Wingstop(WING) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2021, domestic same-store sales grew by 2.1% compared to the previous year, resulting in a two-year growth rate of 34% [11][31] - Average restaurant sales volumes approached $1.6 million, an increase from $1.4 million a year ago [11] - Adjusted EBITDA grew by 9.5% to $22.9 million, with adjusted earnings per share increasing from $0.34 to $0.38 [43][44] - The company announced a 21% increase in its quarterly dividend to $0.17 per share, reflecting strong cash flow generation [28][44] Business Line Data and Key Metrics Changes - Company-owned restaurant sales were flat year-over-year, with a same-store sales decline of 3.1%, but grew by 21.6% on a two-year basis [35] - Digital sales mix reached nearly 65% of total sales, with digital sales on pace to exceed $1.5 billion annually [18][19] - The launch of the virtual brand Thighstop generated over 4 billion media impressions, indicating strong customer interest [14] Market Data and Key Metrics Changes - The average unit volumes (AUVs) for non-comp restaurants reached $1.2 million, showing strength in new openings [32] - Wing prices on the spot market increased approximately 125% year-over-year, but the effective increase for the company was 65% due to price mitigation strategies [37] Company Strategy and Development Direction - The company is focusing on expanding its digital and tech capabilities, with a multi-year project aimed at digitizing every transaction [19] - Wingstop is strategically entering the UK market and has signed a minority investment deal to strengthen its development pipeline [21] - The company plans to enter Canada with a 100-unit restaurant development agreement, aiming to open by early 2022 [22] - Ghost kitchens are a key part of the expansion strategy, with 15 ghost kitchens already open globally [25] Management's Comments on Operating Environment and Future Outlook - Management anticipates wing prices to remain elevated for the remainder of the year, with food costs expected to be approximately 45% of sales [15][38] - The company remains confident in its ability to exceed original unit growth targets for the year, updating guidance to 12% plus [17] - Management expressed optimism about the sustainability of recent sales growth, citing a growing customer database of nearly 25 million [49] Other Important Information - The company has remodeled its headquarters in Addison, Texas, to support future growth and attract top talent [23] - Wingstop has achieved a total shareholder return of over 700% since its IPO, indicating strong investor confidence [28] Q&A Session Summary Question: Sustainability of same-store sales growth - Management believes the recent sales growth is sustainable, supported by a growing customer database and strong digital presence [49] Question: Context on unit growth and franchisee discussions - Management noted that strong AUVs and cash flow characteristics are driving excitement among franchisees for new openings [54] Question: Feedback on Thighstop launch - The launch has been positively received, and management plans to integrate it into the Wingstop menu later in the year [56] Question: Expectations for future same-store sales - Management anticipates strong two-year comps for the remainder of the year, aided by increased advertising and a growing customer base [61] Question: Menu pricing and inflation impact - Management has been taking thoughtful price increases and expects franchisees to continue adjusting prices in response to inflation [63] Question: Entry into New York market - The company plans to operate in Manhattan with a mix of company-owned and ghost kitchen locations, leveraging the high-density delivery market [68] Question: Impact of scale on business - Management emphasized that increased scale allows for better control over supply chain and technology investments [104]