Underperformance vs Peers
Q: What's driving same-store sales underperformance, and how to protect franchise profitability?
A: The company believes that value perception is a major factor in their sales challenges. They are addressing this by emphasizing existing value offerings like the $10.99 XL New York Style pizza and the "Papa Pairings" to reengage customers ( " ). To protect franchise profitability while leaning into value, they are focusing on driving transactions and sales, noting that the gross product margin per transaction remains strong at over $17 ( " ).

Margin Outlook
Q: Will margins normalize in Q4 and H1 2025, or should we expect more reinvestment?
A: The company has been investing in tests and promotions, impacting margins in company-owned stores ( " ). They anticipate food costs to be up mid-single digits in Q4 due to commodity headwinds ( " ). While focusing on regaining transaction momentum, they acknowledge margins will face pressure in the near term but aim to sequentially improve value perception and inject margin initiatives over time ( " ).

Guidance and Investments
Q: Does the wide Q4 guidance range reflect investments in test-and-learn or something else?
A: The company tightened its operating income guidance to $135 million to $150 million for the full year, including about $3.5 million in incremental advertising investments ( " ). The wide range allows flexibility to continue investing to compete and build momentum, accounting for unknowns in testing and digital programs ( " ).

Refranchising Plans
Q: Is the 15% company-owned level appropriate, and will you consider refranchising?
A: The company is evaluating the appropriate mix of company-owned versus franchised restaurants. They recently refranchised 13 restaurants in Wisconsin and are considering refranchising to growth-minded franchisees who are willing to invest and expand ( " ). Maintaining some company ownership is important for brand stewardship, but they may reduce the level from the current 15% ( " ).

Development Incentives
Q: Will development incentives be expanded into 2025?
A: The company has reduced unit build costs to $500,000, improving unit economics ( " ). Current incentives include 0% net monthly fees for five years for 2024 openings, and they plan to continue attractive incentives into 2025 ( " ). They are focused on fostering franchisee confidence and momentum to stimulate growth.

Sequencing of Initiatives
Q: Where can you move the needle most in the short term?
A: Immediate focus is on modernizing the tech stack and revamping the loyalty program to drive transactions ( " ). Enhancements to the app experience, reducing friction in web ordering, and leveraging data for targeted marketing are expected to yield short-term gains. Long-term efforts include improving pizza quality and innovation.

Advertising Contributions
Q: Is the company planning additional advertising investments?
A: Yes, they are supplementing incremental investments in digital and traditional marketing totaling about $3.5 million in Q4 ( " ). This is in partnership with franchisees to boost local market competition and drive momentum into next year.

Commissary Pricing
Q: Will you revisit commissary price increases to aid the top line?
A: They believe the commissary price increases are appropriate to remain competitive ( " ). The focus is on driving transactions and sales, which will benefit franchisees through rebates. They are also working on productivity opportunities in the commissary system to improve economics.

Competition in Third-Party Platforms
Q: Concerned about maintaining share if competitors expand third-party delivery?
A: The company is confident in competing effectively in third-party channels, even as competitors enter ( " ). They have strong partnerships and believe there's room for category expansion. They will focus on providing the best experience and value in their first-party channels.

Transaction Trends
Q: Are transaction improvements due to macro factors or company actions?
A: Improvements are a balance of company actions and consumers returning to food away from home ( " ). Sequential improvements were seen both on an absolute and comparable basis. They are enhancing their loyalty program and app experience to shift customers to first-party channels ( " ).

Asset Base Globally
Q: Are international closures complete, or should we expect more?
A: The company has narrowed focus to priority markets and may see some additional pruning globally ( " ). They expect the international business to be a net profit contributor going forward and are seeing growth in key markets like Latin America and EMEA.

Competitor Intrusion
Q: How will you address competitor intrusion next year?
A: They plan to stick to their outlined strategy, focusing on strengths in innovation, pricing, and value ( " ). They believe they can compete effectively, even as competitors expand into third-party delivery, by emphasizing the best deals and customer experience in first-party channels.

Third-Party Platform Strategy
Q: Is there incremental awareness opportunity on third-party apps?
A: There is some opportunity to increase awareness as customers become more accustomed to ordering pizza via third-party apps ( " ). The focus is on both attracting new customers and increasing frequency among existing customers. They aim to offer the best value and experience to encourage customers to use their first-party platforms.