Wingstop(US:WING)2024-10-30 21:54Financial Data and Key Metrics Changes - Q3 domestic same-store sales growth was 20.9%, driven primarily by transaction growth, marking the potential for the 21st consecutive year of same-store sales growth [10][28] - Average unit volume (AUV) for restaurants surpassed $2.1 million, up from $2 million last quarter and $1.8 million in the prior year quarter [10][28] - Total revenue for the quarter increased 38.8% to $162.5 million, with royalty revenues and franchise fees increasing by $21.2 million [32][36] - Adjusted EBITDA was $53.7 million, a 39.5% increase year-over-year, with earnings per diluted share at $0.88, a 35.4% increase [36][38] Business Line Data and Key Metrics Changes - The average investment to open a Wingstop remains around $500,000, with brand partners seeing unlevered cash-on-cash returns exceeding 70% [11] - The company opened over 100 restaurants in Q3, achieving a unit growth rate of 17% [11][30] - Company-owned restaurant sales totaled $31.3 million, an increase of $7.4 million, driven by 10 net new restaurants and a 7.3% increase in same-store sales [32] Market Data and Key Metrics Changes - The international business is expanding, with a pop-up restaurant in France during the Olympics generating significant interest and leading to the opening of the first restaurants in Paris [23][24] - The company has a development pipeline that includes opportunities for over 750 restaurants across new international markets, including France and Australia [24][52] Company Strategy and Development Direction - The company aims to scale AUVs to $3 million, supported by strategies such as brand awareness, menu innovation, and digital transformation [13][20] - A new partnership with the NBA is expected to enhance brand visibility and drive guest acquisition [16][67] - The company is focused on responsible and sustainable growth, with a strong development pipeline and 95% of new openings coming from existing brand partners [31][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategies and the ability to navigate potential deceleration in same-store sales growth [43][51] - The company reiterated guidance for domestic same-store sales growth of approximately 20% for the full year [39] - Management highlighted the effectiveness of the supply chain strategy in mitigating food cost volatility, targeting food costs in the mid-30% range [34][75] Other Important Information - The company announced a dividend of $0.27 per share, totaling approximately $7.9 million, to be paid on December 6, 2024 [38] - SG&A expenses increased by $9.2 million, primarily due to performance-based stock compensation and investments in headcount [35][39] Q&A Session Summary Question: Insights on Q4 comp trends and potential slowdown - Management acknowledged the potential for a deceleration in Q4 but emphasized long-term strategies and the overall health of the brand [43][51] Question: Unit growth expectations for 2025 - Management indicated strong demand for growth from brand partners and a robust development pipeline, suggesting continued growth beyond 2024 [47][84] Question: Clarification on international market opportunities - Management elaborated on the potential for over 750 restaurants in new markets, including France and Gulf Coast countries [52][24] Question: Impact of NBA partnership on brand awareness - Management highlighted the partnership's potential to enhance brand visibility and drive guest acquisition through various marketing channels [67][66] Question: Frequency of existing customers versus new customers - Management reported growth in both frequency of existing customers and new guest acquisition, contributing to overall sales growth [70][69] Question: Company-owned store margins and food costs - Management discussed the impact of supply chain strategies on food costs and the expectation of a slight decrease in Q4 [75][90]