CEO Charles Morrison says customers are responding well to a test in Las Vegas
Wingstop Restaurants Inc., which in mid-April launched a nine-unit delivery test in Las Vegas, is pleased so far with the trial use of third-party providers, executives said Thursday.
“We're very excited about the early indications of this test,” said Charles Morrison, Wingstop CEO, in a first-quarter earnings call. “We know that our brand is well-positioned for delivery, and I think guests are responding quite well to our approach, but it's very early in the process.”
Morrison said customers and franchisees of the Dallas-based chicken wing chain had been clamoring for delivery.
“We have seen an increased level of demand from our customers regarding delivery, and we knew that at some point, there would be an opportunity for us to deliver,” he said. “The question was where and when?”
The quality of food that would travel well put a damper on delivery development, Morrison said.
“Product quality was very, very important to us to ensure especially that our French fries which are hand-cut and fried daily…were taken care of during that process,” he said.
The fries recipe was modified systemwide to accommodate longer holding times.
“I won't disclose the details of that other than to tell you that we still do hand-cut all of our fries at our restaurants every single day,” he said. He added later that it was changed to ensure the fries would remain crispy and hold longer and hotter.
“We tested thoroughly and feel like there is very little change to taste, flavor or anything else that would be noticeable by the guest,” Morrison said. “So far, all the consumer response we've seen in this test has been very positive.”
Morrison said it was too early to reveal a strategy for rolling delivery out to the entire system.
“We have set some internal benchmarks in terms of what we think success is,” he said. “Without quoting specific numbers, the one thing I would say is we certainly wanted to be incremental to the business, not just cannibalizing existing revenue that we have as carryout.”
Morrison said Wingstop wanted to make sure the delivery value equation was reasonable.
“In some cases, these delivery fees can be very high to the guests, but, for the most part, we want to make sure that the guest is willing to pay that fee, and not have it rewrite the value equation for them,” he said.
A decision on a further rollout of delivery is expected sometime in the summer, Morrison said.
For the first quarter ended April 1, Wingstop’s net income rose 52.2 percent, to $6.5 million, or 22 cents per share, from $4.3 million, or 15 cents per share, the previous year. Total revenue increased 20.4 percent, to $26.6 million, from $22.1 million the previous year.
Domestic same-store sales declined 1.1 percent, with momentum improving toward the end of the quarter. So far, in the second quarter, same-store sales have risen 2.3 percent, Morrison said.
As of April 1, Wingstop had 1,031 restaurants. Of those, 948 units are in the United States, with 927 franchised locations and 21 company-owned restaurants. The company has 83 franchised restaurants abroad in five countries.
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