Wingstop’s digital sales now comprise 36 percent of the company’s total business, an increase of 1,000 basis points from 2018, executives revealed in the surging brand’s third-quarter review this week. And that’s as it heats up focus to expand delivery nationwide.
The Texas-based chain’s Q3 saw double-digit growth in both system-wide and same-store sales. The first jumped 21.6 percent, year-over-year, to $383.5 million, while the latter upped 12.3 percet versus the prior-year period. Wingstop CEO Charles Morrison said the large growth numbers, as well a decision to raise full-year guidance, is a testament to the effectiveness of long-term strategies.
Wingstop's total revenue increased to $49.9 million. The brand expanded its domestic comps outlook for the rest of the fiscal year to between 10–11 percent from high-single digits.
“We are excited about the positive momentum in our business and we believe our focus on these strategic pillars along with the investments we made this year have helped build the foundation for sustained growth for the long term,” he said.
One aspect of Wingstop’s successful Q3 Morrison and CFO Michael Skipworth highlighted was the opening of 37 new locations, putting the total number at 1,340.
Wingstop’s larger focus on innovations in digital sales and advertising has not just been a way to increase short-term sales and profits, though. Morrison said the company will continue to focus on technological innovation as a key driver of sustained growth.
The company previously announced its goal to make every transaction at Wingstop digital. Morrison mentioned the launch at the beginning of 2019 of Wingstop’s online ordering site and mobile app, which he said was important to the brand’s strategy because digital orders carry a $5 higher average ticket. He said Wingstop believes it can drive digital sales without using discounts or incentives, like some other brands do.
As far as its scaled rollout of delivery, Morrison said, it comes from two years of testing that found delivery offers a high sales mix since customers who did not prefer takeout will choose the platform. Roughly 75 percent of Wingstop’s off-premises sales are from takeout.
In late 2018, the company began spreading delivery and ended Q3 with 75 percent of domestic locations onboard. Morrison announced in the call that Wingstop had already reached the 2019 target of offering delivery at 80 percent of locations. He said the company is on track to exceed 90 percent by year’s end.
When asked about whether the company was considering other partners in the delivery availability sector, Morrison said they weren’t. He noted the company was very comfortable with its relationship with DoorDash and considers it a strategic partnership with aligned financial goals.
“Where other brands may rely on the marketplace elements of a delivery provider to bring revenue to them, our primary focus is making sure that we have the best logistics solution that has integrated technology and a well thought through playbook for how we roll into a new market and execute delivery on a scale basis,” he said. “So, no anticipation of another change or another organization coming in.
Another January 2019 change leading to increases in Wingstop’s digital presence was the bump in the company’s national advertising fund contribution rate from brand partners, from 3 to 4 percent. Q3 saw the results of this increase when Wingstop launched the second 12-week national TV Campaign.
“This campaign has been successful in building awareness and the increasing conversion of those aware to more occasions, as we have seen our frequency levels increase along with the addition of new guests to the brand, all of which tied back to the acceleration in our same-store sales,” Morrison said.
Morrison said the company has plans to begin adding a larger focus on delivery in advertisements and the larger company messaging but is confident in the strategy in place with no need to accelerate.
“There’s no urgency to that,” he said. “It’s more about making sure that we deliver an exceptional guest experience by way of delivery and we’re going to do that like we’ve always done, very carefully and thoughtfully.”