Rachel Warren

I mean, in terms of their actual model, right?

I mean, they are a massive logistics and manufacturing powerhouse.

They act as the sole provider for their franchisees.

So

Unlike most competitors who rely on, say, third-party vendors for ingredients, they actually operate their own network of regional supply chain centers that manufacture fresh dough.

They procure everything from cheese to pizza boxes in bulk.

And actually, that vertically integrated model, that supply chain business accounts for about 60%.

of Domino's total revenue.

So by far and away more that they're making, you know, for pizza sales, for example.

And so controlling that entire process has been something that has helped them really strip out a lot of the middleman costs that usually eat into restaurant margins.

And so they have built, I think, a really, you know, massive moat where their scale tends to make them, you know,

cheaper and more profitable for a local owner to stay in the system of franchisee than to leave because they actually share around 50% of their supply chain's pre-tax profits back with the franchisees who buy from them.

All of that translates to a great business.

For me, though, this hasn't been a stock that I've personally wanted to add to my portfolio.

Yeah, one of the things that I think is really interesting, and Matt did a good job of highlighting some of the key elements there, you know, Microsoft's no longer going to pay a revenue share to OpenAI for the models that it uses in its own products.

So this, for example, like Copilot, so this significantly boosts its own margins.

And then as Matt said, OpenAI will continue to pay a revenue share to Microsoft through 2030.

Those payments are subject to a total cap, but still,

I think this is a clear win for Microsoft.

Microsoft's license to OpenAI's technology is no longer exclusive.