Bundled meal promotions tied to sports events were seen as a good value, despite higher prices, the company said. /Photo courtesy of Wingstop.
Proving that TV advertising is not dead, Wingstop on Wednesday reported a 20.1% increase in domestic same-store sales for the first quarter that was almost entirely attributed to traffic growth.
The Dallas-based chain said it is drawing in new guests and increasing frequency as momentum from 2022 carried into the April 1-ended first quarter. Systemwide sales increased more than 30% to $821.6 million.
The growth in part is a result of investments in TV advertising during live sports events, like March Madness and NFL games—though the brand also increased its marketing efforts on social, streaming and digital channels as part of an overall strategy initiated last year to build brand awareness.
“As we looked at our media placement and media strategy for television, we felt the most eyeballs were going to be in live sports, and so that is where our TV buy has been focused,” said CEO Michael Skipworth.
But more is planned to make Wingstop a household name. The company recently announced it has hired the creative agency 72andSunny, which has brought innovative campaigns to brands like Taco Bell and Carl’s Jr./Hardee’s, and is also currently working with the NFL.
“We are making great progress on closing our gap in awareness to other national brands, but there remains a significant opportunity ahead as we look to deliver our 20th consecutive year of same-store sales growth and sustain same-store sales growth over the long term,” said Skipworth.
Wingstop’s new chicken sandwich line, introduced late last year, also contributed to the better-than-expected results and attracted new guests. Skipworth said the chain has only scratched the surface of the chicken sandwich space, a category that has more than 2.8 billion servings annually.
The traffic increase was seen across all channels. About 94% of Wingstop sales are off-premise, including delivery and takeout, and Skipworth said delivery shows no sign of slowing down.
Last year, the brand launched with Uber Eats and its growth with DoorDash has continued, he said. Digital orders represent about 65% of sales, and Skipworth said the chain hopes to digitize all transactions in time.
As part of that effort, Wingstop is expanding a test of AI-enabled phone orders, which still represent about 10% of sales. Using AI to answer phones frees up team members and improves order time, guest satisfaction and even ticket size, he said.
Average unit volumes reached $1.7 million during the quarter, an increase of $400,000 over the last three years.
Anticipating the momentum will continue, the company raised its guidance for the year for same-store sales increase in the high-single digits. Earlier guidance had estimated a mid-single-digit increase.
With commodity costs easing considerably—bone-in wings decreased in cost by 53%—Skipworth said the chain would return to its more typical cadence of small menu price increases once or twice a year.
There was a small price increase during the first quarter that boosted the average check, but the chicken sandwich brought it down slightly with its lower price as a popular lunch item, so Skipworth called it “a wash,” attributing comp growth mostly to transactions.
Alex Kaleida, Wingstop’s chief financial officer, mentioned the company plans to spend $2.8 million on “consulting projects” to support strategic initiatives.
When asked, Skipworth did not elaborate but said, “We feel like, as a brand, this is another one of those put-your-foot-on-the-gas moments.”
In the past, the company has made strategic investments in areas that would advance the growth strategy and deliver results. “I would kind of generally put this in that bucket, where we’re leaning in just to make sure we are taking advantage of the momentum we have in the brand today,” Skipworth said.
During the quarter, Wingstop added a net of 37 new restaurants for a total of 1,996 systemwide. The chain expects to see a record 240 units open this year.
With another 1,200 in the development pipeline, Skipworth said the chain is on the path to reaching its goal of 7,000 units globally, including 3,000 international locations.
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