Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wingstop Inc. Fiscal First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that, today's event is being recorded today Wednesday May 3, 2023.

On the call today are Michael Skipworth, President and Chief Executive Officer; and Alex Kaleida, Vice President and Chief Investment Officer.

would introduce I time this like Mr. to At to begin presentation. the Kaleida you. Thank

Alex Kaleida

the and Quarter you, welcome Fiscal for Thank to Wingstop. Call First Conference XXXX Earnings

available website were our results published this and Our earlier Investor ir.wingstop.com. at are Relations morning on

currently Our results not of discussion from to to risks differ future are could that we subject guarantees and are materially, today uncertainties statements. expect. and cause statements forward-looking numerous includes These performance our what actual

and Presentation our financial affect for considered can results be release. Our results earnings of measures SEC our Reconciliations our risks in substitute accordance in financial as non-GAAP GAAP could with describe GAAP. a be evaluating believe should We filings future such prepared information condition. measures to various in that in isolation, performance. we contained certain not comparable use operating that or are useful

we a session, question many you Q&A ask to and the follow-up each one participants to a for ask allow as question. keep possible to that Lastly, as please

With like to call the that I Michael. would over to turn

Michael Skipworth

start you and XXXX, in business the momentum The saw we of morning, our a call. for our Good back us strong given has year. continued in half and XXXX into the joining to thank

gives industry-leading strong year execute confidence multiyear another against This we resiliency While to in continue XXXX deliver sales start drivers, our to of speaks the brand us several of and strategies. power our our Wingstop to ability of the to results. the staying

top driven restaurant sales all I In and be growth the partners our strength of we our brand growth. quarter, path the becoming true demonstration the fueling transaction our At same-store underlying people, XX of comp brand. of XX.X% of prouder who foundation of global team was a our Substantially, first brand. Wingstop is a by couldn't the delivered strategies are and to

new units We digital in net rate during a XX.X%. growth sales digital representing a growth the our for quarter. expansion sales further quarter saw opened channels unit mix Within our achieving of we XX XX% record the

are Global growth now XX% prior $XX.X sales system line system-wide million, in Adjusted by sales. been versus we EBITDA multiyear of AUVs increase sales sight and in north to we have strength us against This billion $X and executing drivers transaction year. same-store approaching provides sales grew we fueling by believe was the XX% is of million. of driven our clear growing $X an

channel now is against has levers a increase million. $XXX,XXX believe, These we data-driven growth huge delivery last of building and awareness expanding nearly brand scale strategic $X.X marketing. just brand to three within awareness. consist growth grown digital But by menu to and strategies and AUV approaching our the we will our levers alone, executing opportunity is AUVs are innovation, continue In the transformation our years

our at grow by to to sales, local making XX% continues to fund the which the the advertising similar other In that rate advertising beginning the first to progress fund Our X% the bolstered the brands. effective increased the QX conversion fuel QX was in to requirement, further national became advertising ad system year. gap continue a brand at national awareness last of of giving in against us quarter,

such and has a ad to allowed digital to The NBA. presence increase and the include buyer us social in media, and spend more as our in our growth in streaming big be properties NFL to channels, premium

we message, year, the year, half implemented of our a always-on mark working. will top strategy one back throughout consumers first keep an which deploying the XXXX of is in Wingstop XXXX with believe and that full mind entire we will

sales sales growth there other to, remains we brands, opportunity deliver XXth same-store year our but the in closing to term. and national gap We consecutive look over our sustain ahead, long of are making great significant progress same-store a on awareness as growth

feel We for propel agency other our the brands. the NFL help and make name. Wingstop, of We our the agency, recently many Wingstop lead great household new creative the currently can phase growth and XXandSunny a announced XXandSunny, next into of appointment brand,

We're proven for new year. will levers, store talent our growth in support we actioning A their what's creative, excited about this are and against. the further campaign later creative

sandwich, In Not fact, innovations XX sandwich, of we of on new unique sandwiches only that showcase chicken slightly one we and recent our see did guests. August flavor focuses was profiles can creative we menu in existing both XXXX. our which chicken one introduced launch that like chicken to new launched

new building of enabler X.X awareness, This for surface. scratching winning to sandwich an Wingstop that our billion a we flavor, proven in gives opportunity to category upwards and increasing annually, Chicken just servings deliver the are frequency be opportunity occasions. has has powerful a an us

we Not further to believe best-in-class change structural our way sandwich meaningful food unit could would costs, low a we a chain our only economics. in is and yielding growth the a chicken which where mix, already it result our also boneless COGS a range lever, enhance in advances strategy path to plus supply in long-term XX% XX% see

We also drive innovation through flavor.

proven consumer-tested future that as we we bring full During to for and Rub, a with relevance to back Hot brand, the in a the in into with fan-favorite have can options new which flavor has LTO new our mixing LTOs. we record. and been our core toolkit, well occasions lean LTOs are highest tremendous Honey repeat Flavor first brought on tactic flavor of pantry flavor drive as a guests our quarter, potential

case, not platform in DoorDash's platform, launch The this Another contributor down. signs combined occasions. capture continued with on any on the with growth our of consumers us additional build delivery slowing of Wingstop new awareness Uber to an growth Eats has of in July is, year, of last AUV to and provides base shown And channel. channel our

channel have long-term opportunity this in scale and delivery our we channels, growth. expansion believe showcases continue further in growth all to have AUV drive seen We to channels we but the

our XX% and and drive it increased new incredible QX further allowing occasions. in win record a a frequency to and an rates to grow hit first-party in data early We our first-party continues database impact engine leveraging at to mix our remains feeds Wingstop database million. now improvement This digital our sales Even XX retention us in surpassing marketing with for retention significant frequency. business, opportunity drive success to

orders. innovation just As are we our aspirational results we lean from around transaction, continue about to a AI-enabled goal and we into early digitizing pursue of test every completed phone excited

through on and capture guest care are guests ticket experience as this satisfaction the The We in digitally. allows of members team the our member picking order This with time, early increase in is that size results this we improvement ordering up voice to represent orders our phone digital an still order focus see where ability XX% an convert to team guest today their in into would restaurant. test of expanding AI technology. orders taking promising we to the are about sales also

lot something growth. great to to guests unlock winning is is important And with frequency The key extremely we know excellence occasions fueling have experience. the a XX% guest is guests continued how we on. new with transaction powerful moving brand that growth been and focused A them these same-store it of QX which curve, a new the provide operating is sales a for into AUV in bringing up

we executing to for at experience our it current are our initial brand know million. sales for A a our growth. guest goal multiyear best-in-class further unit to to good we be there returns but further AUVs are levers the system we to investment and the margins of enhance the top our that we deliver progress making XX.X%. against the economics restaurants, by and drive encouraged restaurants experience generating contribute The even partners. in back to proxy $X.X results are up, our above AUVs million are mid-$XXX,XXX guest us best-in-class almost our continues saw of confidence QX know opportunity But We which we $X range will line in is company-owned give in our an strengthen to

on chain and price partners. historically laurels delivering wings become committed food executing not the resting our our size spot supply volatile combination We're on more our to brand for our for remain less of and strategy cost has scale to reliant The to from the away predictable strategy market and chain go how standpoint allowing to we from supply our to enabled market make change fundamental great us progress arrangements. our pricing buy with of combined in spot towards is a a longer-term more and moving

excited which would our development Based guidance Wingstop. sites of new are by significant and the and we on another have and of year pipeline progress record partners approximately backdrop the setting restaurants, brand year strong net our into our for construction pipeline Our the we are today XXXX. stages development this in in another our strength the translating strength approved is business XXX our visibility for XXXX in growth pipeline reiterating for be our into and in

exited we As where XXXX, willing we that we acquire to and the a energized XXX brand than restaurants base ready more an net develop new surpassed of are have first and for time, year partners territory. more

the of now X,XXX we development record quarter, In restaurant fact, as of the first global a pipeline end approaching have commitments. that's

the approved year of start for the seeing our openings record of in XXXX. also a We which through sites supports are number outlook

opportunity pace times we opening hit an Truly for momentum for of us past than to strength exciting restaurant brand XXXXth scale in milestone This and in have and with this front our the us to restaurants. exciting development global the X,XXX helped accelerated incredible more development an month. of Wingstop

markets progress more in than where we to X,XXX making opportunity an international restaurants. great open our We're see

expand $X to million, business. a market to economics U.K. domestic playbook launches levels serves market as at past which while AUVs our for Our continues unit future comparable are

in last strength signed response. market recently, the We pipeline. another our year, XX-restaurant example development our the consumer Canada of Our commitment Puerto Korea, a in to most opened the thrilled during June we bring we're QX. flavor first business and by to Wingstop Rico, launched of And

partner business Head week team. joined Raj experience international growth. International our business have an a brings leadership scale as we my Kapoor, tremendous Wingstop of him globally. into shepherd This to He leader to the new Raj a our I'm eagerness and phase opportunity next thrilled of to and of with wealth is

raising positioned digits. set our year year. from growth, Wingstop year, XXXX our our to sales we of to industry-leading guidance I'm consecutive sights the on XXth is mid-single to our are outlook for XXXX the same-store prior With sales another high-single-digit growth. same-store year clearly full start by strong of well excited and a start

We partners new same-store unit history. economics sales to as Our the target our growth unit some net of sustaining high-growth development. asset-light us by strongest in seeing Wingstop restaurant positioned XXX of units. economics are brand drivers is well our industry-leading pace supported in best-in-class believe these an approximately positions brand, unique of upon with deliver an

front in shareholder and us have believe, we well returns. to here at us of deliver Wingstop, We highlights best-in-class really this the opportunity positions

I members to and Before it for the want brand I all partners, the Support members hand off the at incredible Alex, restaurant and team their work thank Center our team commitment. Global in our to

like that, With I'd the -- to to call I'll over Alex. turn

Alex Kaleida

Thank you, Michael.

long-term just growth basis. billion heard Michael, $X.X strength on first the of a sales from system-wide now the which demonstrated the quarter first in As XX-month totals delivered in We you XX.X% our quarter, strategies. trailing

the the year to primarily since in prior from QX, franchise transaction by $XXX.X million was increased growth. by growth prior revenue openings experienced in increased driven in The fees sales. the and franchise of year revenue transaction increase revenues, comparable XX.X% a quarter and fiscal of Total quarter. second prior year domestic net by the and million we first our continued, $XX.X first comp $XX.X other driven XXX Royalty the same-store half majority million period in

of and a to Company-owned $X.X prior $XX.X year million restaurant sales company-owned primarily in entirely six totaled period. an net restaurants same-store XX.X% due versus million transaction comparable growth driven new increase in sales by increase the QX,

sales a than restaurant as by packaging points improved prior more a percentage Cost costs. food in XXXX-basis-point reduction basis the X,XXX of compared sales driven of to by year mainly and company-owned beverage

chicken bone-in for improvement quarter the see which in benefited cost from decrease We continued first a this are restaurant in margins, wings. to the XX% of pleased

and indicators on know the for believe to core our based a our commodities, XXXX line range. food have in chain supply what XX% predictable sight low With leading costs we of today we with strategy for we

restaurant a we anticipate result, XX%. to of As approximately be company-owned sales cost

among cost commodity, to bit chain and in our is deflation our core reduce excitement generating this strengthened supply near unit with food have the dividends, quite partners our as to in Combined strategy economics volatility is paying a record levels. brand of our

to million result SG&A driven In performance-based million of support the a performance. versus and of the strategic the prior the business' stock comparable by compensation first of incentive quarter, and by $XX.X compensation in increased as period long-term total a business, projects increase investments to year the $X.X in an growth

to to development business, We our industry-leading to investments will as international sustain of areas make technology, and these results. in continue such in strategic allow us

non-GAAP Adjusting adjusted for quarter, earnings a $XX.X an of increase million non-GAAP of year. non-recurring share year. the during EBITDA increase XX% prior was versus we XX% Adjusted measure diluted delivered per the versus prior an a $X.XX, the items, measure

franchised to continues asset-light strong cash deliver highly model free flows. Our

the As of we million debt. end net of first had in the quarter, $XXX.X

net adjusted Our and times our end debt growth lower through flow delever EBITDA the trailing at ability of of is to EBITDA X.X a X.X fourth quickly adjusted the times, free strong generation. to quarter a XX-month at was cash than a which underscoring combination

it us that strong over uncertainty back the in half be stands cash macro to $XXX backdrop any and allows of year. navigate we million, a maintaining in We are this the at as opportunistic balance

continue demonstration will remain be of totaling Today, stock will returns. shareholder $X.X capital May and to XX XXXX with This a on announced paid cash driving the June of model. approximately a dividend X, also to we of XXXX. per regular opportunities of shareholder this returning strength of dividend stockholders of share our value We $X.XX million explore maximize to to to as quarterly shareholders common dividend. committed through record our We

outlook for our to shifting Now, XXXX.

have mid-single-digit our strong pipeline start to sales. the sales high-single-digit on increased in year, With growth XXXX for our visibility Based we the from at in units, prior the growth the outlook our XX% outlook of same-store have we year, to new XXX are reiterating the this net translating rate than to of development a point we unit approximately more year. versus same-store

of million initiatives support $XX.X pace to to $X.X our the and million projects expense. our between guidance in an anticipate including strategic to stock-based to of towards be $XX be is also SG&A weighted estimated million second We estimated openings more $XX.X million, million compensation and consulting $XX half.

that We by Wingstop are business, the opportunity health the ahead XXXX brand the for lies in momentum of our excited the beyond. underlying and and

strategy Wingstop, outlook is delivering confidence for the give of part unique have XXXX. power growth Our and in story for us a our staying the

I'd please that, now line turn With Operator, like questions. to the Q&A. open to for

Operator

comes Yes. session. from time, Thank will question-and-answer Tarantino Instructions] we with Baird. begin first you. David At this [Operator the the And question

David Tarantino

to you a year. you're start comps you a and basis, guess, from strength at question And domestic last looked Michael, was morning step AUVs. seeing benefit could My whether the quarter? was such in a you in factors Good I have are that if And a or some those volumes then you drove normal to think seasonality. talk first on Hi. maybe that wondering, congratulations structural the I or strong seasonal we to the up there follow-up. the the I whether the related think about strong in quarter? pretty And like temporary is the surge had look relative way it on it

Michael Skipworth

morning. Hi, David. Good Yes.

we call, QX a the year we the saw continued acknowledge giving our that year build as and comp QX mentioned. progress we momentum think into last you mentioned strong through this did that this how really I to start on us as we

have few executing And in believe, that we're pretty it unique we've lot to occasions visit ad so with through we the in a that in continuing levers in core spot name sandwich, with brand brand, to consumers, that these that's against. delivery executing or chicken that structural, only to awareness fund channel we're repeat or just in different the growth really levers whether bringing into change us growth putting been just not a winning our a is our guests a of business national are our against through the seasonal drive not expanding many expansion

we we so build And the as saw that quarter. through momentum progressed

our arms to year half we the pretty kind in the as strategies to back the about result in how But feel deliver we sales against year our is this and which up, obviously, consecutive we're would year the of XXth executing get going on the And growth. trying rest think their outlook consumer. the ability of everyone and that same-store it's shape of confident around of to in

David Tarantino

I even Michael guidance guess assumes and seasonally your the about adjusted volumes you. comps significantly guidance. did to Thank I from reported your moderate pretty Great. want ask significantly pretty just the maybe you moderate for QX. what

something, of year? maybe So, as just first already a you or are you is seeing second I or half that, of guess question the bit is think conservatism you about the this are seeing

Michael Skipworth

amount of the there's trying fair with going probably with an Yes really uncertainty happen understand a Everyone more what's David as consumer to Fed it's I to macro the the example. of is today the latter. think still Obviously environment recession. later

exactly trying the arms that around And means so we're to our consumer. overall get to all what

a overall in as we're and our That second and said, I really mentioned just macro to year backdrop that like, considering raise unique this a guidance even be to it feel a able deliver brand a year. ago pretty spot strong we

David Tarantino

Thank Great. Makes you. sense.

Michael Skipworth

you. Thank

Operator

Thank Barclays. from Jeffrey comes Bernstein you. And next with question the

Jeffrey Bernstein

Thank very Two questions. you much. Great.

The first the two and concerns a the one Clearly lot month are on rate easing just increases macro of over there and or concerns. just bank small of best growth. unit

any XX% for this just growth all are think any you outlook. you've I'm wondering of unit or those impact the factors having year reiterated So, I plus. on if know for your guidance

get has any trying on at But whether just that some think color impact to all. you

your XXXX pipeline is units. I you mentioned think

unit growth was maybe the pipeline in maybe current last on then and outlook any of I'm the of that color based that one could on follow-up. just wondering I macro? year kind Any have So, terms before? And color some year that provide headwinds what the

Michael Skipworth

on is Yes, we record past ago. had we provide to to a just roughly. year And level a openings And from morning. to of XXX continue some you pipeline demand our year to layer perspective brand here X,XXX top of sit this their the and close mentioned the over the as strong. partners speaks was in that good today really to at we desire to Wingstop reinvest that time X,XXX that Jeff, we're the It seeing then grow.

reiterated new here need sit the in we that pipeline of into as And in on have visibility our XXX we pipeline. outlook pretty net good that fact we And today number sitting sites that of that deliver our today. to units are we

of happens able the to to in so continue macro pretty we regardless unit confident industry-leading what feel overall deliver And be to development.

And do a operations. has there's lot the community. A flow their lending cash brand financing have fueled think is not or if from our of you to of banks about of environment a that or lot we these lot leverage conversations by rate growth partner with regional

Wingstop. And then of brands open to initial on that relatively compared top modest a a other to it's investment

all a think in us things confidence position help sit industry-leading with return be delivering I able today unit those perspective. So, to development another here to from

Jeffrey Bernstein

just Understood. on is commodity outlook. incredible. Clearly XX% deflation on bone-in the plus the wings cost And is the the then of follow-up

spot for shifting buys you Just think second incremental market. quarter more a from outlook supply be could to Thank I great. turn perspective, there's details you. chain's the in would headwind? something into of when that versus If new for any color, terms a the might provide think about you're long-term wondering or your you you that it mentioned just would back half wondering And

Michael Skipworth

see Jeff, the today. commodity we're that we really backdrop encouraged by

in the but of from as maybe little bit Seems some around more there look nothing the signal price -- softness favorable business. well. of to, price of perspective, we're a to obviously, of out the to our macro those leads indicators, are a we leading that wings, at seeing As

wings our half Urner pretty up is trend, our what a environment we of But still we some season, to as if football in to we bit. would that seasonal in in you Urner sit margin food normalize with pretty going the restaurants to But And year that describe, us, that here usually to more I think tick price we're partners favorable you to we pricing, as see demand guided cost, continue company-owned of expect that, a not overall that do the favorable growth. we revert the -- for see into get even the the of only to something there, overall overall Barry seeing for little fuel Barry. the for but today back back a which front brand

and and our and about and against pricing But continued our from further our we talked it, buy, supply able then combination scale The remarks. you food the shift look to chain it negotiate cost that in as prepared the mentioned to our strategy, market longer-term spot more be of out. arrangements in us size allowing is we more away more give us the overall just and execution of predictability

And actually shape and some starting comfort into of as us are giving XXXX, what some up these is to confidence arrangements well.

Jeffrey Bernstein

clarify, Understood. I there not but your in anything And your think to outlook you're maybe response just you bit, little macro a results. softening the seeing mentioned, in

assume then I April? was is safe there saw to quarter questioned a it in specifics trend, month that the the but change hasn't of you the momentum least really first think through been at giving that without through earlier,

Alex Kaleida

Jeff, I in can here. jump

meat. signals and one equilibrium, that are wings supply leading I inventory to, that the on rebalancing One right pointing think demand And around are is of some that's frozen we're now. the between as and suppliers indicators levels breast that softness

Jeffrey Bernstein

April? you sorry. with perspective, seen in really plus the momentum, I a quarter, concerns. sure, the XX% the about was and I'm top first if I haven't line thus the indicated, trying think comp wasn't talking to convey the comp despite from a you I second message that in was you've about quarter macro were slowdown the far

Michael Skipworth

we April, do. the more don't just about that leading the will of were be around Barry outlook and Urner trying indicators to but I the what some intentional think No, influence

the us digits. balance that which and As raising factored it digits for year from for high-single the all I overall outlook think business guidance the to of of our into in kind to resulted demand, mid-single our our relates year, of

Jeffrey Bernstein

Thank you.

Operator

next from the Jon you. with question Citigroup. And Tower Thank comes

Jon Tower

question, then One for questions. Thanks taking Great. the a follow-up. and

in if but more Just just curious chicken quite the about well. that curious, in quarter, Hot importantly, doing product talked LTO, on a Honey seemed during you have the a from the way I'm product an menu LTO where makes success how item given you this mixed quarter? to to especially, to the could at its the sandwich speak that the Rub, looking permanent

Michael Skipworth

Hi, morning. Jon, Good say, start to and I'm it maybe the there. Jeff or I sorry. as would I'll relates LTO

As a amount we brand our over almost flavors. menu on of as years, XX reflect Wingstop there innovation hasn't related significant been to a specifically and

I one eliminated two. added we've think and

So make bar a on for it said and decently the to Honey which consumer high and at obviously, menu our we is a to Hot demand been flavor sentiment overall it has permanently. Rub, That significant. like listen look

we'll that monitor it and John. to And evaluate continue so

relates our brand But we've growth seen Chicken for kind as in exciting of to and is, it what what's Sandwich, channels. all seen we've

mix it channels. that we it's as in cells look we're what all that bit strength categories halo wings sandwich from some mix business. Chicken you the all of boneless seeing a range. of encouraged we've name carryout, by about a in quarter we're delivery look wings saw across tender experiencing And carryout you effect we're prior that bone-in growth of a rise overall in mid-single-digit the because digital saw you at at And non-digital sustain we If seen

that which the what see encouraged into sustain, bringing occasions guests about excited And brand and we're as the more continue brand see that really that. we're which so we Chicken by sales excited new mix mean And Sandwich for we're we winning really means mentioned to to long-term. can earlier that

Jon Tower

to us about it. you. to color -- going Can you what's you're opportunities about. consulting on? business back that going that there now happening Got as supply give forward? Is a just Thank of looking there? might talked chain at I and to at thinking And looking side little something the that think projects Is going business impact going right that else then the the you the the

Michael Skipworth

put-our-foot-on-the-gas sit back we we feel as of a I is of think here, John, step a as kind another and those brand Yes, one like this take moments.

we're you've -- years generally investments And growth known I this would we industry-leading to results. sure where kind playing of so offense we've the phase we we that think in taking and advance excited in of we growth the to areas in make deliver about. strategy our in and position strategic that to of make next bucket, brand leaning brand in continue to to that are in some for have And where just leaning continue today. We're front the us this over can momentum put us that's advantage we're the of

Jon Tower

Okay.

you've not chain do is with this supply to So the examination done previously?

Michael Skipworth

not It's Yes. specifically correct. that historically that talked we've strategy about related to overall chain supply

Jon Tower

pass I’ll Thanks. it Great. on.

Operator

from with Thank Cowen. you. TD And Andrew the next question comes Charles

Andrew Charles

a robust comes XX% comps impressive your of was Great. on the what planned Thanks. is XQ that fund what's in XXXX already Michael higher with outlook the with plan ad top surplus the the ad XX% TRPs? Is or are beef this to to to XXXX hold followed able the XXXX, up on deploy later in plan that the to increase in surplus increase XXXX? fund you

Michael Skipworth

good Andrew, morning.

bit about of bit little a a a John moment. to made back to ties little feeling I it put-our-foot-on-the-gas think just my this like I comment

bringing strategically to surplus leaning finding levers see have do any we our so front brand invest remarks. take into are of in coming the of to the in a And this that prepared drive mentioned fund ad are opportunities advantage growth new that into we of us we and lot growth we guests to in that continue and

the want seeing frequency to and of how but curve those walls not an as that comment the part of within able we're think And to see four what the And we're we we're about to you what up guests seeing of we're really only more AUVs earlier for retain is the see. restaurant, to which excited in them move structural brand the brand. with an change tie-back overall

Andrew Charles

to check-in mitigate to wings bone-in wanted And well volatility. Great. as just opportunity the on then, Okay. I just

the described so, after project. roughly you're flexible the in later detailing very approach You first that here and a year

kind the see made. progress to that's been Just want of

ago, year And head is you of with to took did a sheet fortify. balance where kind recap on $XXX you help million this? Just cash of when obviously your on about the the

really you approach Is your shareholders? as cash with cash to to still deployed usage that lower help is to more there that needed be intensity, something you to a perhaps lower of or here view to efforts, the be able lead may

Alex Kaleida

Andrew. morning, or chain of market, a complex pricing for think of supply more away spot the I of build strategy Thanks buy Good which as Yeah, is our included an scenario. a include, question. you model acquisition tenets from strategy a recall moving This will cost the the multiple scenario, plus our potential potential Alex. co-investment

And call, of year-in where strategy working strategy our our buy having we've and hard, changed conversations on our just been of articulation as we're mentioned first year-out. fundamentally the has element with on that Michael that that really our

So costs one that starting come really I been see for this some the that visibility the And into into first able to in outlook. we've you're articulate is first of think our to range of food we have the years XXXX. low-XX%

opportunistic, continue supply benefits a or we line. balance And of that we're see shareholders whether the be continue that So positioned with to to from mentioned, it the approach, cash going something capital-intensive on then, in to our our to down are as chain less work strategy we as that. work return is sheet capital -- to you the

Andrew Charles

Very good. guys. Thanks

Operator

Thank you.

Alex Kaleida

you. Thank

Operator

Thank you.

next Morgan question with Harbour Brian Our comes from Stanley.

Brian Harbour

kind Because, lower-end had Yeah. talk just about of exposure year Thanks. little of about about a know ago talked you Can some I morning back. customers demographic bit? a Good pulling we guys. the

perspective? the of higher-end you or quite have come a from Has seen especially improved, what way delivery. lower you observe recently? since some to demographic just strong in But a customers the you think more what do given have kind end of I

Michael Skipworth

Hey. Brian, morning. good

ago we years the it funnel we after a we -- saw of had broaden strategy the and where user. several an a described of kind heavy opportunity top recall to you QSR go heavy this If stated as

brand. And heavy diverse this equity user a over about the visits income, little And of is more made pretty higher about skew our the excited less all users the progress bit as a just QSR bit than bringing we've a little relates QSR little it QSR to core. represents those years, we're XX% and into --

call that today XX%. it, or four than of years roughly that's over five consumer business. so lower-income And And our half less ago was

said, we're a brand our unique these core. progress making as have a -- So That position clearly there. with we

high-frequency and brand engage occasion. quarter almost times that And occasion. with month an it's three not once average indulgent frequency our is a The a or they is, is a

puts feel that, And talked occasions. the they from have position though that back overall pressure should about towards the on book so is feeling to or they And it's as month, environment of unique a and they'll their high-frequency get pocket in we've inflation just it's Wingstop in reward the pull consumers whether themselves. more then, QSR end the like almost a tendency recessionary

seen so occasions an exactly indulgent with as we've what that's top-of-mind demonstrated we're those core. quarter indulgent to And those our think them ability awareness And retain value, ability -- we've long throughout our first driving and the with as is presenting occasions. to I and retain

Brian Harbour

increase just in QSRs Great. terms with anything on we in depends Thank of you mean brand. of that, this elsewhere in that holding can kind recently to at the frequency have And related higher-frequency too? and you. of more recently? seen And think is sort even building the you more alluded frequency the certainly this point, you or I I quantify there it What seeing of the are industry but on some to

Alex Kaleida

jump is I in can Hey, Alex. here. Brian this

we've new attracted three times average that Wingstop that's comes mentioned, a that As guest we sustain our of a about this quarter. into able in we've than been frequency core average lower to at overall yet

that our think with curve. move core the the demonstrates I along So well frequency build our new focus as frequency to as guests continued

Michael Skipworth

to driven making transaction And the that Alex into indulgent supports And their entirely I the comp was of just core. further occasions think QX by and then, add point that while in new growth. our XX.X% just is retaining occasions users about of brand, a We those mentioned new with in Brian. I'll bringing lot

Brian Harbour

you. Thank

Operator

Long next Thank Stephens question you. And the from comes Joshua with Inc.

Joshua Long

on maybe very others pulling the in some many your of that understand question. one question -- pushing that you your the on you I is kind feeling if that could strong. or of build-out Great. exciting. costs a clarification first Thank of that understand more you in about and for the cost pipeline? My been permitting pipeline inflation just taking the construction things is Curious, very some mentioned. I may talk that's was of of follow-up. And advantaged peers, your your have but versus have the development and current format what then stores pressures curious kind of environment? I your my just

Alex Kaleida

Josh. Thanks question, is This the Alex. for

about building investment approaching AUVs partners we've seen of what I now to and to been while think for $X.X brand $XXX,XXX our is million. that able sustain initial you've

years. less a So of is that payback two yield than

things behind So of strategically see been some to order on inflation, inventory while equipment we're very doing to forward certainly stage immune in headwinds mitigate some purchases. scenes their the they of smaller buy the to not we've

that's the build that and expansion you're and our to with open low think margins upfront on, what of Wingstops. that level investment I energized to and with the got base our continue the seeing of brand in commitments to the grow partner in continued pipeline, growth But we've more

Joshua Long

work propel up shifting thinking of to unit Great. of That's brand some X,XXX that you terms be And can I the the internationally some the help you as near-term think set you start markets. to towards of mentioned than talk here on kind restaurant about about side of Michael stores as forward But think you global could hires goals helpful. into going more with you UK we some that? target? top a can opportunities frame point key how new becoming to about for we how you scaling off internationally capital the when maybe jumping human XXXX And about also kind a you've near-term made believe, using opportunities XX of recently very the kind of gears should that. in

Michael Skipworth

heard us refer Yes, for absolutely. you've business think I And growth. that's to international position a in our supercharged

demand significant recently are prepared continue we'll We the demand business expand. just just pipeline a of secured to and our speak Puerto the to that pipeline development in build for pipeline partner for overall few new there. mentioned to remarks we to there a amount our development business and that that opened starting have we've territories. Rico, a We We noted in

talked something to record about momentum. for year overall and is Raj of this international unit think bringing target big in about But really about the hire in and of that Obviously, excited business and excited him outlook is we're for speaks strategy. our really roughly growth excited I really a But, year us. and someone about it, what's XXX mentioned you leading we the that we're another Within and front in net. number international

they a year, unit it that US pace to overall But to we're and of contribution are more as team. the is for our meaningful excited they we is the new way agreements which in is mid-teens territories as of of to units the pace today, little we see bit territories what opening see the we a bring a online, But when outside a today, the start development what then about those written joining get up Raj pretty get growth story. brand demand becomes obviously pace. more with out the UK slower the roughly But

Joshua Long

you. Thank Great.

Operator

with And next the Gordon you. Farmer from Thank comes Haskett. question Jeff

Jeff Farmer

in expectations internal in into guys QX what the performance morning or Good heading of XX% quarter? sales were come you thank same-store curious did stand you. thinking to and Great. terms relative where the I'm

Michael Skipworth

continue expected. momentum earlier, we that call obviously, and through kind exited as then full expectations. exceeded some our to quarter. as with Jeff, progress in saw of But transparency, I great that momentum. We to low-double-digits build level. continue mentioned think knew, I XXXX the We it could we it, We execute at were,

And strategies how and the team going on to we're put by and together our we're so encouraged continue the rallied to been the gas. the have how foot effective --

Jeff Farmer

same-store the on just follow-up components. one And Okay. then, That's sales helpful. really a QX clarification

given you no you but have at largely might can said so, but in -- all this or already sales mix no this QX said menu the impact traffic same-store all detail virtually You pricing, -- number?

Michael Skipworth

Yes.

we the level. get approach about we we to very X of think it, that back price strategic to throughout I and year is in enacted think which X two And right to way quarter, Jeff I windows think but in pricing, mentioned QX. pricing this a is points more to towards at our historical the last -- expect

quarter of That of said, success we little a more that a ticket little have sandwich, towards resulting bit growth. had bit But lower we check, overall the two mix lunch the chicken does impact a would to a and which components daypart washed in from little which all the driven comp been by transaction tend like. being bit and average say substantially with experiencing thing is largely a I good of those growth within

Jeff Farmer

you. Understood. Thank

Operator

from Nick Setyan Securities. you. comes Wedbush Thank question next And the with

Nick Setyan

you. Thank

talked basket the XX% XXs. low the about food guys being You XXXX even cost sales for in of with

delivery lower uptick labor to Assuming flattish is Is in driving just other slightly that what's it a OpEx? mix?

Michael Skipworth

contribution alone what seeing fund is really QX you're changed the In X% year-over-year. ad that

Alex Kaleida

the is we some And in food progress our through with and there And some we Barry cost year that's OpEx what Urner outlook margin with seasonality components of I that brand think the type as in XX%. our about that feel we're small as excited see profile. about and the embedded contemplated of that our come approximately how outlook some within seasonality associated that mentioned means But think type really into play. of I partners we

Nick Setyan

Got it.

a more So, level Is of XX% it's line it's hard to just -- that necessarily not the a than signpost margin. fair?

Michael Skipworth

that's Yes, right.

Nick Setyan

you international Would willing in guys system-wide QX? be of the part sales to out break

Michael Skipworth

anything to becomes in not and domestic our business done saw the yet we something was comp That's it to this really obviously as overall really the break But we've progress strong still continues out. somewhat as what for the international we'll that's in business. we first build. --- growth But of story similar I'll quarter say comp more the the it

Nick Setyan

Okay. Thank you much. very

Operator

from with BMO. the And question you. next comes Strelzik Thank Andrew

Unidentified Analyst

new base? hoping does some regarding details average thanks for provide larger question. what your Daniel units the is can many unit And And split taking franchise the I your How philosophy you with and was Strelzik. partners? what pipeline Hi, also partnering would be existing operate? my This for around Andrew domestic is franchisees? on between new your on well-capitalized franchisee

Alex Kaleida

years the trade the And over exit per willingness it's single talked something we've grow as think seen account take to around that the area. brand opportunity we've about the gradually partner Daniel had operators to yes tick we've having I the and up.

that gram restaurants around half a per and So, number seven is partner.

our But partners growth the part is reinvesting is seeing plus brand generating from development of they're XX% their unique cash existing Wingstop from business. the of we're that

brand about -- some do fit who geography. are we're that strategically selective come partners new the we within see our where but are they and into system very we So, those

Unidentified Analyst

That’s very Thank helpful. you.

Operator

comes question Barish Andy you. Jefferies. the from Thank next with And

Andy Barish

for Hey guys. the Thanks question.

built. Just of wondering couple of a momentum times kind that you mentioned

your exceeded -- So and expectations.

together driven Madness a historically, the wondering comments Just March brand new of and of of around just Bundle flavors sports, kind bit and but a the to you're sporting was now? much share as did, kind major with didn't by be make you well. deal March I those events on is focus this with or just putting your outsized mean as fair shift sure getting sports

Michael Skipworth

is Hi, this Andy, Good Michael. morning.

live going television, I in our we the to eyeballs think media felt at looked media we've clearly talked as we about, were for and strategy placement sports. be most

our and that year leaned this half where so year. been continues of year, is into to TV our strategy And We buy has last be back that really last that focused.

a there huge But national the sure say, thing, we with continue wouldn't that is lean into, being can become name moments culturally making we that how I to brand change smart year-over-year. we're we're household also about, -- guests the the resonate to we a a that as as scale, I'll doing relevant really So, say we brand well

think lot so our And with against initiatives of have into or retaining what your those a and in point occasions QX, the I that pivot core. anything to would a in execute our around guests I we unique continuing wasn't are advertising, brand indulgent that bringing but media just growth these you strategy new in out place, saw

Andy Barish

March you. the assume I strongest of quarter, is correct? or could that the we was Got not mean, month

Michael Skipworth

was. It correct. is That

Andy Barish

color. the Appreciate Okay.

Michael Skipworth

My pleasure.

Operator

Tamas question next the Michael And Oppenheimer Company. & with comes from you. Thank

Michael Tamas

Hi. Thanks.

You of strategies you're in of half mentioned and of pretty of in strategies powerful business, the you a driver some the some place couple that back executing on those put times, the XXXX. obviously,

comparisons the XXXX? are, So, talk some the tougher what Thanks. those as you drivers incremental of against maybe later the roll you in about can of part

Michael Skipworth

example. often we to And onetime it's our the single-year, important really Michael, but demonstrated of you over question. drivers to are I business, we that and Uber think appreciate I we about that lap And is, years these I will our think going of XXXX a pull? the not when kind be we've intentional any take are hear how these for Yes, and levers them I Eats an the really you levers, think pull as different, in that's ability launch XXXX don't be to these pull how reaction, and understand,

talking some our strong even as brands. you're today, seen Eats, here sit We've have we low really Uber in of growth engaged on that with single-digit channel. eaters But

So where with to channel, in level can this just the we mentioned which but a double. today, is significant opportunity as see Eats our are for mix with almost us as there to encouraged and amount we of opportunity for quarter, an DoorDash, delivery well Uber last that continue partner expand continue we in that ways to to lean

a highly servings Those excited year there. And occasions, take chicken there's then chicken we're something billion sandwich the X.X US. winning are about. you digits in mid-single But that we're sandwich, mixing incremental

scratching there's and opportunity we So we're just think, a surface. huge the

I And our of year the statement for on of And XXth by the multiyear And so consecutive year that pulled XXXX that we think drivers really we're sales was strategies supported our business. to on specifically for back executing that XXth that being our based our outlook well the in think this way we half is we growth. against of these kind about we're levers XXXX as our think same-store fact

Michael Tamas

out? Makes was Thanks. think that might there in that Do would somewhere about sense. around XXXX I any update last on an be thoughts have quarter that $XXX then where And or you implication million. EBITDA shake

Michael Skipworth

Yes.

raised updated it which I obviously you well think clearly we quarter, our results, our expectations, did we've above even And guidance last consensus clearly number. were a take higher sales signal to own imply but would where rate expectations. same-store but take if a you outlook QX growth

Michael Tamas

Thank you.

Operator

question with next the And you. Thank comes BTIG. from Saleh Peter

Peter Saleh

through on I just growth lower just Are to don't And delivery. can And users but could guys seeing if in want around it question. missed tell what the quarter? through type is conversation two are the guest a the the delivery provide a income taking year. bit the in if little come delivery back know I mix more first for And what younger income you -- you of unique start the on congrats for you third-party just platforms? on to using great us Thanks Great. higher older? to these your platforms? you I color third-party was they

Michael Skipworth

we're mix seeing mentioned I is saw across growth delivery Peter, within as that's encouraged growth about perspective question. channels. excited appreciate What of we're about as an we channel what the the Hi, overall and all on top within But QX. we

DoorDash it just we Eats I opportunity so speaks encouraged board that was really in all to we the growth was And And platforms were it there. by that. that across or we think have Uber the and growth whether saw

opportunity other don't And those But long-term. incremental. into view in before think business within obviously, just being ton of channel we again, ton I a to mentioned of their on every I channel our that have users as visibility in delivery And highly we platforms. to growth see since saw continue growth as a we the we drive

Peter Saleh

real same thought there I of past or couple at of ask lastly sticking given has answer change I guys strategy sites this looking the strategy important with to types just is, estate your Great. forward? going kind become any different of what over but will And I anyway the you then or years? think is it delivery in Are how know the

Michael Skipworth

back AUV it's business if what's in Wingstop think good Peter this. we grown years about our in a alone And meaningful where prepared saw over reflect growth even Yes question. I remarks that our we the three was how I has is really behind think referenced last I think XXXX I for the And and $XXX,XXX. to built

XX% our sales and today here of sit are You off-premise.

So delivery built our was whether that's carryout this. model or for

there's there. strategy as relates to changed that so And that's estate, real it I around our wouldn't significantly overall anything say

well. today, in our of market we to exactly sight but in be. have over key the master expanding path every We've play where the We understand where of those footprint to X,XXX US a much clear we planned US just and which line and will X,XXX, pretty line US crossed globally a sight see of units a a line of to in the path know clearly

change real no So to call out.

Peter Saleh

you. Thank

Operator

Thank Northcoast with comes Sanderson you. Research. question the next from And Jim

Jim Sanderson

the Hi. Thanks for question.

a get if a more drove follow-up on can court first And comment little Wondering traffic the in mix quarter. then full traffic the had detail based Just you I wanted bit promotion. on question late to or what improvement noticeable growth daypart night? on about any in

Alex Kaleida

Good new consistent build our very We're the attention channels, guests across frequency to this it's all seeing We're Yes, and all continue come new interesting league morning, in. with to. been days call Jim. to across nothing business core. seeing

fundamentally digital So – channels growing. are non-digital

lunch -- with an guests one this on how eater. shows up. higher more there's of I business the to of this into little maybe at I to new well halo that mix we've occasion as does earlier what business. index think little the of individual effect as Michael bit pointed attention the sandwich call mentioned a as to rest our is before chicken a your -- a attracted this But think a we've It the

Jim Sanderson

And question about right. court quick the just full All a promotion.

on point. at was reacted? promotion? see it Did despite the a the how consumer the of that bit commentary think mix as price you strongly for price point a Any I higher higher

Michael Skipworth

Yes.

be count at person with position it point price we menu consumers. was include it higher I opportunity guests meaningful so think occasions value per like unique encouraged a bundle it Even we were we and results well. if just and use can an if a a we create have for the really our did saw. the were that saw you for with basketball piece think group basis. mixed value look it protein is I where we But gathering speaks other thing out college to to how knew going that we call on at would guests and the to watch mix to We that a

And we're with that from about intentional pretty we we encouraged something saw promotion. were so and what

Jim Sanderson

All Thank you. right.

Operator

session well both And the you. the concludes so Thank for itself. Thank much today's as attending as question-and-answer presentation. event this you

You may lines. your now disconnect

Wingstop (WING) 3 May 232023 Q1 Earnings call transcript