With 500 stores within the U.S. and Mexico and its 3 billionth wing sale fast approaching, it’s most likely not essential to determine Wingstop as CEO James Flynn sometimes does: “We are not Buffalo Wild Wings ( BWLD).” Wingstop, which was founded in 1994 and began franchising 36 months later, has new private-equity owners and sees a lot of possibility to expand within the U.S. and internationally.
Wingstop, a 500-franchise chain, isn’t done growing nationally, internationally or in to a whole kind of business. Why not? It has had eight consecutive numerous years of same-store sales increases despite a tricky economy that stalled a number of other franchises, which Flynn attributes to consumers trading down from casual dining to so-called fast-casual restaurants since they tightened the purse strings. “We have been for an excellent value for which perform,” he says.
But more importantly, there doesn’t seem to be a lot of direct competitors. Along with a powerful management team, skilled professionals says, that creates selling the Wingstop story to consumers and franchisees so much easier. “If you check around, our company is the sole company that I know of virtually dedicated to nothing but wings. If you take wings plus beverages plus fried potatoes, you got 90%” of the menu — an exaggeration, though Wingstop’s menu is not any-frills. It sells only wings, boneless and bone-in, however with 10 flavors to sauce them up, including “Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ as well as the newest offering, Louisiana Rub.” Orders are made fresh, cooked to buy and customers can get many different side dishes.
Wingstop is a fast food joint. Buffalo Wild Wings, on the contrary, continues to be hugely successful being a part sports bar, part casual-dining restaurant franchise. “We don’t possess real significant chicken-wing competitors,” Flynn says of Buffalo Wild Wings. “We consider pizza probably a larger competitor.”
Record-high wing prices forced Wingstop menu prices to adopt pricing actions in late 2017. One of the unwanted effects: Ticket growth that boomed the 1,157-unit chain’s domestic same-store sales an eye-popping 9.5 percent in the first quarter versus the prior-year period. Systemwide sales jumped 20.4 percent to $313 million and Wingstop had revenues of $37.39 million (adjusted earnings per share of 25 cents). These numbers jolted the chain’s stock more than 7 percent in Friday afternoon trading. Shares are up 65 percent ofexab the very last year.
President and chief executive officer Charlie Morrison admitted in a May 3 conference call that Wingstop’s comps hike “does contain a little bit more ticket growth than we might normally prefer.” This is running about even for the company with transactions, Michael Skipworth, CFO, said.
The change stemmed, in some ways, from Wingstop’s decision to provide split-menu pricing in light of commodity concerns. The chain reduced the price of boneless wings and conversely increased bone-in prices in certain cases. “We did view a mix shift associated with that,” Morrison said, “that have benefited the P&L upward of 200 basis points on food cost, that was great, but concurrently, put a little bit more lift inside the ticket than we might have otherwise preferred.”
Nevertheless, Morrison said Wingstop were “quite happy” using the comp performance, understandably. Momentum carried from the fourth quarter into fiscal 2018, and Wingstop trusted a very strong March to bolster figures.
The company increased its systemwide restaurant count 12.2 percent compared to Q1 2017 thanks to 22 domestic openings and six international ones. Wingstop desires to reach 2,500-plus units domestically and become a “top 10 global restaurant brand,” Morrison said.
Unit-level economics will be the key driver, he added. During Q1, favorable wing prices together with the company’s leverage on labor and operating expenses resulted in a whopping one thousand basis-point improvement to its company-owned restaurant margins. Same-store sales were up 12.5 percent at corporate units.