Wingstop Inc., which tested third-party delivery in three markets last year, plans to invest more in its own in-house smartphone app before rolling the service out to the system this year and next, executives said Thursday.
For a seamless rollout to the Dallas-based chain’s mostly franchised system, the company wants to have its app and web technologies in place, Wingstop CEO Charlie Morrison said on a fourth-quarter earnings call.
Wingstop first tested delivery in Las Vegas in the second quarter of last year and expanded the test to Chicago and then Austin, Texas, in late 2017, he said.
“Our current focus is on optimizing delivery in these test markets and continuing to approach delivery in a thoughtful manner, using learnings from our test markets as a foundation for a broader, strategic delivery rollout to ensure the best possible guest experience,” Morrison said.
Delivery in Las Vegas has sustained a 10-percent sales lift since its introduction in the second quarter of 2017, “and most of the sales are incremental,” Morrison said. In Chicago and Austin, the lift has been in the mid to high single digits.
The company will add $1 million in capital expenditures this year to build an “in-house front-end app (no longer using white label) to integrate better with delivery,” said Andy Barish, an analyst with Jefferies LLC, in a note.
Morrison said integrating technology and delivery would allow a “seamless” rollout to the system late this year and early in 2019. The company tested several delivery companies in the Las Vegas area.
Delivery, along with increased spending on national advertising and digital efforts, are expected to help boost sales, Barish said.
Wingstop’s fourth-quarter online sales made up 22.7 percent of total sales, Morrison said, an increase from 21.5 percent in the third quarter and a 300-basis-point increase from the previous year.
“We continue to grow the digital side of our business organically,” Morrison said. “In addition to providing operational efficiencies inside the restaurant, our expansion of digital sales provides a $5 higher average check. Almost half of our orders still come in over the phone today, which we believe represents a significant opportunity for conversion to digital.”
With special tax benefits for the fourth quarter ended Dec. 30, Wingstop’s net income rose to $10.5 million, or 36 cents per share, from $4.3 million, or 15 cents per share, the previous year. Revenue increased 14.3 percent, to $28.3 million, from $24.8 million the previous year.
Wingstop’s domestic same-store sales increased 5.2 percent in the fourth quarter.
As of Dec. 30, Wingstop had 1,133 restaurants, with 106 international units. Of the 1,027 U.S. restaurants, 1,004 locations were franchised and 23 units were owned by the company.
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