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Wingstop is not just a pandemic phenomenon

The chain’s same-store sales rose 21% in the first quarter, completing a remarkable year. But its performance was improving long before quarantine, says RB's The Bottom Line.
Wingstop
Photo courtesy of Wingstop

The Bottom Line

Perhaps few chains have taken off during the pandemic quite like Wingstop.

On Wednesday, the Dallas-based chicken wing chain reported yet another strong quarter, with same-store sales up 20.7% in the first three months of 2021, when the company also opened 41 locations—a record number for the first quarter.

“Our growth strategy continues to fuel exceptionally strong results for the brand,” CEO Charlie Morrison said in a statement.

Wingstop’s sales took off last year, after consumers stuck at home ordered takeout chicken wings by the carload. Its same-store sales reached an otherworldly 32% in the second quarter last year—the best performance of any publicly traded restaurant chain last year.

Though its same-store sales have slowed since then, Morrison noted that they have remained steady on a two-year basis more recently, rising 30.6% in the first quarter, roughly the same as the 30.4% two-year number in the fourth quarter. The sales results have given the chain average unit volumes of $1.5 million, which have in turn prompted more operators to develop new units, thus the record first-quarter unit growth figure.

Numbers like that have, perhaps unsurprisingly, led to a lot of competition: Restaurant chains have been creating virtual chicken-wing concepts almost as fast as they can produce the wings themselves. Applebee’s, Chili’s, Nathan’s Famous, Dickey’s, Red Robin, Smokey Bones and even Fazoli’s have created virtual chicken wing brands in recent months. And now Dave & Buster’s is testing one.

Yet Wingstop is not just a pandemic phenomenon, which may be another reason so many copycat concepts have emerged recently.

The chain’s same-store sales have been accelerating since the first quarter of 2017—the last quarter Wingstop reported a negative number. The chain averaged a 7.4% quarterly same-store sales increase between the second quarter of 2017 and the fourth quarter of 2019.

Soaring Wingstop sales

Source: Technomic, Restaurant Business

By contrast, pizza chain Domino’s averaged a 5.6% increase over that same period. Pizza Hut averaged flat same-store sales, and Papa John’s averaged a 3.5% decline.

And then Wingstop outperformed all of those chains in the quarters since, even though the pizza concepts have their own delivery services and well-established technology strategies. Wingstop’s same-store sales last year more than doubled the average quarterly increase of its three pizza competitors.

Of course, Wingstop has done this at least in part on price increases to meet heavy demand for chicken wings while pizza chains have been stuck in a perpetual price war since roughly the beginning of time. The addition of so many competitors could also prove to be a challenge, both by giving consumers more options for delivered chicken wings and by driving up prices for the product through intense demand—something that is already happening.

The chain will also struggle to best the sky-high comparisons of 2020, especially in the second quarter.

For now, however, things are coming up Wingstop.

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