After bearing the brunt of soaring wing prices for the past several years, Wingstop executives on Wednesday said that pressure on its bottom line finally appears to be lifting.
Jumbo wing prices were up 41% during the fourth quarter, compared to the same period last year, but Wingstop restaurants saw a 27.5% increase because of the company’s price mitigation strategies, the chain said. That price, though, seems to be declining. It dropped four cents per pound in the past week.
“With regards to wing inflation, we believe the worst is behind us,” Wingstop CFO Alex Kaleida told investors. “As these positive trends continue, we anticipate year-over-year deflation in wing prices in the second half of the year.”
Wingstop is now seeing jumbo wing prices at $2.60 per pound, Kaleida said. Last quarter, wings surged to $3.22 per pound, an 84% increase of the previous year. Bone-in wings make up roughly 60% of all of Wingstop’s product purchases.
Even as the price of wings declines, Wingstop made clear that it is not abandoning its strategies to find a long-term solution to the volatility in the price of that all-important item.
For its part, the brand has raised menu prices about 10% to offset some of the cost pressures. And, last year, Wingstop added bone-in and boneless thighs to the menu, a less-expensive product introduced to help mitigate the impact of wings on the chain’s finances.
Wingstop has also worked with its suppliers to forge some good deals on its wing purchases.
But CEO Charlie Morrison told investors the chain intends to do even more to keep its wing prices under control.
“Over the long term, we’re going to really exercise a lot of effort toward what we can do to take a little bit more control in the supply chain,” Morrison said. “Whether that be through strategies to partner with certain suppliers on dedicating volume to Wingstop, whether that has to do with acquiring or building or evaluating various ways in which we can involve ourselves closer to the production of the product.”
He did not provide further details on how Wingstop might become more closely involved in early-stage wing production, saying there would be “a lot more” to come on that front.
“But right now, we feel very good about just the spot prices and where they’re going in the direction they’re heading,” he added.
Wingstop same-store sales
Despite those cost pressures, Wingstop logged more than 18 straight years of positive same-store sales growth Wednesday, reporting a 7.5% increase in domestic same-store sales for the quarter ended Dec. 25, or two-year domestic same-store sales growth of 25.7%. Average unit volumes climbed to nearly $1.6 million.
For 2021, systemwide sales increased 20.2% to $2.3 billion and total revenue increased 13.5% to $282.5 million.
Wingstop ended the quarter with 1,498 domestic restaurants and 197 international locations.
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