Same-Store Sales Trends
Q: How are current same-store sales trends and what's changed quarter-to-date?
A: The company experienced industry softness in January but saw strength in February, becoming the #3 brand ordered on Uber Eats for the Super Bowl. " They anticipated Q1 would be the toughest quarter, with plans for strong comp sales growth taking effect in Q2 when a 20% increase in media spending and a new advertising campaign will launch, along with new innovations in April. " Despite a soft start in January, they see strong sales momentum ahead. "

U.K. Store Closures
Q: Why are you closing 50 company-operated units in the U.K. despite improving trends?
A: The 50 restaurants being closed are company stores unlikely to reach profitability due to factors like trade zones moving. " They won't benefit from better operations, so the decision was made to close them. " The closures will be immediately accretive to income as these are negative profit restaurants. " Closing them will make remaining stores higher volume and more profitable, with some sales transferring to other restaurants. "

Domestic Development Incentives
Q: Are franchisees increasing commitments due to new U.S. development incentives?
A: There's significant excitement among franchisees. " In 2023, they delivered 57 net new units in North America and plan to grow that by at least 20% in 2024. " The development incentive has been extended into 2025, offering 5 years of national marketing fund relief for stores built in 2024 and 3 years for those in 2025. " The company is hopeful that domestic development will help close any gaps, noting that one domestic opening equals four international openings in financial impact. "

International Development Outlook
Q: How quickly can international development reaccelerate given challenges in key markets?
A: Three markets—U.K., Russia, and the Middle East—are impacting openings over the next couple of years. " The U.K. had been opening about 50 units a year, but some weren't optimal, leading to strategic closures. " They are now ensuring new international openings undergo the same scrutiny as domestic ones. " Once optimization is complete and geopolitical situations improve, they are confident in their long-term international growth rate. "

Consumer Spending and Value Strategy
Q: What changes are you seeing in consumer behavior, and how are you addressing value?
A: There's been consumer spending softness across industries, which isn't surprising due to macroeconomic factors. " Pizza offers great value relative to other segments, and the gap has never been greater. " They're balancing premium and value, currently running a national promotion: an $8.99 large one-topping pizza, the most aggressive deal since the CEO joined. " While competing for transactions, they continue to deliver premium innovation and maintain a balanced strategy. "

Shift in Advertising Strategy
Q: Can national advertising offset reduced local spend from 8% to 6%?
A: National advertising yields over a 25% improvement in return on ad spend compared to local. " By reducing total advertising investment by 25% and gaining a 25% pickup, they believe the impact is at least comparable. " New tools and a media partner enhance targeting and efficiency, increasing confidence despite the reduction from 8% to 6%. " Some franchisees will continue spending above 6% due to existing local partnerships. "

Innovation Pipeline
Q: Are new products coming in 2024 that could be significant?
A: Yes, they're launching a new innovation in April across multiple platforms: pizza, Papadias, and Papa Bites. " This will be advertised holistically to raise awareness of products with less household penetration. " They're also innovating in marketing, loyalty, and promotional strategies to drive both pizza sales and additional offerings. "