Wingstop Inc.’s same-store sales increased more than 30% in the first four weeks of April as the chicken-wing brand shifted to off-premise sales and promoted that with a free delivery offer online through DoorDash, executives said Wednesday.
Dallas-based Wingstop, which is navigating the “ever-changing” coronavirus pandemic, said that second-quarter April sales growth built on first-quarter domestic same-store sales increases of 9.9%. U.S. same-store sales increases between March 29 and April 25 were 33.4%, the company said.
“Prior to the outbreak of COVID-19, digital sales consisted of just over 40% of our sales,” said Charlie Morrison, Wingstop CEO and chairman, on a first-quarter earnings call. “Since closing our dining rooms, digital and delivery orders now account for more than 65% of our sales.”
Internationally, where Wingstop has 160 fast-casual restaurants in nine countries, business has been “adversely” affected by coronavirus, which was declared a pandemic by the World Health Organization on March 11. Of those, 26 are closed temporarily, executives said, but closures systemwide were less than 3% of restaurants.
The international locations are more heavily skewed toward dining-room sales, and the company has provided financial support, such as royalty relief, Morrison said.
Morrison said “uncertainty” remains about shelter-in-place orders and the reopening of business and schools, so the company has recalled any guidance for Wingstop’s performance this year.
Michael Skipworth, Wingstop chief financial officer, said the April 33.4% same-store sales increases “far exceeded even our own expectations.”
While the number of transactions slipped in the last two weeks of March and into April, the digital orders typically produced a check average $5 higher than traditional channels and as much as $10 higher than dine-in transactions, Skipworth said.
Advertising messages in the period pivoted to delivery and placements originally planned for live sports, which were canceled because of the pandemic, to live streaming platforms like Hulu and gaming platforms like Twitch as well as social and paid search, Skipworth said.
Domestic closures were largely in casinos, malls and campuses impacted by state and local restrictions to stem the spread of the coronavirus, Skipworth said.
Among restaurants remaining open, Skipworth said Wingstop is extending full-time and part-time team member incentive pay of as much as $150 per week, which started in March and was intended to end in April, through the end of May.
Morrison said dark kitchens or cloud kitchens remain an option for the brand. Wingstop has a dark kitchen in the United Kingdom, which has reopened there after a coronavirus closure, and “has some planned for here in the U.S.,” Morrison said.
Morrison added that Wingstop has seen innovations during the COVID-19 pandemic, including having members of its construction team conduct a building inspection in in California via smartphone FaceTime video.
But construction and restaurant developments have been slowed, he said.
“We’re doing everything we can to try and get restaurants open,” Morrison said, “but it’s hard. Some municipalities just aren’t working or doing anything so it’s difficult to get them out to sites.” Wingstop opened three restaurants in April, two in the United States and one abroad.
For the first quarter ended March 28, Wingstop’s net income rose 22.6 percent to $8.1 million, or 27 cents a share, from $6.6 million, or 22 cents a share, in the same period last year. Revenues rose 15.4% to $55.4 million from $48.1 million in the prior-year quarter.
As of March 28, Wingstop, founded in 1994, had 1,413 Wingstop restaurants systemwide, including 1,253 restaurants in the United States and 160 franchised restaurants internationally. Of the U.S. restaurants, 1,221 were franchised restaurants and 32 were company-owned.
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