Entering 2021, the question for Wingstop is how to maintain comp growth as it laps the pandemic-related figures and more markets reduce restrictions.
Morrison said he isn’t too worried because he knows the brand has several levers to pull. For example, the higher sales has meant more dollars in the advertising fund, which means Wingstop will reinvest in driving awareness and attracting new heavy quick-service restaurant users. He added that dining rooms are still not open, which accounted for about 20 percent of sales prior to COVID. The CEO also noted he feels confident in the chain’s partnership with DoorDash.
“As we consider what 2020 looks like, there’s no doubt we have some really high hurdles to jump, but what we don’t see in our business is a temporary increase,” Morrison said. “What we see is a long-term sustainable type of algorithm. That’s been the history of Wingstop for a long time. We’re closing in our 17th consecutive year of same-store sales growth, so we do have the confidence to be able to lap even this performance next year.”
In terms of the impact of other brands choosing to enter the wings category, Morrison said it’s more about what it does to the price of chicken wings because many of the emerging competitors are buying all of the frozen product that’s usually in the market around this time of year.
To reduce the costs pressure on franchisees, Wingstop negotiated a pricing mechanism with its largest poultry suppliers that mitigates the impact of continued inflation in bone-in chicken wings over the near-term.
“We know that a frozen wing is inferior to a fresh, and I think we see that in the quality of the product that’s out there and we also believe that most of these are short-term because in today’s current market prices for wings, it would be hard for most newer competitors to sustain,” Morrison said.
One of the more prominent virtual brands has been It’s Just Wings, which was launched in 1,000 Chili’s and Maggiano’s restaurants overnight. The restaurant said the concept is on pace to generate $150 million in annual sales.
But Morrison, who continues to champion Wingstop’s “category of one” mantra, said the brand doesn’t see much impact associated with the delivery-only concept.
“They have locations all over the country, we know that,” Morrison said. “They’re leveraging their kitchens wisely during a very difficult time for their business. So I applaud the fact that they’re working hard to try and do everything they can to support their own locations, but the only impact we’re seeing it have is they’re really acquiring a lot of the frozen wings stock out of the market that normally is available this time of year and utilizing that for this virtual brand.”
“Effectively, their virtual brand is operating the same as ours is,” he added. “Ours is operating virtually quite well. As we mentioned, we’re already on pace to generate over $1 billion in digital sales through selling wings this year.”
In terms of menu innovation, Wingstop started a test of a bone-in chicken thigh product a little more than a week ago. The CEO didn’t give specifics, but did note that it’s being examined in seven markets. Morrison said it’s been the brand’s desire for a long time to “use more parts of the bird” in strategic ways to help mitigate the impact of bone-in wing price inflation. Looking toward 2021, Wingstop is also working on flavoring innovation.