Despite the pressures of supply chain issues and inflation that have plagued many companies over the last few months, Wingstop had a great Q2, reporting a 7.5% sales increase year over year. Wingstop CEO Michael Skipworth spoke one-on-one with Cheddar News to discuss the chicken fast-casual brand’s recent success and how stabilizing wing prices signal a promising outlook for the rest of the year. “The leading indicators that we have in front of us suggest that they'll stay at these prices through the balance of this year and into 2023, which sets a beautiful backdrop for Wingstop in that we've set two record quarters of net new restaurant openings in 2022 and this year is stacking up to be a record year. We expect to deliver a 13% unit growth for the brand,” he said, noting also that Wingstop is expanding its menu options, including a new chicken sandwich this fall. 


Closing Bell

Wingstop CEO Discusses Successful Q2, Chicken Sandwich Debut

Welcome back to closing bell on Tschetter news everyone. Chicken wing giant wing stop is a bit of an outlier in the current environment despite supply chain challenges, labor woes and inflation. The fast food chain says it had a tasty second quarter beating estimates despite a sales miss, The company has managed to grow earnings per share by 25% over the past three years with customers flocking to the chain thanks to lower wind costs. Well, joining me now is Michael skip worth president and Ceo of Wingstop, a publicly traded company, Michael, thank you so much for coming on. What's pretty amazing to me is that you said your company benefiting from quote meaningful deflation a word I think that a lot of people haven't heard in bone in wings this year despite the U. S. Department of Agriculture raising poultry prices by about 26%. The estimate there, why are chicken wing prices down for bonin? And how is that impacting your company? We're in a really unique spot in that the overall supply of of wings where we saw a lot of brands jump into wings during the pandemic and that drove prices up and we saw record prices in 2021 where the price of wings hit $3.21 a pound. Fast forward to today. Other brands models aren't designed to whether that kind of volatility and we see prices of wings almost just over a dollar a pound which translates over 1000 basis points of improvement in the food costs for our franchisees, which is really strengthening those unit economics for Wingstop. So, bone in wings in particular, Michael, those prices are lower. Do you expect them to continue to fall? I think they're at a pretty stable level here. A dollar, $15.14 a pound is pretty low when you look at it historically. But the leading indicators that we have in front of us suggest that they'll stay at these prices through the balance of this year and into 2023 which sets a beautiful black backdrop for Wingstop. In that we're we've set to record quarters of new restaurant openings in 2022 this year Stacking up to be a record year, we expect to deliver a 13% unit growth for the brand. What are prices of your other products, Michael expected to do of course you sell bone in wings as we've been discussing here, but you sell other products to do you expect those prices to stay stationary as is the case with bone in or will they increase of course as inflation does drive up the cost of most food items out there Like every other brand. We've seen inflation in other commodities and other parts of our business. But bone in wings at 65% of our mix. We pioneered wings at the center of the plate item that's the biggest item that we see in our food cost and that deflation that I referenced earlier is far outweighing any inflation. And in fact, if you think about the sales growth, we've had over the last few years of over 30% In our average unit volume of $1.6 million. Our initial investment of just over $400,000 is translating for our franchisees to less than two year payback. Can consumers expect to get what they want, Michael when they come into the store? And I ask that because supply chain challenges, no doubt having an impact on most industries. Wingstop has been a brand that's really leaned in and invested in deep partnerships with our supplier partners and we've really hadn't had issues with access to supply over the pandemic. We were able to grow during the pandemic and had assured supply and it really leans into those strong relationships that we've built over the With our key strategic Supplier Partners. Are there other markets that you're looking at for growth? I know I think we were showing a full screen there, Michael, you open some 67 stores this year, have 67 stores if we can pull that full screen back up. But how is the company looking to expand to reach more customers? If that is in the works? We have an overall vision of expanding Wingstop into a top 10 global brand which we think was represented by over 7000 restaurants. About 4000 of those inside the US were only at 1650 today have a lot of white space in front of us. And then the rest of those outside of the U. S. Were in quite a few markets and have an international business that's emerging. And really as we sit here today is super charged for growth and we're really excited about the opportunity we have there as well for the brand. What about a plant based option? Is that something that you're exploring? Plant based chicken for instance at this time it's not really anything we have on our on our radar that said if you think about how consumers engage with Wingstop, it's an indulgent occasion. Our average frequency is three times a quarter or once a month. And so were there to see served quality cooked to order a really flavorful experience for our guests and they appreciate that we're able to retain those visits. I would mention that later this early september we're actually launching a chicken sandwich for the first time as a brand and I know a lot of other brands have introduced a chicken sandwich but we're really doing it with Wingstop flavor. We're not introducing just one chicken sandwich. We're actually introducing 12 and wing stops 12 unique flavors. And so we're excited about being able to bring new guests in and being able to cap Your new occasions as we continue to be set up to deliver what will be our 19th consecutive year of same store sales growth for Wingstop customers, potential Wingstop customers, Michael. What's the best way for them to save money while still enjoying what's at your restaurant? Yeah, 2021 marked our 18th consecutive year, same store sales growth and we've demonstrated an ability to grow through various cycles. And the way we do that is we lean into value and with the deflation we have in our business today, we're able to lean in and give guest value and we do it in the form of bundles. We launched a bundle when, when kind of the consumer pullback happened in early, late Q one, early Q two and we launched a boneless meal deal which was 20 boneless wings four flavors, large fry two dips for 15 99 that can feed 2 to 3 people and compelling value. And so our menu is organically designed to present consumers with with really compelling value. Alright, my final question, Michael rapper Rick Ross, I see here that he's a big fan of your chain owning 30 different locations. How did this partnership come about? And what does rick ross love about your brand? Rick has been a big fan of the brand over the years and he obviously is an entrepreneur at heart and he's been a great supporter, He does a lot of things on his own to, to support the brand and give us publicity and I think he's just a real fan of the product. I think you hear him talk about lemon paper, he talk about big brand experience and you know, he's a big fan of the brand and we appreciate it. All right, Michael, skip with President and Ceo of Wingstop. Michael thanks so much for coming on the show.