WING - Earnings call transcript Q1 2018

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Incorporated Fiscal First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Please note that this conference is being recorded today, Thursday, May 3, 2018.

On the call, we have Charlie Morrison, Chairman and Chief Executive Officer; and Michael Skipworth, Chief Financial Officer. to conference like to now would turn over the Michael. I ahead. go Please

Michael Skipworth

copy the you, everyone website quarter fiscal A now, welcome. at XXXX posted have release. Thank By our wingstop.com. should and on Relations Investor tab access to earnings is our under first

that guarantees not are Our today uncertainties place from to risks on These statements not undue subject results forward-looking performance to and, and forward-looking statements statements. reliance cause discussion future These therefore, also differ numerous we include what are will actual of could you should them. materially expect.

SEC a and filings financial Our of recent results affect contain the could risks that condition. operating discussion future our detailed

financial considered results prepared will as earnings this presentation over to release. believe With that for of we the useful in a to I measures information substitute with turn performance. our accordance We comparable non-GAAP contained can not call should isolation GAAP The discuss are will additional also or Charlie. be measures Reconciliations GAAP. in certain in be evaluating that, our in

Charlie Morrison

restaurants but quarter growth A increase same-store in than growth ticket was normally result EBITDA and XX% sales by resulted your number is same-store increased more you, a growth, appreciate domestic afternoon, along first same-store start strong I’m top growth XXXX. in does pleased our our momentum, with of X.X% growth and in transaction Wingstop adjusted us growth good in today’s P&L, XX.X% the sales everyone. highest solid quarter. flow-through quarter driven record. very little with We driven for strong quarter call. This since a and line This of would growth Total of delivered we top with on single sales sales prefer. Michael, first strong We to on on contain system-wide expansion. and healthy Thank by a joining the XXXX. line interest the the the domestic unit

of prices Some in driven year. wing record-high our pricing took a by is that actions franchisees last late of result XXXX as

strike and are traffic of to for working balance We XXXX. the the balance of right check

expected, added from are new growth decline net including unit XX% the restaurants significant We QX, prices XXXX. in system to Although pleased international with we XX wing given X during less than the locations. the Wingstop

we are recent We a momentum pleased from we from in development pipeline commitments with as of the agreement seen activity sales new have franchisees. strong our accelerate

last years. results a revenue which our back-end of call, for As strong of EBITDA XX%, the The we adjusted prior nice be EPS increases was the in more to we restaurants. in company-owned XXXX growth consistent little with in XX% our margins and yielding adjusted respectively, and flow-through XX% year, and this discussed on to total development anticipate result loaded translated

with continue wing strength X,XXX we improvement to a During company-owned combined QX, the this the prices. of to on see basis point labor And, expenses, leverage restaurant and operating another favorable model. example in margins, Wingstop of our resulted

confidence furthering margin of pipeline. the momentum development similar franchisees Our during experienced our quarter, our improvements the in

continues to to our passion we our to results. partners XXXX years of model our left quarterly results that strong complemented third the strong X our one start $XXX provides confidence returned million QX the all form with in team lot category members us as total, deliver dividend The since the can IPO. shareholders returning special we and in Wingstop have the in franchise still a strength company. While public first capital dividend of by and business that We for our in have In these this brand and there key year, our a are XXXX. for of to of the strong targets achieve QX shareholders second

from Wingstop over results strong further differentiate concepts. other these deliver to ability long will Our the term

our and we said As began of QX, digital we launch development. national of the a these. national lapping last on that after benefit. year, implementing presence be the XXXX best-in-class before, multiyear furthering on on which advertising, the Super In of We advertising not delivery each briefly strategies: cadence long-term international just provides splash, Bowl. began our program We is expansion, initiation performance delivering key have continued that a big but advertising X national growth television. I’ll with predicated of market the comment did rather enter designed a provides steady to one designed a program

with and we is to is dollars that marketing to Wingstop’s goal system compared benefit gap aided expansion. brand a awareness spend XXXX, sales in with and national doing to brands provide dollars efforts. having benefit line the building digital a to narrow help local unaided In to multiyear growth. brand will other so, continue advertising us due from top These through combined will awareness and television presence Our incremental television -- more

make the franchisees our the ad opportunity the from increase sales. have to we of year, contribution next forward fund look to we to X% X% national As rate

represents and domestic prior a from steadily last the sales in year from digitally, from in this and of sales, QX working to digital additional grown are sales that comprised behind point positive XX% XX.X% generating best long-term XX% XX% further the of continued their franchise X% We Roughly would evaluate are same-store XXX critical more element sales of drive which our Revenue strategy. restaurants last growth is or In was year. growth. to XX% improvement with of basis of next channel to our XX.X% strategy year up brand has year. this digital the from total partners our last QX, in QX our QX expansion awareness leading

opportunity This Alexa way continued just phone Digital Unlike to to access as the we have organically sales will our our half in this projects the like experience offers higher through to digital restaurant, digital We for order. utilizing the innovation. Almost orders to a special technology guests we that only to to more come further not new And launching continue never with the innovative conversion. of Amazon already Wingstop of not for receiving still GM’s testing. the to will hope for our SMS, the development messaging, we are ordering. several a over to convert are have and website we digital a enhance and similar We OnStar all for expansion are road other launched, also interface name concepts, channels operationally efficient you provides continue or incentives of but believe drive marketplace, their digital through to further sales the provide underway which innovations down we few. platform from guest order Twitter done have with our we XXXX, share year, new QX front-end, and guest-facing the In check. we highly average app. is $X experience placed and point frictionless anticipate efficient, Facebook

Turning to delivery.

Las now locations Wingstop Chicago We in pleased over encompasses Austin. Our XX remain results test delivery the Vegas, with and our tests. of

Las sales are incrementality fourth a continue were sustained our see of in to Chicago market mid- to we lift sales Austin, both high lift In single-digit a test XXXX, which incremental. Las the launched launched to majority experiencing quarter year, with Vegas. in that continue initial be the we in levels April similar of sales to of Vegas XX%-plus and last We and of the of

very delivery to our across of markets, we these our possibility the expanding encouraged are X different capabilities. by date traction Given

to be current to how campaign a be level partnership as and sustain work in our expand our our national and market-by-market will Our use footprint. rollout. from they rising and delivery delivery leverage to drivers strategic existing to expansion the optimize these long-term business, national awareness domestic to our to closely so, we from advertising, a meaningful as delivery scale to focus a will for DoorDash In continue new our delivery unit approach is support Understanding believe unit with broader franchisees. and best-in-class a doing rollout. our further DoorDash could take The further able economics sales development brand learnings digital of to and advertising cover is we markets approach delivery foundation right national

restaurants plus reach restaurants. and these does based X,XXX vision Our on is ability level unit domestically our domestic to ultimate not plus X,XXX at economics. But improving maintaining stop

to global brand. Our restaurant Wingstop become XX vision a top for is

domestic the international us world, around our component growth vision. long-term fourth is broad our a addition consumed strategy, the highly with international to our of key and comprises protein development, flavors most and basis growth, adaptability provides which development strategy. for Chicken In our appeal is the of the

markets. success established in supported strategy international emerging and is Our Wingstop’s by early further

and As of with markets. international UK, international This France, Wingstop quarter, restaurant end our Panama. we further the we locations XXX to reach the in Australia have extend year, X plan in of openings the

focus our consist While nearly markets. to our the development introduction these centered successful in is ensuring brand agreements international restaurants, a around of of additional XXXX XXX Wingstop Wingstop new sold

new area in do As such, not of international the we activity territory anticipate sales XXXX. much in

We continue strong growth opportunity expansion in investment same-store have which our our to is those our international sales business. to markets. about improving strong is brand us for the in business, remain drivers competitor see of we ratios of category long-term international excited We We sales significant a as and one of white in believe amount truly sales front growth. a true space multiple have Wingstop a and we and a lack with

advertising, delivery strategic to priorities and development. X what expansion, build upon key we have international accomplished will continue already We across national our of digital

all across fronts as goals. This execute turn quarter to With against our -- achieve Michael. we long-term these I’ll our over it demonstrates progress to that,

Michael Skipworth

Charlie. you, Thank

to same-store vendor last payment development was and during base Total quarter rules I fees received year from $XXX,XXX. six other sales of walk well. this $X.X growth quarter prior grew domestic results due revenue openings The the million. increased line accounting new of same-store prior sales decreased QX that XX and onetime over were would result to I the and period like quarter. restaurant openings new in year recent increased franchise around and and which million our have royalties reflect been which grew Royalties, that compared other $XX.X through total unit is highlight the From revenue a our recognition, Domestic XX% year, revised franchise for revenue the a the consisted in as X.X%. first the last revenue Before Included perspective, fees -- XX% results the growth development international numbers, we growth. year. to to

drove the transaction related both for ticket sales growth quarter year an increase million, which and Advertising increase compared is consistent average in income prior noted, increased in and $X.X comp. the Charlie current the the As fees to system-wide period. with

company-owned restaurants delivered to two $X.X growth ticket July that increase we million in increased to results strong was the quarter. in in growth. million same-store Sales XX.X% contributed equally increase restaurant. driven by primarily This for Transaction restaurant $XX sales average restaurants were a an in company-owned increase to comp QX. Our contributing the the year. and the in company-owned last acquired growth of sales Also our

of decreased and compared basis In food, strong cost of contributing a comp. by by result percentage The of packaging in last was XX% addition and other points. a deflation reduction to beverage basis the sales we as operating costs margin due labor top-line the sales X,XXX the restaurant year. company-owned to decrease the wing on XXX was XX.X% primarily improvement results, to primarily prices driven in to obtained as costs a Also point QX leverage expenses

our the first continued In year. to increased to administrative than outlook vendor used revenue non-GAAP QX to in new related in for were which wing spend. with the Selling, $X.X a actual expense dividend the and the The with expenses guidance, in look national prior related does advertising quarter XX% the was measure, of million fund subsequent time and revenue are one-time favorable, that associated is due P&L increase planned in $XX.X recognized. compared current increased the recognized Under expenses timing accounting general launch costs year prices recapitalization the of additions. we Adjusted As payment recognized advertising quarter, to necessarily XXXX. higher special current not $X.X on note Please the nonrecurring of for recognition of advertising transaction million Advertising anticipate the our headcount $XX.X to in we million to the million a received that the sheet correlate year. we prior the remains was expenses $X.X forward, fund deflation to our our advertising on prior advertising is and increase million. expense balance associated a resulted million $X.X EBITDA, primarily remaining the from the advertising, P&L quarter. year from payout.

most adjusted to directly release. income between per reconciliation record and while Adjusted XX.X% Note $X.X increased share income, million net the to As measure GAAP earnings Charlie earlier in comparable a diluted earnings XX% for share. noted, our adjusted Wingstop. increased quarter per net the EBITDA $X.XX included

cash $XXX first As the debt. of we of equivalents end million $X.X the of and in approximately cash quarter, had million and

adjusted Our the which XX first trailing to the to X.X due times, we EBITDA net debt stood approximately QX recapitalization month is completed from quarter. at during up

During the share. basis quarterly paid new a targeted $X.XX our cash which special as committed dividend dividend, QX, at of of is remain We credit well of in flow. $X.XX with facility a we XX% to capital returning third dividend a closing quarterly on free per approximately of conjunction to regular shareholders through our as

have first the to we was we enhance years public leverage did in shareholder we further special X than return. second will during QX, the as As a we when sheet one paid balance company. in feasible The dividend less also quarter paid our

Now turning to guidance.

of for is of same-store growth long-term System-wide consistent EBITDA XX%, of digits, $X.XX expense of which shares. XX%-plus, targets. XX.X tax count and single $X share an fully approximately and our growth reiterating with sales per diluted unit We of share compensation approximately million guidance are stock-based rate adjusted growth million, approximately our approximately XX%, between effective low adjusted XXXX, earnings XX% diluted domestic of

are your take before questions. we Finally, there X reminders

on change last Investor found diluted to been schedules recognition accounting earnings XXXX is Relations which also Financials our be First, guidance under The therefore $X.XX, has share website. adjusted the of our comparable revised. revenue can in fiscal per for reflects supplemental year EPS and year

happy our Second, of January for to impact stock $X.XX recapitalization not benefits option EPS guidance exercises, the tax from which And finally, in benefit an include EPS estimate estimate an excess the our amounted does EPS XXXX. $X.XX we approximately please lines we being that Operator, afternoon. Thank be be XXXX. any questions this you to have. will with per open now us answer to share And you for for questions. may all the for

Operator

Tarantino Instructions] with comes question first David from [Operator Thank Our you. Baird.

David Tarantino

I to an Hi, year. question good for the on signal And light keep guidance? the congratulations about wanted related to the And I to it maybe the the guess, such to that, and start just year? what afternoon to guidance to the strong in you about that My start to excellent decision of rest and in there anything year ask year. is are a of start led this trying

Charlie Morrison

afternoon, Good David.

for of after the year probably more provide more quarter, little guidance into would of our I say rather than into goes year. that gain think we no I after half we a more the would there’s consistency of bit the towards long-term otherwise. will year. I QX, we guidance that the But the specific anything affirmation signal next had about as clarity reference the little a back bit talked

David Tarantino

comp, And then, helpful. you which mentioned that’s impressive. was the Great, Charlie, very

And was maybe that you what ticket wondering mentioned in just what balance. how seeing. You ticket the franchisees lift there plan included the sort to as wondering level comment it was about quarters. of look more than you the if it versus took few do I I the before your was at those contribution could more we’ve then been of price next that quantify achieving you increases.

Charlie Morrison

low the single-digit comment on we’ve So growth is be type traffic what components our many to we ticket and little in scenario. a than would really prefer more times we about a said check based about prefer of what

fourth of boneless the we a price the would what menu. have. really, upwards little So We see more basis wings that finished mix X some we first quarter at see in great, have of -- we P&L then quarter which we of bone-in little and -- have increased cost, ticket certainly, that, some early prices. than wing bit with the preferred. always first associated We And otherwise did conversely in time, split a put our would reduced of points rollout bit same a on but some did and early food points as cases, lift the fourth shift up the to the is was quarter, the X ticket in our XXX prefer but of pricing mostly to benefited

amount So points. X baseline that of to really the preferred at is X

product to back our new that leveraging half promotional some cetera, products or for that behind on products, ideas packaging ticket orientation in we we goes some et that sure the have, balance question balance make the really advertising of orientation any just as On continued the national of around with to a growth as activities. well value year, brand, the value lift transaction focus

David Tarantino

I And it. understand. so just Got Charlie,

us comps much fourth the help trends quarter, how So changing about versus you changing the traffic up the changing? from quarter ticket of was to think or in this can move that check

Charlie Morrison

look you I I if with in We throw some to into We were saw more March. a the a comp the momentum quarter, because benefit comfortable in think the ticket, Well, of still another up first out at that we’ve sequential of menu the the to to did that good quite the the what at strong happy, great next. of describing do from way delivered very quarter momentum change with QX. one quarter that just coming said, Quite has nature comp. we look to of as to quarter. the the But was in, pick a quite came thing frankly, strength say would fourth

or what to we a a but not in helped of we than comp saw negative that would we’ve industry quarter, factors rollout year. only expectation the that recall, quarter a March last of lift a rolling comparison strong over from were in were see. rolled expected others that there, -- the and you but There advertising our we consensus national saw, during If first even higher over lot

Operator

with Stanley. questions. Glass John comes question proceed next from Please Morgan your with Our

John Glass

a view about maybe said than You talk was lighter little a you it you can an bit on Charlie, thought. little updated development?

think to development? comment, number last this going year wasn’t You a of know, was or you closer that meant of what if to better was coming number the versus year, absolute said I a it be was that on quarter I insight is X your similar years. be sort last got sure that an like to years. absolute comment was percent into of you the I an have long-term you couple the averages. of don’t if to domestically units in that -- said now more, terms Do going

Charlie Morrison

the the a reopen in was included one a trade this year. well different a where area it on for John, a number transfer will of of that yes, number absolute certainly, which, basis couple and result closures that of is the was domestically net example, later

So it’s to but net really had a zero. be closed, it really to be it -- is going

of expect the was that the we a I be our the would made loaded first as QX seen of to As the than noted a the more strength development half first be our And year that this we where the comment pipeline, And lighter with consensus in think back back lot we half to from expected the as consistent of end at of But well expect I is is discussion quarter, year. a we to still the going right that at back both that today the now. year. half. perspective, we look be of to primarily be in

finish. to that we a sure stronger fourth our make So everyone wanted encouraged guidance, that softer quarter around with we start to

that’s year dramatically. basis tough a year Some last food based on we has went now flipped through of the that from cost

a basis company-owned their recall commentary, remember in in X,XXX you -- improvement P&L. our point If saw restaurants the

types improvement. enjoying are of franchisees P&L Our similar

onset able expected us in to year. half we’ll the And so what the gives confidence the that of that back from cash deliver we be generation

John Glass

the presume mean, I currently that point, that between your food franchisees. the -- cost that’s in the I must and being just improvement, And reflected improvement, to having comps the margin you’re I conversations with mean,

you about number accelerates in first would that mentioned on on by new Is development half around what based signups development, metrics? You evidence or mentioned that quarter franchisees on two those encouraged the any something developments. give there further you back you’re the

Charlie Morrison

Yes.

coming couple sites our week each pace The of estate is of deals number a of pipeline in I translating metrics think and I there into the would look those that approved deals are at. real franchisees in, terms and every built. improving of

development to to than metric good that deal number we’re we’re the is restaurants perhaps system The to to the the opening. were the the as year, for and pace increase other add able In quarter, agreements. expect, new we improvement add number through in faster deals seeing system an the to of we signing go of continue deals we new of the

the look wing appear So us. we goes it’s years, moderate time high, cyclicality you we’re But of of where that. factors going. low, as is expect know quite a this great it’s few in at all development, tough. When business market to very very time every for goes a these time for we P&L, I it a And pace for encouraged the period mentioned, we if you And only by that’s it from and prices. because the when think see to the market, sustain the favorable perhaps the opportunity wing prices that

I why back open to restaurants, strength we then year. continue of So momentum, that turning into and those half but which about deals the the into momentum the are needs to that is of the to going reinforce good pipeline got we’ve translate talk just

John Glass

Just one for final question me.

to the about advertising. maybe approach out, talked pacing market-to-market roll of DoorDash On work national a forward you you delivery and as look with you

more in So you’ll do how to introduce you many at point this delivery markets think XXXX?

Charlie Morrison

a set number yet. I have don’t

I line, is looking as key the in is very that other real for delivery and quality the everyone we many the we success to thing at know, on seamless know feel a caution think, great I that results here achieved around high and while that the done are experience is markets. have We consumer very strongly you would The ensuring top fashion.

thing that and diligently accurate very on timely in we a investment scale. is received to go other ability is integration the So say I’d we to hot out. pacing really way, DoorDash And basis, are is, and sure our efficient factors their that we’re at and ready encouraged transaction DoorDash by an would which fresh, ensures provide X the that make to that very of working and the team Those go. the into food prepare roll that and

later another year, I to year, probably a change set don’t that outlook. during would optimize want XXXX this things we pushing the market. in But think can if But to can expectations be quickly. start we probably aggressively really I So that national

Operator

Our comes question next from Jeff Farmer with Wells Fargo.

Jeff Farmer

touch You it on guys did briefly.

restaurant again, that’s that the about balance how XX% over thinking curious, be that quarter. So margin? the I circumstances deeper quarter. how are But about company-owned at should level just be we unique margin we year, of I’m the move in some thinking realize should the year? first as margin in we the there

Charlie Morrison

are wing we that seeing indicative Jeff, these our know, model have the from franchisees best-in-class that and outstanding benefit is lower foremost, margin, and strength we and as of first prices. and probably of the this

lower with or the suggest before, I what in -- is As competitive would we’d see great. suggest of the Barring throughout cadence of side, early That’s prices the all increase that should should would have pricing wing in be follows suggest. type -- the to natural stay will the that the which the all entry fairly experts third, factors wing associated on up. that tick in into it. wing you’ll some any market, mentioned year the the fourth third on Meaning, quarter, price the late prices a pattern -- outlook the

that elements by replacing So the that the about now our at many all back the We’ve some markets, as of launch sides P&L, wage summer. and through certain markets strategies have some other even higher new we of look in the inflation. this our the the already house talked created to in of later adapted of menu we’ve efficiencies will

I I about at think this day, sustainable. being end very the feel P&L of the So good

for you back half wing If factor prices the the of year. the in

Jeff Farmer

that In And you’re XX% on to, growth year. but specific to I call growth. guiding David’s Okay. is XX% year? EBITDA following to the balance over driving can full the on roughly adjusted for if don’t then that’s the know you in I EBITDA if something earlier Understanding, think, there’s you up quarter, conservatism, us XX% -- remind want saw guidance, it the deceleration you there question expected of

Charlie Morrison

I say harder Yes. mean, at to I is rollover we in the it’s line strength top very in the side the think thing we of through that we’re half with is as would saw the look the ability guidance, of comp the I a hit prior that year, confident year what go although if from you it, of the our year. the back

play. reiteration So of we guidance. out to reflected already. are is which that development, that’s consistent numbers see to continue ability consensus long-term that I said, what hit one factor is on before, all to which the But confidence at our there strengthen, that the those I think really, as And key to guidance then talk about we the pipeline want aids in

been has public exceed to quarter that since I meet or company. think able Wingstop that a in demonstrated every we’ve we’ve been

year, pattern, that. of work we’ll we’ll like beneficiaries We to as provide been clarity, we’re the that’s some are going to and consistent and stick our be strong the through here. we But more seeing very probably quarters

Jeff Farmer

Any on question. trends here, concept? metrics, At pointed awareness in final provide just just were And know some the awareness. ICR, did you Okay. update you brand in was, nice I for brand provide brand later can to X months some but of it color X you terms what if improvement awareness. don’t to there us

Charlie Morrison

Yes.

each quarter. every build awareness see to continue and We

continue continue year come fuel Our brand the onboard for objective we’ve to this the had. of sales to the layering new advertising to big restaurants momentum on increased is that Last the grow. for dollars year’s performance

quite X that, still X Our similar the we’re shape and current X ability is causing off weeks level or cadence a weeks any way, every long with cadence TRP or to X saturation, frankly, or on in that it. form in not every is from be a ways

comp continue performance as And to continue the momentum think expect we to it’s it, quarters. reflected I brand the we’ve in past we So and grow the carry. itself build to that over X had nicely

Operator

question next with Jeffrey Bernstein Please from questions. proceed your with Our Barclays. comes

Jeffrey Bernstein

April? I wondering picking Wingstop you you consumer yourself saw from that in the broader I’m Charlie, in at for March just March. momentum and if and the the momentum even up around the strong mentioned had drivers thoughts continued the a mentioned the very that whether industry saw into Wingstop industry, least standpoint, think you’ve any

Charlie Morrison

I of first our won’t there on put some ability the and In do its new quarter, launch our over thought peoples’ in money we consumers. talk market was strengthening the or national with we about believe core drivers especially reflect plan were. we tax the associated to but that I initial will what pockets, March, advertising. the current rolled in But

So continued reform then us as in Low urban well where you the income that like awareness put or consumer momentum skews And in operate carry generally started is performance what tax last think think bode restaurants. unemployment, for of into and a middle ours these terms our lower quite all I think growth helped those well. and is of play, we all things brand whose lapping I the year, that driver we brand we’ve here. had brand I a awareness

specifically. Wingstop So are factors for all of those good

Jeffrey Bernstein

to then And specific delivery.

at sounds sustainable about X So markets both last of to us talked all levels like time. -- your you

I’m mid- wondering drivers so more guessing difference market about would next? things XX%-plus, think think think you you Chicago are? test and which which dictate norm, a doing what what of those drives likely the doing what would between you the And the a Just is you how high-single-digit to Vegas maybe

Charlie Morrison

little new drive That efficient Vegas more market our lift. still small Yes. a warm market that such some explain therefore, to of And awareness market a of is there clutter a break through effective It’s marketing Austin, to then like through and that compared probably dollars harder interesting. a weather Chicago, spent big in obviously, media in a occasions from delivery. tough were can the helping concentrated advertising market, and, market that. Vegas. but perspective kind an

heavier. behind which think really X national that mean, that’s all is. but factor put what incremental So I didn’t performance really our much media, media only we skews say I turn would on the in some I we certainly delivery, is cases, And

that’s sure at what the because one generate forward the into marketing, essentially little to of able is forward support of we we we future media digital added with as the rollout. the factors make and we that best want this radio will so as be a And delivery some the rollout We strategy to look put we our and foot look result. were plan

Jeffrey Bernstein

And you. on thoughts Got just lastly, around marketing. one-to-one the

continue Just And been have? to feedback using to the your what’s as a increase Maybe of might marketing? orders total, how the approach the any wondering you your as are data? one-to-one digital you percentage

Charlie Morrison

being most this and can the build have, platforms developments, The to unique front-end in the our Yes, with our come to customer Web other to some hand guests. the guests. applications, through live of the which application, records to we information translate data -- that that QX data in we expect our data phase we’re that our right probably or will out Web then mine Q in this directly that rich well we we’re -- year. able middle or do, communicate be be CRM built, all this of into technological all as monitor in hand that And mobile we use transactional the notably with app when to ability will use either of going

as technology the what year. investments So for are and we in early noted the quarter fourth that third we’re excited making offers about us we these

Operator

Charles next with from and Company. Our comes your Please proceed question with Andrew question. Cowen

Andrew Charles

correctly I want XQ. be to expected app to make is heard that sure update in the completed I

be to messaged was XQ. it previously think I

expected the just case. anticipated? than that later means curious that’s previously rollout So And quarter resumption, if was is if so, the it delivery I’m one the if

Charlie Morrison

think I general. delivery the in on to Well, commentary back

and go driver more ready And the it to the is whether format it it’s technology. with roll optimized. could out technology hand is that’s that concerned necessarily most all have the I we food the out the right the rollout we’re and hot, to products end the it the when in than What today. we about it’s who be to occasion not fresh guest think We expected platform end gets get in itself important in delivery sure way Meaning, driving will drive To to me, expect bag. making what would is they it. when it. a that the

reinforce that point. want just I So to

Andrew Charles

or you desirable with curious And shortlist? okay. Where just you to the a Sure, in what an round interviews a skill you’re guys still that? And are update CMO down search. looking then on Are set first for doing candidate.

Charlie Morrison

still that of a well. process potential and and search. testament brand Wingstop we going Well, which It’s is the the of in to the in the an great is unbelievable what strength role, are amount quite had We’ve as well. of the great interest

very the We’re being careful and selective process. in

onboard Those in into and awareness once experience, somebody’s also can within the have expertise forward person that then building foot build is retain comes a also in fit well Meaning, to that and do of them. in great first best brings this search. to this user continue conversion. build defined us help skill for but sets aware the Wingstop, are we how them that beautifully is brand critical think we organization, going this customer put convert or how strategies our as media culture I some we

So had flood again, great a of ton interest. interest. We’ve candidates and a of

searches it’s about excited one very, bring those I’m of that So we very forward. actually that candidate when

Operator

next Our with Securities. Guggenheim comes DiFrisco from Matthew question

Matthew DiFrisco

related any asked same-store Could But in to not any you’ve some a way? in regional beat respect In of of the acceleration here. regional see horse you sales, in the to differences? oil economic exposure, Texas given dead the been your past, to indicative be did strength XQ just

Charlie Morrison

don’t I think so.

growth that test store I of was in Vegas. Las could at indicative benefit the same-store had the performance. restaurants But the and those were You they of think just delivery sales XX.X% performance interpret company cranking regional

no or the there’s comp. regional thereof element strength to lack of now, So the

Matthew DiFrisco

also, who’s -- that historically great. to peers sales that good Did guess, I one company franchise mix, you your see your premise was did pizza you’ve That’s had off a seen any of comps both even stores? then, and the player, outpace predominantly And off very in I the XX% XX% X% roughly the also. guess, sales, of premise the

Charlie Morrison

consistent between pretty it’s No, on and off premise.

across I think board, the this we saw performance overall. it fairly consistent

Matthew DiFrisco

might things if you yet something do delivery change even potentially towards would then come a And given as line down you you thought there question. far any design look as or last and store could that Okay. the different as a that Have perhaps grown you there X,XXX where the or that tweaks of sort look design are the stores? to and digital, store than store you’ve first towards location is

Charlie Morrison

We of I it. opportunity. of to an identify an Yes, number within our a and excellent study engineering question, just in walls of areas appreciate X locations our restaurant finished industrial

her Experience operation working looking Stacy to digital business, the our been transactions. X and team further And at ways have to up Peterson, Chief so on the Officer, of optimize marry

big in use and of And the so yes, technologies think they I they’ll information there providing the the also we’re optimize when they’ve definitely some don’t changes. be back there’s their to guest of their how ones. do. flow opportunity to is of for ensure experience house But from potential minor the we wings, did the with wonderful that enjoyed order to along path incorporate after

earlier. So that’s technology this going about of talked investment into kind all of we some of that

Operator

with from Our Goldman Holthouse Karen comes next question Sachs.

Karen Holthouse

driven sure half versus the company? that franchisee the company I’m comp price about traffic the the versus price to specific to dynamic. versus traffic whole clear comment back want Going was of to Or sort Was I side. the being by the on of make system?

Charlie Morrison

it’s a higher and price think X have and is X of and just it to said, don’t on in as that to system-wide our always than year we we had comp. it have the can the want more objective to, I that. balance, this At I’ll we ultimately appreciate little reiterate year. the goal But understand that points last to we based maintain case, we’re

is always not I check. traffic like, than more does make want much it we hey, the to we really, sure balance that What it’s has between So want XX-XX mean, too X. the optimized

Karen Holthouse

much I of like case, to you of of be Just this to And you’re a just lower, is discounting already price if would then, you’re how focus enough see that, reaction explicitly less with I in the that seeing mentality we that you’re sort that away price some strategy to split you the as want be sort guess, -- that understand that’s something re-engineering concerning? going of on is are something to concern of trying increase? points to guess, a that are seeing number about I worried traffic the are we pricing? menu of that’s the in that And planning versus tied sort or if long-term of

Charlie Morrison

That’s a question. good

right think year, in quarter’s fourth would momentum comp performance with that third the and we to more business and just got the commentary of trend as great think the expect. aligns now, I I we our get half back of we’ve with but than a with the rollover strong check

more that anticipate that have If check, you’re you roll going at over. some would point then you to

So is rollover really what trying we’re some to could down occur to you give insight the that road.

promotional not ahead of Our way that down reset. really to price form comes consumer value and a the in necessarily get of to to that mitigate opportunities, the introduced being

strategies I will more our of help the can towards check have. that orientation value some have a lift. pricing we drive as transactions we think the value and the well promotional be pricing But gives products, of people offset great

Karen Holthouse

the with? you -- something hole. you’ve tested familiarity that brand that what’s about you how the that more thought then activity, of you promotion have about sort is out or price are a are And it’s a that of that that doesn’t risk, lot come sort if And try promotional never be? doing some this new and Just climb price is you do can of you and promote, sauces once would some flavors of hole, and always that of back rabbit this. I’ve down rabbit

Charlie Morrison

wings, those strategies. a example be point that price we promotional been offer deliver our and good $XX.XX a pack, have. we quite boneless value by A wing tried It’s for for we’ve when some prices bone-in time Yes, price and a get marketing. a through drink high, would digital a because push Usually, menu might not were we do XX promoting wing boneless that mix fries change product point. you to we where XX.XX

way very for people X effective we not been So a menu, then promote And us very that’s but advertising, the product build that a that do go guest to try X to price to off out. usually point for value-oriented discount. and feeds

discounting. And here value through is so think I the differentiation great not pricing,

Operator

comes your with Chris question Please questions. O’Cull Stifel. next proceed from with Our

Chris O’Cull

past Charlie, stores evidence for markets greater awareness. any that you to is advertising the national that in new from afternoon. seeing discussed yet? the Are benefits in good happening of Thanks, one of of underpenetrated you’ve benefit brand

Charlie Morrison

Glad Yes. question. asked you that

to which to That We that performance back go grows if a been XXXX we momentum. start for consistent it’s early them the vintages starting -- first -- we’ve at their seen is half at of of restaurants set XXX,XXX although with those class have that class year, has look better and what in expectations had we’ve I of very for, few AUV are little only and have of starting because that a XXX,XXX. the about see second XXXX, the performance. year. restaurants about class, that comp first and Similar, maybe look about year to

gate coming starting see the The holding and demonstrate the out meaning, first very quarter to that XXXX some and that are quarter of restaurants they’re we that restaurants XXXX fourth nicely. stronger of momentum, revenue

encouraged So to what by do. we we expected media the are

Chris O’Cull

running commercials? periods have the then company during And when how trended is great. sales That’s not

Charlie Morrison

go during six only weeks. meaningful in any August early timeframe. for point air time It’s and about off really July the We

reacts that And well although guest as as digital so is really marketing, that’s on and TV, we static cable content. to our digital air digital off actually during heavy messaging. we’re time, video well our up And

any during we or notable timeframe. that haven’t sort of meaningful So change seen

Operator

Jake Bartlett Our with next SunTrust comes from with question. question proceed Please Humphrey. Robinson your

Kevin Robinson

or Robinson Jake XXXX? it’s roll the to about out be delivery loaded? Kevin How base out back-end think should in or on for expected loaded Is gradually is it should Bartlett. This case front-end we maybe that roll

Charlie Morrison

frame three quarters, I launch be And a at it roll think time always a phased more. of probably delivery, if No that matter minimum start out. we the will encompasses out roll when not

lot deliveries. to franchisees our with do the and part training of So the that there’s of a education strategy also -- media optimizing that launching is and around for requirement

So in in would not it if period front-loaded. of case, XXXX longer in earnest, quite take a us even any It would it time. starts be

Kevin Robinson

that XXXX support going terms And Okay. of marketing, rollout. we delivery under of in Is that? were X% was marketing to to to a the impression the in there incremental used change be

Charlie Morrison

you things There’s we to that. is clarify. of sure the that you franchisees. when clear that haven’t decision extra provides make do to it it, what investment fund ad conscious on do increase to idea a the you’re made also our to Obviously, by return it great that with on to want two change no There’s a just and want X%. you yet One for

is new onboard one The of leverage before that absolutely place. to to and happen have that we made that utilize the this is during which CMO decision, quarter. other I’d thing should for be putting opportunity pieces our delivery those we’re into like final

Kevin Robinson

And are delivery? markets finding testing grows where you faster your in mix you digital are

Charlie Morrison

has absolutely a It on highly mix. incremental impact or deliver -- on digital

delivery minus, transactions XX%, -- we’ve period. these been fact, or plus digital digital, seen of almost The it’s XXX% dollars has about all the delivery in are of incrementality In are markets. that

yes, So to mix. digital very the incremental

Kevin Robinson

new along due awareness the And unit TV question. final advertising? volumes higher up, the to with going national Are my

Charlie Morrison

pace the Chris as the vintages. just than I asked are to when opening we restaurants answer previous the a at as stronger XXXX QX The XXXX QX that that seeing Yes. mentioned question. he well is

Kevin Robinson

Well answering much. so for questions. Thanks all thank you my of

Operator

from with comes question Stephens. next Our Will Slabaugh

Will Slabaugh

just due much this pricing last readdress expected now those of a at Wanted this general wage large I feel year to with follow percentage made pricing about took the that, wages up inflation to for to wanted of year. year. again on on higher or that markets going holding of a like the franchisees in a as in high a clarify on pricing are later you you you wings and or comment conversations we’re pattern just with mentioned earlier, them minimum there bit particularly to

Charlie Morrison

ago wage inflation wage franchisees X I associated many in addressing reason Yes, inflation in don’t that put year place, was with anticipated because again X mostly price would inflation. a wage for some price be think when put or

inflation really there’d for not reflected And saw else. menu on we much, that the that Now the split of the where higher the menu activity that than complete, year. wing expect put if the balance anything pricing about be price any, the prices more is I would

Will Slabaugh

an helpful. frequency we��re you do of extent that also be And growth rollout app. would of willing be today? if quarter be sales better the and year-over-year in mobile other to XQ guest this of to I then able any to that what offer we app the or you’re any you And to the of willing may to on not specifics But ordering to orders Great. terms currently earlier. able mobile mix might saw gave And new mobile the that the share update give apologize in to drive in

Charlie Morrison

Yes, okay.

XXX XX.X The prior basis for So basis ‘XX QX little piece were online up points was by points than more sales about same better XX.X%. than quarter the year a from XXX here. of and or piece last quarter. That

trajectory the basis still holding lift every with XXX is we’ve about sequential So point quarter. seen a

things going hopefully, for One, the easier to them to As fewer it for to couple relates to come -- to the order process steps. first, the and making, in it the in, navigate greatly modifications a guests, mind. -- we’re ability get simplify to make we’re we their

the upsell X other opportunity of way. big include for more in areas us effective a to opportunity The

flavors dessert, So an a from a new add-on occasion. and/or promote a maybe add add add drink side,

our orders of And DoorDash, wingstop.com, I is fairly piece integration the technology in through add restricted Most of would come the We’re delivery that, for upside not marketplaces example. actually then through have in an today our for opportunity. that’s we last so the of delivery.

to that those want begin. sure up make delivery optimized focused we’ve app And when so occasions a be that to we

Operator

from BTIG. question with next Our Saleh Peter comes

Peter Saleh

back come to conversation the to want I delivery. on

you’re said orders third-party Wingstop of app experience the working more customer the through the you’d versus you’re and on think traditional delivery the lot improving I operators. seeing a coming

there So in-house improve it any take outsourcing versus the to delivery is to maybe franchisees this appetite experience? among

Charlie Morrison

little, that. that an high with to them At be desire if any, extraordinary very do comes I quite opportunity. that. of want do there’s to And that volume would a frankly, might know complexity. it we amount No, very delivery, don’t of But an

seamless importance -- being to to And connecting us of what DoorDash, and that a I most with We’re importance happy very with the and sure our always the are recognize guests together both that, that’s it’s a we the enamored And our parties parties I and we I is what deliver. for making and a we’ve lot should in the delivery. the think putting is always transaction. relationship know of and DoorDash. of think really happen both think understand both end-to-end chains and pleased experience tell promised of upside guest and not what with are That proven But case. experiencing I efficient potential, people doesn’t lot seamless us that the you and

our XX% is for way has carry sure what is consistent to with especially that focus we So the deliver expectation for Wingstop make brand around. out, that been their here, all

Peter Saleh

you’re about incremental, takes or said that dines different? And so in or customer your Great. has believe we talk suggests the a do traditional you X How XX% Can it’s delivery I or in the out? about of data occasion. do type that little the you that different fairly would been a customer delivery bit seeing customers? think those How they customer versus are what about

Charlie Morrison

for who us is. scenario true think, clearly we That’s roll to marketing a fairly the to down early start consistent I of we want ultimately, out customer consumer, sure a it’s road. know awfully as that target delivery towards to it’s clearly part make but what we identify Well,

on the So I’ll a research with more back some of doing. we’re that get you little in once get we insight

Operator

time, ladies the this and this presentation. At you, concludes question-and-answer Thank gentlemen.

time, your your participation. and disconnect may thank You lines for this you at

Wingstop (WING) 6 May 182018 Q1 Earnings call transcript