Wingstop’s digital efforts continued to yield results in the first quarter, as same-store sales rose 7.1% in the first three months of the year thanks to continued growth in online and mobile orders, as well as delivery.
Such orders now account for 30% of the company’s domestic systemwide sales. Wingstop has been adding delivery at more locations and reconfigured its mobile ordering app and website in the period.
“We’re on our way to digitizing every transaction,” CEO Charlie Morrison said on the company’s first-quarter earnings call Tuesday. He said the percentage of digital sales is up 640 basis points from a year ago at this time.
The company also accelerated its national advertising after increasing restaurants’ ad fund contribution to 4% from 3% of sales.
The efforts led to a surprisingly strong sales result, which included higher prices and traffic, during a period in which comparisons were especially difficult—same-store sales rose 9.5% in the first quarter a year ago, suggesting two-year growth of 16.6% on a “stacked” basis.
Executives said that same-store sales improved as the quarter went on, in part because of improved awareness due to the ad campaign. “The advertising campaign is fueling brand awareness,” Morrison said.
Digital and delivery orders, meanwhile, are driving increases in average check. Morrison said that delivery has been positive for sales thus far, but that will increase as more restaurants add the service this year.
“We feel pretty good that the majority of the lift that we will see … for the balance of the year will be in the form of transaction growth,” Morrison said.
The rising sales offset rising costs for the company, especially for chicken wings. Prices for wings increased 10% in the quarter, due to continued increases in demand as well as supply issues. Wingstop expects those costs to increase in the coming years.
The increase in wing costs was surprising, given that they typically fall this time of year.
The company expects higher costs in the form of investments in the business. That includes some front-of-the-house technology. The Dallas-based company is testing kiosks, QR-coded pickup lockers and digital menu boards.
The company is also making investments in back-of-the-house technology to improve speed and has been bolstering staff to prepare for continued unit growth both in the U.S. and internationally.
“We believe we’re at an inflection point as a company,” Morrison said. “Without the necessary investments, we risk not reaching our full potential as a brand. It’s a play we’ve run before with great success.”
The company now operates 1,273 restaurants systemwide, up by more than 10% from a year ago. Net income at the chain rose 7.1% to $6.6 million while revenues increased 29% to $48.1 million.
Total systemwide sales rose 15.8% in the quarter to $362 million.