During its Investor Day two years ago, shortly after Michael Skipworth became CEO, Wingstop declared U.S AUV would rise from $1.5 million to $2 million.
The goal was supported by a multi-faceted strategy focused on closing the brand awareness gap with major quick-service competitors, implementing menu innovation, expanding the delivery channel, pushing data-driven marketing, and undergoing a digital transformation. Some specific examples include the introduction of the chicken sandwich—which fuels the lunch daypart and attracts millennial and Gen Z consumers—the onboarding of Uber Eats as a delivery partner, and MyWingstop, a proprietary tech platform rolled out this spring to enhance consumer engagement and loyalty. In Q2, digital sales mixed 68.3 percent, one of the highest rates in the limited-service segment.
In Q2 2024, those efforts translated to a U.S. AUV over $2 million, driven by U.S. same-store sales growth of 28.7 percent—far exceeding any other major chain (an eye-opening 45.5 percent on a two-year stack). Not only that but almost all of those sales were backed by transaction growth, not pricing. That comes after 21.6 percent same-store sales growth in the first quarter. While other fast-food and fast-casual players are scrambling for value deals to attract consumers, Wingstop continues to reel in a record number of new customers who are coming into restaurants more frequently.
On Wednesday, Wingstop made another declaration—it now wants $3 million in U.S. AUV. The fast casual doesn’t lack confidence about achieving the new benchmark because, despite its accomplishments over the past couple of years, there’s plenty of whitespace for more growth.
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Take brand awareness for instance. This year, Wingstop’s comps have been over 20 percent, but brand awareness has only increased by a couple of percentage points year-over-year. There’s an opportunity to gain a lot more dollars by targeting this gap, and the fast casual is doing this with a media investment that’s double what it was in 2022. Wingstop has remained top of mind by playing advertisements during live sports and streaming services and placing relevant online videos.
“I think we’ve talked about in the past, the gap we have to other more mature national brands is significant. It’s meaningful. It’s definitely in the double-digit range,” Skipworth told investors during the brand’s Q2 earnings call. “And I think as you think about that in concert with these other strategies we’re executing against, it gives us a lot of confidence in our ability to achieve over time our new AUV target of $3 million. And we are bringing in a lot of new guests into the brand. I think if you look at our results against this industry backdrop where there’s a handful of brands that are increasing transactions and a lot more that are losing them, and we delivered in Q2, a 28.7 percent comp that was primarily driven by transaction growth, I think that really showcases the effectiveness of our strategies.”
Another growth avenue is delivery. The channel mixes only 30 percent. However, Skipworth noted that mature, heavy off-premises brands see north of 50 percent in their delivery mix. Wingstop’s awareness level on delivery platforms is still “really low,” the CEO said. There’s also more the chain can do with the chicken sandwich, with 2.8 billion chicken sandwiches being served annually in the U.S. Wingstop wants a bigger piece of that share. The brand sees that guests who enter through the chicken sandwich often explore the rest of the menu and then return sooner and more frequently. Advertisements around the product showcase abundance and flavor variety, which seems to be working for Wingstop.
The fast casual doesn’t have to lean into price-pointed value offers to accomplish this higher AUV either, even with consumers being extra stingy with their wallets in today’s time. Wingstop has actually seen an increase in its average check.
“What we have seen evolve over the last year or so is the consumer’s desire for quality and value as they’re becoming more selective about how to spend those discretionary dollars. And with Wingstop, it’s about an indulgent occasion. It’s about flavor and quality,” Skipworth said. “And I think that’s the way our food shows up.”
The other game-changer will be MyWingstop. The innovation will allow the brand to use first-party data, lean into hyper-personalization, and build a digital ordering experience that’s customized for Wingstop.
“When you create ease of access and you create the best-in-class guest ordering experience, you’re going to win more occasions,” Skipworth said. “So I think it’s really about us just continuing to lean into the strategies that are working.”
In addition to the myriad sales opportunities, there’s nothing about Wingstop’s current prototype—which is relatively small and requires a low amount of labor—that will need to change in order to reach $3 million. The original restaurant opened in Dallas 30 years ago and earns $4 million per year out of the same kitchen. Also, about 10 percent of Wingstop’s system earns above $3 million in AUV, so there’s proof of it working in multiple markets. Skipworth said there’s “a lot of capacity within the restaurant” and there’s no need for any structural change to the size of the box or operations.
He admitted that $3 million AUV may require one additional delivery of chicken per week, but no fundamental change.
“Really the only difference from those restaurants [earning above $3 million] and the ones that are below $3 million have to do with tenure,” Skipworth said. “If you stack up our restaurants by vintage, it’s a pretty linear chart up and to the right. And so the reality is, is these are a little bit more tenured restaurants who have had the opportunity to participate in more of those 20, soon to be 21 years of same-store sales growth.”
As Wingstop seeks higher AUV, it’s also ramping up unit growth. In Q2, the chain opened 73 net new stores, a record for the second quarter. In the past 12 months, the brand has opened more than 300 net new locations, and more than 95 percent of that was from existing franchisees. Development is going so well that Wingstop increased its 2024 guidance to 285 to 300 net new units (up from 275 to 295) and now believes it has room for over 6,000 restaurants in the U.S., up from 4,000. Domestically and internationally, the fast casual envisions 10,000 stores, with targeted growth in Asia-Pacific, Western Europe, and the rest of North America.
Wingstop finished Q2 with 1,988 stores in the U.S. and 312 internationally. It expects to earn 20 percent same-store sales for 2024, up from a projection of low double digits.