Don’t expect Wingstop to jump into the chicken sandwich wars anytime soon, the fast-casual chain’s CEO said Wednesday.
But the Dallas-based chain is broadening its chicken offerings to include whole wings to take advantage of lower commodity prices on whole chickens, CEO Charlie Morrison said in announcing the company’s Q3 earnings results.
“Our focus is going to be to remain the wing experts and focus on flavor as a key differentiator of the brand, which would not position us to make some of the decisions other chicken chains would make to drive incremental traffic,” he said. “As of right now, a sandwich is not in consideration.”
Sandwiches aside, the 1,340-unit chain reported strong sales for the quarter ended Sept. 28. Same-store sales increased 12.3%, while systemwide sales rose 21.6% to $383.5 million. Total revenue increased to $49.9 million.
Wingstop opened 37 net new restaurants during the quarter.
However, cost of sales, as a percentage of company-owned restaurant sales, climbed to 74.2% from 67.9%, driven largely by a 22.7% increase in the cost of bone-in chicken wings. Last quarter, wing prices were up 32.1% year over year after the volatile commodity fell to a four-year low the previous year.
Wing prices have recently dropped around 20 cents per pound, and the chain expects them to dip further in Q4.
Wingstop’s national test of whole, three-part chicken wings is the “key to mitigating volatility in the market price of bone-in chicken wings,” Morrison said in a call with analysts.
“It helped us utilize more of the entire chicken so some portion of our purchases can include whole birds,” he said.
Meanwhile, Wingstop is making progress in its goal of “digitizing every transaction,” Morrison said. For the most recent quarter, digital sales represented 36% of domestic systemwide sales, an increase of 1,000 basis points year over year.
“Digital orders are important because they carry a $5 higher average ticket,” he said.
Wingstop ended the quarter with 75% of its restaurants offering delivery. After two years of testing, delivery is now available at 80% of the chain’s units. Wingstop will run a national ad campaign to promote the service, available exclusively through DoorDash.
“It’s highly incremental,” Morrison said.
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