General and administrative expenses
General and administrative, or G&A expenses, are a mixed bag of expenses in the restaurant business and must be closely watched. Domino’s Pizza, Inc.’s (DPZ) G&A expenses include executive compensation, advertising and promotional expenses, technology expenses, and staffing expenses.
Domino’s reported G&A expenses of $56.6 million, $2.7 million more than the $55.9 million in the corresponding quarter of 2013. But if we compare this as a percentage of revenues, G&A expenses in Q314 were lower at 12.6%, compared to 13.3% in the third quarter a year ago.
Pizza Hut, under the umbrella of Yum! Brands, Inc. (YUM), reported $58 million in G&A expenses, or 22% of Pizza Hut sales in 3Q14. Papa John’s International, Inc. (PZZA) has yet to release its earnings for the quarter, but it reported $158 million, or 42% of sales, in G&A expenses in the quarter ended June 2014.
Domino’s also incurred increased costs as a result of its international team’s expansion.
E-commerce includes the websites, tablet and smartphone applications, etcetera, that people use to order pizza and that grow Domino’s same-store sales. The company also launched an iPad application this quarter. According to Domino’s, digital orders generated higher ticket than phone orders.
Next, we’ll discuss how digital strategy is critical for Domino’s.