Good morning, my name is Tamisha, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2012 Financial Results conference call. [Operator Instructions] Thank you. Ms. Linda Liddle (sic) [Lynn Liddle], you may begin.

Good morning, everybody, and thanks for joining us this morning. A couple of quick housekeeping things, make sure that you do take a look at our Safe Harbor statement in the event that any forward-looking statements are mentioned and then also, this is an investor design call so please members of the media, if you would be in a listen-only mode, we would appreciate that. We have some prepared remarks this morning followed by Q&A and we're going to begin with our Chief Financial Officer, and then our CEO will join us after that. So we're going to start with Mike Lawton, Chief Financial Officer.

Thanks, Lynn and good morning everyone. During the first quarter, we continued to grow our same-store sales both domestically and internationally, and had strong store growth in our international markets, which we believe shows that our strategies are working. We continue to drive shareholder value with 12% adjusted EPS growth. Overall, we are pleased with the operating results this quarter. During the quarter, we announced the successful completion of the recapitalization of our company and as a result, we incurred certain expenses that affected comparability this quarter, which are disclosed in our filings issued this morning. Subsequent to the quarter, we used a combination of cash on hand and some of the proceeds from our recapitalization to reward our shareholders with a $3 per share special dividend. So now, let's dive into our first quarter results. I'll start by looking at our system-wide sales for the quarter. Our global retail sales, which are the total retail sales at franchisee and company-owned stores worldwide, grew 7.2% during the quarter when excluding the impact of foreign currency. When we include the negative impact of currency, our global retail sales grew 6.1%. The drivers of the global retail sales growth included domestic same-store sales, which grew 2% in the first quarter, lapping a negative 1.4% in the prior-year quarter. Broken down, franchisee same-store sales were up 2.1% for the quarter, while company-owned stores were up 1.6%. Also, international had another strong quarter as same-store sales grew 4.7%, which was lapping a very strong 8.3% in the prior-year quarter. We closed a net 9 stores domestically, made up of 13 store openings and 22 closures. Our international division grew by a net 77 stores this quarter, bringing the total store count to 4,912 as of the end of the first quarter. Turning to revenues, our total revenues for the first quarter were down $4.6 million or 1.2% from the prior-year quarter. This decrease was driven primarily by lower company-owned store revenues resulting from the sale of 58 company-owned stores during 2011 and to a lesser extent, lower supply chain revenues. The decline in our supply chain revenues was due primarily to reduced volumes that resulted from lower order counts at the store level and a change in the mix of products sold per order. These declines were partially offset by higher commodity prices. Our promotions this quarter focused on side items, primarily Stuffed Cheesy Bread and Parmesan bread bites. While these did not end up growing order count, they did as intended, raised ticket and sales and store level profits. The previously mentioned decreases in our domestic businesses were offset in part by higher international revenues resulting primarily from same-store sales and store count growth and higher domestic franchisee revenues. More detail regarding our revenue by business unit can be found in our 10-Q, which was filed this morning. Moving on to our operating margin. As a percentage of revenues, our consolidated operating margin increased 1.1% from 28.7% to 29.8% quarter-over-quarter. This was due primarily to a change in the mix of revenues attributable to fewer company-owned stores and increased franchise revenues. Operating margins for our company-owned stores as a percentage of revenues increased 2.9% from the prior year quarter, in part to due to the positive impact of a higher average ticket. These increases were offset in part by a 0.6% decrease in supply chain margin percentage versus the prior year quarter, primarily due to an impact of slightly higher commodity cost, higher fuel costs and to a lesser extent, lower volumes. As a reminder, food commodities are priced on a constant dollar mark up to our franchisees, therefore increases in commodity costs do not impact our supply chain dollar profit. They do, however, negatively impact our supply chain margin as a percent of revenues. The average cheese block price in the first quarter was $1.52 per pound versus $1.69 in last year's quarter, which moderated the overall increase in our market basket during the quarter. We continue to expect our market basket for 2012 will increase 1% to 2% over 2011 levels, which is consistent with what we saw in the first quarter. We have fixed pricing on approximately 35% to 40% of our expected purchases in 2012. Turning to G&A expenses. G&A increased $1.3 million or 2.7% quarter-over-quarter. When you exclude the $1.7 million impact from the sale of company-owned operations in 2011 and the $300,000 of recapitalization-related expenses incurred in 2012, G&A was down $700,000. This $700,000 decrease was due primarily to lower variable performance-based bonuses quarter-over-quarter and the timing of expenses. We have previously indicated that in 2012, we expect an additional $8 million to $10 million of incremental G&A expense from 2011 reported levels, which seems to contradict what I just said. Please remember that variable G&A, including variable compensation can fluctuate from quarter-to-quarter. Where we stand today, we still expect to have higher G&A in 2012, but we are currently trending towards the lower end of the range previously given. Regarding income taxes. During the first quarter, we had a higher effective tax rate versus the prior-year quarter, due primarily to evaluation allowance recorded on a deferred tax asset of $900,000. We continue to expect that 38% to 39% will be our normalized effective tax rate for the foreseeable future. Our net income as reported, was down $6.4 million or 23.5%. This decrease was primarily the result of $7.4 million of after-tax expenses that affected comparability this quarter, these are outlined in a table in our 8-K. Our net income benefited from higher domestic and international same-store sales, international store growth, and higher company-owned store margins, and was negatively impacted by our lower supply chain margin. Our first quarter diluted EPS as reported on a GAAP basis was $0.35, and $0.47 when adjusted for items affected comparability. These items are outlined in the 8-K released this morning. The $0.47 is a $0.05 or 12% increase from the $0.42 as adjusted EPS, in the first quarter of last year. Here's how the $0.05 difference breaks down. Our improved operating results benefited us by $0.05; our lower diluted share count, primarily due to our share repurchases in 2011, benefited us by $0.02; foreign currency exchange rates negatively impacted us by $0.01; and our higher interest expense for the quarter negatively impacted us by $0.01. Now let me step back for a moment and talk to you about our interest rate going forward. As a result of our recapitalization, our all-in interest-rate including fees and amortization of financing cost, will be approximately 5.7%, which is lower than the rate prior to the recapitalization. This rate assumes no draws on our revolver. Now turning to liquidity. We ended the quarter with almost $215 million of unrestricted cash, of which approximately $185 million was paid out after the end of the quarter in the form of a $3 per share special dividend. We'd also like to remind everyone that we currently have $82 million remaining authorized under our open market share repurchase program for future share repurchases. This is another way that we can deliver returns to our shareholders, and management will continue to evaluate all potential means to deliver these returns. In closing, we are pleased with the results in this quarter. We will continue to focus on driving shareholder value through our operating results and our use of strong cash flow. Thanks for your time today and now I'll turn it over to Patrick. J. Doyle: Thanks, Mike, and good morning, everyone and thank you for joining our call. I can report that we delivered another good quarter with positive EPS growth, robust international unit and same-store sales growth and positive U.S. sales comp that fell exactly in the middle of our long-term guidance. Our brand and system continue to strengthen both domestically and internationally and our technological leadership continues to resonate with consumers around the globe. Our international brand equity comes from having a recognized name that's known for quality products, excellent service and engaging technology. For example, one of our international store growth leaders this quarter was Turkey, a market with excellent store operations and great service. And digital ordering is driving gains in countries like India and the U.K., where they recently reported a 44% increase in online sales, and that mobile orders now comprise 16% of the U.K.'s total digital orders. These business drivers are behind an international enterprises that produces strong stores with excellent returns, which in turn spurs franchisees to build more stores, and now the reason why our international business continues to grow at the rate and pace we've seen over the last few years. As a matter fact, as of last quarter, we now have more Domino's Pizza stores outside of the U.S. than we do within the U.S. I want to take a moment to really punctuate that point, and congratulate our Domino's International community for reaching this incredible milestone. It's a testament to our strong international franchisees and our international team, and more proof of the opportunities that exists for our company on the international front. This achievement was helped by robust unit growth in the first quarter, one of the strongest first quarter store growth performances in our company's history. In fact, it marked the highest first quarter global store growth number for Domino's in a decade, and the highest Q1 for our International division ever. The day when Domino's Pizza worldwide has 10,000 stores is not far off. It's a milestone I look forward to celebrating soon. International sales, meanwhile, continued to grow strongly in the first quarter as well. I've often said that pizza isn't recession proof, but it is recession resistant and we're proving that theory right now in many of our European markets, where the economy has been weak. Our Asia region also posted strong results with solid sales in Japan, Australia and South Korea. The U.S. also performed well again this quarter, sustaining the positive sales trend on our bigger base and continued to benefit from the great brand equity we've built over the past few years. During the quarter, we once again promoted a non-pizza side item, Parmesan bread bites, which was excellent for building tickets. It was also a very profitable item for the stores to sell, which makes our franchisees happy. While it didn't drive traffic like a pizza-focus promotion might do, we felt that focusing on some -- on promoting some higher margin items, combined with promotions for some higher traffic driving items during the year, would balance out our marketing calendar, and drive up store profits and sales in 2012. Our corporate stores posted better profits in the first quarter and our franchisees saw strong profit growth as well. We know that profitable franchisees make for a healthy system. Our focus is on helping our franchisees generate strong store profits and to turn those profits into new stores, so that our domestic store growth rate improves. Managing our marketing calendar is an important part of managing our system from a store growth and sales perspective. So some promotions may be designed to drive margin and others to drive more traffic, but we're making sure we're managing the promotions and brand message for the entire system, and it's one of the most important jobs of a franchisor. One topic that's been all over the news recently is the price of gas, so I thought I'd spend a minute on that topic. Let me remind you that for us, the biggest potential impact from gas prices is the effect they can have longer term on commodity prices. At the store level, franchisees may have to pay delivery drivers and increase in mileage reimbursement, but it's usually not a big impact in overall store. In our supply chain, we experience the impact of diesel prices but we also have fuel surcharges that help offset some of those costs. So while we do care about higher fuel costs, the direct impact to us and our system is smaller than many people assume. One thing that continues to impact our system in a decidedly positive way is technology. In the first quarter here in the U.S., we launched our new Android app, joining the iPhone app that we launched last June. We're happy to report that roughly 7% of our total U.S. sales now come from mobile devices, including our 2 apps and existing mobile website. The new Android app is already over 1% of total sales. So over 20% of our digital sales, now come from our mobile site and these 2 apps. The iPhone and Android apps are definitely helping sales, and they give consumers the ordering access that they've asked for and expect from an innovative company like ours. Our recent TV commercial highlights another unique innovation from Domino's. We're using our iPad pizza hero game to hire great team members. If customers do well making online pizzas with the game, they might just get hired at a local Domino's store. We're probably not going to get a flood of new hires this way, but it does demonstrate that we're using innovative thinking here with technology often at the core. And we've got more technology news on the way this year. With Kevin Vasconi, our a new Chief Information Officer on board, we're excited about what the team can do to build on our technological advantage. While technology differentiates us from many in our sector, another important feature of our business story is free cash flow and the financial management of this company. We averaged over $2 million a week in free cash flow over the last 12 months. This robust cash flow stream enables us to use our cash for any number of purposes for the ultimate benefit of our shareholders. Most of you were probably on our call March 19, when we reviewed our successful recapitalization. So I'm not going to repeat all the details from that call. But I'd like to reiterate that we're very pleased with the new debt structure and that we were able to reward shareholders with a $3 special dividend. It shows our commitment to shareholders and our ability to make significant moves to reward them. So with store level profits improving, consistent sales and store growth off to a great start combined with a successful recapitalization of our debt, I'm pleased that 2012 has started off well. With that, I'd like to open the line for questions.

[Operator Instructions] And your first question comes from the line of Brian Bittner with Oppenheimer.

So the market was looking for a little bit higher domestic comps in the quarter, so maybe we can just first address the trends there. I understand the 2% that was reported was definitely in line with your long-term outlook. But I still think there are several reasons why I think the domestic comp could potentially outperform that goal in the more medium term. I think it might be logical to think that maybe the fantastic weather we had in January and February, might have shifted some spending away from delivery in the near term. So maybe you can talk to us about what you saw from a weather affect internally, maybe how you think about that internally? I realize you don't like to address inter-quarter trends or talk about how trends happen throughout the quarter. But any color you could potentially give us on that would be great. J. Doyle: Yes, it's Patrick. I -- first, I'll take the weather one. So we did a lot of analysis on weather and did some regression analysis, and really, dug deep on it because weather is something that gets talked about a lot across our industry and this was, for us, as negative a weather quarter as we could have. That said, our analysis said that it still just wasn't that big a deal for the quarter. It probably was a couple of tenths maybe slightly more than that, but it really was not a big effect. So when we kind of pulled out the weather by region and looked at the overall effect, at the end of the day for the quarter, it really was not that big a driver of the comp result. So I think the answer is first, what you said, which is our long-term guidance is kind of 1% to 3% for the domestic business and we came in, in the middle of that. Obviously, we've been performing the last couple of years at a higher level than that, but we think what we're proving is that we can grow off of this new higher base. That said, I think when we look at the quarter, it really -- the net effects of the quarter were primarily driven by what we were choosing to promote. Parmesan bread bites sold very, very well, but you're not going to drive robust order growth with a side item. I mean there is -- the analogy would be burger chains going on air, selling french fries. The answer is: you want people to know the Parm bread bites are there. It's effective for driving ticket and profits within the store, which I think really was the big positive new story out of the quarter, were store level margins moved really, really nicely forward. Fourth quarter was good, and first quarter was even stronger. I -- and we saw that corporate store margins were up 2.9% and we saw a nice movement from the franchisees. And that's something that I've been kind of calling out for a while, that we're very focused on and it wasn't something that we were seeing -- the level of improvement that we wanted over the last couple of years. We saw really nice store level margin improvement. So I think that's -- those are kind of the different kinds of factors. Weather, really was not that big a deal. It was as bad as it could be for us by being good, in the middle of the winter, but we just didn't see that much effect out of the weather. So I think honestly, we can kind of take that one off the table, and it really came down to what we were promoting; how it affected the overall traffic of the business, that we love what it was doing for store profits and we're still growing off of that higher base.

And the restaurant margins have definitely improved, but I guess really the best way for shareholders to realize the benefit of that is for it to translate into unit growth because -- just because of the model. So maybe you can talk about -- maybe those margin improvement, how it -- it's obviously impacted the franchisees earnings, but what about the backlog for unit growth? Has it improved the backlog for unit growth? Maybe you can talk about the U.S. backlog for unit growth for 2012 and 2013. J. Doyle: Yes, I think the answer is, you're still not going to see anything meaningful in the near term on store growth. But over the medium term, getting store level profits to where they want to be is -- it clearly can become a driver for us. So I wouldn't start raising expectations around domestic-leveled store growth in the near term. But our view is, very strongly, that stores get built because they should be built. And it takes some time for that to cycle through, but our franchisees are in a much better place with their overall profitability than they've been. And frankly, then playing over to the international side, it's why we're seeing just incredibly robust results from the international side on store growth. If you look at the 77 net up, on the international side, it's the best we have done in the first quarter with the international business and you'll see that it's up pretty markedly from first quarter last year. The one thing that I would say on the domestic side is, if you look at the trends on closures, that trend is definitely moving in the right direction. So that's part of that net growth. Our other stores that are at the bottom, that aren't doing as well, that are kind of getting weeded out, the answer is you'll see some sequential reduction in the number of closes. That's probably showing up before you're going to see growth store openings.

And this is just the last question from me. How should we think about the strategy for the rest of the year for the U.S.? Is it going to be a strategy where you're continuing to try to drive margin improvements and focus less on driving traffic? Or is it going to shift back towards traffic? How do we think about the strategy? Because it did shift in the first quarter and... J. Doyle: I think the answer is, you're going to see balance from us over the course of the year. It's got to be a balance of both ticket and some things that are more center of the plate, for us that means pizza, that are going to drive volume more and order counts more. But we look at it on a -- on an overall basis over the year, and obviously I'm not going to get into the specifics around what's coming. But I think the answer is expect some balance around side items and pizza.

And your next question comes from the line of John Glass with Morgan Stanley.

If I could follow up on that line of questioning on the U.S. comps. Why did you choose now, to focus on store level margins? I've gone back just quickly and looked at store level margins, it seems like they've never been better. So it's not as if, I would think that there's a big complaint that they should be higher. Then maybe you could just underscore that, is there a significant, or is there an increased concern that margin should be higher at the store level by the franchisees? And I'm also surprised that given your ability to advertise both online as well -- and use the online messaging, as well as you're promotional activity on traditional media, that you couldn't balance both, that you couldn't have both drive traffic, as well as check? And maybe just the final -- might as well ask them all at once, maybe could you give a granularity, how much did order counts actually fall? And what was the order of magnitude that -- by which they fell off this quarter, just so we understand what the balance was this quarter. J. Doyle: Yes, I mean, we're not going to get into the specifics on the orders, but the answer was, they were a little negative. But that's as specific as we're going to get on it, and a number of things kind of going into that. But we're -- so that's the -- that's kind of, that side. But the margins I -- and in terms of franchisee profitability, you're right, they were very, very good. And relative to where they've been and yes, our franchisee is concerned about the profitability level. The answer is clearly they're -- they are unanimous in that, they would like them higher and so would we. And I guess the -- but I think the real punchline on that, is if you look at domestic unit growth for Domino's, we haven't moved for 2 decades, really. I mean, there have been years that have gone up and down, but the practical answer is, store growth hasn't moved now for quite some time and we're going to fix that over the medium term and part of that is, getting unit level profits to a higher level than where they've been. So we've got to do that in a balanced way. It's not a -- this may sound like it's a big shift in strategy. It's not. We've wanted to move store level profits up. We've made nice progress the last couple of years. We made particularly good progress in 2010. 2011 we made a little progress, not a lot. And it's something that we continue to focus on. We feel like if we can get unit profits moving consistently in the right direction, that's ultimately going to create great value for our shareholders, because it can generate store growth. I don't want to get ahead of myself in terms of kind of expectations around that. I -- the expectations we've given on stores are that the vast, vast majority of that in the near-term is going to come from international. And that that's really robust. But I understand there are fundamentally 4 levers for growing the top line in this business: international stores and comps and domestic stores and comps. And we've had 3 of the 4 of those, moving nicely. We've got to figure a way to get that fourth one going, and we're spending a lot of time and effort on figuring out how to get the store growth going. It's going to take some time but fundamental to that is continuing to improve store level profitability.

And if I can just -- one quick follow up. What store -- I can only see store level margins to your corporate stores, but so -- I'm not sure if that analogy carries over. Maybe franchisees are not as profitable. I understand they pay a royalty. But how much better -- what are, do you think, are franchises store level margins today? And how much better do you think they need to be, in order to -- for them to start opening stores again? J. Doyle: Yes, so -- I mean first of all, from a corporate store standpoint, that -- the royalty is included in there, right? It comes into our -- kind of, into the G&A ultimately. But in terms of how we measure store level profitability, we look at it on an apples-to-apples basis, franchise to corporate. And on average, dollar level profits, franchisees still make somewhat more money than our corporate stores do. We don't have perfect visibility on all of the store's profits, franchisee's profits in the first quarter, but we know they moved very nicely, the right direction. I can't tell you, if they were exactly the same kind of movements, as we saw in the corporate stores, but we get enough of them on a period basis to know that they're moving nicely in the right direction.

And your next question comes from the line of Jeffrey Bernstein with Barclays Capital.

Couple of questions. Just first, a follow up on kind of, the U.S. comp trend. I'm just wondering whether you'd give any color in terms of sequential trends through the quarter, only because it seemed like the broader industry might have slowed later in the quarter. And I think the debate going in was, when you look at comparisons on the U.S. business obviously this past year, you lapped a negative 1 to 2 points which some people might have -- where they expected a stronger comp. But then obviously, 2 years ago in the first quarter was your best comp in a long, long time. So I'm just wondering: one, the sequential trends through the quarter; and two, how you think about kind of, 1 year ago versus 2 year ago -- 2 years ago? Maybe consensus was too aggressive. I don't know what do you want to share, perhaps what your internal target was? I know it's 1 to 3 long term, but I'm just trying to get sense of 1 versus 2 year, especially because we look at the rest of the year, and the 1 year becomes more difficult from a comparison standpoint. So if I could get a sense to how you look at that. J. Doyle: Yes, so we're not going to get into kind of splitting out trends within the quarter, but you got it exactly right on the comps going back. It was a little negative. It think it was 1, 4 negative, last year but that was rolling over 14.3, the previous year. So it's a little bit unusual that you'd be talking about a 3-year comp, you really kind of need to, because last year was clearly very much a reflection of the previous year. And I think frankly, overachieved versus where all of us thought it was going to be. And so I -- really I think the answer is, go back to, kind of the long-term guidance which is, what we've said is, we've built this new bigger base of business. And we really believe that expectation should be -- over the long-term that we're going to grow kind of, low single digits off of that new higher base. We don't expect to give it back. We expect to grow off of it, but 2% is kind of right in the middle of really where we kind of expect the business to be, over the medium to long term.

Okay, so then -- right, as we look after the rest of the course of this year. I know the first quarter, as we've talked about already, was more profit-driven promotion rather than traffic driven. But despite the balance that you're talking about, that you would say for the rest of the year that that's more of a reasonable run rate and it wasn't perhaps a deceleration or a shortfall in the first quarter that would correct itself, and still drive the outside comp, the rest of this year. J. Doyle: I guess, yes I'd -- go back to the 1 to 3. I mean, that's where we think expectations should be. Obviously, there are going to be quarters that are over or under that. But that's where we think we're going to be, the majority of the time and that's kind of, why we choose that range. I think Mike wants to look back to something I said earlier.

I want to go back an earlier comment that Patrick made on store level margins, which you can see in the 8-K Royalties have not been backed out of that number. So it's not -- just a correction of the statement. But when look at comparable profits -- when we look at profits between franchise and corporate, we line them up on an exact same basis. And franchisees are on a dollar basis, a little more profit -- profitable than the corporate stores, but yes. And the franchisees definitely did enjoy more profits in the first quarter of this year.

Got it. And just, Patrick, one other follow-up question. On the international side of things, I know you talked about -- perhaps Europe was a little weaker but pizza is somewhat recession resistant. I'm just wondering if you could talk about whether there were any slowdowns, in some key markets. Some of your multinational peers are talking about that. And it seems like, obviously your international result have sustained themselves pretty impressively. But I'm just wondering if you're starting to see any signs of a slowdown, perhaps more in Europe rather in Asia? J. Doyle: Yes, I -- the answer is, it has held up really well. And we felt that a little bit in Southern Europe, in kind of, Greece and Spain. One thing that I've said many times and continues to be true is that I think the best predictor of the health of this category is employment levels. And so if you see the employment changes out there, at least at the extremes in Europe, Spain at 24.4%, and Greece I think is in the -- is at least in the high teens, we feel that. But I'll tell you, overall, Europe is holding up very, very nicely. And it's been something that -- when I look at, kind of the list of things that I worry about -- we look for weakness in Europe. Clearly the economy has been weakening over there and we're just really not seeing it showing up in our business. So we're feeling pretty good about it.

And your next question comes from the line of Mitch Speiser with Buckingham Research.

Great. And Patrick, yes, just continuing to focus on U.S. unit growth, now with margins looking like they are steadily improving. Can you just maybe discuss some of the key constraints as to why franchise unit growth has not been maybe as strong as some people would like it to be? And it sounds like you're putting a lot of resources behind, trying to get franchisee unit growth going. Can you discuss maybe some of the things that you're thinking about to spark U.S. unit growth? J. Doyle: Yes. I think there are a couple of things that go into it. And one has been over the last couple of years, as we've had some stores that were not performing as well. Even though we've been making progress coming out of the downturn, you got a bell curve on store level profits. And so while the averages have been moving, some stores didn't move as quickly or were at a lower base. And for our franchisees, I think you for our healthier, better franchisees, a smart decision on their part from a straight ROI perspective was, to buy some stores that weren't performing as well. And so we've had franchisees who were growing pretty strongly, but they were doing it by buying stores that were not performing as well or were even distressed. And so as we see that starting to ease, and it definitely has and it's part of why you see fewer closures in the quarter, and if you kind of look at those closures sequentially over the last few years, you're going to see kind of nice progress being made on that front. That's, kind of one part of it. They've got to choose where their capital is going to go, and if there's a steady supply of stores that they can buy and turn around, that's a smart investment decision for them; and ultimately, it makes us a better systems. So while in the very short term, I might like them to be building stores, the fact is, over the medium term, longer term, we're far better off as a brand and a system to have the stronger players buying the stores that aren't performing as well. So the other side of that equation then is, what does it take for them to start building new stores? And if the choice is starting to go away on buying stores that aren't as good, than when did they start generating new store growth. That becomes an ROI decision for them, as they look at improvements in their P&Ls, it's going to change their confidence around the business. We're still are looking at availability of financing being a little bit of a problem still for -- particularly for smaller players. Our larger players are able to tap the debt markets again. Single-store folks that want to build or buy a second store, that's still is constrained. There's not as much availability of debt financing out there for the smaller players as there was. And that's something that I'm not sure that I see easing. I think that's going to be a tough market for a while. For smaller players to access the debt markets. I think it's going to move to more local banks and relationships that they have than some of the sources of financing that were out there. Larger players, very different story. The bigger lenders are back in, and our larger more successful franchisees are clearly able to capture the debt market again. So we still think that there are 1,000 stores to be built, over the longer term in the U.S. That's going to take time to do it. It's going to take time for us to get real moves in store growth in the near term. I wouldn't start building expectations around that in the near term. But it's certainly something we're focused on. We've got a very great team, that we built around us and so they are out understanding this and what the obstacles are. And hopefully, that's a lever we're going to be able to get moving again. But it's still going to take some time before that's going to be a meaningful lever, I think for shareholder value creation.

And if I can slip another in there. On online ordering, you gave us several metrics. And you gave us -- this one, I apologize. But just on the -- just the total percent of online orders in the U.S. and where that was about a year ago? J. Doyle: Yes, so we're north of 30% now and a year ago, we were probably 5 points lower than that, something like that. We're probably in the 25 range. And the other thing that's moved along briskly, is the mobile side of this. So 7% of total orders now are on mobile. That's 7 out of -- north of 30 on total. So you're looking at -- better than 20% of our digital orders are now on mobile. And by the way, we dug up the numbers and I got this one right, we were right around 25% on digital sales a year ago.

Great and just one last one then I'll pass on to the next person. The food cost basket for the year, you mentioned is unchanged. Can you tell us what it was in the first quarter?

As I mentioned in the script, it was between 1% and 2%, which is consistent with what we expect for the rest of the year.

And your next question comes from the line of Joe Buckley with Bank of America.

Just a couple of questions. Again, I guess would be the U.S. to debt. But, if you should look on [ph] the QSR pizza categories in the first quarter, Patrick. And I know you don't want to go back and forth [ph], which I understand, but what are you promoting so far in the second quarter? I know you ha the new Artisan Pizza offering. But what else have you been promoting so far in the second quarter? J. Doyle: Yes, so Artisan as you said, and kind of early week carryout special, and we've also got some of the cheesy bread mixed in, which was, a little more fourth quarter, played just into the first quarter, but a little bit more in the fourth quarter when we were doing that. So it's right now, it's a mix of, really of those 3 things.

Okay and what are your thoughts [ph] on the QSR pizza category in the quarter, we saw the Pizza Hut numbers. QSR in general has been pretty strong. Has the pizza category, led QSR overall? Or is it, kind of, in line or -- I just want your... J. Doyle: Yes, I think and I know there's -- I heard a different number thrown out there from one of our peers. I -- our belief is that you're seeing low single-digit growth in the category. I think you may be seeing share gains from the national players versus the regionals and local players. And it may be why there's a little bit of a difference in the number I'm talking about, and what one of our peers was talking about. I'm looking, I believe at the total category, so not just the national players but also the regionals and smaller players. And I think that's, kind of a couple of points up right now and I think the nationals are doing a little better than that. I mean clearly, with Pizza Hut coming out with their number, stronger and us in the 2 range, I think there's some share shift going towards the national players. And we'll find out about the third national, I guess tonight.

Okay and then, Mike, just a question for you on the international side. When you look at the overall revenue growth, are the differences in the rate of growth in the first quarter between the -- kind of traditional franchise royalties and fees, and the distribution revenues, that are included in the international?

The distribution revenues were relatively flat because of -- I'm double checking but -- I think that they were -- I think overall that the distribution revenue was relatively flat, but I'm having trouble checking the number here. J. Doyle: Yes, it was actually flat.

I -- Yes, it was very flat. So most of the growth did come out of the royalties.

And the distribution revenues being flat, would that be a function -- I know, I'd guess currencies are getting impacted, maybe commodity price is impacted. Is there anything else that would have made it flat?

Yes, it's the relative strength of Canada versus the rest of international. Because the only place we own the distribution centers is in Canada, and so Canada I think was not quite as robust as the rest of international. And that's why you see a little bit of a shift towards more royalty revenues from distribution.

And that -- it makes good sense.

And your next question comes from the line of Steve Anderson with Miller Tabak.

Just 2 quick questions. First of all, you mentioned that the Android app now contributing about 1% of total sales. Is that the number we should use for the total contributions to the first quarter comp? Or how should we look at this? And how should we look at it, going forward? J. Doyle: Yes, it's actually -- it's a little over 1% now. And so no, it was not the average for the first quarter because it actually launched, I think towards the end of February. And it's ramped up very, very nicely in terms of the number of downloads, the way the orders are moving on it, we're really pleased with how it's performing. And we kind of, can go back and look at the growth curve on that versus the iPhone, and there are some mix shifts in there. That's not all, obviously incremental. And we see some coming off of the mobile website because frankly, the app is probably a better overall experience. But the total on mobile is now north of 7%, which is just a very, very nice move for us. And we continue to see that growing.

Now is the contribution more from a -- the ramp up in Android faster than it was from -- coming from iPhone or vice -- or how does that compare? J. Doyle: No, I think it's reasonably comparable. And I think overall, Android has a little higher share than, kind of the iPhone platform. And so over time, probably the answer is, it gets a little bit bigger just because there are more Android phones out there, I think than iPhones in total. But overall in terms of the ramp, I think it's pretty comparable, than what we saw with the iPhone.

Final question, what are you seeing in India? I remember that was a big growth driver in the last quarter for you in terms of resting [ph] restaurant sales. J. Doyle: Yes, I mean, I can't get into specifics because they haven't -- they are publicly traded and they haven't released their numbers yet. But I would tell you, in general the answer is, everything is still on track. And it's a market we're very, very excited about.

And your next question comes from the line of Alvin Concepcion with Citi.

I just wanted to get some more clarification on your comment that you're marketing pizza versus side items would be more balanced. So relative to the first quarter, would we expect more marketing focused on driving order counts, which would then impact profitability? Or was the first quarter more indicative of the balance? J. Doyle: Well, first quarter was pretty side-item focused. I mean, it was -- we had early-week carry out special but it was some Cheesy Bread and then mostly Parm bread bites. So I guess, since we're out right now with Artisan, the answer is, it's going to be at least a little more balanced because the first quarter was pretty much about the side items, with the exception of the carryout special. So over the course of the year, it's going to be balanced. The first quarter was probably a little more weighted toward side items.

Okay great and were there any noticeable changes in the mix of delivery orders versus carryout orders in the quarter? J. Doyle: No. We're pretty consistent with the past.

And your next question comes from the line of Peter Saleh with Telsey Advisory Group.

Great, so I just wanted to ask about the domestic franchisees. Can you remind us again, are franchisees allowed to open or own any other concepts, aside from Domino's? J. Doyle: Yes, no it -- so you've got 1,100 franchisees and it's something that's kind of unique about our system is, they're focused on us. So those who've come up through the system, are dedicated to Domino's. We've got just a few that we kind of experimented with over the last couple of years that have come in with outside customer experience. But that's a very small minority of the overall. So the vast, vast majority are just operating Domino's Pizza stores.

Great and then, the vast majority of your unit growth is really coming from international and we do continue to hear of weakness in Europe from many of your peers. So I'm just wondering, what is your confidence in the new unit growth expectations over the next 12 months, if we do see a weakening in same-store sales, over in Europe? J. Doyle: Yes, I mean, I'd -- first, I'd go back to the previous answer which is, we just really haven't seen it, in Europe yet. But I mean, look at some point, if you see a weakening of comps, does that start to play into your store growth, at some level? Yes. But what I would say is, what you're seeing right now is more an acceleration, and that's because unit level economics are on average, pretty robust in our international business. And, so it would be almost more a momentum effect if things slowed down than kind of the actual -- an actual change in the ROI, short of them turning negative, right? And so it might affect kind of just their level of confidence but the returns are incredibly good right now, on average. And that's why you're seeing the kind of robust growth that we're getting.

And your next question comes from the line of Mark Smith with Feltl and Company.

I think most of everything has been asked, but I just wanted to clarify a few things. First, you said that delivery versus carryout, there's no real change. Is that flat sequentially? Or on a year-over-year basis? And then if you can talk more on that, do you see any impact from weather on carryout? And then lastly, can you talk about, how much you were promoting it this quarter, versus a year ago? J. Doyle: Yes, a year ago, we had a couple of very significant 1-week promotions on carryout, and we do not have the same fund [ph] this year. We were promoting Monday, Wednesday, we've got more of a regular carryout offer going for -- to develop that type of customer. I think as we said, there proportionately, we haven't seen a big change. And part of the reason for that is, year-on-year over the last few years, we have been growing the carryout business as percentage -- as a percentage of total sales. We may have seen a bigger increase this year if we'd run the same carryout specials that we did a year ago because -- but instead we're not seeing that, because the national growth numbers kind of are -- maybe offset by the fact that we were kind of heavily emphasizing that last year. So we're seeing kind of flat on both. We're not seeing a big change but that could be due to the mix of the offers.

And does the weather help when its warmer. Do more people feel like driving over to the store to pick it up?

As Patrick said on weather, we don't see big differences but we certainly would expect that our carryout business would see a bit more benefit with a good weather. But as I said, we're -- we didn't see a lot of shift this year, versus last year.

Okay. And then the lastly... J. Doyle: I just wanted to go back to the weather comment. I mean just -- we pulled it apart hard, looking at that. It was going to be as -- it was going to be the best quarter for us to really understand, how much it can affect it because it clearly, the weather was very, very warm, which is generally a bad thing for us. And it just didn't amount to that much of a change. That much of an effect.

Okay and then real quick, I know that you talked a little bit about the pizza category. But did you guys see any different competitive pressure or easing in kind of pricing pressure this quarter? J. Doyle: No, I mean not a lot. Pizza Hut was out with their box of pizza and breadsticks. But overall, one of the things we always keep in mind around here is, the majority of our competition in the pizza industry is not the national players. The majority of our competitors out there, this is a store-by-store deal. And most of those competitors are -- the regional chains and the local chains, and that's going to tend to not drive as much movements in kind of their promotional processes, et cetera. So overall, even from the national competitors, I wouldn't say we saw really meaningful differences, in terms of what they were doing. But I think just as importantly, I always try to remember that the bulk of our competition is not the other national chains.

And your next question comes from the line of John Ivankoe with JPMorgan.

Hopefully quickly, in Europe or I guess maybe even your developed markets more specifically, I mean, was there anything that, either happened in the first quarter and recent quarters tactically from a promotional product development perspective, that's really, really worked for you guys? That kind of, shows how, again, that you can take or even grow share, grow traffic. And what should be, as you pointed out, the declining overall industry environment? Is there anything specifically going on there, that we just, might not be seeing? J. Doyle: I mean, I think technology is a big part of that over time. And I think that's the newest, biggest leverageable competitive advantage, that we've got both domestically and internationally. So and -- I think that's the most important one.

And like for example, in the U.K. I think you're -- I mean, you're actually -- you're indexing even more than the U.S., is that correct? J. Doyle: Yes, in terms of total digital. Yes, it is higher.

Okay, and in Continental Europe, I mean, again, I mean, it is surprising, as you've laid out total employments to not see a fairly significant contraction in your business. Yes, I mean -- so I mean, your knowledge on the franchise level, I mean, they haven't had to resort to significant discounting or what have you? The price points have been able to hold relativity steady? J. Doyle: Yes, we've -- yes, it's held together pretty darn well. And I think some of it is -- this category is still certainly much less developed outside of the U.S. than inside, on average. Our view over the longer term is, you've got kind of a 5%-ish growth in the category outside of the U.S. and kind of low single-digit growth inside the U.S. And so some of it is, I think there's just still more room for the category to grow outside of the U.S.

Great, understood. J. Doyle: Yes, by the way, I was hoping it was going to be your dad asking the questions but unfortunately I guess it was John Ivankoe Junior.

And there are no further questions. J. Doyle: Okay. I guess there are not. So with that, I'd like to thank you all for participating in today's call and we look forward to speaking with you in July for our second quarter call. Thank you.

This does conclude today's conference call. You may now disconnect.