For as much as Wingstop has grown recently (seven straight quarters of at least 15 percent same-store sales growth), the chain is still chasing a brand awareness gap.
CEO Michael Skipworth called it a “huge opportunity.” The brand has seen record levels of guest acquisition and industry-leading comps, but it’s only moved brand awareness by a couple of percentage points.
The chain’s current media strategy is focused on live sports and targeted placements during streaming and online videos. This is combined with breakthrough creative that’s “proving to be highly effective,” he said. All of this is fueled by an ad fund seeing a 40 percent growth rate.
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As the brand finishes 2024, it’s continuing to unleash advertising dollars to expand reach across the NFL and NBA—two of the most popular sports in America. Wingstop will be shown during more games this year, especially basketball as the fast casual became the NBA’s official chicken partner and official wing. It’s the chain’s first official sponsorship with a major professional sports league.
Skipworth said the partnership will unlock opportunities the brand couldn’t access in the past within the NBA. As part of the sponsorship, Wingstop will have a presence in-game, like its logo on a court or outside the arena. The brand is also planning a social content series with the NBA and some custom TV spots featuring basketball players. Additionally, Wingstop will be promoted at the All-Star game in February in San Francisco.
“We’re really excited about this partnership with the NBA. It’s a first for us,” Skipworth said during Wingstop’s Q3 earnings call. “We think it fits perfectly within our strategy that we’re executing. And obviously, to start at the top of the funnel, we think it’s going to continue to help drive awareness. But this partnership is going to be built on a strong presence on TV already.”
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Given the partnership, Wingstop will be on “a heck of a lot more sports this year than we were last year,” according to the CEO. He also noted the NBA sponsorship won’t divert any dollars away from investing in more placements on live sports. Instead, Skipworth explained, the deal should bring Wingstop front and center within NBA programming.
“We get a little bit of efficiency on those [ad] dollars as we get bigger and bigger as well,” the CEO said. “So being able to lean in, in a bigger way, as we continue to scale the brand.”
Wingstop expects the NBA agreement to fuel its ongoing momentum. U.S. same-store sales lifted 20.9 percent in Q3, driven primarily by transaction growth. On a two-year basis, the company’s domestic comps grew 36.2 percent. The chain is well on its way toward its 21st straight year of comp growth.
The same-store sales growth, along with opening more than 350 stores in the past 12 months, helped Wingstop reach 39.4 percent systemwide sales growth in Q3.
“This top-line growth gives us the fuel in our advertising fund to work against a double-digit gap in brand awareness when benchmarked to more mature QSR brands,” Skipworth said. ” … [Customers] will prioritize restaurants that offer both high quality and value in their experience, and we believe Wingstop is clearly delivering as our quality and value scores are an outlier relative to industry trends.”
Both new and existing guests are boosting their frequency because of increased advertising, the Chicken Sandwich, and the third-party delivery partnership with Uber Eats.
“The addition of Chicken Sandwich, the addition of additional channels or access points with the brand, our advertising are all helping drive frequency, but then it’s also helping us acquire a lot of new guests,” Skipworth said. “We continue to set records quarter-after-quarter on new guest acquisition. And so it’s the combination of both of those things that are fueling this industry-leading growth, which is pretty remarkable to think about our reiteration of our outlook this year of approximately 20 percent. And not only is that number impressive by itself, but it also sets us up for our 21st consecutive year of same-store sales growth. There’s just nobody else out there doing that.”
AUV is $2.1 million after being at $2 million in Q2 and $1.8 million in Q3 2023. The goal now is to reach $3 million AUV over time. Q3 also marked the first full quarter under MyWingstop, the chain’s proprietary online ordering platform. The brand reached a record level of app downloads and user sessions for its app and website. Digital sales mixed 69 percent, and the first-party database lifted by more than 35 percent year-over-year.
While sales accelerate, the average investment to open a Wingstop remains around $500,000. Franchisees are seeing unlevered cash-on-cash returns in excess of 70 percent. These favorable numbers have led to a record level of demand for growth among operators, as seen by this past quarter. The chain opened 106 net new restaurants, breaking a Q3 record. More than 70 different franchisees have opened a restaurant this year, covering 28 states and 10 countries. Also, it’s important to note that 95 percent of openings are from existing franchisees.
New units in 2024 are earning more than $1.6 million in annualized AUV—almost $1 million more than in 2015 when Wingstop went public. Development is going so well that Wingstop upped its 2024 guidance to between 320 to 330 net new stores, an increase from 285 to 300 net new stores.
“The demand for growth is extremely strong from our brand partner community,” Skipworth said. “We referenced that our pipeline is the strongest one we’ve ever had on record for development. And so the pipeline is there to support continued industry-leading growth. But we’re very focused on responsible and sustainable growth. And so, you’ll see us continue to be disciplined.”
Wingstop finished Q3 with 2,120 U.S. stores and 338 international restaurants. The long-term goal is 6,000-plus domestic locations and 4,000-plus international outlets.