Dive Brief:
- Wingstop’s same-store sales fell 7.5% during the second quarter, according to a Wednesday earnings release. The chain has now posted five consecutive quarters of same-store sales declines, however its most recent decline moderated slightly compared to the first quarter.
- The fast casual chain noted that systemwide sales increased by 5.3% compared to the year-ago quarter, with sales growth largely hinging on new store openings — the chain opened 102 net new stores during the quarter.
- CEO Michael Skipworth said during a Wednesday earnings call that its core guests are under economic pressure that is “more pronounced than we anticipated.” The quarterly sales performance is not indicative of a structural problem, nor is it a reflection of its brand relevance or food quality, Skipworth said.
Dive Insight:
Wingstop’s system is significantly exposed to consumers that are price sensitive amid ongoing economic uncertainty, according to Skipworth.
Wingstop’s domestic footprint overindexes in urban trade areas “where households are under more financial stress than higher-income households.” Digital guest visits in those areas declined by 9%, while orders in high-income trade areas increased in the second quarter, he added.
“That divergence in trend reinforces our belief that the pressure we’re seeing today in our core guests is macro-driven, not any change in the underlying strength of the Wingstop brand,” he said.
Indeed, the chain is moving the needle on brand awareness, which increased by five percentage points over the past year, Skipworth said. Brand awareness was key to boosting sales, particularly during key sporting events during the quarter.
Same-store sales overperformed on World Cup match days, with double-digit increases, Skipworth said. Wingstop also saw similar results during the NBA Finals in markets where the hometown team was competing, he added.
Guests that ordered Wingstop on these days tended to be the same guests facing financial pressure, Skipworth said. During these key sporting events, these guests ordered for groups with average tickets increasing and typically chose bundled offerings.
“To us, that's a really important insight,” Skipworth said. “When our guests choose to treat themselves and come together for a group occasion, the Wingstop brand was top of mind.”
Wingstop will focus on its opportunity to “showcase value more overtly to help preserve the Wingstop occasion with our core guests as price-pointed messaging broadly across the industry has continued to intensify,” Skipworth said.
That value-messaging will include highlighting the chain’s group occasion value. Skipworth said the brand estimates that its group orders cost consumers about $8 per person, and that this price has remained steady for years. Communicating that value and stability to core guests and new consumers should help the chain preserve — or even expand — its group dining occasions.
During the second quarter, Wingstop offered a $1 wing promotion, with bundles up to 30 wings for $30, that “validated that the right offer can do more than drive transactions,” Skipworth said. The 30 for $30 promotion grew the overall occasion and increased average first-party ticket by nearly 17%.
The brand also saw a boost in guest satisfaction scores during its Flavors Under $10 promotion, which emphasized price points already on the menu, Skipworth added.
“Competing more effectively for today's consumer requires us to win more occasions and strengthen the emotional connection with our guests over time,” Skipworth said.
Wingstop also launched its Club Wingstop loyalty program in May, as part of its effort to strengthen guest engagement. The reward program is helping drive engagement while allowing the chain to offer the right deals to guests at the right time, he said.
“That's a much more effective way to communicate the compelling value already inherent in our menu than broad-based discounting, and one that supports both guest engagement and healthy brand partner economics,” Skipworth said.
