Bucking overall trends in the restaurant industry, Wingstop Inc.’s domestic same-store sales in the final two weeks of March — when most restaurants were ordered to close dining rooms — were up 8.9%, the company said Tuesday in a business update.
“Our business was well-positioned for the transition to 100% off-premise dining that has resulted from COVID-19,” said Charlie Morrison, CEO and chairman of the Dallas-based fast-casual brand.
Morrison said carry-out and delivery represented about 80% of Wingstop’s sales mix before COVID-19 and digital sales were about 40% of the mix.
“We initiated a promotion to offer free delivery via Wingstop.com and our Wingstop app to ease the burden of delivery fees for guests,” he noted.
Wingstop has extended the free delivery promotion on orders of $15 or more until April 30.
“Guests have taken advantage of the delivery channel and, while we have seen a slight decline in overall transactions due to the loss of dine in, growth in our average ticket has surpassed these transaction declines as we’re primarily serving meals for families,” Morrison said.
For the weeks between Feb. 23 and March 14, Wingstop said its domestic same-store sales growth was 8.5%. That accelerated in the weeks between March 15 and March 28, growing 8.9%, the company said.
In the company’s business update Tuesday, it outlined ways it is meeting consumer demand.
Worker incentives: At company-owned restaurants, Wingstop implemented a restaurant team member compensation incentive program through April 30 that could provide as much as an additional $150 to full-time team members each week.
“We have encouraged our brand partners to execute a similar best practice, and they are responding positively,” Morrison said. “We will continue having open and transparent communication with our team members and brand partners as the situation develops.”
Beneficial food costs: “A bit of good fortune for our domestic business comes in the increased supply of chicken breast meat needed to support grocery stores where volumes have escalated, which has resulted in excess supply of jumbo chicken wings,” Morrison said, which has pushed prices down. “This provides an immediate cash benefit to our brand partners as we purchase wings off the spot market weekly.”
Emphasis on health and safety: The company established a COVID-19 task force with cross-functional leader to provide a flow of information and allow swift decision-making. On March 16, Wingstop closed its domestic dining rooms and offered carryout and delivery only. “We have sourced and will distribute thermometers and protective equipment for each restaurant in our system as additional precautionary measures,” Morrison said.
Digital sales: The company forecast that digital sales would grow from 40% in January to 47% of its mix at the end of the fiscal first quarter.
Community donations: “We are making it a priority to do our part to give back to the communities in which we serve,” Morrison said. Wingstop Charities, which serves youths and their projects, provided donations to food banks across the country resulting in about 80,000 meals to impacted youth.
The company also deployed its food trucks to its local hospitals to serve meals to healthcare workers. Wingstop also said it will donate $1 million to the Restaurant Employee Relief Fund, sponsored by the National Restaurant Association Education Foundation, to provide access to grants.
Wingstop added that it had borrowed $16 million under its outstanding variable funding notes to improve its cash position, providing it with an unrestricted cash balance of about $31 million at the end of the first fiscal quarter of 2020 compared to $12.8 million as of Dec. 28.
For the fourth quarter ended Dec. 28, Wingstop’s net income rose 26% to $3 million, or 10 cents a share, compared to $2.4 million, or 8 cents a share, in the same period last year. Revenue was up 31.3% to $53.2 million from $40.5 million in the prior-year quarter.
Wingstop is scheduled to release its first quarter earnings on May 6.
As of Dec. 28, Wingstop had 1,385 restaurants systemwide. Of those, 1,231 restaurants were in the United States, including 1,200 franchised units and 31 company-owned. Wingstop had 154 franchised restaurants in international markets.
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