passing along particularly rapid menu price inflation lately, which is perhaps less accepted in the less affluent areas. And that third party may also be pulling back in service levels in these less profitable, low density markets. But I'm just guessing there and you might have better data on this? Thanks.

Sure, David. Thank you. I think, if we start with less affluent versus more affluent, I think certainly to the extent that these third-party delivery fees get more complex and increase over time that less affluent customers absolutely going to feel more of a pinch on that. And I think is -- and with the brand, the size of Domino's, a big portion of the customers that we serve out there are -- these are not you know super wealthy folks and values really, really important to them. And so I suspect that in many of these less affluent areas, we stack up very favorably in terms of the all-in value of having delivered food to serve to your family. Whereas in some of the more affluent areas there may be less price sensitivity to some of these more significant delivery charges, and/or if those consumers are ordering a higher overall ticket. If they're ordering $75 worth of food from a casual dining restaurant then paying the fee is less a pinch on a relative basis. So, we're still looking at this and seeing how it evolves. But I suspect that your hypothesis and ours there are reasonably well aligned. And then, I think as it relates to the urban versus the rural, I do believe there that in those more rural environments there's -- where there is less density, I think our -- the cost model around how we deliver probably shines even more in some of those places, where we can keep drivers busy running point-to-point back and forth from our stores. So, we're continuing to watch it and evolve it. There may be some other dynamics there, David, that we look at such as some of the just the migration of people out of some of the urban areas during COVID, and not all of those folks have returned yet back to the big cities or places where they previously lived. So still watching it, trends are still evolving. Well folks, we really do appreciate your time. And thank you all for joining us on the call this morning. And we look forward to getting back together with you again in October to discuss our third quarter 2021 results.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.