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Wingstop works to grow digital orders

Fast-casual operator deploys point-of-sale system to integrate with online ordering

Wingstop Inc. is working to increase the percentage of orders made through its digital channels as it deploys a new point-of-sale platform systemwide, executives said Thursday.

“Advances in technology will drive our business forward both from a sales and operations standpoint, and we have invested heavily over the past few years to improve the guest experience and realize greater overall efficiencies,” Charlie Morrison, president and CEO of the Dallas-based fast-casual concept, said in an earnings call Thursday with analysts.

In the first quarter ended March 26, Wingstop’s online orders comprised 15.8 percent of sales, rising from about 11 percent in the same quarter last year. Morrison said online orders generate a $4 higher average check than other orders.

The company’s new POS system, which integrates with online ordering, food-cost calculations and labor scheduling, is now in 60 percent of the domestic system, and will be in 90 percent by year’s end, Morrison said. That helps the company shift away from phone orders, which still make up about 60 percent of Wingstop’s total.

In the first quarter, about a fifth of the domestic restaurants saw more than 20 percent of sales through online channels, Morrison added. That compares with more than half of sales via online for the big pizza chains.

But Morrison said he sees Wingstop increasing its digital order percentage, especially since about 75 percent of the brand’s sales are for takeout orders.

Michael F. Mravle, Wingstop chief financial officer, said online orders are easier for operators to execute. 

“That order comes straight into the restaurant, passes through the point-of-sale system and delivers the ticket to the make table,” Mrvale said, trimming time spent answer phones and keying in orders.

The new POS also gives franchisees and operators “the ability to have a theoretical food-cost system, as well as a very robust labor management system to monitor and operate their business,” he said. “So I think the tie-in between the POS and the online platform — that full integration creates a lot of technological efficiencies that help our operators.”

Another prong of Wingstop’s strategy includes boosting online ordering awareness through digital advertising and the migration to a national advertising platform.

“In the first quarter, we continued to increase our digital advertising spend, which yields a much higher return on investment by driving current and new guests to our website to place their orders,” Morrison said.

At the company’s recent convention, franchisees gave the go-ahead to pursue a national ad strategy.

Andy Barish, an analyst with Jefferies LLC, wrote in a note Thursday that “franchisees approved an earlier-than-planned move toward national advertising starting in ’17, which should help drive awareness, digital conversion” and same-store sales.

Morrison said franchise agreements had called for transitioning to a national advertising strategy by 2018, or when the company reached 1,000 domestic restaurants, which is targeted by the end of the year or early in 2017.

“We have received an almost unanimous vote from our franchisees at the convention to accelerate this transition to a national ad fund beginning in the first part of 2017,” Morrison said. “This pivotal decision now allows us to buy media more efficiently and increase brand awareness in all markets, including significant benefits in smaller and newer markets where we don’t currently leverage TV and radio.”

In the past, Wingstop had divided the franchisees’ 4 percent of sales allocation equally between national and local marketing, with some of them creating 13 local cooperatives. The reallocation, Morrison said, will move toward a 3-percent spend on national advertising, rather than 2 percent, with social and digital remaining a significant part of the equation.

For the first quarter, Wingstop net income rose 68 percent, to $4.3 million, or 15 cents per share, from $2.6 million, or 10 cents per share, in the same period last year. Revenue increased 16 percent, to $22.1 million, from $19 million.

Domestic same-store sales rose 4.6 percent systemwide, with comparable stores among the 19 company-owned restaurants posting same-store sales growth of 9 percent.

Morrison said Wingstop is on target to open 125 to 135 net new restaurants this year, with its first opening soon in Boston.

Wingstop has 873 restaurants in 39 states and five countries.

Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless

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