With 500 stores within the U.S. and Mexico and its 3 billionth wing sale fast approaching, it’s probably not required to identify Wingstop as CEO James Flynn sometimes does: “We are not Buffalo Wild Wings ( BWLD).” Wingstop, that was founded in 1994 and began franchising 36 months later, has new private-equity owners and sees a lot of chance to expand within the U.S. and internationally.
Wingstop, a 500-franchise chain, isn’t done growing nationally, internationally or right into a whole type of business. Why not? It provides had eight consecutive years of same-store sales increases despite a difficult economy that stalled many other franchises, which Flynn attributes to consumers trading down from casual dining to so-called fast-casual restaurants as they tightened the purse strings. “We have been for a very good value for which we all do,” he says.
But more importantly, there doesn’t are most often a lot of direct competitors. Along with a powerful management team, industry experts says, that makes selling the Wingstop story to consumers and franchisees that much easier. “Should you check around, we are the only company that I know of virtually focusing on simply wings. If you are taking wings plus beverages plus french fries, you got 90%” of the menu — an exaggeration, though Wingstop’s menu is no-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 acquire and customers can get a number of side dishes.
Wingstop is actually a fast food joint. Buffalo Wild Wings, on the contrary, has become hugely successful being a part sports bar, part casual-dining restaurant franchise. “We don’t have any real significant chicken-wing competitors,” Flynn says of Buffalo Wild Wings. “We really consider pizza probably a bigger competitor.”
Record-high wing prices forced How much does a meal cost at Wingstop to consider pricing actions at the end of 2017. Among 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 a lot 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 throughout a May 3 conference call that Wingstop’s comps hike “does contain a bit more ticket growth than we may normally prefer.” It was running about for the brand with transactions, Michael Skipworth, CFO, said.
The change stemmed, in certain ways, from Wingstop’s decision to provide split-menu pricing in light of commodity concerns. The chain reduced the buying price of boneless wings and conversely increased bone-in prices in certain cases. “We did see a mix shift associated with that,” Morrison said, “that have benefited the P&L upward of 200 basis points on food cost, which had been great, but at the same time, put a bit more lift inside the ticket than we may have otherwise preferred.”
However, Morrison said Wingstop were “quite happy” with the comp performance, understandably. Momentum carried through 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 when compared with Q1 2017 due to 22 domestic openings and six international ones. Wingstop wants to reach 2,500-plus units domestically and be a “top 10 global restaurant brand,” Morrison said.
Unit-level economics would 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 1,000 basis-point improvement to the company-owned restaurant margins. Same-store sales were up 12.5 percent at corporate units.