Wingstop Set For Continued Growth With Rising Consumer Sentiment
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Wingstop consumer sentiment research has connected to a new set of consumers with a growing sector in young millennials and Gen X, both of which have been increasing in occasions with Wingstop over the past two quarters. Growing its delivery channel is one of the many strategies Wingstop employs to reach its goal of $2 million in AUV compared to its current $1.6 million. These tactics include improving its digital platform, driving brand awareness, menu innovation, and using data-driven marketing, executives reported on the earnings call.
Wingstop generated $1.7 billion in digital sales during 2022, CEO Michael Skipworth reported during the company’s Q4 2022 earnings call.
Skipworth said that the chain’s digital mix is above 60%, and delivery makes up about 30% of sales.
Unlike other chains, such as Chipotle, that have seen digital sales stagnate as a percentage of revenue as consumers revert to pre-pandemic behavior, Wingstop’s digital business is expanding, Skipworth said.
Trouble Ahead?
Since Wingstop's same-store sales only increased 8.7%, it underperformed the market. This gives me some pause and makes the latest earnings print look somewhat worse than it does at first glance. Of course, the other revenue driver is new store openings - which continue to open quickly.
The other factor here is wholesale chicken wing prices, which affect the bottom line as opposed to the top-line factors outlined above. Here we saw a reversal to pre-pandemic prices, with wholesale chicken wings declining 49% between July 2021 and July 2022. This bodes well for Wingstop, although we don't see this translated into a lower cost of revenues for the firm.
Source: Seeking Alpha