Wing.Stop Inc becomes a top 10 global restaurant brand

Wing.Stop Inc becomes a top 10 global restaurant brand
Wing.Stop Inc

 

Wingstop Inc. notched its 25th year in business this month, and Chairman and CEO Charlie Morrison said the limited-service chain’s staying power reflects the strengths now powering its drive to become a top 10 global restaurant brand.

 

“Any business in this industry that can sustain for 25 years or more and continue the pace of growth that we have is truly unique,” Morrison said in an interview. “There are only a handful of companies that have exceeded that milestone and, certainly, have exceeded the milestones that we have as an organization.”

 

In fiscal 2018, Dallas-based Wingstop posted systemwide sales of $1.26 billion, up 16% year over year. U.S. same-store sales gained 6.5%, more than double the 2.6% growth in the previous fiscal year. Total restaurant locations climbed 10.5% to 1,252 from 1,133 at the end of 2017. During the last three years, the limited-service chicken wing brand has seen a compound annual growth rate of 15% in systemwide sales and 14% in unit development. Over the longer term, the company has put together 15 consecutive years of same-store sales growth. The chain reported that its cumulative 56.4% same-store sales growth from 2012 to 2018 tops that of Domino’s, Starbucks, Burger King, Taco Bell, KFC, Baskin-Robbins, Dunkin, Wendy’s, McDonald’s and Pizza Hut.

 

 “To be growing as fast or faster than any of the large chains in the industry today makes us very proud that we have been able to create a brand that focuses on wings as a center-of-the-plate item and has still, to this day, made a category all by itself,” said Morrison. “It’s truly a demonstration of sustainability and really positions us well for many years to come.” Wingstop’s initial public offering in June 2015 has helped spur its expansion, in part by boosting consumer and shareholder awareness of the brand, according to Morrison.

“The success of our IPO was based upon our growth trajectory as well as the key growth drivers that we believe will continue to drive the business well into the future,” he said. “Since being a public company, our shareholders have enjoyed a total return of over 400%, which certainly exceeds anything that’s out there in the restaurant industry today.”

 

U.S., international markets eyed for expansion

 

Morrison said Wingstop has a “clear line of sight” to become a Top 10 brand. Growth drivers include “fortressing” of key U.S. markets, international expansion, more national advertising, broader delivery service and continued migration to a digital platform — with a goal of being able to digitize every transaction. On the Nation’s Restaurant News 2019 Top 200 census, Wingstop came in at No. 49 with U.S. systemwide sales of more than $1.21 billion, up from No. 50 a year earlier. The chain was No. 14 in U.S. systemwide sales growth (+15.71%), jumping from No. 29. In total U.S. locations, Wingstop ranked No. 40 with 1,124 restaurants and No. 25 in unit growth (+9.44%), both up one place from the 2018 NRN list.

 

As we continue to climb the ladder toward the Top 10 brands, we believe we can get there through those growth drivers, in fairly rapid order,” Morrison said. “Today, we believe that our brand has an equal level of opportunity for penetration in the U.S. and internationally. We’ve noted that our targeted U.S. penetration level would be about 3,000 restaurants. If you double that with our international footprints potential that would lead us to become a Top 10 brand.”

 

Wingstop has identified 25 designated market areas (DMAs) in the U.S. to fortress, including in Arizona, California, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington and Wisconsin. The company now has 650 restaurants in those DMAs and another 320 locations in the pipeline. It aims to cover more than 75% of a DMA’s population with “restaurant-protected trade areas.” “We believe we exist in a category of one; that means we don’t really have a true competitor. So ‘fortressing’ for us means a specific focus on key markets that hold the potential for the majority of our growth in the U.S. and achieving that top-end number of 3,000 restaurants — and doing so in a way that ensures we don’t invite competition into our business and maintain that category-of-one positioning,” explained Morrison. “We believe we have a ton of white space that doesn’t involve cannibalizing ourselves to get there.”

 

Globally, Wingstop also is targeting 25 key markets, with a potential of up to 150 restaurants each, for a total of around 3,000 international locations over the long term. The company now has 128 franchised restaurants in nine countries outside the U.S., including Mexico, Singapore, the Philippines, Indonesia, the United Arab Emirates, Malaysia, Saudi Arabia, Colombia and, most recently, Panama. “Many of them are in markets that are very conducive to expansion of Westernized concepts like Wingstop and that have a high degree of chicken consumption per capita,” Morrison said.

 

Other nations that Wingstop has identified as expansion opportunities include Canada, Brazil, South Africa, Kuwait, Bahrain, Malaysia, Australia, New Zealand, China, India, Poland, Ireland, Germany and France.

“In Europe, we’ve started in the U.K. We launched our first restaurant there this year very successfully, and we’re getting ready to open our first restaurant in France,” he said. “We believe chicken consumption opportunities are huge there; France has some of the highest-volume KFC restaurants in the world.”

 

Nontraditional locations

 

In terms of restaurant sites, Wingstop also is increasingly considering nontraditional locations. These include airports, college and university campuses, food courts, stadiums and sports complexes, casinos and travel centers. Wingstop has locations in Dallas-Fort Worth Airport, college food courts and Azteca Stadium in Mexico City, as well as a small-box concept in Singapore. “We’re continuing to expand our learning about how to serve guests in those environments and make sure the food quality and speed of service are balanced so that it’s a successful venture,” Morrison added. “We believe we’ve done that in the locations we’re in already.”

 

Digital transition

 

In tandem with its location strategy, Wingstop is charting a path toward a 100% digital sales mix. Through its partnership with DoorDash, the chain now offers delivery at just over half of its U.S. restaurants. It expects to roll out the service to 80% of its locations by the year’s end, covering more than 960 restaurants in 44 markets. Delivery is now available in six markets — Austin, Houston, Chicago, Denver, Los Angeles and Las Vegas — that represent about 30% of Wingstop’s restaurant count. The service accounts for 9% to 12% of the total sales mix in these markets, and eight of 10 delivery orders are new customers. Digital orders, too, have shown a $5 higher average ticket size.

 

I think we're way ahead of the game as compared to just about anybody else. We're only second to the large pizza chains in terms of our digital penetration as a brand,” Morrison said. “In fact, over 30% of our sales come into Wingstop via digital channels — web, mobile web and our app. So we don't even count transactions inside the store as digital, which is truly industry-leading.

 

  • He added that, we built a technological platform a couple of years ago to be able to provide a seamless, integrated digital transaction to our franchisees.”