Operations

Wingstop unit growth spikes with strong performance

With same-store sales at the chicken-wing chain up nearly 21% in third quarter, almost all from traffic, it's no surprise franchisees want to open more restaurants.
A Wingstop unit in the U.K., where units are averaging $3 million in sales. | Photo courtesy of Wingstop.

Wingstop on Wednesday reported yet another outstanding performance in the third quarter with domestic same-store sales up nearly 21%.

The 20.9% increase, which was almost entirely driven by transactions yet again, wasn’t quite the comparable sales of 28.7% in the second quarter this year, which disappointed Wall Street watchers who were expecting even better sales, sending the stock price tumbling immediately after the report.

Still, the chain’s two-year comparable sales topped 36%, and the company still expects to reach 20% same-store sales growth for the year, which far surpasses most public restaurant companies.

Systemwide sales increased nearly 40% to $1.2 billion, and Wingstop’s net income grew by nearly 32% to $25.7 million.

And with cash-on-cash returns of 70%, franchisees are eager to grow. The company upped guidance for new store openings, saying Wingstop now expects to see a net of 320 to 330 new restaurants open globally this year, up from earlier projections of between 285 to 300.

A record 106 restaurants opened during the third quarter, bringing the total for the Sept. 28-ended quarter to 2,458, of which 2,064 are franchised and 56 are company owned.

The fast-casual chain’s average unit volume also increased to $2 million, compared with $1.8 million a year ago, and CEO Michael Skipworth said Wingstop is well on its way to reaching its $3 million AUV goal as it pushes to reach 6,000 units domestically.

Skipworth credited in part efforts to raise brand awareness by focusing advertising on live sports. This week, for example, Wingstop announced its first-ever official major league sports sponsorship by becoming the Official Chicken Partner of the NBA and the NBA G League, with marketing that Skipworth said has been highly effective.

The media placements have helped drive in new guests, but Skipworth said brand-awareness scores have only moved by a couple of percentage points, indicating there’s opportunity ahead. The growth in sales has contributed to a 40% increase in advertising dollars, so expect to see more Wingstop marketing across both NBA and NFL programming, he said.

The third quarter was also the first full quarter with the chain’s new MyWingstop tech stack in place, which gives franchise operators more data to drive profitability, and allows for more hyper-personalized engagement with guests.

“We’re now beginning to welcome guests on our website and app with relevant, personalized and optimized content that will only further improve with time,” he said. 

During the quarter, order efficiency times improved by 10% and 69% of sales came from digital channels, moving the brand closer to its goal of becoming 100% digital.

Skipworth also noted that Wingstop is “super charged for international growth.” In addition to the goal of reaching 6,000 units domestically, Wingstop is pushing to reach 4,000-plus outside the U.S. At the end of the quarter, there were 338 international locations.

The company gave away a half million wings in Paris during the Olympics this summer in a marketing stunt meant to increase brand awareness there before opening the first restaurant in Paris. 

“The opportunity in France is as large, if not greater, than what we’re building towards in the U.K.,” Skipworth said. The U.K. has more than 50 Wingstop units, which have AUVs over $3 million, he said.

“And when we combine our opportunity to expand France with other markets recently signed, we believe we can deliver over 750 restaurants across these new international markets alone,” he added.

 

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