Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wingstop Inc (WING, Financial) reported a significant 21.6% same-store sales growth, primarily driven by transaction growth.
- The company opened 65 net new restaurants, reflecting a 14% growth rate, and is on track to open between 275 and 295 new restaurants in 2024.
- Adjusted EBITDA reached $50.3 million, marking a 45% growth rate over the previous year.
- Digital sales accounted for 68% of total sales in Q1, with the rollout of the proprietary tech stack, MyWingstop, enhancing digital transaction capabilities.
- International expansion is strong, with markets like the U.K. showing AUVs exceeding $2.5 million, and new markets like Canada, Puerto Rico, and Korea performing well.
Negative Points
- Despite strong growth, there is an acknowledged need to close the gap in brand awareness compared to top QSRs, indicating significant marketing and outreach efforts are still required.
- The company anticipates a need for increased investments in technology and supply chain to support continued growth, which could impact short-term profitability.
- Wingstop Inc (WING) faces macroeconomic uncertainties, including potential consumer spending pullbacks and election year unpredictability.
- The company's SG&A expenses increased by $1.5 million compared to the previous year, driven by investments to support long-term growth.
- While digital sales are high, there is a continuous need to innovate and enhance the digital customer experience to maintain competitive edge and customer engagement.
Q & A Highlights
Q: What types of new customers are you attracting, and how does brand awareness with this cohort compare to when you began your journey?
A: (Michael J. Skipworth - President, CEO & Director) We're attracting a higher-income, mostly Gen Z and millennial demographic who prefer digital engagement and tend to order boneless wings. Our brand awareness has increased by a few percentage points over the last year, but compared to more mature QSR brands, we still see a high double-digit opportunity for growth in brand awareness.
Q: Can you discuss the confidence level in your updated guidance for low double-digit same-store sales growth, considering the current economic slowdown?
A: (Michael J. Skipworth - President, CEO & Director) We are confident in our unique, brand-specific growth drivers and our ability to execute our strategy effectively, as evidenced by our Q1 results which showed significant transaction-driven same-store sales growth. We have factored in the macroeconomic conditions and consumer caution into our guidance.
Q: What are your top priorities for investing in the business given the strong cash flow from significant comp growth?
A: (Michael J. Skipworth - President, CEO & Director) Our investment priorities include technology enhancements, particularly our proprietary tech stack MyWingstop, and further developments in our supply chain. These investments are aimed at maintaining our competitive edge and driving long-term growth.
Q: Could you elaborate on your strategy for promoting boneless wings and improving their sales mix?
A: (Michael J. Skipworth - President, CEO & Director) Our long-standing $0.70 boneless wing promotion has been effective, but it's not a major mix driver. Our focus remains on delivering high-quality, cook-to-order products and maintaining disciplined pricing, which has kept our value and quality scores at record levels.
Q: What needs to happen with the MyWingstop platform before you can start realizing benefits in guest frequency and check size?
A: (Michael J. Skipworth - President, CEO & Director) The main requirement is completing the rollout of MyWingstop, which will enable the launch of the guest ordering app and mobile web experience. This platform will enhance our CRM capabilities, potentially improving guest frequency and ticket sizes.
Q: Are there any international markets where development has slowed, and how are new international agreements progressing?
A: (Michael J. Skipworth - President, CEO & Director) Development has not slowed in international markets; in fact, interest remains strong globally. We anticipate announcing new deals in the coming quarters, which will further strengthen our development pipeline. These deals are typically direct franchise agreements to maintain favorable economics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
